Criminals Spoofing Bank Websites, Offering Attractive CD’s

The SEC’s Office of Investor Education and Advocacy has issued an Investor Alert to warn investors about phony Certificates of Deposit 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 bank 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.
  • Identify “clearing partners” that they claim are registered with the SEC.

This is something for both banks and investors to be aware of. Small Midwestern banks are part of the group of banks that criminals have targeted with spoofed websites and online ads so be on the lookout for sites trying to impersonate your bank.

Make sure that your high net-worth customers know that this is a concern and educate them on what to be aware of.

If you have questions about IT security or the cyber threats that could affect your bank, call ITPAC today.