Does anyone use cash any more? We all are using our credit cards to get points or cash back and I use my debit card more often than I use cash. I use my debit card for on-line purchases, at the gas station and in restaurants and shops. While on vacation in Florida recently, my debit card was declined at a grocery store, both as a debit and as a credit. The grocery store clerk told me it happens all the time, but I’m sure she thought I was a deadbeat. Fortunately, I have a credit card that saved the day. I called the phone number on the back of my debit card and found out my card was frozen because someone had used my debit card number making purchases in Las Vegas! My emergency phone number for my bank was my home number and since I was out of town I didn’t get the message. Lesson number one is to use your cell phone as an emergency number.
As luck would have it, the fraud was caught immediately and only $60 was charged to my account which has since been reimbursed. I found out that the bank does reimburse the account holder for charges but it could take several days or weeks so it is important to have an emergency credit card. If somebody steals your cash just as you were ready to make your on-line mortgage payment, you could be in trouble! They are researching how my card was compromised and they indicated they would let me know their findings, although I find it hard to believe they will be able to track it down. The bank also recommended that I establish an “on-line” account and just move enough money over from my main account to cover purchases.
We have clients who don’t open their brokerage statements or balance their checkbooks. The first line of defense in protecting your assets is to thoroughly review all of your statements to ensure that things are as they should be. Also, you should check your account frequently on-line and not wait for monthly statements. It is also helpful to notify your credit card issuer that you will be on vacation in (wherever) so they can make note of that in your file.
Many cases of fraud have occurred because advisors have some form of “custody” of their client’s money. The SEC has recently strengthened the rules regarding custody to protect investors. The client is better protected if their assets stay in their name in a separate brokerage account and are not co-mingled with other client’s assets. Many of the temporarily successful ponzi schemes were get rich quick opportunities, where the only person getting rich was the perpetrator. Remember, there are no guarantees, so be wary of anyone who promises a certain return.
Barbara Gray, CFP®