Account Fraud

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
rustinchole
Posts: 2
Joined: Mon Oct 16, 2017 2:03 am

Account Fraud

Post by rustinchole » Fri Jan 12, 2018 1:02 pm

In the event of someone illegally accessing my investment accounts at Vanguard and draining them what are my potential options (hypothetical). Of course for a bank account you will be refunded but what about investments? Does Vanguard investigate and reimburse? Do they look to see if the theft was in part caused by the account holders negligence?

Thanks for all you do guys, never not been able to find help in this place.

User avatar
Pajamas
Posts: 3024
Joined: Sun Jun 03, 2012 6:32 pm

Re: Account Fraud

Post by Pajamas » Fri Jan 12, 2018 5:33 pm

Vanguard provides some information about this:

https://personal.vanguard.com/us/help/S ... ontent.jsp

The details are important.

User avatar
bligh
Posts: 619
Joined: Wed Jul 27, 2016 9:13 pm

Re: Account Fraud

Post by bligh » Fri Jan 12, 2018 5:45 pm

Setup account alerts to email and text you on any and all account activity. As a Boglehead this activity would be quite limited.

I have it setup that way, and it helps me sleep soundly at night. In general it is a good idea to have something like this on all your accounts. That way you can instantly call the brokerage as soon as any activity is initiated.

rustinchole
Posts: 2
Joined: Mon Oct 16, 2017 2:03 am

Re: Account Fraud

Post by rustinchole » Fri Jan 12, 2018 11:48 pm

Reading through that link has not assuaged my fears. This line about only refunding if the loss isn't in some way my fault is particularly concerning.

"This protection does not apply to unauthorized activity caused in whole or in part by your fraudulent, intentional, or negligent acts or omissions, including activity by a person whom you have intentionally or negligently permitted to transact in your account, or to whom you have intentionally or negligently given access to security information relating to your account."

Of course if someone has my information it's going to be due to my own negligence right? There is always more I could do to protect it so it would not be hard to put fault on the account holder for not doing absolutely everything possible. I'd like to know how vanguard defines negligence in this sense, do you think calling in and talking to legal would be of any use or am I way over thinking this? We spend so much time mitigating against investing risks I'd hate to lose it all to my own carelessness. I do have the email alerts set up, I'm going to step up my security with the two factor identification though.

MikeG62
Posts: 616
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Account Fraud

Post by MikeG62 » Sat Jan 13, 2018 9:08 am

rustinchole wrote:
Fri Jan 12, 2018 11:48 pm
Reading through that link has not assuaged my fears. This line about only refunding if the loss isn't in some way my fault is particularly concerning.

"This protection does not apply to unauthorized activity caused in whole or in part by your fraudulent, intentional, or negligent acts or omissions, including activity by a person whom you have intentionally or negligently permitted to transact in your account, or to whom you have intentionally or negligently given access to security information relating to your account."

Of course if someone has my information it's going to be due to my own negligence right...or am I way over thinking this?

I do have the email alerts set up, I'm going to step up my security with the two factor identification though.
While IANAL, I do not think your statement is incorrect - may not be due to your negligence at all - and, yes, I believe you are over thinking this.

Of course, these thing are always facts and circumstances dependent. However it seems to me that if you take reasonable steps to protect your accounts, including the use of 2FA as well as alerts (whether by e-mail or text) anytime any money is moved out of your account (and react promptly to any such alerts), then you are doing the things a reasonable and prudent person would/should do to protect their account from unauthorized access.

stan1
Posts: 5152
Joined: Mon Oct 08, 2007 4:35 pm

Re: Account Fraud

Post by stan1 » Sat Jan 13, 2018 9:21 am

rustinchole wrote:
Fri Jan 12, 2018 11:48 pm

"This protection does not apply to unauthorized activity caused in whole or in part by your fraudulent, intentional, or negligent acts or omissions, including activity by a person whom you have intentionally or negligently permitted to transact in your account, or to whom you have intentionally or negligently given access to security information relating to your account."
What we don't know is whether Vanguard would consider putting your password into a password manager or account aggregator such as Yodlee or Personal Capital as negligent. I'd make the argument that using password managers is a widely recommended best practice by cybersecurity "experts" as a way to manage using a randomly generated, unique password on each site therefore not negligent but I'm not an attorney and I haven't had to hire one to make this defense. I'd note that there is no body of experts saying its a good idea to put your login credentials into an account aggregator (although Vanguard did offer Yodlee as a service via its own website for external accounts at one point -- I don't think new customers can use it any longer).

User avatar
oldcomputerguy
Posts: 2253
Joined: Sun Nov 22, 2015 6:50 am
Location: In the middle of five acres of woods

Re: Account Fraud

Post by oldcomputerguy » Sat Jan 13, 2018 9:40 am

bligh wrote:
Fri Jan 12, 2018 5:45 pm
Setup account alerts to email and text you on any and all account activity.
Vanguard allows you to set up alerts for:
  • Add, edit, and delete linked bank accounts
  • A password is changed, a security question and answer are changed, or my password is locked on the web or through an app.
  • Buy, sell, and exchange Vanguard mutual funds
  • Buy, sell, and exchange non-Vanguard mutual funds
  • Brokerage trade execution notices
  • Initiated, in progress, and completed status messages for asset transfers
  • Reminder and confirmation text messages when you have appointments with us.
The first five let you set alerts via email and/or SMS text. The next-to-last (asset transfer status messages) can be set only for email alerts, while the last (appointment reminder) can only be set for SMS text.

I personally have all the check boxes set except for the last one, since I don't expect I'll have an appointment with someone from Vanguard any time soon.
Anybody know why there's a 20-pound frozen turkey up in the light grid?

User avatar
nisiprius
Advisory Board
Posts: 34614
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Account Fraud

Post by nisiprius » Sat Jan 13, 2018 9:56 am

Keep in mind that Vanguard is not like PayPal or a bank bill-paying service. It is not designed to move money between two different people. Let's suppose a hacker got access to my account. What, exactly, could he do apart from causing vandalism or mischief just for the heck of it?

He could initiate transfers between my Vanguard account and my own bank accounts. What good does that do him?

Of course there are processes for linking new bank accounts to a Vanguard account, but they are intentionally slow and cumbersome, involving mail and paper and physical addresses. Whenever I've done it, it has involved Vanguard mailing me a letter at my physical address informing me of the change, and the time taken to activate the link is long enough to be reasonably sure I've received the letter. The hacker would be exposed to the possibility of discovery for something like ten days.

The only scenario anyone has mentioned for a hacker being able to rob me quickly and at low risk is to commandeer my account and have me buy a worthless penny stock that the hacker is pumping, driving the price up at the same time as he sell his own holding.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Post Reply