Caution - Olympic Spam

Symantec, a maker of security software, reports that in July 78 percent of all email sent was spam. That is up 12 percent from the same time last year. As the Olympics start on Friday, August 8, 2008, there is a prediction that spam and malicious messages will increase. Beware those messages offering special video clips or other enticements. These may be ways to draw users in and infect their computers.

Follow links only from trusted sources. Keep your anti-virus program updated and use your firewall.

Two Banks Fail, But Depositors Are Fully Covered
On July 25, 2008, the regulator for nationally-chartered banks (the Office of the Comptroller of the Currency) seized two insolvent banks, First National Bank of Nevada, headquartered in Reno, Nevada, and First Heritage Bank, N.A., headquartered in Newport Beach, California. After the banks were closed, the FDIC was named Receiver.

Here's what's particularly noteworthy: the FDIC did a deal with Mutual of Omaha Bank, Omaha, NB, to acquire many of the assets of the failed institutions and assume all deposits, both insured and uninsured. In doing the deal, the FDIC weighed the costs of administering the claims on the uninsured portion of deposits (as well as other factors) and determined that allowing Mutual of Omaha Bank to acquire all deposits (and not just the insured ones) was the "least costly" resolution for the Deposit Insurance Fund, compared to all alternatives, because the expected losses to uninsured depositors were fully covered by the premium paid for the two banks.

FDIC reports this is the second time in the last two years in which another bank acquired a failing bank's insured and uninsured deposits. Ten banks have failed in the last two years.

Depositors of the two failed banks can breathe a sight of relief and proceed with business as usual. They automatically become depositors of Mutual of Omaha Bank.

Trust, but verify, when it comes to deposit insurance
Occasionally, when a financial institution fails a customer will learn the hard way that his deposits aren't insured in the manner he thought they were.

For example, after one recent failure, a customer said that when she set up a money market account and purchased a CD, she had asked the new accounts representative if the funds (with a combined total of well over $100,000) would be fully insured. She was reportedly told that they would, because the two were different types of accounts. Wrong!

The customer learned only after the FDIC became receiver that the bank employee was incorrect (or the customer misheard or misunderstood what she said). The two accounts had to be aggregated under the terms of the FDIC rules and would be insured, in the aggregate, only for up to $100,000.

Most bankers are well-versed in the intricacies of deposit insurance coverage, so this type of scenario should be rare, but smart customers will use tools readily available online from the FDIC to verify for themselves how the insurance will apply.

Just a couple of clicks away is FDIC's Electronic Deposit Insurance Estimator on our Bank Failures page in the Featured Links section. Nicknamed EDIE (for its acronym), it's a web-based, interactive application that allows you to put in all the information about your accounts and how they're structured, how much is in them, etc. and, based upon the insurance rules, it will calculate precisely what the deposit insurance coverage would be in the event the bank failed and provide a report. Oh, and did we mention it's free?

A few words of advice. When you go through it, you need to give it your total concentration and read each question carefully. You know the old saying with computer stuff -- garbage in, garbage out. If you don't put in the right information, the report generated will not be reliable. FDIC has created an incredible tool. Use it to help you make informed decisions about deposit insurance matters.

Fraud Warning from the FBI

The FBI has warned consumers that with all the natural disasters, fraudulent requests for assistance will increase. They recommend paying attention to these following points:

• Do not respond to unsolicited (spam) e-mail.
  
  
• Be skeptical of individuals representing themselves as officials soliciting via e-mail for donations.
  
  
• Do not click on links contained within an unsolicited e-mail.
  
  
• Be cautious of e-mail claiming to contain pictures in attached files, as the files may contain viruses. Only open attachments from known senders.
  
  
• To ensure contributions are received and used for intended purposes, make contributions directly to known organizations rather than relying on others to make the donation on your behalf.
  
  
• Validate the legitimacy of the organization by directly accessing the recognized charity or aid organization's website rather than following an alleged link to the site.
  
  
• Attempt to verify the legitimacy of the non-profit status of the organization by using various Internet-based resources, which also may assist in confirming the actual existence of the organization.
  
  
• Do not provide personal or financial information to anyone who solicits contributions: providing such information may compromise your identity and make you vulnerable to identity theft.
  

FBI Warning on EPPICards

The Federal Bureau of Investigation is warning the users of EPPICards to watch out for a phishing attack. EPPICards are used to deliver child support payments to recipients in 15 participating states. These cards act like debit cards.

Phishers are sending text messages and emails asking users to logon to a linked web site and verify confidential data or complete a survey, which then asks for confidential data. The site and survey is a fake and the data will be used to steal from those entering the account numbers, PINs and other information.

Users should be aware that this is not a method used to verify your information.

Read more on the FBI's bulletin here.

FTC Settles "Wal-Mart Shopping Spree" for $28 Million

Brian K. MacGregor was the architect of the "Wal-Mart Shopping Spree" scam and he is now paying the price. Several of his companies were involved in a scam where consumers were tricked into disclosing bank account information. The consumers were promised shopping sprees at Wal-Mart, Macy's, movie tickets or vouchers for free gas. Items were promised for free, but with a shipping and handling fee to be paid by the consumer. Some thought they were paying monthly fees for a program membership.

Macgregor violated the FTC Act and Telemarketing Sales Rules. As a consequence, a fine, representing the money paid in the scheme of $28.2 Million is to be paid. The participants are also barred from participating in this type of activity in the future.

The FTC says this:

Consumers who had money taken by any of the corporate defendants without their express informed consent may send a letter to: Federal Trade Commission, attn.: Faye Chen Barnouw or Jennifer M. Brennan, 10877 Wilshire Blvd., Suite 700, Los Angeles, CA 90024. The letter should identify which company took money from them, include the dates and amounts of the withdrawals, and contain any supporting documentation. Consumers who have already sent this information to the FTC do not need to resubmit it. Consumers seeking more information about this case may call the case hotline number: 202-326-2090. More information is available on the FTC web site.

What is your bank account worth?


For you, your bank account is worth every dollar you have in it plus peace of mind. But to the thief who gets your bank account information, it is worth just a little less than "face value" because there has to be some equity in it for the buyer. Many thieves who get your data aren't the same scoundrels who'll empty it. The first thief ends up with so many account numbers that they sell them off. McAfee Avert Labs found an active site where these credit card accounts are bought and sold.

On this site, a US account at Washington Mutual with an available balance of $14,400 sold for $924 which is $.06 on the dollar. (The pounds and euro values are converted to dollars for ease in comparison.) A Citibank account based in the UK with an available balance of $20,345 sold for $1,310. Again, $.06 on the dollar.

And to demonstrate an honor among thieves, when this credit card information is purchased it comes with a guarantee. If the buyer isn't able to access that account within 24 hours, a replacement account of equal value will be provided. Access to the account would be cut off if, for example, the owner notified the bank that the card was lost.

It is very important that consumers check their statements when they arrive to review the transactions in your deposit and credit accounts. If a transactions looks suspicious, check it out immediately. If any were not authorized by you, immediately notify your bank.

ID Spoofers Suffer

The Federal Trade Commission announced that the first telemarketers who were ID spoofing were fined, liable for $530,000 in damages and barred from continuing this activity. ID Spoofing is a process where the caller sends a false signal as to where the call is originating.

There were two individuals and one corporate defendant barred because of violating the Do Not Call rules as they attempted to sell mortgage loans, refinancings, and other products. Srikanth Venkataraman, doing business as Scorpio Systems didn't pay for access to the Do Not Call List, did call some numbers that were on the list, and faked the caller ID system.