FINRA Warns of High-Yield CD Scams
With yields on certificates of deposit at historic lows, the Financial Industry Regulatory Authority is warning investors not be tempted by promotions touting high yields.
In the FINRA alert, a case of suspected email fraud appeared to come from a large U.S. bank that supposedly was promoting a certificate offered by an international banking partner.
“At a time when most CDs at U.S. banks and credit unions were offering just over 1% for a comparable term, this pitch offered a CD with a 15% yield, and contained instructions on how to wire funds,” according to FINRA.
Red flags that have indicated a CD offer may be fraudulent include:
- interest rates that are significantly higher than average;
- emails with addresses that are not originated and sent by the financial institution that is cited in the promotion;
- emails that contain misspellings or grammatical errors;
- promotions that claim to be from a U.S. financial institution that has aligned with an international bank;
- promotions that claim to be for a "limited time only"; and
- promotions that claim to be directed at "best customers" and that require extremely high minimum investments (for example, $100,000).
“Savers continue to face near-historic low yields on traditional bank products. Fraudsters attempt to take advantage of investor desire for higher yields by luring them into potentially fraudulent CDs that promise both safety and double-digit returns,” said Gerri Walsh, FINRA's senior vice president for investor education.