Protection for Online Accounts
What if someone hacks into my online brokerage account and empties it? Would I have any legal recourse to require the mutual fund company to reimburse me for the loss?
Mutual fund firms are pushing hard to get customers to sign up for online access to their accounts. But what if someone hacks into my account and empties it? Would I have any legal recourse to require the mutual fund company to reimburse me for the loss?
To put it bluntly, no. "Customers have no recourse unless they can prove that the institution was negligent in the theft," says Matt Bienfang, senior analyst with TowerGroup, a financial-services consulting firm.
But that doesn't mean you shouldn't do business on the Internet. Fund companies and brokers have gone to great lengths to protect your money online, both by encryption technology and by administrative procedures that would make it tough for someone to clean out your account.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
At T. Rowe Price, for example, proceeds are sent only to the address you have on record. So if somebody were to hack into your account, the check would still show up at your address and be payable to you. If an address change is submitted online, the company does not allow redemptions for ten business days and sends a confirmation of the change to both the new and the old addresses.
Charles Schwab and E*Trade are among a handful of online brokerages that offer a security guarantee, promising to cover 100% of any losses in your account because of unauthorized activity. But those guarantees aren't ironclad. At Schwab, for instance, there's a key disclaimer: "If you share [your login or password] with anyone, we'll consider their activities to have been authorized by you."
Even if you're found to be at fault, you still may be able to get your money back. Bienfang cites a North Carolina case in which E*Trade made the customer whole, even though the client had not installed security software, such as spyware protection, on his computer. "E*Trade felt that any damage to its brand as a result of the incident would be more expensive than reimbursing the client's loss," says Bienfang.
-
Stocks Chop as the Unemployment Rate Jumps: Stock Market TodayNovember job growth was stronger than expected, but sharp losses in October and a rising unemployment rate are worrying market participants.
-
Should You Renew Your CD?With rate cuts impacting earnings, we examine if now is a wise time to renew CDs.
-
7 Ways to Plan Now to Save on Medicare IRMAA Surcharges LaterUnderstand the critical two-year lookback period and why aggressive planning before you enroll in Medicare is the most effective way to minimize IRMAA.
-
Kim Kardashian's $1.3 Million Crypto Fine Is a Warning to InvestorsKim Kardashian didn't tell her instagram audience she was paid to promote a crypto token. Now, she'll pay a hefty fine.
-
Beware the Caller From “The Government”: It’s a ScamScams Scammers' persistence is matched only by their insolence: They even try to impersonate the very agencies trying to stop their grift.
-
The Best Way to Protect a Parent from ScammersScams Adult children worried about their parents’ ability to spot and avoid fraud have several options to help protect them, including a durable power of attorney, a guardianship and a revocable trust. Which might be best for your family?
-
How to Avoid a Summer of Scams – Expert Tips to Help Aging ParentsScams Financial professionals share their top tips to help avoid becoming a statistic in a summertime wave of identity theft, account hacks and telemarketing fraud.
-
Penny Stocks: Why You Should Always Stay AwayScams With the exception of some large foreign firms, investors should generally avoid stocks that trade over-the-counter.
-
Keep Momma Away from This Financial AdviserScams When a family member wants to be your financial adviser, watch out!
-
Beware of Gift Card ScamsScams Threatening calls that you will be arrested or your electricity will be turned off can sound so real. But don’t go running out to buy a gift card to keep your lights on. Learn how the fast-changing gift card scam works so you’ll be ready if your phone rings.
-
Scam Alert: 4 Types of Fraud That Target the Elderly (and How to Beat Them)Scams Scams target people of all ages, but the most vulnerable tend to be older adults — and the money they lose can have a big impact on their retirement. According to the National Council on Aging, seniors lose an estimated $3 billion each year to financial scams!
