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Lincoln, Neb., June 22, 2009 – The Nebraska Department of Banking and Finance is issuing a warning of a scam targeting consumers who need to borrow money. A company calling itself Hillsboro Financial Group, which lists its address as 4060 Vinton Street, Suite 4, Omaha, NE, offers personal loans to consumers and requires up-front fees for “lender’s insurance” in advance of funding a loan. The Department was made aware of the company by a borrower who was referred by an online loan broker. The borrower was required to make an initial “security” payment of $800 prior to obtaining the loan and was asked to wire the money to a Canadian address. The Department has verified that the company does not have an office at the Omaha address listed. The Department strongly cautions consumers against completing applications with lenders with whom they are unfamiliar.
Karen Reynolds, a securities analyst for the Department, advises that when it comes to borrowing money, make sure you research the lender thoroughly before committing to anything and never agree to pay an advance fee. It is illegal for companies doing business in Nebraska to charge such fees in advance to obtain a loan.
“These fraudulent companies often promise unsecured loans to people who are unable to obtain loan approval through traditional financial institutions, or take advantage of consumers with little financial experience,” said Reynolds. “Also, these companies will often gather personal information from consumers, making them prime candidates for identity theft as well,” she said.
Reporting a scam also is essential. “Many people are too embarrassed to admit that they have been conned by such schemes and fail to report the fraud. If these crimes are not reported, the door is left open for these predators to strike again,” she said.
Look for loan fraud warning signs:
- Be especially wary of unsolicited calls, e-mails or letters offering you a loan.
- Requests for money to be sent in advance to cover "processing", "application", "insurance", or the "first month's payment" are a red flag of loan scams. Although legitimate lenders may charge fees, charges are taken from the loan amount.
- Be cautious of lenders who are not interested in your credit history. A lender who does not care about your credit history means it will not make you a loan—just collect fees.
- Once you have provided money and personal information to a scammer, the company representative may ask you for even more money by telling you that the original amount was erroneous or insufficient.
- Requests that you wire or send money, as soon as possible to another city or to another country, such as Canada, or Nigeria, by Western Union, Moneygram, or similar means. Legitimate lenders will not pressure you to wire funds or send money in advance of a loan.
- A lender who is not registered in the state in which you live. Lenders and brokers are generally required to register in the states where they do business.
Report loan scams to:
- Report loan scams to the Nebraska Department of Banking and Finance by calling the consumer hotline at (877) 471-3445 in Nebraska, or (402) 471-3445 out of state.
- Call or report loan scams to the Federal Trade Commission at 1-877-FTC-HELP or 1-877-382-4357
- Call Phone Busters at (888) 654-9426 to report the toll-free numbers being used in Canada.
- File fraud alerts with each of the three credit bureaus. Scammers who obtain your sensitive information, such as your Social Security Number, bank account number and driver's license information, may use it to obtain credit in your name, or make withdrawals from your accounts.
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Washington, D.C. (October 2008) -- The Independent Community Bankers of America (ICBA) and the Nebraska Independent Community Bankers are reminding community bank customers of the extraordinary stability of the community banking industry as the troubles of large Wall Street financial institutions and investment firms dominate mainstream headlines.
"Our customers may be watching the news and reading the papers and naturally, they worry about their own banks," said John Nelsen, Executive Vice President of FirsTier Bank, Holdrege, "We understand their concern, but want to reassure our customers that they need not worry about the stability of their bank and the safety of their money."
"These are challenging times for our nation’s economy and financial system – one of the most challenging in many, many years.," said Cynthia L. Blankenship, ICBA chairman and vice chairman and chief operating officer of Bank of the West, Irving, Texas. "The reality is there are more than 8,400 commercial banks in our country and insured deposits are safe in an FDIC insured institution. No depositor has ever lost a penny of FDIC-insured funds. Investment banks are not FDIC insured."
Deposits held in FDIC insured community banks are insured for up to $100,000 per depositor, and $250,000 for certain retirement accounts.
"When it comes to community banks, the vast majority have been and continue to be some of the safest, soundest and most secure financial institutions in our nation," said Blankenship. "Community banks follow responsible business practices. Community banks are risk-averse; they are sensible businesses that work every day to support their customers, communities and local markets."
"We encourage customers to call their community banker if they are concerned," said Kurt T. Yost, President/CEO, Nebraska Independent Community Bankers. "And we want everyone to feel secure—both now and well into the future."
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Washington, D.C. (October 2008) -- Nebraska Independent Community Bankers (NICB) and the Independent Community Bankers of America (ICBA) want to reassure community bank customers about the safety of their deposits in accounts with community banks. Here are answers to some questions community bank customers are asking about their accounts:
Q: I’ve heard lately that money market funds are in crisis. I have deposits in a money market account through my community bank. Is my money at risk?
A: There’s an important difference between bank deposits which are insured by the FDIC and non-bank money market funds. Worry on the part of consumers can be attributed to the confusion between money market mutual funds, which have been the subject of recent headlines, and money market deposit accounts, which are the ones you probably own.
Key differences:
- Money Market Mutual Funds are mutual funds which hold short-term debt investments such as low-risk government securities, certificates of deposit and short-term debt issued by public companies (“commercial paper”). These shares are typically sold to investors by brokerage houses and mutual fund companies, and just like any fund that is not a bank deposit, they are not FDIC-insured and there is the potential (though very low) for shareholders of these accounts to lose money.
Nevertheless, under the Treasury Department’s recently announced guarantee plan, amounts shareholders had in money market mutual funds prior to close of business on Sept. 19, 2008 will be insured for a period up to one year, if the mutual fund signs up and pays a fee to be covered.
- Money Market Deposit Accounts are widely available interest-bearing bank accounts. They are essentially savings accounts with higher interest rates. Depositors owning these very safe accounts are FDIC-insured to $100,000, or $250,000 for some retirement accounts.
Q: Isn’t the best course of action right now to withdraw my money and put it "under the mattress"?
A: Absolutely not. In fact, that is the surest way to allow inflation to erode your spending power. Think about it this way—your great-grandfather could have bought an entire meal for a dollar a 100 years ago, but if he’d stuffed that dollar under the mattress for you to find today, you could barely buy a candy bar with it now.
More important, if you keep your money in a bank savings or checking account, the FDIC backs it with insurance, and no one has ever lost money that’s covered by deposit insurance.
Q: Then what should I do with my money? I don’t really like a lot of risk.
A: Fortunately, there are plenty of safe alternative deposit products available at your local community bank in addition to money market deposit accounts, which, again, are quite safe. You should talk with your community banker, but here are some of the most popular:
Certificates of Deposit (CD) are FDIC-insured deposit products with attractive interest rates. Sometimes called time deposits, a CD has to be held and the money cannot be withdrawn until its maturity date (typically three months, six months, or one-to-five years). Depending on the account, you could be assessed a penalty fee for withdrawing funds early, but some banks offer CDs that let you withdraw some of the funds before maturity without a penalty fee. You should check with your community bank, but bank CDs are insured by the FDIC.
Individual Retirement Accounts (IRAs) are tax-advantaged accounts for retirement savings. In the majority of cases, banks offer two-types of IRAs: traditional and Roth. Contributions to traditional IRAs are made with pre-tax assets, but at retirement, withdrawals are taxed as income. Conversely, all Roth IRA contributions are made with after-tax assets; however, withdrawals are usually tax-free. These accounts are FDIC-insured. And, after recent changes in federal law, IRAs are usually insured for up to $250,000 instead of the traditional $100,000 deposit insurance coverage.
Savings Accounts are among the traditional deposit bank accounts. These deposits are FDIC-insured and carry virtually no risk. Because the risks are low, the interest rates you can earn on these accounts also tend to be comparatively low. Unlike a regular checking account, there are monthly restrictions on the number of times you can draw funds from the account, and sometimes you will be required to keep a minimum balance. But savings accounts are an important way to keep funds safe and secure, covered by deposit insurance and relatively easy to access.
U.S. Treasury Securities are the collective array of government bonds, from Treasury bills to U.S. savings bonds. They are regarded as the safest of all investments because they are backed by the U.S. government. In addition, earnings on Treasury securities are exempt from state and local taxes. But they are not covered by deposit insurance.
Q: My spouse and I are combining our money into an account under my name only. Will the FDIC insure each of us for the full $100,000?
A: No. The FDIC insures deposits up to $100,000 per depositor and $250,000 for certain retirement accounts. If you have more than $100,000 at a community bank, however, you can still be fully insured if your accounts meet certain requirements. For example, accounts owned by a single person are separately insured from joint accounts or retirement accounts owned by that person. In this case, you can each have $100,000 insured in separate accounts with one name each, and have another $200,000 insured in an account that bears both your names. The FDIC has information on its Web site (www.fdic.gov) about how deposit insurance coverage works. Or better yet, talk to your local community banker. And remember, no one has ever lost a penny of FDIC-insured deposits held in community banks.
About ICBA
The Independent Community Bankers of America, the nation’s voice for community banks, represents nearly 5,000 community banks of all sizes and charter types throughout the United States and is dedicated exclusively to representing the interests of the community banking industry and the communities and customers we serve. For more information, visit www.icba.org.
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