October 2013: Fraud & Security Advice

In this month’s Broker Monitor Report, we review consumer-facing content that brokerage firms present to prospective and existing clients. We review how brokerage firms are communicating their security measures, fraud prevention tips and guidelines. While many brokerages provide back-end security technology and practices to protect sensitive information online, we did not review such details or the login security process for this report. As we look at online security and fraud, we focus on the following issues:

  • Security Measures Taken
  • Phishing Attack Prevention
  • Tips and Guidelines Provided
  • Information on Scam and Fraud Techniques

All firms on our roster provide online security and fraud information to some extent; however, there does not appear to be a universal method for communicating this information. Eight firms house content alongside broader privacy policies, all of which (except two discount brokers) are full-service firms; all other firms (nine) offer a centralized security center.
 
One recurring theme within these centers is protection against phishing attacks. A common marketing method, as it is important for communicating with clients, is email distribution (e.g., advertising new products, delivering research and news content). The downside of reaching millions of investors through email is exposing that very information. In light of this, firms are keen on staying ahead of any phishing attacks resulting from email marketing campaigns. We found that investors at 13 different brokerage firms can forward suspicious emails they may have received from the firm to a dedicated email address.
 
The most common content found within security centers focuses on ways in which firms can protect sensitive client account information and ways clients can secure computers when accessing online accounts or browsing the Internet – all firms offer this information. The majority of firms also help investors understand different types of scams and fraud techniques – with identity theft universally addressed by all firms. Several firms also address scams geared towards senior investors, and provide security tips when traveling.

Additional key findings include: 

  • 13 firms offer dedicated email addresses to which clients can forward suspicious emails.
  • Eleven brokerages in this report disclose and advertise their own fraud protection guarantees.
  • Firms often disclose a specified time-period in which to report suspicious transactions or inaccurate information on account statements – the most common is nine days; six firms do not specify a time period, but urge clients to contact the firm “immediately” or “promptly.”