July 25, 2023

Earlier this year, two seemingly unrelated events took place at opposite ends of the technological spectrum. While a countless number of people were amused by the parlor tricks of ChatGPT and its artificial intelligence abilities, a smaller group of Silicon Valley residents were suffering financial losses from the manipulation and forgery of checks stolen from the U.S. Mail. Shortly after the initial amusement of ChatGPT wore off, questions arose about the potential of AI tools to perpetuate advanced crimes. If old-fashioned check fraud from a local post office proved difficult to stop, how would anyone, especially frequently targeted senior citizens, halt the threat posed by sophisticated technology? While it can seem daunting to defend against motivated criminals with asymmetrical technical advantages, there are practical solutions using account structures and standard financial service offerings to greatly diminish the vulnerability of personal assets to theft.

There is a principle in security that shrinking the attack service reduces risk. To limit the opportunities for fraud, turn off check writing, debit card, and bill pay functionality on all large investment and savings accounts. For even further protection, consider voluntarily freezing accounts to stop all withdrawals. Rather than use large investment or savings accounts for ongoing bills, create an operating cash or checking account with full withdrawal ability to meet your daily transactional spending needs. Fund the account only with two to three months of cash needs to reduce the amount of money exposed to possible theft and replenish the balance on a schedule with pre-authorized transfers from larger accounts that have more restricted cash movement.

Despite rampant check fraud, there has been little in the way of halting stolen or forged checks other than to simply ditch check writing on an account. Rather than pay bills by check and suffer exposure to the leaky mail system, set up electronic autopay with service providers such as utility, cable, and phone companies and take advantage of on-demand electronic payments for national, state, and local taxing authorities. Should individual, rather than corporate, providers need to be paid, utilizing a peer-to-peer payment system like Venmo, PayPal, or Zelle offers greater security and convenience compared to checks. If stopping all check writing isn’t practical, using a Uniball 207 pen will thwart would-be thieves as the indelible ink immediately bonds to paper and cannot be altered or washed, the most common tactic with check fraud.

Credit cards continue to offer much greater security and protection than checks or debit cards and should be used as the primary form of payment whenever possible. While banks can be challenging to work with if check or debit card fraud occurs and restitution isn’t always guaranteed, credit cards are required by law to cap cardholder liability for fraud at $50. With nearly all of the liability for fraud resting on credit card companies, they are highly motivated to prevent thefts and, as a result, employ a number of ubiquitous security technologies that are both visible—such as mobile phone approvals, chips in cards, and security codes—and non-visible like geographic and usage algorithms to actively defend you from harm.

Taken together, isolating large accounts while employing an operating cash account that pays off a credit card being auto debited goes a long way towards protecting assets and reducing risk. One final step is to defend against the opening of unauthorized debt accounts. All three major credit bureaus offer the ability to freeze an individual’s credit. Once put in place, no new credit applications or checks can be run against the frozen Social Security Number, effectively putting down an iron wall between a bad actor and someone else’s credit.

The present and future of financial crimes can seem tremendously scary, especially to vulnerable populations who may be experiencing cognitive decline and are increasingly targets of fraud. The same technology that poses a threat in the hands of a nefarious actor, however, will also be used by well-funded and highly incentivized financial firms to thwart theft and exploitation. And while it can seem that perpetually repelling both today’s low-tech criminal and tomorrow’s high-tech thief is impossible, building a purposeful account structure, limiting risk factors, and adopting best practices go a long way to securing assets.