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FDIC Consumer News - Summer 1997

Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Fraud Alert

Neither snow, nor rain, nor heat, nor gloom of night can prevent a crook from stealing a new credit card from the mail and running up fraudulent charges. Follow this fraud step by step:

(1) A crook steals from a consumer's mailbox (or elsewhere) an envelope containing a new credit card or a card renewal. "Thieves can usually recognize credit card mailings," says Gene Seitz, an investigator with the FDIC's Division of Supervision in Washington. "Many only have a P.O. Box as a return address and the cards are easy to feel through the envelope."

(2) Having the card owner's name and address, the thief next finds out consumer's phone number. He then calls, pretending to be a representative of the card company, and asks if the new card has arrived. When told no, the con artist instructs the worried consumer to call a particular toll-free number to report the card missing.

(3) The consumer's call actually goes to a member of the same crime ring who asks for the consumer's Social Security number, date of birth, mother's maiden name and other personal information. With this information, the thieves can call the card issuer, activate the card and go on a shopping spree.

Susan Sylstra, executive director of the International Association of Financial Crimes Investigators, based in Novato, California, says robbers also steal a new card from the mail, counterfeit it, and put the original back in the mail. "The consumer then gets the real card and activates it, but that also enables the thieves to start using the counterfeit," she says.

Under federal law, if your credit card or card number is used by a thief the most you're liable for is $50 per card. You owe nothing if you contact your card company before any unauthorized charges are made. Even so, card fraud is a national problem and a reason interest rates are higher on credit cards than on other loans. You can help stop card fraud by calling your card company immediately if a new card doesn't arrive as expected or if the envelope appears tampered with (and get the correct toll-free number from your card statement or by calling an operator at 800-555-1212). Never leave your card payment in your doorway or mailbox where thieves can steal enough information to order a new card in your name. Always check your card statement when it arrives and look for suspicious or unusual transactions.

Experts also emphasize that you should never give out personal information over the phone unless it's a call you originate to someone you know and trust. "Card companies never call customers asking for personal information; they already have that information," Seitz says.

Warning: Scams by Phone and Computer Have Familiar Ring

Phony prize offers are the top telemarketing fraud reported by consumers to law enforcement authorities. And when it comes to Internet crimes, the most common complaint involves "pyramid schemes," typically ads falsely promising big bucks for recruiting other people to invest money. That's according to 1996 data recently released by the National Fraud Information Center (NFIC), a project of the National Consumers League in Washington that fields reports of suspected frauds and passes them along to federal and state authorities.

The NFIC said the 10 most commonly reported telemarketing scams, in order, involved offers of: prizes, work at home, magazines, investments in a communications business, loans involving up-front fees, lotteries, vacation packages, credit cards involving up-front fees, miscellaneous business and franchise opportunities, and office supplies.

The top Internet frauds involved: pyramid schemes, sales of software and computer equipment, Internet services, business and franchise opportunities, work at home, buyers clubs, magazines, investments, scholarship offers, and prizes.

If you think you've been victimized or if you want more information about fraud prevention, contact the NFIC at 800-876-7060 or visit its Internet site at www.fraud.org.

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Last Updated 08/05/1999 communications@fdic.gov