Avoiding the Pitfalls of Online Trading, a guide by US-CERT
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.
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.
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 (more…)