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Consumer Alerts

The following provides information on a variety of topics, such as fraud, consumer credit, etc.

  • Federal Trade Commission site on Cross-Border Fraud
  • Federal Trade Commission Consumer Protection Division
  • FDIC Brochure on Predatory Lending

FDIC Consumer Alert - January 23, 2004

The FDIC has issued an alert for consumers regarding a fraudulent email claiming the loss of FDIC coverage. The email asks consumers to verify account information to ensure coverage by the agency. Click here to go to the FDIC site and read the email.

2004 Top 10 Scams

As identified by The North American Securities Administrators Association (NASAA):
Ponzi Schemes: Uses the promise of high returns to attract investors, then uses the money collected from previous investors to pay new investors.
Senior Investment Fraud: Older investors are targeted with complex investment scams involving unregistered securities, promissory notes, charitable gift annuities, viatical settlements, and Ponzi schemes, all of which promise of inflated returns.
Promissory Notes: Short-term debt instruments that are often sold by independent insurance agents and issued by little known or non-existent companies. They often promise high returns and are used fraudulently when the issuer of the note has no intention or capability of paying returns promised.
Unscrupulous Brokers: Can include unexplained fees, unauthorized trades or other irregularities in brokerage activities. Often, the broker generates commissions for these unauthorized activities.
Affinity Fraud: Con-artists join or gain access to religious, ethnic and professional groups to sell illegal or fraudulent investments.
Insurance Agents and other Unlicensed Securities Sellers: Some insurance agents and other unlicensed securities sellers are lured by high commissions into selling fraudulent or high-risk investments, such as promissory notes, ATM and payphone investment contracts and viatical settlements.
Prime Bank Schemes: Con-artists promise high returns through access to the investment portfolios of elite banks or promise investments in "risk free guaranteed high yield instruments".
Internet fraud: Market manipulation, insider trading and unlicensed broker and investment advisory activity, including pyramid schemes. Can also include email correspondence asking for help in depositing large sums of money in overseas bank accounts, i.e. Nigerian scam.
Mutual Fund Business Practices: Mutual funds have been under investigation for putting their own interests ahead of investors' interests by using tactics such as sales contests, abusive trading practices, and illegal trading practices.
Variable Annuities: Some annuities include high surrender charges, steep sales commissions, and claims of guaranteed returns. Investors are often unaware of these items or the information is not properly disclosed. Some information, such as guaranteed returns, are fraudulent. Other information regarding tax benefits often include additional costs. Many time variable annuities are pitched to seniors through investment seminars.

Consumer Alert Issued by Nebraska Department of Banking and Finance - Dec. 5, 2003

Email is latest tool used by thieves to collect personal and/or financial information. Numerous emails are circulating that appear to be from legitimate financial institutions asking residents to verify their email address, financial information and other personal information. This information can then be used to access bank accounts or commit identity theft.

Nebraska residents are urged to never give any personal or financial information as a result of an unsolicited email request. If you have questions regarding the authenticity of the email, please contact the financial institution via telephone at a number that you know to be your financial institution. Do not use the telephone number contained within the email or any links contained within the email to verify its legitimacy.

As con-artists become more savvy with technology, it is important to note that they may even reference the actual website of a legitimate financial institution. This does not, however, make the request legitimate. The only legitimate request for any personal, identifying information from a financial institution should come only after a customer has first contacted that institution and has been told he/she will need to provide such information. It should never come in the form of an unsolicited email or telephone call.

Any Nebraska residents receiving or falling victim to such requests should report it to their financial institution and the Federal Trade Commission site on Cross-Border Fraud.

Consumer Alert Issued by Nebraska Department of Banking and Finance - Nov. 5, 2003

Nebraska residents should be wary of any emails advertising delayed deposit businesses or "payday" cash lenders without first determining if the business is licensed by the State of Nebraska.

The Nebraska Department of Banking and Finance, which regulates direct deposit businesses, is aware of one entity, calling itself "Cash Advance Expert", advertising through email solicitations. The company's website offers overnight cash advances against an individual's paycheck. It asks for personal checking account information in order to deposit this cash advance. This company is not licensed by the State of Nebraska and operates out of the Philippines.

Nebraska residents are encouraged to never give personal or financial information in response to an email solicitation. Doing so could result in theft of funds from your financial account and/or identity theft.

Protect your information

Never give out personal information over the phone or an unsecured internet site. Personal information such as driver's license number, social security number and/or bank account number can be used to access YOUR MONEY! Any legitimate business will give you ample time to consider the offer, check references and should have any terms of agreement available in writing. BE CAUTIOUS AT ALL TIMES. If you are suspicious about an offer you have received over the phone or via the Internet, contact the Department of Banking & Finance.

"Digital Investment Certificates" - Maryland Investments Club

The Canada Deposit Insurance Corporation (CDIC) is advising all North American investors and depositors that a person or group of persons conducting business as the Maryland Investments Club is offering fraudulent securities. The person(s) are offering investment certificates called digital investment certificates for sale over the Internet. They claim that these certificates are held electronically and guaranteed in full by the CDIC. The CDIC has warned that this is a fraud. Contact the Nebraska Bureau of Securities at (402) 471-3445 to report any any dealings with the Maryland Investments Club or digital investment certificates supposedly guaranteed by the CDIC.

"Prime Bank" Financial Instruments

Illegal schemes that tout the sale, trade and or redemption of prime bank financial instruments is again traversing the country. These schemes involve individuals and/or false entities claiming to sell financial instruments called a "prime bank" note, guarantee, letter of credit, or debenture. The Federal Reserve does not guarantee or license individuals to sell, trade or redeem such financial instruments. Alerts were also given in 1993 and then again 1996 about these schemes.

Nigerian Scam Letters

Beware of official looking letters offering to enter into a confidential business arrangement that supposedly results in several million dollars being put into your bank account. These letters have been circulating throughout the country since the mid 80s - including Nebraska. It is known as the Nigerian Advance Fee Fraud and has resulted in a depletion of bank accounts, and even the death of an American businessman in 1995, according to the U.S. State Department. New variations of the Nigerian Advance Fee Fraud are being developed all the time. Some such variations include: the transfer of funds from "over-invoiced" contracts and assistance in escaping the country with accumulated wealth to contract fraud and the sale of crude oil, among others. Following are tips to help avoid being a victim in this and similar frauds.

  • Do not respond to business proposals that ask for your personal banking information, letterhead stationery, blank business statement forms or money.
  • Do not give credit card numbers or other account numbers to businesses unknown to you.
  • Research any business proposals that requires personal information or money with your bank, the Better Business Bureau, and the Consumer Protection Division of the Attorney General's office.
  • Always be cautious about submitting advance fees for any business or sweepstakes offer. Some advance fees are illegal in Nebraska.
  • If an offer sounds too good to be true, it probably is.

For more information on the Nigerian Advance Fee Fraud, visit these websites:

  • U.S. State Department
  • Crimes of Persuasion
  • The 419 Coalition
  • Links to Organizations Fighting Nigerian Fraud
  • Internet Fraud Complaint Center
  • U.S. Secret Service

When is Your Check Not a Check? Electronic Check Conversion

The Federal Reserve Board published a guide to help consumers understand their rights and responsibilities with regard to electronic check conversion transactions. The guide, "When is Your Check Not a Check? Electronic Check Conversion," discusses what electronic check conversion is, how consumers can tell if their check will be electronically converted, some of the differences between a regular check transaction and electronic check conversion, consumers' rights in an electronic check conversion transaction, and what consumers can do if they have problems with such transactions. The publication is located on the Fed's web site at

Protect yourself from Mortgage Fraud

The best method of protection is knowledge. Learn how to shop for the best mortgage and your rights as a consumer. A Department of Justice Mortgage Booklet gives consumers valuable information when shopping for a mortgage! If you think you have been the victim of mortgage fraud, file a written complaint with our Department.

If you are going through foreclosure or need other home ownership counseling services, contact the Family Housing Advisory Services at 1-888-573-0495 for assistance.

Visit the following sections to learn more about how to protect yourself. Or visit our Consumer Education page to learn more about how to safely invest your money.

  • Self Employment SCAMS! (in PDF Format)
  • Advance Fee Loan Brokers
  • Internet Solicitation Alert
  • Safety tips for ATM Banking
  • On-Line Securities Offerings Alert
  • FDIC Consumer News - Identity Theft

    Always Beware of Advance Fee Loan Brokers

    Collecting brokerage fees in advance of making the loan is illegal in Nebraska. Often Nebraska citizens looking for a loan are victimized in these scams after answering classified advertisements in newspapers and free publications for advance fee loan broker services. If such a fee is asked for, that's a clue that the loan is not on the level.

    If contacting someone who claims to be able to find a loan for you, ALWAYS ask for a disclosure statement containing:

  • the company name;
  • a street address;
  • a telephone number for the business;
  • corporate officers;
  • a statement of how long they have been in business;
  • and; a list of references.

    NEVER sign anything or complete a business transaction without first checking to see if they are licensed by the State of Nebraska. Tell them you will check out the information they give you...then do it. Remember, a valid loan officer will give you time to check their credentials. The offer DOES NOT GO AWAY. Once you have given money to these scam artists, it's very difficult to get it back.

    Here are some tips to help detect this type of scam.

    (1.) The "broker" usually runs an ad offering to find mortgage and/or consolidation loans. The ad usually includes a toll-free telephone number. The prospective borrower calls and the scam artist takes some credit information then promises a call back. After a delay of perhaps an hour, the borrower gets a call back full of good news: the loan has been approved, usually at a very favorable rate and with a monthly payment that the borrower can handle.

    (2.) The "broker" then asks for a certain amount of money -- ranging from a few hundred to almost two thousand dollars -- as a brokerage or processing fee before the loan can be disbursed. Sometimes, once the initial fee is sent, the con-artist will contact the borrower and say they can't get the loan at the original rate they had thought, but for an additional amount (often $500-$2000), they would be able to qualify for a different type of loan. These requests for money can go on for some time, and the scammer may actually come up with some kind of loan (at a high interest rate) for the person. However, the money they have already given is gone and the victim finds they could have probably gotten the loan all by themselves at the higher rate.

    (3.) The borrower is asked to send the money in the form of a cashiers check or money order through a private mailing service, such as Federal Express or United Parcel Service. We're not quite sure why the fraudulent businesses/individuals insist upon something other than regular mail service, but we suspect that it has to do with involving the postal services of the United States and/or other countries in the hunt.

    (4.) Most (but not all) companies conducting this type of scam are from other countries, in particular Canada. This is presumably so there will be little or no involvement of law enforcement from the United States. To complicate matters even more, there is no U.S. government agency to give immediate assistance.

    We do not know of anyone who has ever gotten a loan through one of these Canadian operators. Once the victim has sent the money, there is no loan and no further contact.

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    Internet Solicitation of High Interest Deposits and/or Personal Information

    A number of internet solicitations regarding loans and other quick money schemes come across the internet every day. Two examples we have seen involve "Loans you never have to pay back", and attempts by foreign individuals to use your account/name in return for a percentage of the "millions" they will be running through your bank. In order to do this, they often entice individuals to give personal information such as driver's license number, social security number and bank account numbers. Many legitimate businesses operate over the internet, but they will never ask you for such personal account information before discussing the terms of any agreement with you. Check with the Department of Banking & Finance if you have any questions about offers you receive over the internet.

    The following names are used by one company thought to be conducting a banking business, including the solicitation of high interest deposits over the Internet. It is believed this entity is based in the United Kingdom. It is NOT a banking organization chartered by the Nebraska Department of Banking & Finance nor the Comptroller of the Currency.

  • "Bankers International Trust"
  • "BIT"
  • "Bankers International Trust Investment Club"
  • or "BITIC".

    The deposits of this entity would NOT be insured by the Federal Deposit Insurance Corporation (FDIC). Proposed transactions with this entity should be viewed with extreme caution.

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    Safety Tips for ATM Banking

    When you decide to use an Automated Teller Machine (ATM), you should follow certain precautions to avoid being victimized by criminals.

    (1.) If the majority of your banking is done through an ATM, you should choose a bank which has its ATM located in a highly visible area and has adequate lighting. Try to do your ATM transactions during the daylight hours. If you must bank after dark, do so accompanied by another person and at a machine located near a well-lighted parking lot.

    (2.) Be cautious in choosing ATM machines. If there is no financial institution affiliation displayed, you may want to drive to the nearest financial institution and use an ATM which is located within or attached to their building.

    (3.) Try to shield your PIN numbers as they are punched in.

    (4.) Be cautious of suspicious people or loiterers in the area or near the ATM. Sometimes, there are others waiting to make a transaction. Use good judgement to determine who has a valid reason to be there and proceed accordingly. If you feel uncomfortable, drive to another ATM location.

    (5.) As you perform your ATM transaction, look around and be aware of what others in the area are doing.

    (6.) Avoid making large cash withdrawals or deposits at an ATM. Muggers like to steal cash because it's not traceable.

    (7.) If the machine malfunctions and your card is not retrievable, report it as soon as possible to the financial institution from which it was issued. Be wary of extraneous ATM instructions which are taped on the outside of the machine and may require you to enter your PIN number several times in succession in case of a malfunction.

    (8.) Record your PIN and put it in a safe place. Never keep your PIN written down in the same place as your ATM card.

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    ON-LINE SECURITIES OFFERINGS: What Every Investor Should Know

    The Nebraska Department of Banking & Finance's Bureau of Securities, monitors the Internet to ensure that securities offerings available to Nebraska residents through the Internet comply with Nebraska law.

    Securities offerings over the Internet are permitted, provided that such Internet offerings are in compliance with the Securities Act of Nebraska, Neb. Rev. Stat. §§ 8-1101 to 8-1124 (Reissue 1998). The Department's monitoring effort is intended to provide maximum protection for investors by preventing the sale of unregistered securities to Nebraska residents, while balancing the needs of legitimate businesses to raise needed capital. Because of the nature of the Internet, no monitoring effort will be able to catch every on-line investment opportunity.

    Investors Must Take Steps to Protect Themselves

    (1.) Read all information provided by the company carefully. Securities may only be offered through a disclosure document called a prospectus. The document is required to provide all information necessary to make an informed decision regarding an investment. Among other information, the document should discuss the risks involved in the investment, the background of the management of the company, and should include financial statements on the company.

    (2.) Beware of claims of high returns with little or no risk involved. The basic rule of investing is that the higher the return, the higher the risk involved. A claim of high returns with low risk is an indication that the investment may be fraudulent.

    (3.) Check out any offering with the Department BEFORE you invest. Any security offered or sold to Nebraska residents must comply with Nebraska's securities law. One call to the Department can determine if the offering and if the person selling the security are registered in Nebraska.

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