Expediency vs. Security or Why REDW Stanley Goes the Extra Mile to Protect Our Clients

  |   January 27, 2017

From Capital Conversations, Winter 2017 – View Newsletter

We’ve recently had a number of REDW Stanley clients object to our established process for wiring money—calling it “convoluted” or “so not a part of the 21st century” because it’s still largely paper- and people-based. But while I do agree the process may seem overly complicated or outdated, there are very good reasons why this is so—and they all have to do with protecting our clients.

How Our Process Works

Let’s say our client needs to wire money, perhaps to close on a house or for another equally valid reason. Typically, the client has discussed this need in advance with his or her Relationship Manager, who then makes sure the necessary cash is available when needed. The client completes and signs a required form that includes instructions for wiring the dollars to the proper entity. The form remains with the Relationship Manager until the client instructs the Relationship Manager to submit the wire to the Custodian (either Schwab or Ameritrade) on a specific date. Before actually submitting the wire, the Relationship Manager must first call the client at an established and on-file telephone number to confirm that the wire instructions are valid and may be submitted to the Custodian for processing. Confirming with the client by telephone that the wire is legitimate also allows the Relationship Manager to confirm with the Custodian that we have, indeed, verified that the wire should be sent.

In the case where we receive an unexpected or urgent request for the wire or transfer of money that arrives via voice mail or email, the Relationship Manager follows a similar protocol. Before preparing any forms or executing trades to generate cash, the Relationship Manager’s first step is still to call the client using an established phone number that is already on file—not a phone number noted in the voice mail or email. Only after we personally recognize you and the request is confirmed as legitimate are steps actually taken to wire the dollars.

Simple and speedy, right? Maybe not, but REDW Stanley has sound reasons for sticking to a more methodical and low-tech process when wiring money.

Wire Fraud is a Reality

Wire fraud is a huge concern for the banking and financial industry these days—not only because of the money that may be lost if the fraud is successful, but also because it can lead to identity theft, with potentially devastating results. And those trying to separate you from your money are becoming more and more sophisticated in their efforts. Gaining access to one financial account number can lead to acquiring other important personal information, such as Social Security numbers, birthdates, passwords, and so on.
Just recently, we had a client ask us via email to transfer dollars from his portfolio to his bank account. He claimed that he was out of town and didn’t have any checks, and so needed to have the funds wired to his bank account. The instructions he provided for securely wiring funds to a specified bank account appeared to be genuine and legitimate.

But, long story short, only after we called the client to confirm the request did we learn that the client had not made the request, had not emailed the information to us, and did not have an account at the named bank. To further illustrate how brazen and persistent these folks can be, when the dollars were not wired, we then received phone calls asking why not—which we did not return, as we determined the calls had not actually come from our client, but rather from the individual posing as our client.

Detecting Identity Theft

Discovering wire fraud is one means of detecting identity theft. Another is when a tax return is filed using a stolen Social Security number (SSN) in order to claim a fraudulent refund. This type of tax-related identity theft is normally discovered when you e-file your legitimate return and discover that a return has already been filed using your SSN. Or you might receive a letter from the IRS stating they have identified a suspicious return that is using your SSN. Or they contact you about owing additional tax or having a refund offset in a year when you didn’t file a return. Or if IRS records indicate you’ve received wages or other income from an employer for whom you did not work.

In the Case of Identity Theft …

If you do detect identity theft, it is critical to take action as soon as possible by taking the following steps:

1.   Report identity theft to the Federal Trade Commission (FTC) at www.identitytheft.gov
2.   Contact one of the major credit bureaus to place a fraud alert on your records:

www.Equifax.com             888-766-0008
www.Experian.com          888-397-3742
www.TransUnion.com     800-680-7289

3.   Close any financial-related accounts that were opened without your knowledge.

These additional steps should also be taken, if necessary:

  • If you think someone may, or may have used your SSN fraudulently, please notify the IRS immediately.
  • If you would like the IRS to monitor your account for suspicious activity, complete Form 14039, Identity Theft Affidavit.
  • Continue to pay your taxes and file your tax return, even if you must file the old fashioned way, with paper.
  • Contact the IRS for specialized assistance at (800) 908-4490.

In addition, the State of New Mexico has a protocol for reporting identity theft using information reported to the IRS. Weekly, the New Mexico Taxation and Revenue (Tax & Rev) Department receives a report from the IRS listing all individuals who notified the IRS that they have been victims of identity theft or fraud. This list is uploaded to Tax and Rev’s database and a fraud indicator is attached to the taxpayer’s account. Any return filed under the taxpayer’s SSN is flagged and reviewed before the return is processed or any refunds issued. If more than one return for a taxpayer is filed, Tax and Rev’s Questionable Refund Unit will contact the taxpayer requesting more information.

How to Protect Yourself

Wire fraud and identity theft are crimes that can materially impact individuals, and those who perpetrate these frauds are getting smarter and more sophisticated about finding ways to access your information. To protect yourself and your data:

  • Always use security software with firewall and anti-virus protection and use strong passwords.
  • Learn to identify and avoid phishing emails, or threatening calls and texts from fraudsters posing as legitimate organizations like your bank and credit card companies, and even the IRS.
  • Do not click on links or download attachments contained in unknown or suspicious emails.
  • Protect your personal financial data. Do not carry your Social Security card and make sure your tax records are stored securely.

Although it may be irritating when we call to verify and confirm that you did write that check or that you really do want to wire those dollars, or when our emails are sent in a secure manner, be confident that we take these actions to protect you, our clients.

Protecting your personal financial information is a top priority for the professionals at REDW Stanley.

©Lee Lorenz


Copyright 2017 REDW Stanley Financial Advisors, LLC. All Rights Reserved. This publication is intended for general informational purposes only and should not be construed as investment, financial, tax, or legal advice. 

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