Online trading can be an easy, cost-effective way to manage investments.
However, online investors are often targets of scams, so take precautions to
ensure that you do not become a victim.
What is online trading?
Online trading allows you to conduct investment transactions over the
internet. The accessibility of the internet makes it possible for you to
research and invest in opportunities from any location at any time. It also
reduces the amount of resources (time, effort, and money) you have to devote
to managing these accounts and transactions.
What are the risks?
Recognizing the importance of safeguarding your money, legitimate brokerages
take steps to ensure that their transactions are secure. However, online
brokerages and the investors who use them are appealing targets for
attackers. The amount of financial information in a brokerage's database
makes it valuable; this information can be traded or sold for personal
profit. Also, because money is regularly transferred through these accounts,
malicious activity may not be noticed immediately. To gain access to these
databases, attackers may use Trojan horses or other types of malicious code
(see Why is Cyber Security a Problem? for more information).
Attackers may also attempt to collect financial information by targeting the
current or potential investors directly. These attempts may take the form of
social engineering or phishing attacks (see Avoiding Social Engineering and
Phishing Attacks for more information). With methods that include setting up
fraudulent investment opportunities or redirecting users to malicious sites
that appear to be legitimate, attackers try to convince you to provide them
with financial information that they can then use or sell. If you have been
victimized, both your money and your identity may be at risk (see Preventing
and Responding to Identity Theft for more information).
How can you protect yourself?
- Research your investment opportunities - Take advantage of resources
such as the U.S. Securities and Exchange Commission's EDGAR database and
your state's securities commission (found through the North American
Securities Administrators Association) to investigate companies.
- Be wary of online information - Anyone can publish information on the
internet, so try to verify any online research through other methods
before investing any money. Also be cautious of "hot" investment
opportunities advertised online or in email.
- Check privacy policies - Before providing personal or financial
understand how your information will be stored and used (see Protecting
Your Privacy for more information).
- Make sure that your transactions are encrypted - When information is
sent over the internet, attackers may be able to intercept it.
Encryption prevents the attackers from being able to view the
- Verify that the web site is legitimate - Attackers may redirect you to a
malicious web site that looks identical to a legitimate one. They then
convince you to submit your personal and financial information, which
they use for their own gain. Check the web site's certificate to make
sure it is legitimate (see Understanding Web Site Certificates for more
- Monitor your investments - Regularly check your accounts for any unusual
activity. Report unauthorized transactions immediately.
- Use and maintain anti-virus software - Anti-virus software recognizes
and protects your computer against most known viruses. However, because
attackers are continually writing new viruses, it is important to keep
your virus definitions current (see Understanding Anti-Virus Software
for more information).
- Use anti-spyware tools - Spyware is a common source of viruses, and
attackers may use it to access information on your computer. You can
minimize the number of infections by using a legitimate program that
identifies and removes spyware (see Recognizing and Avoiding Spyware for
- Keep software up to date - Install software patches so that attackers
can't take advantage of known problems or vulnerabilities (see
Understanding Patches for more information). Enable automatic updates if
the option is available.
- Evaluate your security settings - By adjusting the security settings in
your browser, you may limit your risk of certain attacks (see Evaluating
Your Web Browser's Security Settings for more information).
The following sites offer additional information and guidance:
Author: Mindi McDowell
The above article is reproduced with the kind permission of US-CERT (United States Computer Emergency Readiness Team) and the original document may be viewed by clicking here