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In this article, our attorney Victor Nunes discusses how consumer negligence can directly affect a financial institution’s liability in cases of fraud within both the traditional financial market and the cryptoassets market.

Technology, while it boosts the market and makes doing business easier, also brings risks. The growing number of new fraudulent schemes in the financial sector — both traditional and crypto-related — is undoubtedly one of the major issues today.

Because of this, it is absolutely essential that users and investors adopt certain precautions regarding their accounts on brokerages and financial institutions in general.

The main precautions every investor should take

In summary, investors should:

• Keep their passwords, codes, and passphrases safe, preferably without storing them on mobile phones or internet‑connected devices.
• Avoid using the same email account for both brokerage/financial institution access and multiple unrelated apps or services.
• Ask their brokerage about all available security mechanisms and enable every protection feature offered.
• Be skeptical of social media posts and supposed advisors promising unusually high returns, and always seek verified information about the person and the company they represent.
• Never click on links sent by unknown individuals and always confirm the legitimacy of any contact through the institution’s official channels.

All these precautions significantly reduce the chances of fraud and the unlawful withdrawal of funds or digital assets from users’ accounts on these platforms.

In addition, failing to follow these precautions may, in cases of fraud, be considered the consumer’s exclusive fault. In practice, this means that if the fraud occurs due to circumstances unrelated to the services provided — such as clear negligence by the user — the service provider’s liability may be removed.

By Victor Nunes — Attorney, Donato & Garcia Neto Advogados