Protect Your Brokerage Accounts from ACATS Fraud

When we consolidated to Fidelity from other retirement accounts, we did direct (brokerage to brokerage) but through check mailed to Fidelity.

Flieger
ACATS is used to transfer securities in kind. Transferring by check requires cashing out securities first, which is a taxable event in taxable accounts.
 
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The only downside with Fidelity is you have to disable/enable money lockdown when transfer money between Fidelity accounts. But I have it enabled for all my accounts. I’d rather deal with the occasional disable/enable than fraudulent withdrawals.
Important, because I would only lock certain accounts. For example, my cash management account is used for bill paying and ATM withdrawals when overseas (otherwise my debit card is locked). I don’t keep much there otherwise.
 
The technique where the scammer floods your inbox so you don't see the notification that there was a transfer is a new one on me. I can imagine waking up one day a doing a "select all > delete" on a huge slug of spam, and accidentally deleting the legit notification of the fraudulent transaction.

The article says to keep your share balance in your own system, which I've done forever; not more than a month would go by without seeing any transaction I didn't initiate.

I get email alerts for everything, and that's the other thing...I open everything right away, even phishing attempts, which I forward to phishing@thecompanybeingfaked.com. I don't have spam filtering on, because it was more trouble than it was worth.
 
I had an experience with a flooded inbox to try to cover up a fraudulent credit card purchase. A few years ago, Walmart got hacked and someone used my cc number to make an online purchase of a blender. They apparently also had an account at a large company that manages mailing lists for others. Within 2 minutes of the blender purchase, my email and some added name info they made up was used for a bulk signup to receive 150 different newsletters, from legitimate businesses, governments and medical institutions. I immediately knew there was a problem when I saw I had 150 welcome emails. I quickly got the credit card stopped and Walmart purchase cancelled.

Getting rid of the mailing lists took a bit of time. About 75 of them required my email confirmation, so they went away when I never confirmed my signup. The other 75 sent me newsletters, but I was suspicious to ever click "unsubscribe" on them in case one was spoofed and hoping I'd click there. I was lucky in that when the thieves added a first and last name for the mailing lists they simply keyed in a number 5454545. I think I eventually got dropped from many lists for the invalid name. I unsubscribed to the remaining lists by finding the associated websites and directly unsubscribing there.
 
I use the Fidelity money transfer lockdown. I like that it doesn't slow me down for logging on or buying a stock or bond like adding TFA to the account would. I have unlocked the transfer lockdown once to do a withdrawal and it was easy to do.
 
Important, because I would only lock certain accounts. For example, my cash management account is used for bill paying and ATM withdrawals when overseas (otherwise my debit card is locked). I don’t keep much there otherwise.
OK, I checked it out. Very handy.

Money Transfer Lockdown in link below but you have to log in to read it, ha ha.
 
I misspoke, I have it enabled for all my accounts except a cash management account. I use a brokerage account for cash management. But that account has a smaller balance and no securities. It sweeps to MM fund.

I am happy that Fidelity supports this. One less thing to worry about.
 
Thanks for posting this. I will take a look at Schwab’s security protocol today. Does anyone know if they have a similar lockdown feature?
 
Thanks for posting this. I will take a look at Schwab’s security protocol today. Does anyone know if they have a similar lockdown feature?
I don't know about Schwab, but I'd be very interested to know about both them and Vanguard. I think the last time this ACATS fraud issue was discussed here in the forums, I checked and could not find any sort of security setting within Vanguard that would prevent it. Not surprising at all, really, considering Vanguard doesn't even support TOTP codes via authenticator apps.
 
I don't know about Schwab, but I'd be very interested to know about both them and Vanguard. I think the last time this ACATS fraud issue was discussed here in the forums, I checked and could not find any sort of security setting within Vanguard that would prevent it. Not surprising at all, really, considering Vanguard doesn't even support TOTP codes via authenticator apps.
Okay, so I found this blurb over on Bogleheads regarding Vanguard ACATS lockdown:

You must call the Vanguard "security department" and make a special request to lock down against ACATS transfers. The security department will request that you send this in writing to Vanguard, and once they receive the request in writing, they will lock down your account for ACATS Fraud.

After the initial setup, you can then call and instruct them over the phone to turn it on and off, as needed.
 
Yet another reason to leave Vanguard for another brokerage.

When Vanguard first started having customer service problems I left for Fidelity.
 
Yet another reason to leave Vanguard for another brokerage.

When Vanguard first started having customer service problems I left for Fidelity.
Yeah, definitely something I'm considering. The latest annoyance with Vanguard is how long it takes them to add a new bank for outbound transfers. Not only do they do the "two micro-transactions" verification (which only takes 1 day and I'm fine with), they also make you wait an additional 7-10 calendar days for a security review! This makes absolutely no sense to me. I could see the need for a multi-day security review for a full ACATS transfer out, but for just setting up a link to an external bank? Why wouldn't the two micro-transactions be verification enough?
 
I've been using Fidelity's transfer lockdown feature for many years, including on our CMA, which functions as our checking account. The transfer lockdown does not disable normal CMA features such as checkwriting, bill pay, debit card, ATM, direct debit, or any INCOMING transfers. It only disables manual outgoing transfers, such as EFT, wires, and transfer of shares.

We also have lockdown enabled on a taxable brokerage acct. That acct has a recurring automated withdrawal rule which transfers cash dividends into the CMA when paid. The lockdown does not interfere with this automated withdrawal activity. But you have to temporarily turn it off when you first set up the rule. I'm told that this also works with an external checking acct. I just happen to use a Fidelity CMA for the convenience and security features.

Yet another reason to leave Vanguard for another brokerage....
I house all my Vanguard ETFs at Fidelity. Best of both worlds. Only downside is I've been blacklisted from getting free TurboTax. :)
 
Just put the Fidelity Lockdown in place. Thanks for the info!

Flieger
 
Thanks for posting this. I will take a look at Schwab’s security protocol today. Does anyone know if they have a similar lockdown feature?
I am interested also, looked through my profile at Schwab couple days ago after reading post on Bogleheads, did not find any option to lock transfers. If you will find it - please share.
 
Important, because I would only lock certain accounts. For example, my cash management account is used for bill paying and ATM withdrawals when overseas (otherwise my debit card is locked). I don’t keep much there otherwise.

The money lockdown feature doesn't stop bill payments, debit card purchases, ATM withdrawals or ACH debits. In my CMA account, I only keep enough to cover a month's worth of expenses for billpay etc. I still lockdown that account to prevent ACATS.
 
The money lockdown feature doesn't stop bill payments, debit card purchases, ATM withdrawals or ACH debits. In my CMA account, I only keep enough to cover a month's worth of expenses for billpay etc. I still lockdown that account to prevent ACATS.
Right, they spell that out.
 
This is really interesting. And scary.

Can these thieves do this with retirement accounts? or is it just for regular brokerage accounts?

Reason I ask is a have an absent minded niece that has an Inherited IRA that I can't "see" and I'm hoping money isn't being pilfered
 
Well I expect the transfer is far more complicated for an IRA, due to the extra tax reporting, but maybe I’m wrong. And a lot of brokerages won’t do transfers in kind from one IRA to another.
 
Well I expect the transfer is far more complicated for an IRA, due to the extra tax reporting, but maybe I’m wrong. And a lot of brokerages won’t do transfers in kind from one IRA to another.
Right, that is my assumption too. Thanks.
 
I sent a message to Vanguard asking about their protections against this fraud. I'll update with their answer.

If you have a VG account, send them a message & demand some action.
 
I sent a message to Vanguard asking about their protections against this fraud. I'll update with their answer.

If you have a VG account, send them a message & demand some action.
I believe someone mentioned up thread that you can call in to Vanguard and have some type of lockdown protection turned on.
 
I believe someone mentioned up thread that you can call in to Vanguard and have some type of lockdown protection turned on.
Thanks. I missed that post in the first scan.
I just checked that Vanguard will send email/text alerts when ACAT is initiated and as it progresses.
 

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