Fidelity 401(k) Breach: A Stark Reminder to Secure Your Accounts Today
Understanding the Fidelity 401(k) Breach
March 28, 2025- Late last year, Fidelity Investments announced a data breach affecting 401(k) plans. This hack reportedly exploited weaknesses in Fidelity's call center procedures, resulting in some retirement accounts being emptied. While Fidelity has reimbursed affected investors, litigation is now pending against the company.
As digital transactions become more common, safeguarding online accounts against cyber threats is more critical than ever. This breach serves as a wake-up call to strengthen our own security measures, regardless of where the breach originated.
The Importance of Online Account Security
Cybercriminals often gain access to accounts by stealing login credentials rather than exploiting software vulnerabilities. Without multi-factor authentication (MFA), online accounts are especially at risk. MFA, also known as two-factor authentication (2FA), requires additional verification beyond a password, making unauthorized access much harder.
How to Create a Strong Password
While many people use password apps, if you don’t, you may want to have a password “system” that only you know, that you don’t have to write down, that will remind you to change it periodically, and that will be different for every website. A strong password should be unique, complex, and easy for you to remember but difficult for hackers to guess. Many people use personal information—such as their first car, best friend’s name, or pet’s name—which can be easily discovered online. Instead, consider using this system that generates secure passwords without relying on real-life details.
Here’s one way to create a personalized password system:
Choose a future travel destination (e.g., Atlanta).
Select an imaginary travel date (e.g., June 2025).
Pick a number between one and five (e.g., four).
Select a special character (e.g., %).
Identify a famous person from your chosen destination (e.g., Jimmy Carter).
Using these elements, form a password by combining the first three letters of the destination in uppercase (ATL), four numbers from the date (0625), the fourth letter of the website’s name in lowercase (e.g., “z” for Amazon), the special character (%), and the first four letters of the famous person's last name (Cart). This results in a new Amazon password: ATL0625z%Cart.
When the future travel date arrives, update the password by changing the date and location, creating an easy-to-remember but difficult-to-hack system.
For additional security, consider storing your password system in a secure place and share its location only with someone you trust. If security questions are required, use fictional answers that only you would remember (e.g., "first car: DeLorean," "best friend: Marty McFly"), and not real life answers that your Facebook friends could figure out.
Why Your Email Password Is the Most Important
Your email password is arguably the most crucial password to protect, as most accounts allow password resets via email. If a hacker gains access to your email, they effectively hold the keys to all your other online accounts. Ensuring that your email password is strong and protected by multi-factor authentication (MFA) is a top priority.
How Multi-Factor Authentication (MFA) Enhances Security
Traditional security relies on a username and password, but if a hacker steals your credentials, they can access your account. MFA mitigates this risk by requiring a second verification step, such as a code sent to your phone or an authentication app. Even if a hacker obtains your password, they cannot access your account without this second factor.
Taking Action to Safeguard Your Online Accounts
The Fidelity 401(k) breach underscores the importance of proactive online security. Here’s what you can do today:
Update your passwords using a unique and structured system.
Enable multi-factor authentication on all accounts, especially financial and email accounts.
Use fictional answers for security questions to make them harder for hackers to guess.
Stay vigilant against social engineering scams, where attackers impersonate trusted institutions to obtain credentials.
Most hacking victims, particularly seniors, fall prey to social engineering rather than sophisticated cyberattacks. If you receive an unexpected call or email claiming to be from your bank or another institution, verify its legitimacy before providing any personal information. Always communicate directly with organizations using official contact channels.
By adopting these security measures, you significantly reduce your risk of becoming a cybercrime victim. Start today by reviewing and strengthening your online security practices to safeguard your personal and financial information.
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Information presented is for educational purposes only and is not personalized investment, financial, legal, tax, or accounting advice. Nothing on this website should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and unless otherwise stated are not guaranteed. Be sure to consult with tax, legal, accounting, and financial professionals about your specific situation before implementing any planning strategies. Investment Advisory Services offered through Timberchase Financial, LLC, a Registered Investment Adviser with the U.S. Securities & Exchange Commission. Registration does not imply a certain level of skill or training.