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Bank Fraud: How to Recognize It, Avoid It, and Report It

Last year, identity theft and fraud hit an all-time high, according to Javelin Strategy & Research. More than 16.7 million people were affected and thieves claimed nearly $16.8 billion in 2017. How we make purchases online and in-person is evolving but so are criminals. Bank fraud is generally defined as any unauthorized transactions made using your bank account.

Here is how you can stay ahead of potential threats and tell if someone is trying to get a hold of your account information.

Understand your weak spots

Three common ways fraudsters access your bank information include phishing, malware, and scams. Phishing occurs when someone tricks you into giving them your personal information usually by posing as a business or your bank. These sites and emails can appear very similar to what you’re used to in order to trick you into entering your information.

Malicious software, or malware for short, is a type of virus usually acquired through an email attachment, internet pop-ups, or through downloading bad programs to your device. According to the cyber security company Norton: “This is software that is specifically designed to gain access or damage a computer without the knowledge of the owner.”

These viruses are built to bypass normal security features and often have the ability to record your keystrokes (known as “keyloggers”) and may also crash your computer and phone while allowing another person to monitor your activities online.

You’re likely familiar with scams and the general concept of how they work. Scams rely on bait that lures the victim into a trap. This can come in the form of ads promising a deal that is too good to be true or in some cases a service that you feel is necessary, such as debt repair or student loan relief. When you input your financial information, a fraudster is on the other end copying it for his own use.

Tips to avoid bank fraud

  • Read email carefully. To avoid phishing schemes, make sure you’re paying close attention to the details. You’ll want to pay attention to things like typos, unfamiliar links, attachments, and any other awkward or urgent language. Do not click on any links in the email that appear suspicious or enter any of your bank information. If you have a feeling that the email is fraudulent, contact your bank immediately to verify.
  • Make sure your computer and mobile security software is up to date. Avoiding a phishing scheme can also help you to avoid malware. One of the best things you can do is to install antivirus software, keeping your computer and mobile phone constantly updated with the latest versions released by your manufacturer. Because hackers are constantly evolving, developers routinely put out new software updates with new security protections, too.
  • Avoid suspicious downloads. Additionally, since no method of protection is perfect, you’ll want to double check the sources and validity of the content and apps that you’re downloading while online and avoid suspicious pop-up ads. If you suddenly notice unusual behavior, such as sporadic shutdowns or an increase in pop-up ads, you may be infected. If this is the case, the University of Texas at Austin Center for Identity recommends this approach: Stop using the computer for shopping, banking, or any other uses that involve passwords and other personal identification information. Then, consult an IT professional.
  • Use a credit card or prepaid card to shop online. Never shopping online may feel impossible as online shopping is so widespread these days. Consider shopping online using a prepaid debit card loaded with enough cash to complete your purchase but nothing more. If someone steals your account info, they won’t actually get access to your bank this way. A credit card is better than a debit card for online shopping, as it typically comes with zero-fraud liability protection, which means you won’t be on the hook for stolen funds.
  • Stay alert. Your best defense against scams is being skeptical. Scams rely heavily on opportunities that are too good to be true and most often come with a catch that could end up hurting your finances. Do not give any personal information until you are able to verify the legitimacy of any claims that are made.
  • Keep passwords complex and use two-factor authentication. Password123 just won’t cut it these days. Create complex passwords. Use a password manager tool if you have trouble keeping track of all your passwords. And for every service that offers two-factor authentication, sign up right away. This means someone can’t just log into your account whenever they want — the service will send you a text message or email to verify that it’s you first.
  • Monitor your credit card and bank account. There are several services that allow you to monitor your credit on a regular basis while other services will allow you to check your official detailed credit report once a year. Some credit monitoring services even provide a layer of identity theft protection.
  • As a last resort, you may also freeze your credit, but this measure will only prevent fraudsters from opening new accounts in your name. It does not prevent criminals from using your current credit cards or prevent identity theft.

How to report bank fraud

Among e-commerce shoppers, 78 percent of fraud victims caught the activity within a week, Javelin found. Those who did not shop online were less likely to become victims but when they were, it took more than 40 days to notice. If you suspect fraud in your account, you should immediately contact your bank to alert them. Your next step should be changing your passwords, PIN, and other login information to prevent further damage.

If you feel your Social Security information was compromised, you may also consider contacting the Social Security Administration Fraud hotline at 1-800-269-0271. You will also want to thoroughly review your credit report. If you find any accounts that you did not open, you can ask the credit bureau to remove it, contact the institution where the account was opened, and have it closed. It is best to keep a record of the conversations you had and with whom, and ask for written documentation that the account has been closed.


Many banks have boosted their efforts in preventing potential fraudulent charges by adding credit-monitoring features and protections in recent years; but you will still need to do your part to keep yourself safe. Checking your bank accounts and credit reports regularly as well as avoiding scams and phishing schemes can go a very long way.

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