I campaign for online trading of stocks. It has advantages and disadvantages than doing the traditional way of talking to a stock broker over the phone. The main concern about online trading with stocks is about being online. Most people are still apprehensive about dealing money over the internet. And knowing that cybercrime is on the rise, the dreadful thought of money being lost online is so great that it prevents people from doing so. And as I talk about it, one of the usual question pops up, “how safe is my money with the online broker?” I continue it with – “compared to your money in the bank?” Allow me to explain that your money with an online broker is safer than your money in the bank.
Based on my experiences and observations, I can confidently say that be more vigilant with your money in the bank when you do online banking than when doing online stock trading. For there is a greater chance that your money will be ‘stolen’ from a bank rather than with an online stock broker. If this is the risk that we are talking about then it is so. Your money in an online bank can have a higher vulnerability to cybercrime than the money with an online broker. This is because, bank transactions can accommodate a payment to another person or bank account when allowed. But this cannot be done with an online stock broker. The online stock broker can only pay the owner of the stock account whenever a withdrawal request is made. If they will pay another person or entity from an existing account, they will be liable under the Anti-Money Laundering Act. This is the reason the money with an online stock broker is safe. They will only remit the money to the bank registered in their records and should be bearing the same name of the account holder. Whereas, with the bank, you can allow a remittance to another account even if it bears a different name. This is why most cybercrimes are directed towards online banking than online trading.
I would remember my own experience some years back when my email account was hacked, taken over by someone in Europe. It sent a message to all my contacts of an apparent trouble I got into while on a trip and asking for financial assistance. An hour after I discovered it, my phone rang. My US broker was on the other end, telling me she received an email instruction (apparently) from me, instructing to withdraw some of the available funds to be remitted thru money transfer to Europe. She told me she cannot do it and do not normally do it that way. I was just smiling for I know the instructions, even if it really came from me, is not doable. I just have to explain to her what happened and we started talking about something else. With this experience, or without it, I know that my money with an online stock broker is safe even those off-shore.
On the other hand, hackers will always attempt to break into your online bank account as often as they can. Few months ago, I posted in Facebook an attempt to hack my online bank account by sending me an interesting email with a subject – Payment Delayed Subject to Confirmation. This means that there is money awaiting for you but you need to update your bank account details online. This is an attempt to ‘phish’ your information and take control of your account. After posting the attempt and monitoring the comments thereafter, I found out that some people fell prey into it and lost money. One was even a friend I personally know. This experience led me to research a bit on cybercrime statistics worldwide and experts say the amount of money that will be lost through it will continue to rise over the years as criminals are getting better. It will not stop so stay vigilant on your online transactions. I wrote an article about this already. And as I write, another email came in with a caption – Payment Delayed to your account. Good day to all.
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