Preparing, Protecting, & Managing Your 401(k) During Economic Uncertainty

Since the Coronavirus (COVID-19) pandemic started to affect the American economy in March, the stock market has been fluctuating along with the news headlines. For many people, especially those close to retiring in Virginia, 401(k) management is a big concern. As a longtime community bank serving the Shenandoah Valley, we have plenty of experience helping our customers navigate historic crises. In this article, our Wealth Management team offers its best advice for preparing, protecting, and managing your retirement savings throughout economic uncertainty and recession.

3 Foolproof Ways to Prepare Your 401(k) For a Recession

You can take these steps now if you’re still employed, or save the advice for a post-coronavirus world.

1.  Start and grow your emergency savings account.

An emergency fund is the foundation of healthy finances. If you haven’t started one yet, aim for a small starter goal, such as $500 or $1,000. That’s enough to cover any unexpected expenses, such as a car or home repair, or medical bill. Once you reach your goal, use the momentum from your “win” to keep going, one month of living expenses at a time, until you’ve saved 6 months to a year of your basic monthly budget. Depending on how secure your job and industry are, you may not need quite that much. However, the 2020 Coronavirus pandemic has taught all of us the necessity of preparing for the unexpected.

An emergency savings is for large, unexpected expenses that you can’t cover with your monthly budget alone.

Once you have a good thing going with your emergency fund, resist the temptation to use it for non-emergencies. For example, down payments on a house or car should be saved for separately. Your emergency fund is for the large expenses you didn’t see coming and can’t cover with your monthly budget. In other words, an emergency fund keeps you from going into debt. And, if you lose your job, it could keep you out of bankruptcy.

2.  Reduce spending and look for “extra” money.

When times are good, everyone should be focused on paying down debt and/or building savings. For example, consider the extra money you typically receive in a year:

  • Annual or quarterly bonuses
  • Gift money on your birthday and other holidays
  • Tax refund
  • One-time inheritance
  • Contest or lottery winnings

While it can be tempting to spend this money right away, try to earmark at least half to put in your emergency savings account or to pay down credit card and/or car/personal loan balances. When a downturn or recession comes, you will be glad to have a bigger emergency fund or a smaller line item in your budget for monthly debt payments.

Another way to “find” extra money is to pare down discretionary spending on food and drinks, entertainment, subscriptions, etc. For example, if you are staying at home right now, you can put the money you save on transportation and discretionary purchases into your emergency fund or make an extra debt payment.

3.  Take advantage of free matching money at work.

Always take advantage of an employer’s contribution match to grow your 401(k) savings more quickly.
Are you leaving money on the table? Many employers will match up to a certain percentage of your own retirement account contribution. To grow your 401(k) savings more quickly, make sure you’re putting enough in to take full advantage of your employer’s match.

3 Surefire Ways to Protect Your 401(k) From a Recession

Now that we’re in what could be an economic recession, here’s what you can do to protect your retirement investing.

1.  Adjust risk to your age. 

Investing is a long game, but as you near retirement age, your risk tolerance diminishes. That doesn’t mean you should pull all of your money out of the market–you need to earn interest on it to keep up with the pace of inflation. What it does mean is that your investment approach should be adjusted to lessen risk. You should be able to do this yourself by logging into your retirement account. If you work with a financial planner, they can help you adjust your portfolio allocation to meet the specific needs of your retirement goals.

If you’re worried about having enough money in your 401(k) for retirement, the IRS permits “catch-up contributions” of an extra $6,000/year for people aged 50 and up.

2.  Diversify your investments.

Diversifying your investments can help reduce the risk of a bad stock negatively impacting your portfolio.

Whatever stage of life you’re in, diversifying your investments can help reduce the risk of one bad stock negatively impacting your entire portfolio. Instead of trying to pick and choose stocks on your own, go for low-cost index funds that provide exposure to a lot of companies in different industries and sectors. Our Wealth Management team can also help you optimize your investment portfolio.

3.  Keep contributing.

One of the best ways to protect your 401(k) is to continue making regular contributions. For example, don’t get scared by the changing market and lower your automatic payroll deduction. If your income or financial situation has changed in the wake of the pandemic, at least let your 401(k) balance keep growing by leaving it alone. When you find another job, you can start contributing again.

3 Tips for Managing Your 401(k) During a Recession

Similarly, here’s how to stay the course for however long this lasts.

1.  Do nothing.

Don’t try to “beat the market”. Investing is a long-term game.

If you’re an everyday investor who doesn’t know much about the stock market, your best option is to do nothing. If you make changes out of an emotional reaction to scary headlines, you’ll likely do more harm than good to your portfolio. Aside from a few outliers, most people don’t “beat the market.” Stay the course, talk to your financial advisor, and remember that investing is a long-term game.

2.  Stay invested in necessities.

Allocating assets to investments of essential items can help off-set any negative hits your portfolio may take during a recession. Essential items and services can be more “stable” investments since they don’t see as much of a drop in usage from consumers during recessions.

However, we are not recommending that you move your entire portfolio to essential-service investments. As mentioned earlier, you want to avoid making large changes to your portfolio at the same time.

3.  Ask for help.

Ask your Financial Advisor for help managing your investment portfolio if you have concerns or uncertainty.

If you’re concerned about managing your investment portfolio and finances, talk to a financial advisor. A professional wealth manager can help you evaluate your options and help you make the best wealth-building decisions for you.


Make an appointment with one of our Infinex Financial Advisors today!

Our Infinex financial advisors are experienced at planning for your future. We can guide you through retirement planning, personal insurance, and short-term financial goals to create a plan you can commit to and follow. Meet our experienced financial advisors and make your appointment today!

Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. F&M Financial Services, Inc. is a nonbank subsidiary of F&M Bank. Infinex is not affiliated with either entity.

Securities and Insurance Products:

Not Guaranteed by the Bank | Not FDIC Insured | Not a Deposit | Not Insured by Any Federal Government Agency | May Lose Value Including Loss of Principal

10 Steps To Financial Recovery For Virginia Small Businesses

2020 threw a major curve ball to the entire world, with small businesses especially hard hit by pandemic-related economic challenges. Now, as Virginia moves into the third phase of reopening, local small businesses are taking stock of the damage and preparing to bounce back. Here are 10 things to check off your to-do list to help your business start down the road to recovery. Is your business headed in the right direction? Are you on track to meet your quarterly and annual goals? Review our list of 10 steps to financial recovery for Virginia small businesses and contact our commercial team for personalized advice.

1. Review your business plan or create one if you don’t already have one in place.

"We're not just bankers, but knowledgeable professionals that can offer sound advice to a variety of industries." - Jordan Dean, Vice President; Commercial Relationship Manager

 

As your business grows, you may need to reevaluate your business plan to accommodate new goals and circumstances. Or, if your business is brand new you may not have finished building a business plan yet. For inspiration, check out these business plan resources from SCORE Shenandoah Valley.

Need more personalized help? “The lending staff at F&M can work with commercial customers to provide quick decision making,” says Jordan Dean, Vice President; Commercial Relationship Manager. “We’re not just bankers, but knowledgeable professionals that can offer sound advice to a variety of industries.”

2. Set a budget, track it, and stick to it.

Sticking to a set budget will help make sure that money is being spent in the right places and at the right times.

Just as a budget is the foundation of your healthy personal finances, your business also needs to plan and track cash inflow and spending. SCORE Shenandoah Valley has a free on-demand course with tips on budgeting for your business.

3. Reduce high-cost debt.

"We provide local decision making, which helps set the stage for deep-rooted relationships with our customers." - Brooke Zirk, Vice President; Commercial Relationship Manager

Are your principal or interest payments too high and dragging down your cash flow? Consider consolidating and refinancing your high-cost debt into a more affordable monthly payment with our Business Term Loans.

Discussing cash flow scenarios with your loan officer can help lead to unique solutions for your business. “My goal is to form long-lasting relationships with my customers as I help them grow and thrive. I bring a consultative approach to understand all aspects of my client’s business and personal goals”–Brooke Zirk, Vice President; Commerical Relationship Manager.

4. Understand and manage your business cash flow cycle more effectively.

“understand your cash flow cycle, use debt where appropriate and have a plan!” - Matt Hill, Assistant Vice President; Commercial Relationship Manager

“Many profitable businesses have closed their doors due to cash and resource mismanagement,” says Matt Hill, Assistant Vice President; Commercial Relationship Manager. That’s why it’s so important to “understand your cash flow cycle, use debt where appropriate and have a plan!” Matt would also “advise new business owners to use the services of a commercial lender to help them either plan for financing options for a new business or even do a wellness check for existing businesses.”

5. Pay bills on time.

"Our decisions will always have your best interest in mind and your success is linked to ours." - Kevin Nixon, Vice President; Commercial Relationship Manager

Falling behind on regular overhead costs isn’t a good sign for the financial health of your business. Use these accounting and cash flow resources from SCORE Shenandoah Valley to forecast profits and losses and set yourself up to stay on top of accounts payable this year.

If you need help evaluating your cash flow strategy, don’t be afraid to ask your loan officer. “Our decisions will always have your best interest in mind and your success is linked to ours. It’s our job to match your financial needs with the best product whether it’s a loan, checking account, etc”–Kevin Nixon, Vice President; Commercial Relationship Manager.

6. Establish or build on existing savings.

"We put customer need above our own, and decisions we make are done to help the community we live and work in." - Mary Pavlovskaya, Bank Officer; Business Deposit Services Officer

Saving for a rainy day can help your business manage cash flow and avoid falling too far into debt. Browse the business savings account options at F&M Bank and don’t be afraid to ask questions of your banker. You may also want to consider the tools you are using to conduct business to determine if cost savings options are available.

“When partnering with a business, we tailor our Business Solutions package to fit your specific needs. From treasury and merchant services to our one-of-a-kind courier option, we have everything a business needs to succeed!”–Mary Pavlovskaya, Bank Officer; Business Deposit Services Officer.

7. Improve your digital presence and SEO.

As a small business owner, you’re already juggling many responsibilities. The prospect of digital marketing can feel overwhelming, but if you can’t afford to outsource it, it’s worth it to devote a regular bracket of time each week to improve your SEO and SEM.

46% of all Google searches have local intent – this indicates that searchers want to find information about something in their community.

8. Utilize social media and promote your business regularly.

The same thing goes for social media. As a local business, you need to interact with your customers on their favorite social platforms. Check out these free social media marketing tools to help you get started.

9. Become more involved in the local community.

"We have a proven history of promoting, serving and enriching our local communities, friends, and neighbors." - Donna Brown, Vice President; Commercial Relationship Manager

 

As a longtime community bank, we understand the importance of getting involved locally. After all, the success of our bank–and any local business–is tied to the success of the community. As Donna Brown, Vice President; Commercial Relationship Manager, says:

“The betterment of our local communities, businesses, and individuals continues to be at the forefront of our corporate objectives and goals, as it has always been since 1908. We have a proven history of promoting, serving and enriching our local communities, friends, and neighbors.”

This year, spend some time thinking about the causes and organizations you’d like to get involved with and then execute your plans. At the same time that you’re doing good work, you’ll build awareness of your brand, engage with existing customers, and connect with new prospects.

10.  Build a relationship with their banker/financial institution.

When you partner with a relationship bank like F&M, you can count on sound financial advice and recommendations throughout the life of your business.

“I would advise every business owner to develop a relationship with their banker.” – Barbara Bartley, Assistant Vice President; Commercial Relationship Manager

“I would advise every business owner to develop a relationship with their banker. Most bankers can help guide their customers in financial decisions and give them thoughts to consider when starting a business and moving ahead with growth and needs”–Barbara Bartley, Assistant Vice President; Commercial Relationship Manager.

“We take the team approach, and our employees are dedicated to servicing our customers and building lasting relationships.” – Renee Hartless, Assistant Vice President; Commercial Relationship Manager

“We take the team approach, and our employees are dedicated to servicing our customers and building lasting relationships. We also have local decision making which means the person that you are working with from the beginning is also approving your loans.”–Renee Hartless, Assistant Vice President; Commercial Relationship Manager.


Contact a commercial lender at F&M Bank today!

If you’re looking for Virginia small business lenders, give our team of commercial lenders in Virginia a call. You can browse our staff here, learn more about the business banking solutions we offer, and contact us at your convenience.

Preparing Your Loan Forgiveness Application

Thank you for choosing F&M Bank to process and service your Paycheck Protection Program (PPP) loan. We hope the funding has positively impacted your business and provided a sense of financial security amid crisis. Your small business makes our community a better place to live, work and play, and it was a great honor to help you obtain loan approval.

Obtaining the loan was the first step. We are here to assist you in preparing your application for forgiveness and what required documents may be applicable.

PPP Loan Forgiveness Update

We have been working internally to create a streamlined, effective process, and a portal has been established to process PPP loan forgiveness applications. All customers have received an email inviting you to our PPP Loan Forgiveness Portal where you will be asked to create an account. Once your account has been created, you can access the portal directly at this link. If you have not received an email invitation, please notify us at assist@fmbankva.com.

Form 3508EZ or 3508

Upon account creation, you will be prompted to complete a questionnaire that determines your eligibility for the EZ form. If you meet that criteria, you will be directed to the 3508EZ Form. If not, you will work your way through the complete 3508 Form. If you begin the EZ form, but would prefer to complete the entire 3508 form, you may switch to the full form.

Throughout the form, you will notice some fields, like business name and loan number, are pre-filled for your convenience. As you enter your financial information, the forgiveness amounts will automatically calculate, similar to a solution like Turbo Tax. Once you sign and submit your application, the F&M Bank team will take over.

Form 3508S

As you may be aware, the SBA recently released the 3508S form for loans totaling $50,000 or less. This form was developed to simplify the forgiveness application. Upon account creation, please follow the steps the complete the 3508S form.

PPP Loan Additional Assistance

If at all possible, please use the portal to fully complete your application, including the attachment of supporting documentation.

It is recommended that you consult with your tax advisor, legal counsel or a bookkeeping service to assist your business if necessary.

Please, contact your loan officer with any questions. For additional information, please refer to the SBA’s website.

We are Here for You

F&M Bank is your financial partner – we help you navigate challenge and celebrate in your success. We would like to invite you to continue your banking relationship with our institution after the PPP process has ended and would love the opportunity to continue meeting your financial needs for years to come!

We will continue to stay in touch regarding your PPP loan and the documentation required for loan forgiveness. However, if you have any questions along the way, or would like to discuss personal or business banking solutions, please do not hesitate to contact your loan officer or nearest branch location.

Guide To Navigating Market Volatility At Each Life Stage

The global Coronavirus pandemic is an unprecedented experience for Americans alive today. It’s natural to feel a lot of anxiety about the future, including the future of your portfolio. Luckily, market volatility is not unprecedented. In this article, we’ll apply the lessons of previous market downturns to help you develop a sensible economic outlook for whatever stage of life you’re in now. Have questions? Contact one of our Virginia-based Financial Advisors today.

Long-Term Financial Goals in your 20’s and 30’s

In this stage of life, you have the power to take the long view and buy low, which will help you take advantage of upswings when the market inevitably turns around. In general, you want to buy less when the market is high and more when it’s low. This is when you are most likely to benefit the most from compound interest.

Start Now

Whether you’re just out of college, building your career, or married with kids, now is the time to get your finances in order and put a financial plan in place. Even if you can’t afford to save much right now, whatever you can put into your investment accounts will benefit you in the long run. You can reduce total interest paid on debt, benefit from flourishing markets, and be financially prepared for unexpected emergencies or expenses.

  • Open a retirement account if you don’t already have one. If you don’t qualify for an employer sponsored plan, you can open your own Individual Retirement Account (IRA).
  • Boost your emergency savings. Start with a manageable goal like $1,000 and work your way up to a month of living expenses, then a few months.
  • Pay down debt. If you have credit card balances, start with the lowest one and throw a little more at it each month until it’s gone. Then tackle the next-highest balance. If you don’t have credit card debt, look at student loans or a car loan. The sooner you can pay off these debts, the more money you’ll be able to save.

Your 20's and 30's is the best time to open a retirement account, start building your emergency savings, and pay down debt as much as possible.

Invest For The Long-Term

Set aside three to six months’ salary in a savings account for a rainy day. This will come in handy if you lose your job as well as for unexpected expenses and emergencies like a trip to the ER or a big car repair. Keep your emergency funds in cash in an FDIC-insured savings account.

  • Take advantage of compound interest as soon as you can. Earn interest on the interest you receive by adhering to a disciplined investing plan.
  • Don’t make any drastic financial changes right now if it’s not necessary. Instead, focus on saving aggressively and putting any extra money towards retirement.
  • Keep savings in cash or CDs so the funds are readily available for any significant expenses or purchases you will make in the near future.

Practice Dollar-Cost Averaging

This is an investment strategy* in which assets are purchased regularly at a fixed dollar amount. For example, 401(k) plans use dollar-cost averaging by making regular purchases according to the participant’s pay schedule and contribution. As a result, investors could end up buying certain investments at a discount during periods of market underperformance.

*Dollar-cost averaging is a method of helping to control risk. It does not assure a profit or the avoidance of loss. Investors should consider their ability to continue a dollar-cost program in periods of declining markets.

In Your 40’s and 50’s, Get Out Ahead Of Market Volatility

This life stage includes the prime income-earning years when you’re likely to have the greatest savings power. Stash away as much cash as possible while it still has a few decades to compound.

Stash away as much cash as possible during your 40's and 50's while it still has time to compound.

Start Diversifying With Safer Investment Options

Diversify your portfolio* info safer investment options such as bonds, bond mutual funds, CDs, and Money Market Accounts. These options tend to be more stable as markets change, helping to protect your portfolio from dramatic ups and downs.

*Diversification is a method of helping to control risk. It does not assure a profit or the avoidance of loss.

Consider Additional Principal-Protecting Options

Consider an annuity or a life insurance policy, especially if you have a family that is dependent on your income. The younger and healthier you are, the more likely you are to qualify for a lower rate.

In your 60’s and Through Retirement

Now it’s time to create a more risk-averse investment strategy.

For those nearing or already entered into retirement, it’s essential to protect the assets that will carry you through the entirety of retirement. The best approach is to set up three buckets of investment money that can financially carry you through each phase of your retirement:

  • 5-Year Bucket: Short-term income to fund immediate needs.
  • Intermediate Bucket: This is for money invested in a moderate-risk portfolio that can continue to grow over the next 6 to 15 years.
  • Long-Term Bucket: Finally, you have money that can be aggressively invested and won’t be touched for 16 years or more.

Your 60's is the time to protect the assets you worked hard for - make sure to tailor your budget to carry you through each stage of retirement.

Build A Retirement Budget

The amount of money you need to live on in retirement depends on how much you’ve saved so far and what a “comfortable life” looks like for you.

Start by making a list of your current expenses. Include both fixed bills, such as housing costs, as well as discretionary spending for items like clothing, travel, entertainment, and so on.

How much of your salary are you living on now?

If you’re spending close to all of what you make now, it’s a good idea to “test run” your retirement by trying to scale back and only spend 70 percent or so of your income. Yes, you may drop some expenses in retirement (less spending on transportation, a paid-off house to live in) but other costs of living could rise (healthcare, property taxes). And if you want to enjoy travel, classes, and other leisure/enrichment activities that aren’t free, you’ll probably spend more on that in retirement and need to budget accordingly.

Have you saved enough?

A number of factors (some out of your control) will determine how much yearly cash your retirement savings provides. If you don’t feel like you have enough, don’t get dejected. Just keep focusing on saving. You can, on average, double your nest egg balance in the last ten years or so of your career. People age 50 and older are even permitted to make larger “catch-up contributions” to 401(k) plans and IRAs.

Seek Out Other Income-Producing Assets

The more streams of income you have, the better your overall financial stability will likely be. For example, many retirees take on part-time jobs to supplement their savings. This could relate to a passion or hobby, such as working in a garden store if you love plants, or teaching a class at the local community college to share your expertise from a long career.

Also consider income-producing assets such as real estate/investment properties, dividend-paying stocks, and/or variable annuities.

Best Practices For All Life Stages

Financial planners can help you navigate your finances, stay on budget, and make educated financial decisions, at any stage of your life.

  • Don’t make any spontaneous decisions or changes. Talk to your financial advisor to discuss your financial goals and concerns before making any rash decisions, especially decisions related to retirement savings or investments.
  • Don’t make early withdrawals. If you take an early withdrawal from your 401k before age 59.5, you’ll pay ordinary income taxes and a 10% penalty. Withdrawing money early also forfeits tax-advantaged growth and can trigger a higher tax bill.
  • Get a financial planner. Professional financial managers can help you navigate the market turbulence and prevent you from making detrimental financial decisions during market volatility.
  • Reassess and rebalance on a regular basis. Whether it’s quarterly, semiannually, or annually, make a standing appointment to review your investments and assets to ensure your finances are where you want them to be.

F&M Bank’s Infinex Investment Executives Can Help You Navigate the Market!

Whatever stage of life you’re in, our financial planners can help you understand your options and develop a strategy for your investment portfolio that matches your individual goals for retirement. Feel free to reach out with any questions you may have or schedule a consultation with an Infinex Financial Advisor at any of our locations in Staunton, Harrisonburg, and the greater Shenandoah Valley.

 

Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. F&M Financial Services, Inc. is a nonbank subsidiary of F&M Bank. Infinex is not affiliated with either entity.

Securities and Insurance Products:
Not Guaranteed by the Bank | Not FDIC Insured | Not a Deposit | Not Insured by Any Federal Government Agency | May Lose Value Including Loss of Principal

Economic Impact Payment Resources

We hope that you remain healthy and safe as we endure this pandemic. COVID-19 has impacted everyone in our community in some way, but some financial relief is on the way. As individual economic impact payments from the CARES Act are distributed, we hope this serves as a helpful resource.

Electronic Deposit of Individual Economic Impact Payments

If you filed taxes in 2018 or 2019 and included your bank routing and account number for payments or refunds, and this information has not changed, the IRS has the information it needs to send your payment electronically.

If you file taxes, but the IRS does not have your direct deposit information, you can provide that online through the Get My Payment portal. This portal can also be utilized to check your payment status or confirm your payment type if you are unsure.

If you are not required to pay taxes, but want payment electronically deposited, you can sign up. The IRS and the U.S. Treasury launched this website where you can enter your information, including bank account details, to indicate where you would like your stimulus money deposited.

Paper Check Individual Economic Impact Payments

If instead of direct deposit, you receive a paper check in the mail, you may deposit it through the F&M Bank mobile app, or at any of our drive thru locations.

Social Security Recipients

The IRS will use direct deposit by the Social Security Administration to facilitate payments. If the direct deposit information you have provided in the past is for a bank-issued prepaid debit card, you will receive your funds on that card account.

As a reminder, the F&M Bank routing number is 051404419. To find your account number, please reference the bottom of your F&M Bank checks. It is the number listed directly beside the routing number we have included above.

Scams Related to Individual Economic Impact Payments

Although we are facing a pandemic, fraudsters are still at work. There will be a large amount of funds disbursed to qualifying individuals. Accordingly, there is a risk for fraud of various types. The IRS has announced various ways individuals can be on guard against these types of bad activities.

Do not provide any banking information to anyone claiming to be registering you for your relief payment. F&M Bank will never call, text or email you directly asking for personal information such as your account number. Even if your Caller ID indicates the call is from F&M Bank, it is better to be safe than sorry. Please, hang up immediately and call your local branch to inquire if the call was legitimate.

Watch out for Corona-Criminals

In a time of uncertainty and isolation we are all reaching for more information, especially from respected institutions such as the Centers for Disease Control (CDC), the World Health Organization (WHO) and respected hospitals and research facilities. But unfortunately cybercriminals are using the names of these institutions to lure unsuspecting individuals into fake offers, giving out personal information, and clicking on download links that can infect their computers. This can lead to fraud, identity theft and the loss of account information and passwords. As with all things related to the coronavirus outbreak, it pays to be vigilant.

In short, if you have accessed an online article, blog, or website that is not familiar, and you don’t feel 100% safe, do not click on offers or download documents, interactive maps or programs. This may be an attempt to introduce a malicious computer virus, ransom-ware or other program into your phone, tablet or PC for the purpose of collecting your personal information. If you click on a link and you are asked for permission to download, or give access to your photos, contacts, etc., think twice. Do you really understand what this program or app is going to do with the information you are providing? Like the coronavirus we need to be very careful about the things that we virtually touch and what we allow to touch us!

See below two recent articles from the Federal Trade Commission about coronavirus scams:
Avoid Coronavirus Scams
Types of Coronavirus Scams

As always, if you feel that you might be a victim of identity theft or you have a question about the safety of your accounts or your login information please contact us. We can help.

Identity Theft Protection Guide

How safe is your financial and personal data? Identity fraud has been growing for the last few years. In 2017, there were a record 16.7 million victims of identity fraud and a total of $16.8 billion stolen in the U.S. alone. And while identifying information can be stolen from offline sources like unshredded mail, online activities like shopping now pose the biggest threat. You may think you’re already familiar with cybersecurity best practices. However, cybercriminals continue to evolve their methods into increasingly sophisticated ploys to steal your identity and your money. Everyone⸺from government, corporations, and financial institutions to individuals⸺has a role to play in preventing identity theft and fraud. In this guide, you’ll find the latest tips for protecting your sensitive information and your bank account. Keep reading to discover how many you know and how many are new to you. Then put them into action!

What are the different types of identity theft?

Your first line of defense in preventing identity theft is to understand the various forms it takes. Here are the current most popular types of identity thefts:

  • Tax: Common during tax filing season, tax ID theft occurs when someone steals your social security number in order to falsely file federal and/or state returns under your name. The purpose of tax ID theft is to steal your tax refund before you get around to filing and collecting it yourself.
  • Medical: This is when someone steals your Medicaid, Medicare, or private health insurance ID number in order to obtain medical services under your name or send fraudulent bills to an insurer to collect the reimbursements.
  • Social Media: Cybercriminals will even steal your name and photo to use in a fake social media account. For example, Retired Army Colonel Bryan Denny had his photo stolen and used on a variety of websites, from social media platforms to online dating sites. Cybercriminals will fake romantic relationships in order to steal money from unsuspecting women. They may also use fake profiles to inflate follower numbers or to spread disinformation.
  • Financial Identity: This encompasses any fraudulent use of your financial accounts, such as using your stolen debit or credit card, and online shopping fraud where the cyber criminal uses your account to make a purchase and then has it shipped to a different address.
  • Child Identity: This type of ID theft isn’t as common as the others, but it still affects about a quarter of children under 18. Thieves can steal a child’s social security number and other identifying information to open credit accounts and other fraudulent activity.

Now that you can recognize the most common identity theft scams, it’s time to brush up on your prevention skills.

13 Tips For Foolproof Identity Protection

Identity Theft Protection

We start with general tips and move to specific advice for protecting yourself online and on mobile devices.

  1. Don’t share your personal information with anyone. Reputable businesses and banks will never ask for your social security number, account number, pin, password, or any other sensitive data. So, whether you get a phone call or an email posing as a legitimate business you have an account with, never share any information that could be used to log into your bank or bill accounts, or to open a credit account in your name.
  2. Look over your shoulder. The simplest way to steal information is to observe someone’s computer or mobile device screen. Stay alert to your surroundings, especially when you’re in a public space and entering personal information.
  3. Shred physical mail and confidential documents. Buy a personal shredder for your home or take advantage of local shredding opportunities such as F&M Bank’s 2019 Community Shred Day Events. Dispose of receipts, bank statements, credit card offers, bills, and any other papers with sensitive information. You should also shred old tax returns once you are past the date of needing to keep them. Check the IRS guidelines for how long to hold onto returns.
  4. Enroll in e-statement delivery and billing. One way to prevent identity theft through physical mail is to switch to electronic delivery as much as possible. Receive bank statements and monthly bills through email instead. As a bonus, you’ll also help the environment by reducing paper use!
  5. Set up text alerts to monitor account transactions. Most banks offer mobile banking apps with an option to set up certain text alerts. For example, F&M’s Mobile Banking allows you to establish text alerts for specific types of transactions or any transaction above a specific amount. This could help you detect and report fraud as soon as it happens.
  6. Keep tabs on your credit report. A regular review of your credit report will let you know if any unauthorized accounts have been opened in your name. Federal law gives you the right to receive a free copy of your credit report once a year from each of the three agencies. If you space it out, you could review your report 3 times a year.
  7. Keep your virus protection updated. Since the majority of identity theft cases now originate online, particularly in the context of e-commerce, it’s very important to check your computer’s virus protection software for updates. Also, complete updates for other computer software such as your operating system, web browser, etc.
  8. Browse the web securely. Only use websites that begin with “https” instead of just “http.” The ‘s’ stands for secure. Also, look for a padlock or key icon on your browser bar when you shop online or log into an account. When using public wifi, limit your activities to non-secure web browsing. Don’t enter your credit card information or check your bank balance, for example. Cybercriminals could steal your sensitive information because the wifi network is not secured.
  9. Designate one card for online shopping. Instead of using multiple credit and debit cards to make online purchases and pay bills, consider using just one. That way, if your card information is stolen, you can limit your exposure. It’s also better to use a credit card if possible. You can dispute fraudulent charges and you don’t risk having your checking account emptied.
  10. Keep your mobile device secure. A phone or other mobile device can be a treasure trove of information for a cyber-criminal. Protect yourself by using a passcode or pattern lock; wiping all data from the phone if it is lost, stolen, or you decide to give it away; and being selective about the apps you download. Both Apple and Android offer apps for finding a missing phone and remotely deleting data if it is permanently lost or stolen. You should also keep your mobile device’s operating system software up to date⸺don’t ignore those Update Needed reminders!
  11. Beware of mobile phishing scams. “Phishing” simply refers to fraudulent messages from scammers posing as a legitimate organization or person. Don’t open links or attachments in texts and emails that you weren’t expecting or that come from unknown senders. Ignore pop-up messages offering to repair an infected device.
  12. Make your passwords hard to guess. Don’t use publicly available information, such as a birthday or child’s name. Experts recommend passwords that consist of the first letter of each word in a phrase. For example, “Life is good at the beach” would become “LIGATB.” Add numbers and symbols to replace certain letters, such as a ‘0’ instead of an ‘o’ or ‘@’ instead of ‘a,’ and to extend the length of your password. Don’t share your passwords with anyone, even family and friends. Change them once or twice a year.
  13. Report suspected fraud immediately. In the last section, we’ll go over the specific steps to take if you become a victim of identity theft. For now, keep in mind that time is of the essence when it comes to fraud and identity theft.

Popular Identity Theft Scams to Look Out For

ATM Scams

Every year, the IRS publishes its “Dirty Dozen” list of the worst tax scams. Check out the 2018 list and stay alert throughout the year, especially between January-April.

Skimming devices, which read the information on your credit or debit card, are another tried-and-true identity theft scam. You can find them on ATM machines, card readers at the cash register, and gas pumps. Never insert your card into a device that looks tampered with.

In the market for a new mobile phone or laptop computer? Beware of websites advertising deals that seem too good to be true. They probably are. Scammers create websites just to bait search engine users who are looking for the best price on popular products. If you visit the fake site, you’ll be asked for your personal information in order to redeem the offer.

Identity thieves also use the bait-and-switch method over the phone. You can set up a fraud filter on incoming calls to avoid answering potential scams. If you do, never give out personal information⸺not for a free cruise, sweepstakes check, or anything else “irresistible.”

What to Do if Your Identity is Stolen

Identity Theft Recovery

Being a victim of identity theft is a terrible experience, but there are things you can do to resolve the situation as quickly and efficiently as possible. Here are our tips for reporting scams and fixing your credit history.

  • Call your bank and credit card companies immediately to cancel stolen cards and set up a fraud alert on your account.
  • File a report with your local police station.
  • Contact the fraud units of the three credit reporting companies. You can also place a fraud alert online.
  • You may want to place a security freeze on your credit report, which will stop lenders from issuing a credit to anyone using your identity. This will also stop you from opening new credit accounts, but you can always lift the freeze when you’re ready.
  • Keep a record of all of your fraud-related communications with company representatives, police officers, etc. You may need to refer to this information later on.
  • Report your identity theft to the Federal Trade Commission (FTC) by calling 1-877-ID THEFT (1-877-438-4338) or visiting ftc.gov/idtheft.
  • Read the Fraud Victim Bill of Rights granted by the Fair Credit Reporting Act. Among other things, you can repair your credit history by blocking negative information related to identity theft from appearing on your credit report.

F&M Bank is Your Local Partner in Identity Theft Prevention

Shredding, Safe Choice Program, Online Course, Accounts with Protection

As your Shenandoah Valley community bank, we offer many resources to help our customers protect themselves against the growing threat of identity theft. In addition to our paper shredding events you can sign up for F&M Bank’s ID Safe Choice Program, take advantage of the free Identity Theft Protection that comes with our Cash Reward and Cash Back Checking Accounts, and take the free “Safeguard Your Identity” course in our community classroom.

The Shenandoah County Chamber of Commerce also offers periodic Identity Theft workshops⸺check their calendar for upcoming events. For more local resources, the Harrisonburg Police Department offers Identity Theft and Crime Prevention tips.

Remember that F&M Bank will never ask for your account or login information. Contact us right away if you have questions or concerns about your checking or other accounts.

Staying Safe from Tax Scams

As people seek to file their tax returns this year, cybercriminals will be busy trying to take advantage of this with a variety of scams. Citizens may learn they are victims only after having a legitimate tax return rejected because scammers already fraudulently filed taxes in their name. According to the Internal Revenue Service (IRS), there was a 60% increase in 2018 in phishing scams that tried to steal money or tax data. The IRS identified 9,557 fraudulent tax returns as of only February 24th, 2018 for the last filing season. As everyone aims to file their returns among all this fraud, the following advice will explain how tax fraud happens and provide recommendations on how to prevent it from happening to you or how to get help if you are unfortunately affected by a tax scam!

How is tax fraud perpetrated?

The most common way for cybercriminals to steal money, financial account information, passwords, or Social Security Numbers is to simply ask for them. Criminals will send phishing messages often impersonating government officials and/or IT departments. They may tell you a new copy of your tax form is available. They may include a link in a very official looking email that goes to a website that uses an official organization’s logo and appears legitimate, yet is fraudulent. If you attempt to login into the false website, or provide any personal information, the criminals will see what you type and try to use it to compromise your other accounts and file a false return in your name.

Additionally, much of your personal information can be gathered online from sources like social media or past data breaches. Criminals know this, so they gather pieces of your personal information from a variety of sources and use the information to file a fake tax refund request! If a criminal files a tax return in your name before you do, you will go through the arduous process of proving that you did not file the return and subsequently correcting the return.

Criminals also impersonate the IRS or other tax officials, demanding tax payments and threatening you with penalties if you do not make an immediate payment. This contact may occur through websites, emails, or threatening calls or text messages that seem official but are not. Sometimes, criminals request their victims to pay “penalties” via strange methods like gift cards or prepaid credit cards. It is important to remember that the IRS lets citizens know it will not do the following:

  • Initiate contact by phone, email, text messages, or social media without sending an official letter in the mail first.
  • Call to demand immediate payment over the phone using a specific payment method such as a debit/credit card, a prepaid card, a gift card, or a wire transfer.
  • Threaten you with jail or lawsuits for non-payment.
  • Demand payment without giving you the opportunity to question or appeal the amount they say you owe.
  • Request any sensitive information online, including PIN numbers, passwords or similar information for financial accounts.

How can you protect yourself from tax fraud?

  • File your taxes as soon as you can…before the scammers do it for you!
  • Always be wary of calls, texts, emails, and websites asking for personal or tax data, or payment. Always contact organizations through their publicly-posted customer service line. If they contact you end the call and call the organization on the phone number on their website. As mentioned previously, the IRS will initiate contact on these issues by mail through the postal service.
  • Don’t click on unknown links or links from unsolicited messages. Type the verified, real website address into your web browser.
  • Don’t open attachments from unsolicited messages, as they may contain malware.
  • Only conduct financial business over trusted sites and networks. Don’t use public, guest, free, or insecure Wi-Fi networks.
  • Use strong, unique passwords for all your accounts and protect them. Reusing passwords between accounts is a big risk that allows a breach of one account to affect many of them!
  • Shred all unneeded or old documents containing confidential and financial information.
  • Check your financial account statements and your credit report regularly for unauthorized activity. Consider putting a security freeze on your credit file with the major credit bureaus. This will prevent identity thieves from applying for credit or creating an IRS account in your name.

If you receive a tax-related phishing or suspicious email at work, report it according to your organization’s cybersecurity policy. If you receive a similar email on your personal account, the IRS encourages you to forward the original suspicious email as an attachment to its phishing@irs.gov email account, or to call the IRS at 800-908-4490. More information about tax scams is available on the IRS website and in the IRS Dirty Dozen list of tax scams.

If you suspect you have become a victim of tax fraud or identity theft, the Federal Trade Commission (FTC) Identity Theft website provides a step-by-step recovery plan. It also allows you to report if someone has filed a return fraudulently in your name, if your information was exposed in a major data breach, and many other types of fraud.

Content from the Community Institution and Association’s Cyber-Tip Newsletter