Sunday, October 28, 2018

The Insider Threat To Your Finances


In the Information Security field, it’s essential to be aware of insider threats. It’s just as important to know about the insider threats to your finances. In an organization, an insider threat is an employee or contractor who has legitimate access to network resources and can cause damage the network either intentionally or unintentionally. Unintentional insider threats come from IT staff who misconfigure a firewall or the operating system of a computer. The intentional insider threat is someone who may have a grudge against the company and wants to damage it. The person may want to gain financially by embezzling funds or colluding with external individuals who may profit from gaining access to sensitive information. In either case, the consequences can be financially costly and damage the organization’s reputation.

The same goes for your personal finances. Many people are defrauded by people they know — their teenage children, house guests, adult children with substance abuse issues or financial problems. The insider threat can be a spouse with substance abuse or mental health issues. It might be a spouse who plans to clean out your joint financial accounts before a divorce.

There are many unfortunate stories of parents being robbed by their adult children, such as this story of a mother whose son stole $4.5 million from her. The son used a mobile payment app to transfer the money out of her account and into his.

There are also cases of teenagers stealing from their parents. Here is the story of a 13-year-old boy who charged £80,000 to his father’s credit card to fuel a gambling addiction.

Even young children can cause some financial damage to their parents. Read the story about a 6-year-old girl who used her mother’s phone to order $400 worth of toys from Amazon. It turns out to be a cute story, but highlights how quickly and easily parents can be on the hook for big expenses their children incur, thanks to how easy technology has made online shopping.



Most heartbreaking of all is when elderly parents are defrauded of their entire life savings by their adult children. This is a very complex and requires long term planning and legal counsel. The use of what’s known as the two-person rule can protect the elderly parent. The two-person rule requires financial transactions by the adult child be signed off on by a second person, such as a lawyer.

Spouses may be the biggest potential insider threat to your finances. This can be a difficult idea to contemplate or discuss as individuals are expected to completely trust their spouses in order to have a successful marriage. But the stories of people being cleaned out of their finances by a spouse are too many to count. In one example, a woman wrote to MarketWatch’s Moneyist (formerly the Moneyologist) about her husband of 24 years sending over $600,000 to a temple in another country. In a very unusual scheme, an Indiana woman cleaned out her husband’s retirement and savings accounts with the help of the husband’s brother who impersonated him.

There are more extreme cases where people suffer from physical, mental, and financial abuse, such as this UK woman whose husband used money to control every aspect of her life. A Florida woman went from living into a mansion and running a multi-million dollar business to living in a shelter and making $8.25 an hour as a result of her husband’s physical, mental, and financial abuse. He left her emotionally traumatized and with $4 million of debt.

Parents, too, can be the insider threat — to their children’s finances. Like the B.B. King song goes — “Nobody loves me but my mother. She could be jivin’ too.” This woman’s identity was stolen by her mother when she was 11-years-old. The mother racked up $500,000 worth of credit card debt in her daughter’s name over many years. The daughter grew up and became an expert in child identity-theft. It was only at the age of thirty-four, after her mother’s death, that she learned that the woman who raised her was the culprit in her own identity-theft case.

There is no end to the number of ways one can fall victim to being financially defrauded or by people they know. But there are steps you can take to protect yourself from insider threats and reduce your exposure.

  • Shutdown or Log out of your computer when not using it, particularly when you know guests are visiting. Don’t let them have access to sensitive data such as tax records or online your online financial websites. A guest could easily plug in a USB thumb drive and copy all of your personal files to it in minutes. 
  • Encrypt your computer hard drive. If someone pulls the drive from your system, the person can easily access all of your data if it's not encrypted. 
  • Don’t give your children of any age access to your credit cards or online financial accounts. Most teenage and adult children are trustworthy, but people’s lives can go off the rails in a flash due to substance abuse or gambling addictions. 
  • For guests or young children, create a separate account on your computer so they can browse the web. If you have an old iPad or tablet, let them use that instead of your primary device. Clear any saved passwords for your financial accounts and any sensitive data from it. 
  • Store your important papers such as tax records, financial statements, etc., in a secure place in your home — a safe or file cabinet, not a desk in the guest bedroom. 
  • When it comes to couples, consider using a joint checking account for shared expenses — the mortgage, car payment, insurance, groceries, and other regular expenses. Each person in the marriage should also have a separate account that the spouse does not have access to. It should contain enough to get you through at least a month of expenses, preferably more. The funds not only provide for some financial security but also as a fund to escape physically or emotional abuse relationships. Persons in such situations should consult the National Domestic Abuse Hotline
  • Review your bank, credit card, retirement, and other financial statements regularly. Be transparent about this and do it together with your spouse. Each person will know everything that the other is doing and can help keep everyone on the same page financially. It can help build trust and alleviate suspicion. As the saying goes, trust but verify. 
  • Review your credit reports each year or more often to determine if any unauthorized accounts have been opened in your name or your spouse’s.
  • Put a freeze on your credit so others do not open accounts in your name. It’s now free to do so
  • Stay on top of your financial matters.

Photo Credit: Illuminati by Thought Catalog


No comments:

Post a Comment