5 practical ways to keep your financial information and identity safe online

Over the past five years, more than 3.79 million people were victims of cybercrime and fraud, according to the FBI Internet Crime Complaint Center (IC3), with potential losses estimated around $12.5 billion. A record 880,400 of those complaints were received in 2023 alone. And those are only the cases we know of: The FBI estimates that only about half of older Americans affected by fraud report it.

Financial fraud and theft has been around as long as currency has, despite the locks, cages and walls we put around our money to protect it. And while the rise of internet commerce and digital banking comes with new and innovative security and encryption, it’s also turned criminals toward more sophisticated cyberfraud.

Yet technology also brings with it new and easier ways to monitor and protect your personal and financial information from people looking to part you from your money. Here are five practices to build into your regular money management — and keep your personal and financial information safe from criminals and fraud online.

1. Monitor your finances regularly

The best way to catch issues or problems early is to take time to scan through your financial statements, bills and reports. Take special care to monitor your bank accounts for fraudulent charges and credit reports for accounts in your name that you didn’t open or no longer want.

Set a schedule to check your bank accounts at least once a week to confirm each charge is one you’ve made, and check for wrongly assessed fees that can be a sign of fraudulent activity. Your bank and accounts should allow you to set up email and text alerts online or through an app that signal whenever a purchase or withdrawal is made from your account. If you suspect something is wrong, call your bank’s fraud or customer support line immediately. Your bank can freeze, cut off or limit access to your account while investigating.

Don’t forget to order your credit reports from Equifax, Experian and TransUnion, the three largest credit report companies, through the federally authorized AnnualCreditReport.com. Each reporting agency is required to provide you with your credit report at least once a year. Review your contact information, open accounts and loans, outstanding balances and payment information for accuracy, and report any discrepancies or incomplete information directly to the bureau. Bureaus are required to follow up on reported claims, reporting what they’ve found and how they plan to resolve it within 30 to 45 days of your claim.

⭐ Expert tip: Stay on top of your credit reports throughout the year by staggering delivery from each of the three reporting bureaus, instead of ordering them all at once. Set a reminder to order, for example, a report from Experian in January, from Experian in May and from TransUnion in September. That way, you can review open accounts, payment details and more at multiple times over the year, helping you to catch issues as early as possible.

Dig deeper: How to make sure your bank is FDIC-insured — and what to watch for with nonbanks

2. Choose security over convenience online

Unlike what the movies and TV shows portray, most “hackers” don’t use special codes to breach encryption protections and steal from financial companies. Rather, they get access by tricking people into giving up their personal information. And as technology evolves, in more and more sophisticated ways.

Follow these simple rules to protect yourself from falling victim to cybercrime and scams:

• Don’t trust links in your emails or texts. Even if the email or text appears to be from your bank or some other financial institution, it’s best to open a new browser tab and type in your bank’s web address. Clicking a link could take you to a mirrored site created to get your bank sign-in information or other private personal info.

• Don’t open unexpected email or text attachments. Whether you know the sender or not, email attachments can spread spyware, adware and other malicious software just by opening them. One way to sniff out an email scam is to click the sender’s name in your email app or browser — that way, even if the name looks familiar, you can confirm whether the email address is where you’d expect it from. If not, it’s best to flag the message as spam through your account, delete it and block the address.

• Don’t give out or confirm your login or account details through email, text or over the phone. Financial institutions, the IRS and other legitimate companies will never message you for personal or financial information — like account numbers, your Social Security number or passwords — that can compromise your accounts. Even if the message appears to be from a legitimate source, it’s best to call the bank, agency or company directly to confirm whether it’s a real request.

• Don’t trust your caller ID. Scammers can fake a number and a caller ID label. Which means just because a caller says they’re from your bank, it doesn’t mean they’re legitimate. Always hang up and call known numbers for your financial companies to confirm the initial call was legitimate.

• Opt for multifactor authentication on your financial accounts. Multifactor authentication is a way of asking you for at least two forms of ID in order to sign in to your accounts. Examples include entering a texted code after login, answering a series of security questions or using biometrics like fingerprint ID to log in to your device. It might feel tedious at first, but two-factor authentication can keep your accounts safe — even if your passwords become compromised.

Dig deeper: How to block and unblock email addresses in AOL Mail

3. Break free from paperwork

Giving up your filing system filled with paper statements and other financial correspondence isn’t always easy. But if security is your goal, these tips can help you choose a shredder over that new file cabinet you’ve been eyeing.

• Consider electronic statements and bills. Identity theft can happen in a lot of ways, and theft of your financial paperwork is high on the list. Paper copies of your financial documents offer the potential for your personal information to end up in the wrong hands, whether through hijacking of your mail, theft of financial paperwork from your desk or snooping through your trash. E-statements are a safer way to hold on to documents you might need (and easier to trash when you no longer do).

• Set up direct deposit for income and payments — including Social Security. Many companies and agencies are moving away from paper checks. And it’s not only the most convenient way to have your paycheck deposited, but also the most secure. In the same vein, electronic bill pay online or through your banking app can free you from sending checks in the mail and hoping the post office delivers your money on time.

• If you’re not ready to give up your paper trail, make sure to shred all financial paperwork before you throw it away. You can buy an electric paper shredder for as little as $30, and some big box stores even sell manual shredders for under $15.

⭐ Expert tip: If you don’t want to buy your own shredder, your local UPS or office supply store may offer a shredding service. Often the first pound of paper is free, and you’re charged $1 to $5 per pound after that. But only use stores with in-house shredding: Putting your personal financial information in a communal shredding bin that gets picked up by a third-party shredding service can leave you vulnerable, depending on how seriously the store takes security.

Dig deeper: 7 best budgeting apps of 2024 — organize your finances the modern way

4. Never give money to a stranger

We teach our kids about stranger danger from the time they’re toddlers, but it can be easy to forget when we’re hanging out with online “friends.” No matter how long you’ve spent time chatting with someone online, you should remember that fraudsters don’t mind taking time to create a rapport with you, if it eventually pays off for them.

Keep these tips in mind when buying products and services from people online:

• Never transfer money to someone you haven’t met in person. Craigslist and Facebook marketplace are full of scammers taking advantage of Venmo, Zelle and PayPal users when buying or selling a product. To avoid a peer-to-peer scam, avoid paying or accepting payment from people you’ve never met in person.

• Leave money disputes to the app companies. Common scams involve fraudsters sending a payment “by accident” through peer-to-peer apps, asking you to send back the amount or overpayment from your own account to make it right. If this happens to you, ask the person to dispute the payment directly with the app, and not with you. If they refuse, they could be a scammer.

• Know how to dispute a purchase before you buy. Not all peer-to-peer apps allow you to dispute a purchase. Zelle tells you to treat purchases through its app as cash, which means you can’t get a refund. Venmo and PayPal offer purchase protection against fraud or broken items, but you must select the online purchase option when you send payment, and the dispute process can take a long time. Understanding your dispute options can help you make more informed decisions when buying online.

• Narrow your focus on legitimate online marketplaces. Sites like Etsy, eBay and Mercari use an escrow system and offer a dispute process that can go a long way to helping both parties resolve issues with an online purchase. No system is perfect, but these marketplaces at least provide some recourse if you’re facing a fraudulent transaction.

Dig deeper: Top 15 financial scams targeting older Americans — and how to keep your money safe

5. Talk to your loved ones about your finances

Sharing your financial information might feel awkward initially — even with close family. But it’s important to open up to at least one or two trusted loved ones, especially as you get older.

Let your loved ones know the state of your finances, and make sure they understand your wishes and where they can find your financial information, just in case you find yourself unable to make your own decisions. You may even want to grant your most trusted family members the passwords to your accounts — or let them know where they can be found — should you need their help to monitor and keep your finances going if you’re sick or hospitalized.

Having an extra eye to look over financial requests you receive can help you and your loved ones steer clear of known scams you come across — and might end up saving you both from losing money.

Dig deeper: How to find a trusted retirement advisor: Factors to consider for your golden years

Sources

• Internet Crime Report 2023 [PDF], FBI. Accessed August 3, 2024.

About the writer

Heather Petty is a finance writer who specializes in consumer and business banking, personal and home lending, debt management and saving money. After falling victim to a disreputable mortgage broker when buying her first home, Heather set on a mission to help people avoid similar experiences when managing their own finances. Her expertise and analysis has been featured on MSN, Nasdaq, Credit.com and Finder, among other financial publications. When she's not breaking down the complexities of finance, she's a young adult mystery writer of an internationally acclaimed series — and counting.