Preventing & Recovering from Fraud

Preventing & Recovering from Fraud

Steps you can take to be safer and get back on track

Unfortunately, fraud is commonplace, and no one is immune.  Most of us have received the dreaded call from the credit card company, asking if a transaction was legitimate.  If it was not, they lock your account and send you a new card with a new number and you have to do the recovery work. 

There are so many types of fraud that I am just going to cover the two we have dealt with most often: bank account fraud and credit card fraud.  Either one can damage your confidence and take a chunk of time out of your life.


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Bank Fraud

Bank fraud, in our experience, is less common than credit card fraud, but carries a much higher risk because the fraudster is draining your bank account.  In addition, you may be liable for some of the damage.

There are a number of ways bank fraud can transpire.

By phone.  Someone calls and either offers you something that you want or need and you pay by giving them your bank account number.  This is the type of bank fraud we have seen most often.  Never pay someone who solicits you by phone.  Make the call yourself if you want something. Especially don’t share if they say they are “from” the bank or the IRS!  Also know that FEAR = FRAUD.  If someone is scaring you, never believe them.  Hang up and verify some other way.

Writing checks.  Any time you write a check that has your bank account number on it, you are giving that account number to the recipient and to anyone who could open the mail.  Instead, use Zelle® or your bank’s bill pay service and your account number is not shared.

Using insecure passwords.  If your passwords are under 12 characters, repeated across websites, or easily “guessed”, you are putting your bank account at risk.  Not having multi-factor authentication set up makes it worse.  Don’t be lazy!  Especially with bank and investment accounts.

Data breaches.  We hear about them frequently.  The best thing you can do is have a great password, change it often and definitely if there is a breach.  Using an identity monitoring service helps you know when you are at risk.  Some plans also help with restoration.

Depositing fake checks.  Sometimes bad actors will send a fake check “by mistake”.  They tell you to deposit it and wire some of the money back to them. By the time the fake check bounces, your account is overdrawn.   You also do not need to write your account number on checks you endorse, just your signature and “For Deposit Only” is needed.

ATM skimming.  Skimming devices can be inserted into ATM machines and gas pumps that can read your debit card and give access to bank funds.  Beware if the machine seems tight or stiff when you insert your card.

Lost or stolen debit cards.  When you lose your debit card, or if you suspect fraud of any type on your bank account, you must contact the bank immediately.

  • Contact bank within 2 days ($50 max loss)
  • Calling between 2-60 days means you could be liable for up to $500.
  • Over 60 days ($500 liability and no reimbursement by the bank is required).


Credit Card Fraud

Credit cards generally present less risk of fraud because you are not liable for charges you didn’t make and although it happens more frequently, the losses are often caught by the credit card company and tend to be smaller amounts.  But sometimes small amounts can fly under the radar for a long time if you are not watching your statement each month.

The sources of credit card fraud are mostly similar to bank fraud and include:

  • Sharing your card# with a bad actor, either by phone or online.
  • Financial institution breach
  • Using insecure passwords without authentication
  • Phishing. When someone calls or emails, posing as trusted institution, like a bank, government, or card company, and ends up asking for your card number.
  • Internet. Clicking on unsafe ads and links and then using your card.
  • Lost or stolen credit cards can be used by others unless you report the card as missing.

An ounce of prevention…

Pay attention to statements.  We once had a client whose Money Market account was almost drained over a week’s time.  The bank didn’t catch it (but did restore the loss).

If you use online banking, banks and credit card companies allow you to set up alerts so you know if various events occur, like an overseas transaction, transactions above a limit you set, balance levels, etc.

If you do not play in the online sandbox, call and see if the financial institution can set up alerts for you.

With a credit card, you can put a freeze on the card if you think you might find it again, suspect fraud, or will not be using it for a while.  We highly recommend using a credit card when shopping online or by phone because it is NOT a direct link to your bank account.  If you have debt issues, then this might not work for you.

Debit cards are best used for getting cash.  If you use them elsewhere, you are putting your bank account at risk. 

Check your credit report regularly.  It is free to do through the FTC three times a year.  It let’s you know if someone has opened a loan or card in your name.

Bank and Credit Card Fraud Recovery

With any kind of fraud, your first step is to report it.  Having photocopies of all cards is a good idea so you have not only the card number, but the phone number to call.  Your bank statement is helpful in the case of bank fraud.

Be sure to change passwords on any affect accounts.

Next, you will need to review past statements and find out what companies are being paid automatically from the account in question.  Then you will need to change the account number being charged by each one.  Most credit card companies will allow recurring charges to continue even though the card number has changed.  But sometimes you will get an email or letter from a company saying that your account will be cancelled if you do not supply an updated account number for them to charge.

This process can take many hours and be very frustrating, especially if you cannot do it yourself online.


Not all fraud is due to a mistake or inaction by you.  Sometimes it is out of your control, as in the case of a corporate data breach that exposes your account information or other personal data.  We often see fraud when clients begin to experience cognitive decline and are not adept at dealing with our increasingly online world.  Following the suggestions in this article will help you avoid most bank and credit card fraud. 

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Your financial stability is our top priority.

Your health and peace of mind are worth every step of this journey.