Parents, you need to teach your kids about financial fraud
Managing Director, Head of Wealth Management Banking & Liquidity
By Marlene Ross and Angelena Mascilli
In 2024, individuals under the age of 20 experienced $22.5 million in fraud losses, as reported by the FBI.
So how prepared are children today to protect their future wealth? With rapid technological advances and the persistence of the “on-the-go” lifestyle, are your children equipped with the right tools to spot fraud?
Taking steps to help secure your children’s financial future should start early and be an ongoing process. Unforeseen changes in circumstances could place your children in a position to handle money matters they may not yet feel prepared to undertake.
Here are five things you can do today to help elevate your children’s confidence in safely handling money.
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Stay abreast of current fraud threats and prevention best practices
Stay apprised of what’s happening in the industry by reading the latest news articles about fraud trends and technology enhancements as well as speaking with your banking team. Leverage that information to teach your children about the inherent risks of sharing sensitive data and information about themselves, your family or organization. Fraudsters leverage sophisticated tactics via social platforms to build trust and exploit an individual’s lessened defenses.
- Protect your personal information. Freeze family credit profiles with the major credit bureaus to prevent fraudsters from opening lines of credit such as credit cards or loans in your name or your family’s names by using data such as date of birth (DOB) and Social Security number (SSN).
- Watch out for scams. Phishing emails, vishing (voice phishing) calls and smishing (SMS/text phishing) communications are designed to elicit fear in order to get you to take an action. Validate the request and the requestor by calling the company on a known phone number.
- Secure your devices. Never allow remote access, click on links or open attachments in emails, texts or social posts from unknown senders, which could activate malware that could harm your device or expose your personal data. Keep operating systems and antivirus software up to date.
Create an open dialogue around money
Remove the taboo when discussing finances so children can obtain a better understanding of what it takes to manage and protect wealth. Financial wellness often begins with general banking knowledge. Whenever possible, include them in financial decisions and explain the risks and opportunities of the actions you’re taking.
- Banking 101. Discuss how to select the appropriate account type when starting to think about saving and spending and the benefit of having greater security for your funds.
- Selecting a bank. Every financial institution offers different account options and features. Understanding your or your children’s needs and how you plan to transact can help narrow down options.
- Understand the agreement. Read the terms and conditions and ask questions before making a decision to open an account, to avoid surprise fees and balance requirements.
Using financial tools safely
With the increase in child-friendly money management options such as making them an authorized credit card user or opening a custodial account, ensure your children are aware of the dangers of sharing account and card details directly or by saving them in unsecure online platforms. Enable account alerts to receive notifications of potential unauthorized activity and remember to immediately report fraud.
- Credit versus debit cards. Financial tools have their own unique features. Credit cards provide spending power that does not require immediate use of personal funds and offers 0% liability coverage to protect you from owing money for unauthorized transactions. Debit cards, however, are linked to your bank account, so if hacked through a skimming device that steals card information, fraudsters gain direct access to your money. There are helpful resources out there on how to use cards safely.
- Don’t overshare. Be wary of requests to disclose your sensitive information such as your online logins or banking details, which could be used to steal money from your account. Legitimate callers will not ask for account numbers or passwords.
- Use legitimate websites. Exercise caution when using hyperlinks in emails, texts or social posts that could direct you to a fraudulent look-alike site. One way to protect yourself from this kind of fraud attempt is to type the website address directly into the browser instead of clicking on the link. When searching online, look for official company website indicators, such as the correct spelling of the company name in the URL and a padlock icon in the web address, which states the site owner when tapped.
Beware of online imposters
Artificial Intelligence capabilities continue to evolve, which can make it harder for individuals to know who they are engaging with. Remind children to be suspicious of friendships and interactions that lead to requests for money, goods or meet-ups if they haven’t thoroughly vetted the individual. Be wary of interactions that are solely online.
- Romance/friendship scams. Fraudsters leverage social media to gather information about you, your friends, families and other contacts, which can be used to create a persona to lure you into a false relationship. Fraudsters attempt to build trust over time to lessen your suspicions, and when confident, they begin to request money based on legitimate-sounding scenarios. It may start with small amounts, but gradually requests for funds become more frequent and for larger amounts. It is important to be careful with dating sites, which bad actors can use to send requests for compromising photos or information. Young people should also be aware of scams specifically targeting their age group, including fraud related to student loans and college prep courses.
- Artificial Intelligence (AI) and deepfakes. Technology advancements can help improve processes, but they can also be used to exploit individuals and businesses. When communicating virtually, look for red flags such as blurred images in the face or background, unusual changes in skin tone around the edges of the face, unnatural blinking, muffled or altered/electronic voice sounds or cropping and box-like shapes around the mouth, nose or neck.
- Safety first. Limit the amount of information shared on social platforms. Never allow anyone to remotely access your device as they could upload malware, gain access to sensitive data or lock you out of your system and demand payment to restore your access.
Prepare your future financial readiness posture
In the event of an emergency, are your children prepared to take action? Create estate and fraud prevention plans to ensure they know who to contact and how. Map out short- and long-term goals, grant access rights to trusted individuals and involve relevant parties. Periodically revisit these plans to make any needed changes.
- Add a trusted contact. Life is full of surprises. Identify an individual that can be contacted on your behalf in the event you cannot be reached. Ensure they have all necessary details to contact and advise others should something unexpected occur.
- Make a plan. Partner with your banking and wealth management team along with other personally relevant individuals to map out your financial expectations and goals for the future. Designate two or more individuals who can act on your wishes in the event you cannot.
- Secure your documents. Keep all sensitive data locked away from those who should not have access to it, but ensure those who do need to know are aware of how to obtain it.
We can help
A J.P. Morgan advisor can answer your questions, provide advice on how to monitor your account for unauthorized activity and update you on emerging threats in the marketplace.
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Managing Director, Head of Wealth Management Banking & Liquidity
