This is a follow up to a post from November 2006 entitled Online Brokerages: Digital Cash Ripe For The Picking
Digital money, online banking or even just using your credit card online has never been more dangerous. No, this is not a call to ‘Stop Using the Internet’ this is a ’scared straight’ post, designed to shock you into taking a closer look at online security. Worms, Bots, Trojans, Keyloggers and Root Kits appear across the Internet as an ever present plague of locust eating away at consumers’ private data. Keeping your digital money safe and secure should be your number one priority BEFORE you log in to that online financial account.
Because of the characteristics of digital currency:
- The fact that transactions are not reversible
- Very little of the receivers information gets disclosed to the sender.
- Accounts are fast and free to set up without any personal verification of the details.
Digital currency accounts gets attacked by hackers, Phishers and thieves very often. Everyday, I receive from 5-15 phishing emails for e-gold, PayPal and some other banks I’ve never even used. Because of these threats to digital money accounts, most users of digital currency will make their online experience much more secure than the casual surfer using a credit card that offers a guaranteed refund in the case of fraud. Digital currency users KNOW that when your account is hacked, that money is G-O-N-E. There is no magic toll free number to call and get a refund. On with this true life story…
There is an older gentleman named Dave DeSmidt living in Mukwonango, WI, who kept his life saving in his 401(k) retirement account. I say life saving because held in his account with J.P. Morgan & Co. was 25 years of personal saving. This retirement money totaled $179,000.
Now while your credit card and online banking accounts are protected by law against fraud, online brokerage accounts are NOT. These digital money accounts, which are regularly accessed by users, have now become a prime target for hackers and thieves.
Mr. DeSmidt, awoke one morning last October, logged into J.P. Morgan and found a zero balance. His account had been hacked by an intruder and the entire saving disbursed to a private checking account of someone he did not know. DeSmidt said. “I don’t have a clue how it happened.”
Apparently, on October 23, someone in New Jersey, logged into his online brokerage account, changed the ‘linked’ bank account to another bank and requested a transfer of the full amount. The following day, Mr. DeSmidt’s balance read zero.
It is important to note that not even the name on the checking account matched the online brokerage account, yet the transfer was completed. Often fraud protection controls similar to those found on credit card accounts are NOT found on brokerage accounts. Computer crooks have progressed from credit card with small balances and fraud protection, to larger amounts and easier brokerage accounts. These targets offer the account holder little or no protection.
J.P. Morgan’s report on the theft had this to say:
“J.P. Morgan concludes there was no external or internal breach of controls with the J.P. Morgan environment,” the report said. “Access and authentication controls established within J.P. Morgan worked appropriately.”
Bottom line, the money was gone. There are no US federal consumer regulations to protect consumers when a brokerage account is hacked.
Now, having said that, let’s update this story….MSNBC became involved, publicized the theft and to make a long story short, Mr. DeSmidt did get his money back before Christmas. J.P. Morgan, without being required to by law, refunded his account. Its important to note, this is an exception to the rule, most thefts of this type are not covered by national news organizations and a loss can be permanent.
Bottom line, make sure your computer is secure BEFORE you log onto to that digital currency account. Here are a few webs I visit for assistance in the daily security of our PCs:
- Kaspersky Lab
- CounterSpy
- eTrust PestPatrol
- McAfee
- Spybot Search and Destroy (S&D)
- Gibson Research Corporation
- KeePass
- AI RoboForm
- JAP — Anonymity & Privacy
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