In recent years, there has been an increase in ACATS fraud. The process goes something like this:

1. The scammer opens a new account under your name.
2. The scammer instructs the custodian (i.e. financial institution) of the new fraudulent account to transfer the assets from your existing legitimate account(s) into the new account. (Note: They do not need access to your current account to have these funds transferred, just your account number.)
3. Once the funds are transferred to the new fraudulent account that they have access to, they immediately close it and pull all the money out of the account.

Most people don’t realize their account has been breached until they log in and see a zero balance. In this blog I will be going over how the big three financial institutions (Fidelity, Schwab, and Vanguard) are handling this.

Fidelity: They have a feature to enable “Money Transfer Lockdown”. This still allows money to be deposited into the account but prevents any withdrawals from this account. If you ever need to withdraw from the account, you can always temporarily disable this feature. To enable, go to “account and trade” > “security settings” > “money transfer lock”.

Vanguard: They introduced a new feature that prevents outgoing transfers. To enable, go to profile/settings > “Security Profile” > “Lock your account” > select which account(s) you want to lock/unlock.

Schwab: As of when this blog was posted, they have not established this feature. I called their customer support and encouraged them to implement this feature.

Other ways to protect yourself against ACATS fraud:

• Monitor account(s) regularly.
• Enable transaction alerts on your accounts.

Note: AI was not used for the creation, nor revision, of this blog post.