Some of you, and by extension your spouses and children, may be interested in signing up for trading applications on your smartphones—like Robinhood and WeBull—to take advantage of current market trends. The prevalence of these trading applications in pop culture may invite new investors and may suggest that the information these trading applications collect is secure and protected. However, that is not always the case. To begin trading, or even fund your trading account, these applications usually ask that you use certain third parties, such as Plaid, to verify your financial accounts by providing your online banking username and password. Because you are setting up this access for the purpose of funding your account, this may initially seem harmless. But these third-party processors can use their newly acquired account access to mine transaction and use data and then sell that data to their business partners. Even more concerning is the realistic probability that you cannot truly rely on these third-party processors to protect your access information. Indeed, there are usually strong limitations of liability and disclaimers hidden in their general terms of use. In other words, the seemingly harmless activity of setting up an online investment account through a “reputable” application on the App Store or Google Play could leave you holding an empty bag after your financial information is stolen and used.

Accordingly, instead of providing your online banking log-in information, use a secondary verification method. For example, many trading applications provide a secondary, hidden option that only uses your account and routing number; whereby, the trading application will deposit a very small sum into your account and ask you to verify the amounts deposited. This option is much more secure, as you are not granting anyone access to your accounts or exposing your password. If the trading platform does not offer a verification option that does not require you to provide login information, this is a red flag, and you should consider finding a different trading platform.

In the event that you decide to provide your login information, you should setup and maintain two-factor authorization settings, which request your text or email approval for every attempted log-in. Further, when possible immediately change your password after account verification. Though not entirely secure, this can help to further protect against the unwanted loss of your data or tampering with your financial accounts.

Please note, the risks described above are not unique to trading applications. You should never provide a third party with access to your accounts.