Beware Too-Good-to-be-True Offers


by on January 22, 2013

The adage suggesting that if an offer seems “to good to be true, it probably is,” can unfortunately apply to banking.

The Credit Union Times reported yesterday that the Securities Exchange Commission (SEC) is suing a man for operating an unchartered credit union. Her Majesty’s Credit Union, located in the U.S.Virgin Islands (a territory of the United States) but operated out of Colorado was allegedly offering a 7.75% APY on CD accounts, drawing funds from at least a handful of investors who were unable to withdraw the funds at maturity. As it turns out, the man behind the credit union has a history of launching failed credit unions – he was banned by the NCUA in 2011 under an alias. He also has a criminal record.

The lesson consumers should take away from this story is to be skeptical of institutions offering accounts or features that seem to be way outside the norm, especially when those banks or credit unions are not federal insured by the FDIC or NCUA.

In somewhat related news, an incident related to the Manti Te’o fake girlfriend scandal reminds us of the dangers of giving out your bank account information, even to those you think you can trust. The Notre Dame football player’s “girlfriend” reportedly had asked for his checking account number so she could help out with his expenses. A friend you’ve never met before offering to give you money definitely falls under the too-good-to-be-true category. You should never give anyone you don’t know well and trust completely access to sensitive financial information like bank account numbers, PINs, passwords, etc.

USFWS Northeast / flickr source

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