The Password You Should Never Use: How to Protect Yourself from Cybercrime

IAN ROGERS

Financial expert

Paul Clitheroe urges individuals to avoid using easily guessed passwords like “123456,” which hackers can crack in less than a second. Despite increasing awareness of online scams, many Australians are still falling victim to sophisticated fraud, with $73.2 million lost in just the frst three months of 2024, according to Scamwatch.

Cybercrime Is Big Business

Scams have evolved from simple email frauds to large-scale, highly organized operations. Fraudsters are more cunning, leveraging advanced technology and psychological manipulation to trick even savvy consumers. What’s alarming is that, despite knowing the dangers, many people still use simple, predictable passwords,

Australians.

Key Findings and Recommendations

The report recommended that federal, state, and territory governments:

• Introduce nationally consistent EPOA laws.

• Establish a national register for EPOAs.

• Raise public awareness about the importance of setting up EPOAs and understanding the associated risks and responsibilities.

• Develop educational materials, including a dedicated website and training courses, to inform Australians about

EPOAs.

Among the report’s key fndings:

• Only 52% of individuals with an EPOA sought professional advice when creating one.

• 37% of those with an EPOA granted it to someone exhibiting characteristics that are risk factors for elder abuse.

• The overwhelming majority (93%) of Australians support the need for standardized information across the country on fnancial EPOAs.

The Path Forward

Fitzgerald’s appeal follows nearly two decades of stalled action. With gaps in public knowledge and inconsistent legislation across Australian states and territories, the need for reform has become increasingly urgent. “The time to act is now,” Fitzgerald said, emphasizing that these reforms are vital for safeguarding the fnancial security and autonomy of older Australians. He called for the introduction of consistent national legislation to minimize confusion, ensure better protection for the elderly, and fll critical knowledge gaps that leave them vulnerable to abuse.

The push for reforms, endorsed by both National Seniors Australia and the Australian Law Reform Commission, underscores the necessity of empowering older people and ensuring that their rights are protected. For more information on the report and recommendations, visit the National Seniors Australia website www. nationalseniors.com.au/ putting their fnancial and personal information at risk.

Clitheroe stresses the importance of password security in the ongoing fght against cybercrime. Using a weak, common password such as “123456” is akin to leaving your front door unlocked. Despite how often this advice is repeated, the World Economic Forum reports that millions of people continue to use easily cracked passwords. To protect yourself from hackers, it’s crucial to create long, complex passwords that are unique for every online account. Password managers are a great tool to safely store and manage multiple, secure passwords.

Three Essential Tips for Scam Protection

1. Don’t Use Simple Passwords

Hackers can crack weak passwords like “123456” in less than a second. Choose long, complex passwords that are diffcult to guess, and use different passwords for every account. A password manager can help you store and organize them securely.

2. Check Your Accounts Regularly

While banks and telcos have improved their security measures, you are your best line of defence. Regularly monitor your bank and credit card accounts for suspicious activity and set up alerts for instant notifcations of transactions. If something doesn’t seem right, contact your bank immediately.

3. Guard Your Personal Information

Your personal details are valuable to scammers, with stolen credit card information being traded on the black market for as little as $10 per card. Be wary of unsolicited messages or emails asking for personal or fnancial details.

Reputable organizations, including your bank, will never ask for sensitive information via text or email.

Cybercrime: A Growing Threat

Australians lost over $73.2 million to scams in the frst quarter of 2024 alone, and many of these losses went unreported, meaning the true fgure is likely much higher. What’s worse, scams are becoming more sophisticated, making it harder for even the most cautious individuals to avoid falling victim. It’s no longer about poorly written emails claiming inheritance from a Nigerian prince. Today’s scammers use advanced technology and large-scale operations to deceive their targets, often impersonating trusted entities.

Fraudsters prey on your personal details, which can be as valuable as cash. They may steal your credit card information or, in worse cases, your entire identity. This is why Clitheroe recommends regularly checking your credit score for any sudden changes, which could indicate that your information has been compromised. Sites like CreditSmart allow you to check your credit score for free, offering early detection of potential identity theft.

The Importance of Vigilance

Ultimately, one of the most effective defences against scams and cybercrime is a healthy sense of scepticism.

Clitheroe’s mantra rings true: “If it sounds too good to be true, it probably is.” Before clicking on a link, sharing personal details, or transferring money, take a moment to verify the legitimacy of the request. Scamwatch and Moneysmart provide valuable resources to help you stay informed about the latest scams and how to protect yourself.

If you believe you’ve fallen victim to a scam, contact your bank immediately. Quick action can often prevent signifcant fnancial loss, and there’s no shame in seeking help if you’ve been targeted. The sooner you act, the better your chances of recovering lost funds or minimizing the damage.

For more information on scam prevention, visit the Scamwatch or Moneysmart websites, or ask your bank for advice on protecting your accounts.

How Retirement Bonuses Work

In today’s superannuation landscape, some funds offer a retirement bonus when members transition from the accumulation phase to the pension phase. This bonus comes from funds that were originally set aside to pay capital gains tax (CGT), which is no longer required in retirement.

Approximately one-third of super funds currently offer these bonuses, with amounts and structures varying.

For example, Telstra Super offers 0.5% of the balance up to $8,000, while MLC offers a more generous 1.2%. However, many factors can affect the payout, such as investment choices, waiting periods, and eligibility conditions.

During the accumulation phase, your super is invested, and funds are reserved for future CGT obligations. When you move into retirement, where super income streams become tax-free, that reserved CGT becomes unnecessary. Some funds return a portion of this money to you as a retirement bonus, potentially boosting your retirement savings. However, only a minority of funds offer these bonuses, so it’s important to understand the details if your fund does.

How Bonuses Are Calculated

Retirement bonuses can be calculated in several ways:

1. A fxed percentage of the average account balance over a specifed period.

2. A percentage of the opening pension account balance, often with a cap. 3. A tailored percentage based on the member’s specifc balance and investment history.

Some bonuses may also come in other forms, like fee waivers, but these are less common. The key takeaway is that the more super you move into the pension phase, the larger your potential bonus.

Real-World Examples

• Telstra Super offers a bonus of 0.5% of the transferred balance, capped at $8,000. To qualify for the maximum, you would need to transfer $1.6 million into a retirement income stream.

• Australian Retirement Trust offers a similar 0.5% bonus with a maximum of $9,500.

• MLC offers a more generous bonus at 1.2%, though the percentage has fuctuated over time. While retirement bonuses can offer a nice fnancial boost, they are typically one-off payments, and various factors can infuence their size, including investment choices and waiting periods.

Is It Worth Switching Funds?

The idea of switching funds to chase a retirement bonus may seem tempting, but it’s essential to consider the broader picture. Eligibility criteria, such as waiting periods, may apply. For instance, some funds require you to be a member for at least 12 months to qualify for the bonus.

Moreover, the value of the bonus may not be signifcant for everyone. With the median super balance for Australians aged 65-69 being around $200,000, a 0.5% bonus would only amount to approximately $1,000. While it’s extra