October 23, 2019/US SEC

The SEC’s Office of Investor Education and Advocacy (OIEA) is issuing this Investor Alert to warn investors about phony Certificates of Deposit (CDs) promoted through internet advertising and “spoofed” websites – websites that mimic the actual sites of legitimate financial institutions. Investors should be extremely cautious when purchasing CDs from sites found only through internet searches. 

“Spoofed” websites – often using URL addresses similar to those of legitimate firms’ websites, or using legitimate-sounding names and URLs – may be used to trick investors into buying bogus CDs. Spoofed websites selling fake CDs often have red flags of fraud. They may: 

• Offer interest rates higher than you can find at any other financial institution, with no penalties for early withdrawals;

• Promote only CDs and no other financial products, such as banking or brokerage accounts, loans, or commercial banking services;

• Require high minimum deposits, often $200,000 or more;

• Direct potential investors to wire funds to an account located outside the U.S., or to a U.S.-based account that has a different name than the financial institution claiming to sell the CD; 

• Claim that the spoofed financial institution is a Federal Deposit Insurance Corporation (FDIC) member and that deposits are FDIC-insured; and

• Identify “clearing partners” that they claim are registered with the SEC. 

Be Skeptical and Ask Questions

If you are considering an investment in CDs, conduct internet searches for the financial institution to see if you find any search results other than the website initially identified. Call the financial institution using a telephone number found somewhere other than the suspect website to determine the legitimacy of the investment opportunity.  

If the website claims the CDs are FDIC insured, verify the financial institution by using the FDIC’s BankFind tool – https://research.fdic.gov/bankfind/ – or call the FDIC to verify at 877-ASKFDIC (877-275-3342).  Make certain the name of the financial institution claiming to provide the CDs is exactly the same and not just similar to a firm verified by the FDIC.

If the website claims the CDs are offered by a credit union, verify the financial institution by using the National Credit Union Administration’s (NCUA) “Research a Credit Union” webpage – https://mapping.ncua.gov/ResearchCreditUnion.aspx – or call the NCUA’s Consumer Assistance Center at 800-755-1030.

If a website provides a name and a CRD number of a broker-dealer or an employee of a broker-dealer, use FINRA’s BrokerCheck to check whether the address provided in FINRA’s BrokerCheck matches the address provided on the website. 

You can also check out the information with an unbiased source such as the SEC’s Office of Investor Education and Advocacy or your state securities regulator.  Our short publication called Ask Questions discusses many of the other questions you should ask of anyone who wants you to make an investment.