What You Should Know About Brokerage Account Fraud Protection

If you share your user name or password with a person or service, you may have a tougher time getting the brokerage firm to pay a claim.

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Am I protected if someone steals money from my brokerage account? With all the identity theft and data breaches now, I’m concerned. --Alan Farrar, Casselberry, Fla.

Many brokerage firms, such as E-Trade, Fidelity, Schwab and Vanguard, cover 100% of any losses in your accounts due to unauthorized activity. Ask your broker about its security measures and guarantee, and take the steps it recommends to protect your account, such as using strong passwords and a unique user name, as well as installing up-to-date antivirus software on your computer. If you notice suspicious activity in your account, contact the firm immediately. In submitting a claim, you may need to complete a notarized affidavit explaining the unauthorized activity or provide a copy of a police report.

If you share your user name, password or answers to security questions with a person or service—say, a financial adviser or an aggregator site, such as Mint—you may have a tougher time getting the brokerage to pay a claim if money is stolen through a data breach at the third party.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.