Accounting / Bookkeeping Basics: Detecting And Preventing  Digital Fraud

Digital fraud is fraud that is accomplished by stealing information or by hacking into computer resources that are assumed to be secure. It’s one of the most common forms of fraud and, unfortunately, it usually could have been prevented if the victim had exercised a bit more diligence in how they attended to their digital security. Digital fraud includes:
- Hacking
- Phishing
- Packet Sniffing
- Networks
- Stealing Email
- Stealing Work or Home Computer Credentials

In many cases, information that is stolen digitally will also be used digitally. For instance, if someone steals your credit card number with a phishing scam, they’ll likely use that credit card info online to commit further acts of fraud; oftentimes, they’ll make expensive online purchases with the information.

Paper Fraud
Unfortunately, quite a few people seem to have forgotten about the risks of paper fraud. Your bank statements, personal letters and other information that you toss out in the garbage is a huge source of information to potential fraudsters. If you’re like many people and, at least to some extent, run a business from your home, you have to be even more cautious. One other thing to keep in mind is the fact that, once it’s out on the curb, your garbage is actually not protected by your right to privacy anymore. Dumpster diving and tipping over garbage cans can give fraudsters access to a huge amount of information that they can use to take advantage of you.

Consider the following items that you probably throw away without thinking about it.
- Bank statements
- School records
- Credit card statements
- Utility Bills
- Hospital and other medical bills

People committing fraud aren’t looking for one particular piece of information; they’re looking for several from which they can construct a whole identity that they can exploit. If they had information about you such as that listed above, for example, they would know:
- Where you bank
- Where you go to school
- What kind of credit card you have

- How much you pay in utilities every month and your physical address
- What kinds of medical conditions you suffer

This is plenty of information for anyone intent on committing an act of fraud. People who commit fraud will oftentimes piece together information that they glean from a variety of sources and use that to access more of your personal information or, if they can, to get at your money or your credit card numbers. As the statistics from the CSN demonstrate, most people who are the victims of fraud end up paying some financial price for it.
 

Compartmentalizing Personal Information
Compartmentalizing information means separating information in a way that ensures that someone who knows one piece of information about you cannot figure out other pieces of information about you. In the sense of protecting yourself from digital fraud, it means making sure that you’re digital self is not so predictable that a skilled fraudster could get into everything you own by exploiting their knowledge of one part of your digital life.
The best example of how someone bent on defrauding you could do this is, again, centered on passwords. One of the things you want to make sure you never do is use the same password for multiple sites. By separating your digital identities on every site in this regard, you ensure that someone who gets your social media password, for example, cannot use that as a tool to figure out your bank password. Likewise, keep personal information online to a minimum. Your bank will have your address and other personal information, but there’s no reason that this has to be reproduced on your social networking profile. By keeping the information that you provide on any given site to a minimum, you can reduce the chances that anyone will be able to combine your information from several different sites and gain access to information you want kept private.

Remember to keep your business and personal computer  use separate, if possible. If you have a home business or if you work at home for your job, see about buying a computer exclusively for work. You’ll find that’s a lot less stressful to have information that applies to work and information that is personal separate than it is to mingle the two.
There isn’t much attention given in the media to the subject of paper security. It’s still vital, and various acts of paper fraud constitute a huge percentage of the total cases of fraud every year. According to industry reports, check fraud and other types of fraud are on the decline, but they’re still very big problems. Even though digital information transmission is rapidly replacing paper methods, there is still very good reason to be concerned about the security of any paper documents you have in your home or office.

Here are some tips to help you make sure you’re as secure as possible.

Shredding Documents
If you’re old enough to remember, shredding documents used to be a constant task in offices. Today, most of the office communications that are sent for business are sent electronically. This has made people a bit less diligent about how they handle documents in an office setting and because the same change has occurred for everyday people many people don’t even have a paper shredder in their homes. You need one and here’s why.
When you take your trash and throw it in a dumpster or take it to the curb, it’s no longer yours. Anyone can come by and go through it. If you’re wondering why people would bother doing this, go back to the paper shredder. All of those bank statements, credit card statements, personal records and the rest of it that people throw away these days tend to be intact and, for a fraudster, that’s very useful, indeed. Much as compartmentalizing information can keep anyone from having access to too much, putting a wealth of personal information into one garbage bag and throwing it out invites disaster.You can pick up paper shredders that go on top of a garbage can for under $50 at most any discount store; oftentimes, they’re under $30. These devices can give you a lot of peace of mind. It’s best to shred anything you’re throwing out so that you don’t miss anything when you’re sorting through shred/no shred piles. Just shred it all. You can recycle shredded paper or you can even use it for some other purposes, such as protecting your belongings by padding boxes with shredded paper when you move or when you put things in storage.
 

Home Safes
You should consider getting a home safe. There are many different types of safes out there and even apartment-dwellers can find suitable models that don’t require you to modify the structure of your living space.Home safes have many benefits to them. They protect vital documents against fire and flood damage, which is great for items such as your car title, birth certificate, social security card, and so forth. They also protect your information against theft.
The most secure home safes are those that are mounted to the floor or into a wall. These are almost impossible to remove without a full crew of people to do the job. Most burglars are not going to bother trying to get one of these out of your home.
Some safes aren’t mounted to the floor or wall. These are, of course, less secure than safes that are mounted, but they’re still a huge improvement from a locking file cabinet. These safes can be stashed in the back of a closet or anywhere else that’s convenient. They’re very heavy, so it’s hard for burglars to take off with them. Most burglars won’t bother, as they’re not likely to be able to get the safe open, even if they do abscond with it.
Place anything you wouldn’t want someone to get access to into your safe. Aside from valuables, you may also want to put financial documents, tax records and so forth in a safe. You’ll always know where those documents are and they’ll be almost completely inaccessible to anyone trying to steal them from you.

Safeguarding Personal Information
Your Social Security number, driver’s license number, address, credit card numbers are only some examples of the very useful information to fraudsters that you’ll typically own in physical form. This information needs to be treated in a way that keeps it safe, and that starts with handling it correctly.

Here are some basic tips to follow:

- There’s no reason to have your Social Security card in your wallet

- Your passport should be at home unless you’re using it

- Keep credit cards behind the other cards in your wallet so people can’t get the numbers when you pay for something
- Never set a credit card or debit card down on  an ATM or a cashier’s counter while paying. Keep it in your hand at all times.

Remember that fraudsters are very good at memorizing numbers, so any numbers that you flash in front of them are likely to be exploited!

ATMs
There are two major threats at ATMs: other people and skimmers. Dealing with other people just means exercising basic street smarts. Look around you before you use any ATM to make sure that the area is safe. Cover your hand while you’re entering your PIN and take your receipt. When your cash is dispensed, take it out of the machine and put it in your pocket right away. Don’t take out your whole wallet and stand there for a length of time putting it away. You can do that later and without exposing the contents of your wallet to anyone looking.Skimmers are devices that are attached to ATM machines and sometimes to credit card payment machines. They’re devices that skim your card number when you slide it and, of course, your PIN when you enter it. Look at a machine carefully before you use it. Check to see if the card reader is actually a part of the machine or if it’s been added to the front of the real reader. It’s easy to tell if you pay attention, but most people don’t. If anything seems off about an ATM machine, don’t use it. This same advice applies to credit card payment machines, such as those you see on gas pumps. Tug lightly on the machine to make sure that none of the components are loose and, therefore, likely ones that were added on by  someone intent on defrauding people of their money by stealing their PIN and their card numbers.
Paper fraud is as dangerous as electronic fraud, so be prepared to deal with the consequences if you’re not vigilant.

Now that you know the major types of threats out there, you’re prepared to start developing a strategy to deal with them. It starts with maintaining awareness.

Being Vigilant
When you’re reading the news, be sure to take the time to read the tech section of whatever news sources you enjoy. They’ll usually give you good information about the latest threats out there. If a new virus or other piece of malware shows up in the world, be sure you check your computers and smartphones to make sure you’re protected against it.
Where smartphones and laptops are concerned, be wary of using them on public networks. Remember that any passwords or other information you transmit may be intercepted. If you have a 3G or 4G phone, it’s safer to check your email and do other secure work over that connection than it is to do it over a wireless LAN. Turn off your wireless networking function on your phone when you’re not at home to make sure that your phone isn’t hooking up to random networks.If you can, use wired connections instead of wireless connections. Having an open wireless network in your home can cause real trouble for you and, in many ways it’s much safer to use CAT-5 cable than to use a wireless LAN.

Check Your Credit Report
You can get a free credit report from the three major reporting agencies once per year. Be sure you do so. There are also services that allow you to subscribe to your credit report. If you have excellent credit, you’re a more appealing target for fraudsters. They can get a lot of mileage— meaning money—out of your identity before people will catch on. You’ll have to keep an eye on activity on your accounts to make sure you’re info isn’t being used for fraud.

Stopping Opportunities for Fraudsters
Be sensible about what you do and you’ll cut off many different opportunities for fraudsters. If someone calls asking for your credit card number, PIN or password, it’s always fraud. Just hang up. There’s no need to talk to them to make this determination. A financial institution that needs to speak with you will never ask for your PIN. A website will never ask for your password. The only people who ever need your credit card number are people from whom you’re purchasing right at that minute.If you can avoid doing so, never save your credit card information with any online or over-the-phone service. It only takes a few minutes to enter it when you make a purchase and hackers consider the databases that companies have of people’s credit card numbers to be very appealing targets. There have been instances where they’ve gotten into them already, so do thing the old-fashioned way and don’t let convenience make you a target!
The less personal information you get in the mail the better. If your bank offers an online statement option, take it. That way, you don’t have to deal with the paper version. Shred anything with  your name on it that you get in the mail before you throw it away.