Home > Consumer Protection > Consumer News & Information > FDIC Consumer News - Summer 1998

FDIC Consumer News - Summer 1998

Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Click on FDIC Web Site to Help Fend Off Fraudulent Internet Banks

The FDIC has developed a new, “user-friendly” service that enables Internet users to check the validity of a bank on the ‘Net and to report suspicious sites to the FDIC via e-mail. Just go to the FDIC’s “Suspicious Internet Banking ” site. (In the spring 1998 issue of FDIC Consumer News, we said the new service was on the way.)

The “Suspicious Internet Banking” site gives you new ways to avoid being victimized by a fraudulent Internet operation that may be luring innocent victims with unusually attractive offers, such as 20 percent interest on a deposit (which you may never see again) or an unbelievably good deal on a credit card (perhaps just a ploy to get you to divulge personal financial information that later can be used fraudulently).

“It’s true that an Internet bank may be able to offer consumers higher interest rates on deposits due to their lower overhead costs, but their costs are not so low that they can pay 20 percent when everyone else is paying six percent,” says Jeffrey Kopchik, an attorney in the FDIC’s Office of Policy Development. “Our goal is to protect consumers by finding these sites and getting them off the ’Net before they do any harm.”       

The FDIC’s new “Suspicious Internet Banking” site can help in two main ways if you want to shop the Internet for deposit interest rates, credit cards or other banking services.

1. You have access to a database of legitimate banking institutions. Let’s say you find a bank Web site that’s offering something that sounds too good to be true. As a first step, check the “Special Alert” list on the “Suspicious Internet Banking” page. There we name banks already identified by government authorities as not authorized to conduct banking business (or otherwise being fraudulent).

Also, you can click on “FDIC Institutions Search Engine” to check out our database of banks and savings associations that are legitimately chartered and FDIC-insured. Why is this list helpful? Because to conduct banking business in the United States, a bank or savings association must get permission from a federal or state agency. So, if you don’t find an Internet bank in our database, be very careful before sending money or doing any business with it. (Note: Credit unions aren’t in the FDIC database. To check out a credit union that has a Web site, contact the National Credit Union Administration.)

2. You can tip us off to suspicious Web sites and help the FDIC try to get fraudulent banks off the Internet. Let’s say you don’t see your bank Web site listed on either of the lists mentioned previously. You may have found a fraudulent Internet bank unknown to the FDIC and law enforcement agencies. You can help bring the bogus “bank” to the FDIC’s attention by filling in an online report form and e-mailing it to us. (Just click on “Report Suspicious Internet Bank Sites.”) The FDIC will investigate what you’ve found.

If it turns out that the Web site is fraudulent, the FDIC will work with federal law enforcement agencies to get that site off the Internet. Kopchik explains that shutting down a fraudulent Web site isn’t always easy, especially if it originates outside of the U.S. The FDIC will add the entity’s name to our “Special Alert” list, so that other consumers will be warned not to do business with it.

John Jackwood, Special Assistant to the Director of the FDIC Division of Compliance and Consumer Affairs, sums up the benefits of the new Web service this way: “An Internet user now has a simple and quick way to help guard against becoming a victim of Internet banking fraud. At the same time, one consumer can help many other consumers by reporting suspicious banking activity on the Internet to the FDIC.”

In a related development, the FDIC recently began a pilot program to search the Internet for institutions that may be misrepresenting themselves as legitimately chartered or federally insured. Employees from the FDIC, as well as from other federal and state bank regulatory agencies, spend time each week “surfing” the ’Net looking for fraudulent banks. Suspicious banks will be referred to the appropriate law enforcement authorities and, if possible, put out of business. Their names also will be added to the FDIC’s “Special Alert” list.

Previous StoryTable of Contents Next Story

Last Updated 12/7/2011 communications@fdic.gov