FDIC Consumer News
A Bank By Any Other Name May Still Be Insured
How the FDIC can verify an institution's true identity
Suppose you want to confirm that an unfamiliar bank or banking Web site that is offering attractive deposit accounts is FDIC-insured. You go to "BankFind" — the FDIC's online database of all FDIC-insured institutions at http://research.fdic.gov/bankfind — and it’s not listed. Does that mean the bank or Web site could be uninsured, or worse, fraudulent? The answer is ... maybe or maybe not. One reason is that insured branches and bank Internet sites can do business using names that don't match the bank's official name.
"The FDIC is increasingly receiving phone calls from consumers asking about banks or bank Web sites that do not appear to be insured and are not listed on BankFind," said Calvin Troup, a Senior Consumer Affairs Specialist. "While some of these offers could be from fraudulent Web site operators or businesses not insured by the FDIC, often these are insured banks or bank Web sites that happen to operate under a different name than the legal name of the bank."
Since many insured banks do not identify all Web sites or "trade names" (other names used for marketing purposes) associated with the legal name of the bank, the FDIC is concerned that depositors who are not sure about the true identity of a particular institution could exceed the $250,000 insurance limit by inadvertently placing funds in a bank where they already have deposits.
Here are examples that can help explain these situations, plus information on how the FDIC can help answer your questions.
Web Sites: Most FDIC-insured institutions that offer online banking services have sites with titles that are similar to the bank's name. But let's say you are considering a deposit at a Web site called www.GreatAmazingBank.com, but there’s no record of that name in BankFind. The good news is that the FDIC is collecting from all insured banking institutions the official Web addresses for all public sites they use to solicit deposits from consumers. With that information, an FDIC Deposit Insurance Specialist can confirm if a Web site belongs to an insured bank by another name. If the Web address provided by the consumer does not belong to an insured bank, the site may be affiliated with a nonbank financial organization. Or, it could be a fraudulent site set up by criminals to entice people into transferring money or disclosing personal information for use in committing identity theft.
Trade Names: What if you are researching a banking institution called Small Local Bank but that name does not appear in BankFind? It still may be FDIC-insured if it is part of a larger depository institution with a different name (we’ll call it Large Bank), growing over time through the acquisition and merger of many different, smaller banks. How could that be? Well, if Small Local Bank was well-known in the area it served, Large Bank could continue to use the old name for the branches there as its trade name, but with all of the deposits really going into Large Bank. Again, although it may seem that you would be depositing your money in two different banks, all your money will actually be deposited at Large Bank.
"Consumers need to know if a branch's name is different from a bank’s legal name because it is all one bank," said Martin Becker, Chief of the FDIC's Deposit Insurance Section. "They need to understand that if that bank fails, their deposits from all branches would be combined and insured up to the insurance limit."
The FDIC is working to put additional information on its Web site so consumers will have the ability to independently research bank and online banking names. However, until then, you can call the FDIC at 1-877-275-3342 and ask to speak to a Deposit Insurance Specialist who will help to make sure you are fully insured.