ACATS Transfer thefts from Fidelity

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Wrench
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Re: ACATS Transfer thefts from Fidelity

Post by Wrench »

Dirghatamas wrote: Sun Jul 03, 2022 12:14 am OK this ruined my evening run!

I thought I had all the standard security stuff nailed: 2FA, Symantec and YubiKey, Credit Freeze at the 3 reporting agencies + Bank account freeze using Chexx...but this seems to be a simple and very dangerous loophole that affects all brokerages (not just fidelity) and seems impervious to basic security steps one can take. There seem to be trivial security additions brokerages could do ( same as ACH noted below) but apparently none have. This is concerning. During my run, being an engineer, I payed a mental war game of how many ways a bad guys could attempt this and how could I proactively stop it. It seems to be damn difficult without making the brokerage acct very inconvenient.

ACH vs. ACATS security: Let's say you (good guy) have an acct with Institution A (brokerage or bank doesn't matter). Let's say the bad guy opens an acct at Institution B under your name. They just need your SSN, DOB and maybe your address which are all easily available nowadays after Equifax and other breaches. Now the security case of transferring money (ACH or wire) is very different from transferring stocks/bonds/ETF/mutual funds. To actually transfer money, the institution B, when it receives a request, will first deposit a couple of tiny amounts to the Institution A acct using ACH. Then it will ask the bad guy to enter those amounts. As long as the bad guy doesn't have the Userid + password + 2FA of your acct with Institution A, they will fail to link for money transfer (brokerage or bank is irrelevant).

For ACATS transfer/link, they could potentially do the exact same thing: do a trial deposit to make sure you actually are the owner of the other acct you are trying to transfer from..they apparently haven't done so. This seems to be a trivial and dangerous omission. All brokerages and banks already have this security feature implemented so why not enable it? Doesn't make any sense.

2FA and strong passwords: Some posters have talked about 2FA but that is irrelevant for this loophole. The bad guy doesn't need to get into your acct. They don't need to know your exact dollars in the acct or even what stocks/funds etc you own. If they try a "full acct transfer", the system will typically NOT ask for such details. The last time I transferred a full acct to Vanguard (maybe 7-8 years ago), the transfer was electronic, needed no paper mail or paper signatures and involved NO email or any notification from the other brokerage. So the bad guy doesn't need to get into your acct in order to drain it :shock: I haven't tried a full acct transfer recently so don't know what steps the brokerage takes.

Credit and bank freezes: I always have my credit frozen and bank acct also frozen (using Chexx). Unfortunately, neither will help. First, you don't need your credit unfrozen to start a brokerage acct. I personally did this perhaps 5 years back and didn't need to unfreeze. I haven't done so recently so don't know if brokerages have become more security conscious and won't start an acct if credit is frozen.

For bank accts, I believe Chexx will contact you if some one tries to open a bank acct in your name (if you freeze it), but there is an easy work around. I have no idea why the bad guys in the OP case opened a bank acct. There is no need. Brokerages have wire transfer service. So, the bad guy could have transferred securities from A to B using ACATS, then sell all of it at B and wire transfer the resulting money to say a bank in Russia or some other shady place. You don't need a bank acct in USA to do that. So how does the Chexx system freeze (which is USA only) help?

Possible solutions: I think an ACH like trial deposit scheme mentioned above would be quite good. Because that doesn't seem to exist today for ACATS, we are basically on our own. I went ahead and locked my Fidelity acct but that will be quite inconvenient as I use check writing. I also sold my house recently and wire transferred the proceeds to Fidelity. Had to give the title company the acct number..so brokerage acct numbers exist in many places with questionable security. Don't think there is a solution at Schwab. Vanguard does have a solution (using snail mail) but that seems very cumbersome as it locks the whole acct and not easy to reverse... scary stuff!
Your possible solution might be a step in the right direction, BUT these days most systems allow you to log in to the sending institution to confirm your account. This bypasses your system completely. If a hacker has access to your name, DOB, SSN, address AND account number, they quite likely have access to one or more of your passwords, too. Since most people re-use passwords or minor variations of one password, the hacker can easily verify account info and off they go. With online security, much like physical security, almost any system can be overcome with enough determination, time and effort. The best one can do is institute the most secure system you can live with, then hope the hacker gets discouraged enough by your systems so he/she moves onto the next mark.

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beyou
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Re: ACATS Transfer thefts from Fidelity

Post by beyou »

catnapper wrote: Sat Jul 02, 2022 3:13 pm
frisco wrote: Sat Jul 02, 2022 3:10 pm
Does anyone know whether “Transfers between Fidelity accounts” affects 401(k) BrokerageLink contributions?
Not sure if this answers your question, but when I set up lockdown, it said:
"Note: Workplace savings accounts, such as 401(k) accounts, are not eligible for lockdown mode at this time."
Irrelevant. ACAT does not work for 401k accounts.
One must get cash by calling or online request to liquidate funds. Security behind the request may vary significantly from 401k provider to 401k provider, but a totally separate process.
Last edited by beyou on Sun Jul 03, 2022 6:15 am, edited 1 time in total.
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Re: ACATS Transfer thefts from Fidelity

Post by beyou »

drk wrote: Sat Jul 02, 2022 4:52 pm
grok87 wrote: Sat Jul 02, 2022 4:28 pm so would this be an argument AGAINST transitioning a vanguard mutual fund account to a vanguard brokerage account
Alternatively, it's an argument for keeping your brokerage account number private. This is more of a concern at Fidelity because you can write checks against a brokerage account or hold assets in a CMA.

The Lockdown feature is interesting, but it seems like a PITA for those of us using self-funded overdraft from a CMA. I'll just stick with my current approach of using an isolated CMA for check-writing.
Is your Fidelity brokerage acct # ON THE CHECK ?
Often brokerages have some separate bank acct # on a check that is internally linked to your brokerage acct #, but this bank acct # cannot be used for ACAT. In fact at Vanguard they warn you also can’t use the check acct # if you request checkwriting, to setup ACH withdrawals at another bank. Vanguard site says “you cannot use them to set up electronic banking or bill-paying services”. Someone needs physical access to the check to do anything at all, and you do not have to sign up for checkwriting at Vanguard if even that small risk bothers you.
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beyou
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Re: ACATS Transfer thefts from Fidelity

Post by beyou »

drk wrote: Sat Jul 02, 2022 4:52 pm
grok87 wrote: Sat Jul 02, 2022 4:28 pm so would this be an argument AGAINST transitioning a vanguard mutual fund account to a vanguard brokerage account
Alternatively, it's an argument for keeping your brokerage account number private. This is more of a concern at Fidelity because you can write checks against a brokerage account or hold assets in a CMA.

The Lockdown feature is interesting, but it seems like a PITA for those of us using self-funded overdraft from a CMA. I'll just stick with my current approach of using an isolated CMA for check-writing.
Another reason to GO PAPERLESS. Snail mail is another way people can get your brokerage acct # which can then lead to ACAT.

Another reason to use random complex passwords and 2FA, to prevent hackers from getting into your online account. It is often said that Vanguard only lows ACH cash withdrawals to existing banks setup, which is true, but online access allows viewing your brokerage acct #, similar to snail mail statements. Lock down you online access and avoid paper, to reduce the risks.
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Re: ACATS Transfer thefts from Fidelity

Post by student »

RetiredAL wrote: Sun Jul 03, 2022 1:16 am
whodidntante wrote: Sun Jul 03, 2022 1:11 am
Lyrrad wrote: Sun Jul 03, 2022 12:23 am
whodidntante wrote: Sat Jul 02, 2022 3:09 pm Fraud investigations can be really inconvenient. My guess is that E*TRADE is going to be on the hook for 150k because they failed to verify the person's identity and facilitated the theft.
I assume this is the case. If the thief got a (valid) medallion signature guarantee on transfer paperwork, then whomever gave the guarantee would presumably be responsible up to the guarantee limit.

Personally, I don't plan to take any security measures, other than perhaps making a copy of my important electronic statements.

I figure that I will be made whole as long as I report the issue within a reasonable timeframe.

If I see credible reports of people not being made whole in a reasonable timeframe in similar situations, then I would reconsider.
I've done ACATS to E*TRADE before. It's a series of mouse clicks and a bit of typing. No medallions are involved unless you are eating small, fancy steaks at the time.
Did they require you to upload a source statement or just provide the source account number?
I have done that at Chase and they require both.
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Re: ACATS Transfer thefts from Fidelity

Post by student »

Gaston wrote: Sun Jul 03, 2022 3:30 am
anon_investor wrote: Sat Jul 02, 2022 4:36 pm With a combo of money transfer lockdown and 2FA using authenticator app only, Fidelity seems the most secure of my brokerage accounts (others are Vanguard and Merrill Edge).
Thanks for the heads-up on the use of a 2FA authenticator app. I just checked my Fidelity account, and it looks like they only support the Symantec app. Sound right?
That's my understanding.
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Re: ACATS Transfer thefts from Fidelity

Post by anon_investor »

student wrote: Sun Jul 03, 2022 6:28 am
Gaston wrote: Sun Jul 03, 2022 3:30 am
anon_investor wrote: Sat Jul 02, 2022 4:36 pm With a combo of money transfer lockdown and 2FA using authenticator app only, Fidelity seems the most secure of my brokerage accounts (others are Vanguard and Merrill Edge).
Thanks for the heads-up on the use of a 2FA authenticator app. I just checked my Fidelity account, and it looks like they only support the Symantec app. Sound right?
That's my understanding.
Yes, and you have to call Fidelity to set it up.
Statistical
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Re: ACATS Transfer thefts from Fidelity

Post by Statistical »

Lyrrad wrote: Sun Jul 03, 2022 12:23 am
whodidntante wrote: Sat Jul 02, 2022 3:09 pm Fraud investigations can be really inconvenient. My guess is that E*TRADE is going to be on the hook for 150k because they failed to verify the person's identity and facilitated the theft.
I assume this is the case. If the thief got a (valid) medallion signature guarantee on transfer paperwork, then whomever gave the guarantee would presumably be responsible up to the guarantee limit.

Personally, I don't plan to take any security measures, other than perhaps making a copy of my important electronic statements.

I figure that I will be made whole as long as I report the issue within a reasonable timeframe.

If I see credible reports of people not being made whole in a reasonable timeframe in similar situations, then I would reconsider.
What medallion signature? I have done ACATS from Vanguard to Fidelity and Fidelity to M1. Neither one required a medallion signature. ACATS is just weak. There should be a step in the process where the user of the departing account verifies it. This could be done electronically from within the departing brokerage website or manually by the departing brokerage contacting the user by phone to verify.
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Re: ACATS Transfer thefts from Fidelity

Post by Guilty2022 »

Just to add a data point: Smart-Choice HSA did notify me of the transfer and account closure when I transferred money from Smart-Choice HSA to Fidelity HSA.
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Re: ACATS Transfer thefts from Fidelity

Post by AerialWombat »

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Re: ACATS Transfer thefts from Fidelity

Post by stocknoob4111 »

The idea I had mentioned about having some sort of whitelist feature coupled with a activation delay would be bulletproof. It establishes a chain of trust but also ensures that the user is given a chance to intercept an unauthorized modification of the chain because the activation delay would not be controllable by any customer service rep.

The lockdown feature is the second best solution because it is susceptible to social engineering. It is plausible an expert social engineer can convince a rep to turn it off.

Also, we should not assume that protecting your account# is enough of a safety measure... an account# can be obtained directly from the brokerage through social engineering. A slip up of any customer service rep is enough to obtain the info and since the evidence (recording of the call audio) will only be with the brokerage they aren't going to share any incriminating evidence if they are sued so you will have zero evidence against the brokerage. Then they will simply claim that you must have shared those details with someone so their security guarantee isn't applicable. I'm sure they can find some loophole to wash their hands off from making you whole.

This is particularly scary because I have 80% of my entire net worth with Vanguard and if I lose that it will be absolutely and totally devastating for me at this point in my life :shock:
Last edited by stocknoob4111 on Sun Jul 03, 2022 9:33 am, edited 1 time in total.
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Re: ACATS Transfer thefts from Fidelity

Post by technovelist »

stocknoob4111 wrote: Sun Jul 03, 2022 9:25 am The idea I had mentioned about having some sort of whitelist feature coupled with a activation delay would be bulletproof. It establishes a chain of trust but also ensures that the user is given a chance to intercept an unauthorized modification of the chain because the activation delay would not be controllable by any customer service rep.

The lockdown feature is the second best solution because it is susceptible to social engineering. It is plausible an expert social engineer can convince a rep to turn it off.

Also, we should not assume that protecting your account# is enough of a safety measure... an account# can be obtained directly from the brokerage through social engineering. A slip up of any customer service rep is enough to obtain the info and since the evidence (recording of the call audio) will only be with the brokerage they aren't going to share any incriminating evidence if they are sued so you will have zero evidence against the brokerage.
Yes, but even if they do turn it off you will be notified by an email and/or a text message when it happens.
In theory, theory and practice are identical. In practice, they often differ.
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Re: ACATS Transfer thefts from Fidelity

Post by student »

Luckywon wrote: Sat Jul 02, 2022 11:15 am
catnapper wrote: Sat Jul 02, 2022 11:10 am I just signed into my Fidelity and turned on "Lockdown" for all accounts. I didn't even know it was a thing until today.
Etrade has an even more robust option "no funds out". Schwab had no similar option the last time I asked, which in my opinion is one of their few weaknesses.
How do I enroll in "no funds out" option at Etrade?
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Re: ACATS Transfer thefts from Fidelity

Post by quietseas »

Does the Fidelity lockdown also stop ACH transfers out to existing linked bank accounts?

If lockdown is enabled, what steps are required to turn it off?
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Re: ACATS Transfer thefts from Fidelity

Post by student »

quietseas wrote: Sun Jul 03, 2022 9:37 am Does the Fidelity lockdown also stop ACH transfers out to existing linked bank accounts?

If lockdown is enabled, what steps are required to turn it off?
It seems that you just log on and click the appropriate button.
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Re: ACATS Transfer thefts from Fidelity

Post by Statistical »

quietseas wrote: Sun Jul 03, 2022 9:37 am Does the Fidelity lockdown also stop ACH transfers out to existing linked bank accounts?

If lockdown is enabled, what steps are required to turn it off?
Yes. To disable it you login, go to security center and either turn off lockdown or remove that account from lockdown. You will then need to use 2FA to validate turning it off or removing the account.
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Re: ACATS Transfer thefts from Fidelity

Post by JoMoney »

JoMoney wrote: Sat Jul 02, 2022 4:14 pm I decided to enable the "Money Transfer Lockdown" on my Fidelity account(s) as well.
It will be a small hassle when I want to do some Roth conversions to transfer between my accounts, but not that big a deal.
It would be nice if they had a "white list" feature, where I could approve money transfers but only to specific pre-identified accounts.

I'm also a little concerned about whether or not it will block a biller who I have a regular direct debit authorized for.
The details says it will block "Outbound Money Transfers" but says it does allow "Checkwriting and Direct Debit"
I presume the biller that seems to do some sort of ACH debit from my account is considered a "Direct Debit" :confused and not some other form of EFT that might be rejected... I guess I'll find out if it gets rejected on my next bill :?
FWIW, If anyone else was interested, I was browsing through my Fidelity "Activity - History" , and it looks like all the ACH pulls externally debiting from my Fidelity account are listed as "DIRECT DEBIT", including things like Treasury Direct pulling money into that TD account for savings bonds purchases. So based on what Fidelity says are transactions that will still be allowed, these "DIRECT DEBIT" transactions will not be hindered, which is as desired by me.

The items listed as "ELECTRONIC FUNDS TRANSFER" were for when I initiated a transfer to/from another account as an ACH pull or push from the Fidelity side. So my understanding by this is while in "lockdown" mode, I will not be able to ACH push money to an external account (although the Bill-Pay, checkwriting, and Debit Card functionality will continue to work on available cash in the account.)

I want my credit card bill and rent that's drafted from the CMA account to be paid, and I'm a little more comfortable with the protections that Reg E demands from ACH transfers (and with the slow availability of ACH pulled money, I'm more confident I'd be able to catch and have these reversed in a timely way.) But I do not want an ACATS account transfer to be initiated, and it looks like this will stop that. The only issue I foresee lockdown causing me in how I use my accounts, is the few times a year I might do a IRA->Roth rollover I will have to remove lockdown temporarily.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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Re: ACATS Transfer thefts from Fidelity

Post by student »

JoMoney wrote: Sun Jul 03, 2022 9:48 am
JoMoney wrote: Sat Jul 02, 2022 4:14 pm I decided to enable the "Money Transfer Lockdown" on my Fidelity account(s) as well.
It will be a small hassle when I want to do some Roth conversions to transfer between my accounts, but not that big a deal.
It would be nice if they had a "white list" feature, where I could approve money transfers but only to specific pre-identified accounts.

I'm also a little concerned about whether or not it will block a biller who I have a regular direct debit authorized for.
The details says it will block "Outbound Money Transfers" but says it does allow "Checkwriting and Direct Debit"
I presume the biller that seems to do some sort of ACH debit from my account is considered a "Direct Debit" :confused and not some other form of EFT that might be rejected... I guess I'll find out if it gets rejected on my next bill :?
FWIW, If anyone else was interested, I was browsing through my Fidelity "Activity - History" , and it looks like all the ACH pulls externally debiting from my Fidelity account are listed as "DIRECT DEBIT", including things like Treasury Direct pulling money into that TD account for savings bonds purchases. So based on what Fidelity says are transactions that will still be allowed, these "DIRECT DEBIT" transactions will not be hindered, which is as desired by me.

The items listed as "ELECTRONIC FUNDS TRANSFER" were for when I initiated a transfer to/from another account as an ACH pull or push from the Fidelity side. So my understanding by this is while in "lockdown" mode, I will not be able to ACH push money to an external account (although the Bill-Pay, checkwriting, and Debit Card functionality will continue to work on available cash in the account.)

I want my credit card bill and rent that's drafted from the CMA account to be paid, and I'm a little more comfortable with the protections that Reg E demands from ACH transfers (and with the slow availability of ACH pulled money, I'm more confident I'd be able to catch and have these reversed in a timely way.) But I do not want an ACATS account transfer to be initiated, and it looks like this will stop that. The only issue I foresee lockdown causing me in how I use my accounts, is the few times a year I might do a IRA->Roth rollover I will have to remove lockdown temporarily.
I onlu turned on the lockdown but not for CMA account since I only have small amount of money in there.
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Re: ACATS Transfer thefts from Fidelity

Post by JoMoney »

student wrote: Sun Jul 03, 2022 9:53 am...
I onlu turned on the lockdown but not for CMA account since I only have small amount of money in there.
If it creates a hassle for how you use the account, probably not worth it to enable it, but since the Cash Management Account is more likely to be an account where the account number is given out for debit or checkwriting purposes, it may also be the account that's more vulnerable to having an ACATS transfer initiated against.
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Re: ACATS Transfer thefts from Fidelity

Post by whodidntante »

RetiredAL wrote: Sun Jul 03, 2022 1:16 am
whodidntante wrote: Sun Jul 03, 2022 1:11 am
Lyrrad wrote: Sun Jul 03, 2022 12:23 am
whodidntante wrote: Sat Jul 02, 2022 3:09 pm Fraud investigations can be really inconvenient. My guess is that E*TRADE is going to be on the hook for 150k because they failed to verify the person's identity and facilitated the theft.
I assume this is the case. If the thief got a (valid) medallion signature guarantee on transfer paperwork, then whomever gave the guarantee would presumably be responsible up to the guarantee limit.

Personally, I don't plan to take any security measures, other than perhaps making a copy of my important electronic statements.

I figure that I will be made whole as long as I report the issue within a reasonable timeframe.

If I see credible reports of people not being made whole in a reasonable timeframe in similar situations, then I would reconsider.
I've done ACATS to E*TRADE before. It's a series of mouse clicks and a bit of typing. No medallions are involved unless you are eating small, fancy steaks at the time.
Did they require you to upload a source statement or just provide the source account number?
In my case it was a partial transfer, so an account number and list of securities to transfer were required. I don't recall being asked for a statement. Some brokers do. For example, Chase Y'all Invest. But calling Chase a broker is a bit of a stretch.
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Re: ACATS Transfer thefts from Fidelity

Post by anon_investor »

whodidntante wrote: Sun Jul 03, 2022 10:09 am
RetiredAL wrote: Sun Jul 03, 2022 1:16 am
whodidntante wrote: Sun Jul 03, 2022 1:11 am
Lyrrad wrote: Sun Jul 03, 2022 12:23 am
whodidntante wrote: Sat Jul 02, 2022 3:09 pm Fraud investigations can be really inconvenient. My guess is that E*TRADE is going to be on the hook for 150k because they failed to verify the person's identity and facilitated the theft.
I assume this is the case. If the thief got a (valid) medallion signature guarantee on transfer paperwork, then whomever gave the guarantee would presumably be responsible up to the guarantee limit.

Personally, I don't plan to take any security measures, other than perhaps making a copy of my important electronic statements.

I figure that I will be made whole as long as I report the issue within a reasonable timeframe.

If I see credible reports of people not being made whole in a reasonable timeframe in similar situations, then I would reconsider.
I've done ACATS to E*TRADE before. It's a series of mouse clicks and a bit of typing. No medallions are involved unless you are eating small, fancy steaks at the time.
Did they require you to upload a source statement or just provide the source account number?
In my case it was a partial transfer, so an account number and list of securities to transfer were required. I don't recall being asked for a statement. Some brokers do. For example, Chase Y'all Invest. But calling Chase a broker is a bit of a stretch.
I did an ACATS transfer of ETFs from my Vanguard taxable brokerage to a newly opened Merrill Edge taxable brokerage last fall. The process was initiated entirely through the Merrill Edge website. There was no follow up from either side. The only key info the bad guys might not have from various data breaches (e.g. name, DOB, SSN) would be the Vanguard account #.

I wish other brokerages had a money transfer lockdown feature like Fidelity.
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Re: ACATS Transfer thefts from Fidelity

Post by Hockey10 »

quietseas wrote: Sun Jul 03, 2022 9:37 am Does the Fidelity lockdown also stop ACH transfers out to existing linked bank accounts?
Yes, it prevents a transfer.

I make occasional transfers from my Fidelity brokerage account to an external bank checking account. First I turn off the lockdown in Fidelity. Then I make the transfer. Then I turn lockdown back on. Whenever lockdown is turned off or on, Fidelity sends me an alert.
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Re: ACATS Transfer thefts from Fidelity

Post by anon_investor »

Hockey10 wrote: Sun Jul 03, 2022 10:27 am
quietseas wrote: Sun Jul 03, 2022 9:37 am Does the Fidelity lockdown also stop ACH transfers out to existing linked bank accounts?
Yes, it prevents a transfer.

I make occasional transfers from my Fidelity brokerage account to an external bank checking account. First I turn off the lockdown in Fidelity. Then I make the transfer. Then I turn lockdown back on. Whenever lockdown is turned off or on, Fidelity sends me an alert.
Does the lockdown have to remain off until the transfer is complete or only when you initiate the push via Fidelity?
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Re: ACATS Transfer thefts from Fidelity

Post by JoMoney »

Hockey10 wrote: Sun Jul 03, 2022 10:27 am
quietseas wrote: Sun Jul 03, 2022 9:37 am Does the Fidelity lockdown also stop ACH transfers out to existing linked bank accounts?
Yes, it prevents a transfer.

I make occasional transfers from my Fidelity brokerage account to an external bank checking account. First I turn off the lockdown in Fidelity. Then I make the transfer. Then I turn lockdown back on. Whenever lockdown is turned off or on, Fidelity sends me an alert.
I'm still waiting to see results for myself, but from how Fidelity tags transactions in my account, it appears that it DOES NOT stop an ACH transfer out if it's initiated from another bank (which it lists as "DIRECT DEBIT"), but does stop you from initiating the transfer as a 'push' from the Fidelity side to an outside account (which it lists as "ELECTRONIC FUNDS TRANSFER".)
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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JoMoney
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Re: ACATS Transfer thefts from Fidelity

Post by JoMoney »

anon_investor wrote: Sun Jul 03, 2022 10:32 am
Hockey10 wrote: Sun Jul 03, 2022 10:27 am
quietseas wrote: Sun Jul 03, 2022 9:37 am Does the Fidelity lockdown also stop ACH transfers out to existing linked bank accounts?
Yes, it prevents a transfer.

I make occasional transfers from my Fidelity brokerage account to an external bank checking account. First I turn off the lockdown in Fidelity. Then I make the transfer. Then I turn lockdown back on. Whenever lockdown is turned off or on, Fidelity sends me an alert.
Does the lockdown have to remain off until the transfer is complete or only when you initiate the push via Fidelity?
The asterisk in the description implies "Previously Scheduled EFT from your account may still be processed"
Image
Implication seems to me that once you unlock and initiate the transfer, you might be able to then lock again and it will continue to process.
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Re: ACATS Transfer thefts from Fidelity

Post by student »

JoMoney wrote: Sun Jul 03, 2022 10:08 am
student wrote: Sun Jul 03, 2022 9:53 am...
I onlu turned on the lockdown but not for CMA account since I only have small amount of money in there.
If it creates a hassle for how you use the account, probably not worth it to enable it, but since the Cash Management Account is more likely to be an account where the account number is given out for debit or checkwriting purposes, it may also be the account that's more vulnerable to having an ACATS transfer initiated against.
I usually only have about $2k in the account. I can deal with the anxiety of waiting for Fidelity to fix a $2k issue. I don't think I can deal with a $200k issue.
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Re: ACATS Transfer thefts from Fidelity

Post by quietseas »

Getting to be a long thread, but another problem here is that the brokerage will 1099 the victim's TIN/SSN creating a tax issue with the IRS while the problem is investigated. Hopefully the brokerage would eventually issue a corrected 1099 if their investigation reveals fraud, however if the brokerage for some reason declines to restore the client's position there will be a real mess with the IRS. Very scary indeed.
Luckywon
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Re: ACATS Transfer thefts from Fidelity

Post by Luckywon »

student wrote: Sun Jul 03, 2022 9:34 am
Luckywon wrote: Sat Jul 02, 2022 11:15 am
catnapper wrote: Sat Jul 02, 2022 11:10 am I just signed into my Fidelity and turned on "Lockdown" for all accounts. I didn't even know it was a thing until today.
Etrade has an even more robust option "no funds out". Schwab had no similar option the last time I asked, which in my opinion is one of their few weaknesses.
How do I enroll in "no funds out" option at Etrade?
Enrolling and temporarily lifting must be done on phone and they will verify identity with a text code and asking identity questions.

Unlike Fidelity's Account Lockdown, where checks, billpay debits are not blocked, Etrade's No Funds Out blocks funds going out in any form, so I think it is better.
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anon_investor
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Re: ACATS Transfer thefts from Fidelity

Post by anon_investor »

quietseas wrote: Sun Jul 03, 2022 10:43 am Getting to be a long thread, but another problem here is that the brokerage will 1099 the victim's TIN/SSN creating a tax issue with the IRS while the problem is investigated. Hopefully the brokerage would eventually issue a corrected 1099 if their investigation reveals fraud, however if the brokerage for some reason declines to restore the client's position there will be a real mess with the IRS. Very scary indeed.
Isn't there some tax deduction for losses due to theft?
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whodidntante
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Re: ACATS Transfer thefts from Fidelity

Post by whodidntante »

anon_investor wrote: Sun Jul 03, 2022 10:16 am
whodidntante wrote: Sun Jul 03, 2022 10:09 am
RetiredAL wrote: Sun Jul 03, 2022 1:16 am
whodidntante wrote: Sun Jul 03, 2022 1:11 am
Lyrrad wrote: Sun Jul 03, 2022 12:23 am

I assume this is the case. If the thief got a (valid) medallion signature guarantee on transfer paperwork, then whomever gave the guarantee would presumably be responsible up to the guarantee limit.

Personally, I don't plan to take any security measures, other than perhaps making a copy of my important electronic statements.

I figure that I will be made whole as long as I report the issue within a reasonable timeframe.

If I see credible reports of people not being made whole in a reasonable timeframe in similar situations, then I would reconsider.
I've done ACATS to E*TRADE before. It's a series of mouse clicks and a bit of typing. No medallions are involved unless you are eating small, fancy steaks at the time.
Did they require you to upload a source statement or just provide the source account number?
In my case it was a partial transfer, so an account number and list of securities to transfer were required. I don't recall being asked for a statement. Some brokers do. For example, Chase Y'all Invest. But calling Chase a broker is a bit of a stretch.
I did an ACATS transfer of ETFs from my Vanguard taxable brokerage to a newly opened Merrill Edge taxable brokerage last fall. The process was initiated entirely through the Merrill Edge website. There was no follow up from either side. The only key info the bad guys might not have from various data breaches (e.g. name, DOB, SSN) would be the Vanguard account #.

I wish other brokerages had a money transfer lockdown feature like Fidelity.
A statement can easily be faked, so asking for one from your new customer does not improve security. The burden to confirm identity falls on the broker who authorizes the transactions. Clearly, E*TRADE owes someone a significant pile of money.
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Re: ACATS Transfer thefts from Fidelity

Post by rkhusky »

Statistical wrote: Sun Jul 03, 2022 7:44 am What medallion signature? I have done ACATS from Vanguard to Fidelity and Fidelity to M1. Neither one required a medallion signature. ACATS is just weak. There should be a step in the process where the user of the departing account verifies it. This could be done electronically from within the departing brokerage website or manually by the departing brokerage contacting the user by phone to verify.
Given that the brokerages are aware of the ACATS vulnerabilities and their joint liabilities, the fact that they haven’t implemented robust verification processes is an indication that they haven’t lost much money to this type of fraud yet. Once the cost/benefit analysis shows a positive return, they will implement something.
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Re: ACATS Transfer thefts from Fidelity

Post by BernardShakey »

beyou wrote: Sun Jul 03, 2022 5:59 am
catnapper wrote: Sat Jul 02, 2022 3:13 pm
frisco wrote: Sat Jul 02, 2022 3:10 pm
Does anyone know whether “Transfers between Fidelity accounts” affects 401(k) BrokerageLink contributions?
Not sure if this answers your question, but when I set up lockdown, it said:
"Note: Workplace savings accounts, such as 401(k) accounts, are not eligible for lockdown mode at this time."
Irrelevant. ACAT does not work for 401k accounts.
One must get cash by calling or online request to liquidate funds. Security behind the request may vary significantly from 401k provider to 401k provider, but a totally separate process.
Maybe a good reason to leave my money in my 401k when I retire :wink:
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Re: ACATS Transfer thefts from Fidelity

Post by chw »

This ACATS transfer issue certainly is troubling. At a minimum Lockdown seems to be advised for all Fidelity based accounts. 2 factor authentication and text alerts also seem to be mandatory for all. I didn’t know about lockdown until today, and did activate it. A bit of a hassle to disable for the occasional transfer of cash out, but seems easy enough to turn off when doing a transfer. I thought I was well protected with 2FA, but the fraudsters seem to always have workarounds.

It would seem the financial regulators should do a better job working with financial institutions to stay ahead of KYC and institute other safeguards to protect the public. Sadly, I believe much of this is driven by ease of doing business on-line. I think instituting some old-school protocols may avoid some of the transfer issues.
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Re: ACATS Transfer thefts from Fidelity

Post by JoMoney »

Luckywon wrote: Sun Jul 03, 2022 10:44 am
student wrote: Sun Jul 03, 2022 9:34 am
Luckywon wrote: Sat Jul 02, 2022 11:15 am
catnapper wrote: Sat Jul 02, 2022 11:10 am I just signed into my Fidelity and turned on "Lockdown" for all accounts. I didn't even know it was a thing until today.
Etrade has an even more robust option "no funds out". Schwab had no similar option the last time I asked, which in my opinion is one of their few weaknesses.
How do I enroll in "no funds out" option at Etrade?
Enrolling and temporarily lifting must be done on phone and they will verify identity with a text code and asking identity questions.

Unlike Fidelity's Account Lockdown, where checks, billpay debits are not blocked, Etrade's No Funds Out blocks funds going out in any form, so I think it is better.
FWIW, if you didn't want the checks, billpay, debit card, etc.. functionality on your Fidelity account you can not enable it and/or dis-enroll in it, and worth noting that you can't transfer or impact securities with those features either, only cash available for withdrawal in the account can be debited.
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Re: ACATS Transfer thefts from Fidelity

Post by Statistical »

whodidntante wrote: Sun Jul 03, 2022 11:04 am
anon_investor wrote: Sun Jul 03, 2022 10:16 am
whodidntante wrote: Sun Jul 03, 2022 10:09 am
RetiredAL wrote: Sun Jul 03, 2022 1:16 am
whodidntante wrote: Sun Jul 03, 2022 1:11 am

I've done ACATS to E*TRADE before. It's a series of mouse clicks and a bit of typing. No medallions are involved unless you are eating small, fancy steaks at the time.
Did they require you to upload a source statement or just provide the source account number?
In my case it was a partial transfer, so an account number and list of securities to transfer were required. I don't recall being asked for a statement. Some brokers do. For example, Chase Y'all Invest. But calling Chase a broker is a bit of a stretch.
I did an ACATS transfer of ETFs from my Vanguard taxable brokerage to a newly opened Merrill Edge taxable brokerage last fall. The process was initiated entirely through the Merrill Edge website. There was no follow up from either side. The only key info the bad guys might not have from various data breaches (e.g. name, DOB, SSN) would be the Vanguard account #.

I wish other brokerages had a money transfer lockdown feature like Fidelity.
A statement can easily be faked, so asking for one from your new customer does not improve security. The burden to confirm identity falls on the broker who authorizes the transactions. Clearly, E*TRADE owes someone a significant pile of money.
Or etrade will claim they did everything right and the customer is attempting to engage in fraud against etrade by falsely claiming ACATS fraud for an ACATS transfer they created. Now prove the ACATS transfer was actually fraudulent and not actually done by you. At a minimum that is going to require a legal team and months if not years in court. Worse if this was a retirement account and funds withdrawn from it etrade will file a withdraw with the IRS who will be expecting taxes and penalty. That might get resolved someday as well but lots of stress and time spent fixing it. For sure it isn't going to go down as "etrade this was fake. ok here is your $200k back no problems."
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Re: ACATS Transfer thefts from Fidelity

Post by Luckywon »

JoMoney wrote: Sun Jul 03, 2022 11:07 am
Luckywon wrote: Sun Jul 03, 2022 10:44 am
student wrote: Sun Jul 03, 2022 9:34 am
Luckywon wrote: Sat Jul 02, 2022 11:15 am
catnapper wrote: Sat Jul 02, 2022 11:10 am I just signed into my Fidelity and turned on "Lockdown" for all accounts. I didn't even know it was a thing until today.
Etrade has an even more robust option "no funds out". Schwab had no similar option the last time I asked, which in my opinion is one of their few weaknesses.
How do I enroll in "no funds out" option at Etrade?
Enrolling and temporarily lifting must be done on phone and they will verify identity with a text code and asking identity questions.

Unlike Fidelity's Account Lockdown, where checks, billpay debits are not blocked, Etrade's No Funds Out blocks funds going out in any form, so I think it is better.
FWIW, if you didn't want the checks, billpay, debit card, etc.. functionality on your Fidelity account you can not enable it and/or dis-enroll in it, and worth noting that you can't transfer or impact securities with those features either, only cash available for withdrawal in the account can be debited.
That's interesting, if you disable billpay do all your payees get wiped such that you have to set up anew?

How do I block/unblock check being cashed at Fidelity? I'd definitely have that blocked most of the time.
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Re: ACATS Transfer thefts from Fidelity

Post by drk »

beyou wrote: Sun Jul 03, 2022 6:14 am Is your Fidelity brokerage acct # ON THE CHECK ?
I don't have checks for my brokerage account (per my comment), but the checks for my CMA include the account number. Given that ACH details work the same between brokerage accounts and CMAs, I assume that brokerage accounts do as well. Regardless, if I held assets in my CMA, someone could with a check to attempt to transfer them into an account at another brokerage with the same name.
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Re: ACATS Transfer thefts from Fidelity

Post by student »

Luckywon wrote: Sun Jul 03, 2022 10:44 am
student wrote: Sun Jul 03, 2022 9:34 am
Luckywon wrote: Sat Jul 02, 2022 11:15 am
catnapper wrote: Sat Jul 02, 2022 11:10 am I just signed into my Fidelity and turned on "Lockdown" for all accounts. I didn't even know it was a thing until today.
Etrade has an even more robust option "no funds out". Schwab had no similar option the last time I asked, which in my opinion is one of their few weaknesses.
How do I enroll in "no funds out" option at Etrade?
Enrolling and temporarily lifting must be done on phone and they will verify identity with a text code and asking identity questions.

Unlike Fidelity's Account Lockdown, where checks, billpay debits are not blocked, Etrade's No Funds Out blocks funds going out in any form, so I think it is better.
Oh. I have to call. I guess it is worth it. Thanks.
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Re: ACATS Transfer thefts from Fidelity

Post by nyinvestor718 »

Is there a comprable 'lockdown' feature for Merrill Edge and Interactive Brokers?
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Re: ACATS Transfer thefts from Fidelity

Post by whodidntante »

Statistical wrote: Sun Jul 03, 2022 11:13 am
whodidntante wrote: Sun Jul 03, 2022 11:04 am
anon_investor wrote: Sun Jul 03, 2022 10:16 am
whodidntante wrote: Sun Jul 03, 2022 10:09 am
RetiredAL wrote: Sun Jul 03, 2022 1:16 am

Did they require you to upload a source statement or just provide the source account number?
In my case it was a partial transfer, so an account number and list of securities to transfer were required. I don't recall being asked for a statement. Some brokers do. For example, Chase Y'all Invest. But calling Chase a broker is a bit of a stretch.
I did an ACATS transfer of ETFs from my Vanguard taxable brokerage to a newly opened Merrill Edge taxable brokerage last fall. The process was initiated entirely through the Merrill Edge website. There was no follow up from either side. The only key info the bad guys might not have from various data breaches (e.g. name, DOB, SSN) would be the Vanguard account #.

I wish other brokerages had a money transfer lockdown feature like Fidelity.
A statement can easily be faked, so asking for one from your new customer does not improve security. The burden to confirm identity falls on the broker who authorizes the transactions. Clearly, E*TRADE owes someone a significant pile of money.
Or etrade will claim they did everything right and the customer is attempting to engage in fraud against etrade by falsely claiming ACATS fraud for an ACATS transfer they created. Now prove the ACATS transfer was actually fraudulent and not actually done by you. At a minimum that is going to require a legal team and months if not years in court. Worse if this was a retirement account and funds withdrawn from it etrade will file a withdraw with the IRS who will be expecting taxes and penalty. That might get resolved someday as well but lots of stress and time spent fixing it. For sure it isn't going to go down as "etrade this was fake. ok here is your $200k back no problems."
I know that E*TRADE will not willingly cough up the money. That's what regulators are for.
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Re: ACATS Transfer thefts from Fidelity

Post by anon_investor »

whodidntante wrote: Sun Jul 03, 2022 11:59 am
Statistical wrote: Sun Jul 03, 2022 11:13 am
whodidntante wrote: Sun Jul 03, 2022 11:04 am
anon_investor wrote: Sun Jul 03, 2022 10:16 am
whodidntante wrote: Sun Jul 03, 2022 10:09 am

In my case it was a partial transfer, so an account number and list of securities to transfer were required. I don't recall being asked for a statement. Some brokers do. For example, Chase Y'all Invest. But calling Chase a broker is a bit of a stretch.
I did an ACATS transfer of ETFs from my Vanguard taxable brokerage to a newly opened Merrill Edge taxable brokerage last fall. The process was initiated entirely through the Merrill Edge website. There was no follow up from either side. The only key info the bad guys might not have from various data breaches (e.g. name, DOB, SSN) would be the Vanguard account #.

I wish other brokerages had a money transfer lockdown feature like Fidelity.
A statement can easily be faked, so asking for one from your new customer does not improve security. The burden to confirm identity falls on the broker who authorizes the transactions. Clearly, E*TRADE owes someone a significant pile of money.
Or etrade will claim they did everything right and the customer is attempting to engage in fraud against etrade by falsely claiming ACATS fraud for an ACATS transfer they created. Now prove the ACATS transfer was actually fraudulent and not actually done by you. At a minimum that is going to require a legal team and months if not years in court. Worse if this was a retirement account and funds withdrawn from it etrade will file a withdraw with the IRS who will be expecting taxes and penalty. That might get resolved someday as well but lots of stress and time spent fixing it. For sure it isn't going to go down as "etrade this was fake. ok here is your $200k back no problems."
I know that E*TRADE will not willingly cough up the money. That's what regulators are for.
Social media shaming, might help.
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Re: ACATS Transfer thefts from Fidelity

Post by urban »

Statistical wrote: Sat Jul 02, 2022 3:53 pm There is no reflection on the account positions/balance until it is gone.
Not necessarily. For example, most brokerages, including VG, transfer out only whole number of shares (for ETFs), and sell partial shares before the transfer. So there will be some unusual selling activity where a share size is less than 1. But you have to monitor your account to catch it.
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Re: ACATS Transfer thefts from Fidelity

Post by grok87 »

chw wrote: Sun Jul 03, 2022 11:06 am This ACATS transfer issue certainly is troubling. At a minimum Lockdown seems to be advised for all Fidelity based accounts. 2 factor authentication and text alerts also seem to be mandatory for all. I didn’t know about lockdown until today, and did activate it. A bit of a hassle to disable for the occasional transfer of cash out, but seems easy enough to turn off when doing a transfer. I thought I was well protected with 2FA, but the fraudsters seem to always have workarounds.

It would seem the financial regulators should do a better job working with financial institutions to stay ahead of KYC and institute other safeguards to protect the public. Sadly, I believe much of this is driven by ease of doing business on-line. I think instituting some old-school protocols may avoid some of the transfer issues.
can you please elaborate on the "bit of a hassle to disable for the occasional transfer of cash out" please?
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Re: ACATS Transfer thefts from Fidelity

Post by RetiredAL »

student wrote: Sun Jul 03, 2022 11:38 am
Luckywon wrote: Sun Jul 03, 2022 10:44 am
student wrote: Sun Jul 03, 2022 9:34 am
Luckywon wrote: Sat Jul 02, 2022 11:15 am
catnapper wrote: Sat Jul 02, 2022 11:10 am I just signed into my Fidelity and turned on "Lockdown" for all accounts. I didn't even know it was a thing until today.
Etrade has an even more robust option "no funds out". Schwab had no similar option the last time I asked, which in my opinion is one of their few weaknesses.
How do I enroll in "no funds out" option at Etrade?
Enrolling and temporarily lifting must be done on phone and they will verify identity with a text code and asking identity questions.

Unlike Fidelity's Account Lockdown, where checks, billpay debits are not blocked, Etrade's No Funds Out blocks funds going out in any form, so I think it is better.
Oh. I have to call. I guess it is worth it. Thanks.
Careful there!

When the thief has the real owners name, address, account number, SS number, Customer Service is likely to accept thief's phone call as the real owner and the to execute over the phone instructions.
student
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Re: ACATS Transfer thefts from Fidelity

Post by student »

RetiredAL wrote: Sun Jul 03, 2022 12:39 pm
student wrote: Sun Jul 03, 2022 11:38 am
Luckywon wrote: Sun Jul 03, 2022 10:44 am
student wrote: Sun Jul 03, 2022 9:34 am
Luckywon wrote: Sat Jul 02, 2022 11:15 am
Etrade has an even more robust option "no funds out". Schwab had no similar option the last time I asked, which in my opinion is one of their few weaknesses.
How do I enroll in "no funds out" option at Etrade?
Enrolling and temporarily lifting must be done on phone and they will verify identity with a text code and asking identity questions.

Unlike Fidelity's Account Lockdown, where checks, billpay debits are not blocked, Etrade's No Funds Out blocks funds going out in any form, so I think it is better.
Oh. I have to call. I guess it is worth it. Thanks.
Careful there!

When the thief has the real owners name, address, account number, SS number, Customer Service is likely to accept thief's phone call as the real owner and the to execute over the phone instructions.
I think etrade text a number to your cellphone as part of the process.
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anon_investor
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Re: ACATS Transfer thefts from Fidelity

Post by anon_investor »

student wrote: Sun Jul 03, 2022 12:43 pm
RetiredAL wrote: Sun Jul 03, 2022 12:39 pm
student wrote: Sun Jul 03, 2022 11:38 am
Luckywon wrote: Sun Jul 03, 2022 10:44 am
student wrote: Sun Jul 03, 2022 9:34 am

How do I enroll in "no funds out" option at Etrade?
Enrolling and temporarily lifting must be done on phone and they will verify identity with a text code and asking identity questions.

Unlike Fidelity's Account Lockdown, where checks, billpay debits are not blocked, Etrade's No Funds Out blocks funds going out in any form, so I think it is better.
Oh. I have to call. I guess it is worth it. Thanks.
Careful there!

When the thief has the real owners name, address, account number, SS number, Customer Service is likely to accept thief's phone call as the real owner and the to execute over the phone instructions.
I think etrade text a number to your cellphone as part of the process.
Is the bad guy created the etrade account, won't the etrade text go to the bad guy?
lws
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Re: ACATS Transfer thefts from Fidelity

Post by lws »

UpperNwGuy wrote: Sat Jul 02, 2022 3:29 pm People here keep posting the advice (bad advice in my opinion) that investors should only check their balances once or twice a year. Perhaps that advice helps with behavioral investing errors, but it's bad advice for account security. I check my balances daily for this reason. I don't want any funds to mysteriously disappear from my accounts.
Totally agree.
This is one stash you don't want to vanish.
Don't depend only on notifications.
You may not get them all.
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Re: ACATS Transfer thefts from Fidelity

Post by whodidntante »

lws wrote: Sun Jul 03, 2022 12:51 pm
UpperNwGuy wrote: Sat Jul 02, 2022 3:29 pm People here keep posting the advice (bad advice in my opinion) that investors should only check their balances once or twice a year. Perhaps that advice helps with behavioral investing errors, but it's bad advice for account security. I check my balances daily for this reason. I don't want any funds to mysteriously disappear from my accounts.
Totally agree.
This is one stash you don't want to vanish.
Don't depend only on notifications.
You may not get them all.
I always thought that advice originates from people who have never been the victim of serious theft. I could be wrong.
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Re: ACATS Transfer thefts from Fidelity

Post by student »

anon_investor wrote: Sun Jul 03, 2022 12:45 pm
student wrote: Sun Jul 03, 2022 12:43 pm
RetiredAL wrote: Sun Jul 03, 2022 12:39 pm
student wrote: Sun Jul 03, 2022 11:38 am
Luckywon wrote: Sun Jul 03, 2022 10:44 am

Enrolling and temporarily lifting must be done on phone and they will verify identity with a text code and asking identity questions.

Unlike Fidelity's Account Lockdown, where checks, billpay debits are not blocked, Etrade's No Funds Out blocks funds going out in any form, so I think it is better.
Oh. I have to call. I guess it is worth it. Thanks.
Careful there!

When the thief has the real owners name, address, account number, SS number, Customer Service is likely to accept thief's phone call as the real owner and the to execute over the phone instructions.
I think etrade text a number to your cellphone as part of the process.
Is the bad guy created the etrade account, won't the etrade text go to the bad guy?
I already have an etrade account. Now that I know how to add an extra layer of security at Fidelity to protect my money at Fidelity, I wanted to know how to add an extra layer of security at etrade to protect my money at etrade too. (Luckywon said I can have a no funds out by calling.)
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anon_investor
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Re: ACATS Transfer thefts from Fidelity

Post by anon_investor »

student wrote: Sun Jul 03, 2022 12:55 pm
anon_investor wrote: Sun Jul 03, 2022 12:45 pm
student wrote: Sun Jul 03, 2022 12:43 pm
RetiredAL wrote: Sun Jul 03, 2022 12:39 pm
student wrote: Sun Jul 03, 2022 11:38 am

Oh. I have to call. I guess it is worth it. Thanks.
Careful there!

When the thief has the real owners name, address, account number, SS number, Customer Service is likely to accept thief's phone call as the real owner and the to execute over the phone instructions.
I think etrade text a number to your cellphone as part of the process.
Is the bad guy created the etrade account, won't the etrade text go to the bad guy?
I already have an etrade account. Now that I know how to add an extra layer of security at Fidelity to protect my money at Fidelity, I wanted to know how to add an extra layer of security at etrade to protect my money at etrade too. (Luckywon said I can have a no funds out by calling.)
I wonder if Vanguard or Merrill Edge has anything similar.
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