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Three Common Types of Banking Fraud and Ways to Protect Yourself

August 5, 2014

Bank fraud can be devastating to your personal and business finances. More and more tools and techniques are used by thieves and scam artists to steal your identity and money, or corrupt your business. In this three part series, I will discuss a few common banking fraud and security threats, plus some prevention tips suggestions that can help minimize your chances of falling victim to a fraud incident.


Viruses are extremely common, though their delivery methods can vary. Malicious software or malware generally are designed to infiltrate systems without being detected by the usual firewalls – whether they are delivered through an email attachment, software, or an open computer network. Viruses can access your information by recording keystrokes, sending ads or spam, or by redirecting traffic to certain websites.

What to Do:

  • Beef up your security through proactive updates to your virus protection software, the use of more than one brand of internet security software, private wireless settings, and timed sessions that log out after prolonged inactivity.
  • Use a computer dedicated exclusively to managing your online banking/financial transactions. Avoid checking email, downloading files from public file-sharing and social networking sites on the dedicated computer.
  • Enable your web browser’s pop-up blocker.


Phishing refers to an email that appears to have been sent by a legitimate party, such as a bank, government agency, or well-known business. The email asks you to take action on an urgent matter by clicking on a link to a seemingly official website and providing your information. With a similar ruse, vishing attempts to gain access to your information by providing a fraudulent phone number to contact after informing you of unusual activity via voicemail, email or text message. Through SMiShing, fraudsters try to acquire your information via step-by-step instructions sent by text message from what appears to be a credible source.

What to Do:

  • Verify the sender’s information, especially to ensure the sender’s e-mail address has not been altered to trick you into thinking the request is legitimate.
  • Contact the sender using information you can obtain outside of the suspicious request to validate the request.

What Not to Do:

  • Do not respond or interact with the message you received by following the links, calling the contact number, or completing any given instructions provided.

Quick Tip: It helps to clearly understand the policies of your financial services companies on when and how they request private information. Please keep in mind that Square 1 Bank will never request, via e-mail, voicemail or text, that you provide your sensitive, personally-identifying information for any purpose.

Identity Theft

Identity theft is a crime and occurs when your personally identifiable information (PII) is stolen and used to commit fraud and other crimes. Common ways fraudsters steal your identity include social engineering, stealing your mail, dumpster diving, the use of personal information they gather from spoof emails and websites, plus other scams.

What to Do:

  • Enroll in online banking and frequently check your account activity so you can immediately report suspicious charges or activities.
  • Report any and all lost or stolen checks, debit cards, or credit cards promptly, and know when your cards expire.
  • Use unique passwords and avoid using personally identifiable information and do not use the same password for every system/website you may access.
  • Always shred important documents, such as bank statements and items containing sensitive information that you received in the mail before throwing them away.
  • Review your credit reports at least annually to ensure your reports are accurate and do not contain suspicious inquiries and/or unknown account information.

The Bottom Line

Though many fraud prevention methods may seem tedious, simplistic or unnecessary when used in the best of times, some of the most basic preventative measures can reduce your vulnerability to fraud and security threats. Having sound security protocols in place should be a priority for companies in all stages and industries.

If you are a victim of fraud, contact your local law enforcement agency and financial institution immediately.

Up Next

Parts II and III of this series will discuss wire + ACH fraud, email safety, and unsecured computer networks.

The views, opinions, beliefs, conclusions, and other information expressed in this material is not given, verified, or endorsed by Square 1 Bank, a division of Pacific Western Bank. Instead, this material is solely the work of the author, and represents his views, opinions, beliefs, conclusions, and other information he wishes to present, in all cases without any manner of endorsement from or verification by Square 1 Bank, a division of Pacific Western Bank.

This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that the author believes to be reliable, but which has not been independently verified by the author or Square 1 Bank, a division of Pacific Western Bank, and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal, or other advice, nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to this material should be construed as a solicitation, offer, or recommendation to acquire or dispose of any investment, or to engage in any other transaction.

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