The threat cybercrime poses to your finances (and 4 ways to protect yourself)

In 2019 individuals and organisations in Australia lost over $630 million to online scams, according to the Australian Competition and Consumer Commission (ACCC).

Of that total, $126 million was stolen in investment scams, while online shopping scams increased by 42%, fuelled by the rise in the number of people shopping online. Since many online scams go unreported, the actual amount of financial losses is likely to be higher.

The increasing digitisation of information and online investment opportunities available to the public have been accompanied by a rise in cybercrime.

Generally, the more money you have, the more attractive you are to online scammers. Yet many investors are unfamiliar with this class of criminal activity.

As technology advances, cybercriminals find new ways to attack. Especially at risk are unwitting investors and unprepared individuals.

This article will provide you with an introduction to cybercrime and some simple ways you can protect yourself against it.

What is cybercrime?

Cybercrime is any type of criminal activity that targets or makes use of a computer, network, or networked device. The offenders can be individuals or organisations, and the crimes almost always involve money.

These crimes involve theft, blackmail or ransom demands to restore access to encrypted files, for example.

Luckily, there are plenty of novice hackers who don’t succeed or get caught. But there are also a sizeable number of organised cybercriminals with access to advanced hacking programs and techniques.

The 4 types of cybercrime activities

1. Phishing

Phishing is the act of contacting a target via email, text message, social media, or phone and pretending to be a representative of a legitimate business or government body.

The cybercriminal asks for the victim’s personal information, which may include bank account information, passwords, superannuation details, etc.

If successful, the scammers use the stolen information to impersonate the victims for financial gain.

Last year saw a 44% uptick in reported phishing scams.

2. Identity theft

By all accounts, this is the most damaging type of cybercrime.

It can take years to clear your name, recover losses, and undo the damage if you fall victim to an identity thief. Some victims recover little more than their identity.

In 2020 online theft of personal information rose by 55%. Most victims are 25 to 34 years old.

While scammers can steal lots of identities quickly, cybercrime investigations take much longer. That’s why victims of identity theft often face an extended period of financial hardship.

3. Ransomware

Scammers can encrypt a victim’s computer files using a form of malware called ransomware.

They then demand a ransom in exchange for restoring the victim’s access to their data.

Essentially, victims are locked out of their computer or device until they pay the ransom.

One example is the highly publicised WannaCry ransomware attack that targeted 230,000 computers across 150 countries.

The affected parties had to pay a ransom in BitCoin to regain access to their data.

4. Sales and Investment Fraud

Investment fraud involves a wide range of confidence tricks, scammers adopting the persona of a financial broker.

By coaxing people into making an outwardly solid investment, fraudsters can gain access to the victims’ contact details and account information.

How Can You Protect Yourself?

Now that you’re aware of the most popular types of cybercrimes, how can you avoid becoming a victim?

Here are four relatively easy measures you can take to protect yourself.

Tip #1. Keep all of your software updated

Hackers target known vulnerabilities in computer operating systems, mobile devices, networks, and so on.

Unfortunately, some users refuse to keep their software up to date for fear of slower performance following the update.

But it’s these updates that often include patches — a set of changes to a computer program or its supporting data to update, fix, or improve it, including fixes for security vulnerabilities.

In other words, the benefits of updates almost always outweigh the costs.

Tip #2. Don’t share personal information online

Phishing relies on victims willingly sharing their confidential information online, either directly to the scammer or through various sign-up or opt-in forms.

You must never give out your personal information online or over the phone unless you’re certain about the trustworthiness of the other party.

One way to detect a phishing scam is to look for pressure tactics: Trustworthy entities rarely have reason to pressure someone into disclosing information.

Furthermore, providers of financial services and government institutions never ask for sensitive personal data over the phone or via email.

They will typically not ask for passwords or other identifying or confidential information outside of a sign-in or log-in scenario. They certainly won’t contact you to ask for it over the phone, email, or chat.

If you have any reason to suspect criminal activity, ask the caller for the name of their company and then verify it’s legitimate.

For example, check the business has a physical address (preferably local) and landline number and/or search the business-names register to confirm they’re listed.

Tip #3. Always use multi-factor identification when offered

Multi-factor authentication (MFA) is one of the best tools for stopping cybercriminals in their tracks. It’s used to ensure digital users are who they say they are by requiring them to provide at least two pieces of evidence to prove their identity.

For example, a person may be required to provide not only a password but also enter a PIN sent to their smartphone.

So if hackers manage to get your password, they still have another security hurdle to clear before they’re able to access your account.

If MFA is available, always set it up, especially for your emails online bank accounts, and the like.

Tip #4. Stay Up-To-Date on Major Security Issues

It’s helpful to stay informed on the latest security breaches.

Business entities whose security has been breached commonly make a public announcement.

Stay on top of the news so you can be among the first to find out if one of your accounts might be compromised. If so, change your password and take any other measures the entity advises you to.

It’s also a good idea to keep an eye out for new vulnerabilities discovered in devices and software.

Updating your anti-virus software will help since the developers constantly patch up vulnerabilities, as discussed earlier.

Stay informed and safe

Many aspects of your personal finances are now accessible online, from your bank account to your investment portfolio.

This makes cybercrime a major concern, especially for people with spare cash to invest and who consequently are prime targets.

By staying informed and always keeping your guard up, you’ll be less likely to fall victim to cybercriminals.

For more information about protecting yourself from cybercrime, contact Modoras Financial Performance Solutions today at  1300 888 803.

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IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (SYD) Pty Ltd ABN 18 622 475 521. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (SYD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (SYD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (SYD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (SYD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.