Full text of FDIC Consumer News : Spring 2000
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FDI Consumer News
Spring 2000
Paper or Plastic?
JOHN DOE
JANE DOE
10730 MAPLE STREET
ANYTOWN, USA 20000
Your decisions aren't over when
you make up your mind to buy a
product or service. Next comes
figuring out your best way to
pay. Here's our guide to the
potential risks and rewards
of using cash, checks, credit
cards or debit cards.
You're browsing at a local store
and you see the lamp you've been
searching for, the last one left,
drastically reduced to $100. You
know you can't live without it, but
you also know you want to be
able to return it if you find out
the lamp doesn't work after you
get it home. How should you pay
to best protect yourself? Give
cash and get a receipt? Write a
check? Pull out a credit card? Or
use your debit card to deduct the
payment from your bank account
electronically?
INSIDE
The top 10 insurance
mistakes that cost
depositors money
PAGE
8
Our simple plan for finetuning your finances for
the 21st century
PAGE 13
It's the year 2000. Now
what?
PAGE 14
If you're
like many
people who've
been in situations
like this, chances are
you made a quick decision
about the payment without
paying much attention to the
potential costs, consumer
protections, or other factors. In
our example, your best move
probably would be to put that
lamp on your credit card before
you put it on your end table.
Why? Because under the Fair
Credit Billing Act, if you happen
to charge a defective item that's
more than $50 from a merchant
in your home state or within 100
miles of your home, "you have a
right to return it to the merchant
and get the charges reversed,
unless you clearly accepted the
item in an 'as is' condition or in a
transaction where all sales are
final," says Robert Patrick, an
FDIC consumer law attorney
based in Washington.
Every payment method has its
virtues and shortcomings, and
much depends on your personal
preferences and the specific
situation. Still, you need to know
enough about your payment
options
to make
informed
decisions.
"Consumers
are not stupid
about banking
issues, but they
often are ignorant about the
most efficient choices for
themselves," says E. Thomas
Garman, a professor at Virginia
Polytechnic Institute and State
University in Blacksburg, VA, and
director of Virginia Tech's
National Institute for Personal
Finance Employee Education.
FDIC Consumer News wants to
help you understand your rights
and the potential risks and
benefits when it comes to the
most common ways to pay for
things. Starting on the next page,
we've compiled information we
hope can save you time, money
and hassles when you make
purchases, even over the phone,
on the Internet or through the
mail. We want you to be smarter
and safer the next time someone
asks that familiar question, "And
how would you like to pay for
that?"
continued on next page
Paper or Plastic?
Cash
---
How It Works
You pay the merchant
(or other provider of goods or
services) in U.S. bills or coins.
The merchant can immediately
use the money for new
transactions or deposit the cash at
the bank.
Major Pluses
Cash is familiar and easy to get
and use. Automated teller
machines (ATMs) now make cash
available 24 hours a day, seven
days a week. And the basic
consumer payment in cash is
simple, involving no fees, cards,
machines, security numbers, ID
checks, or other time-consuming
steps.
"Cash usually is the cheapest way
to go-no fees, no service
charges, no interest payments,"
says Kathleen Nagle of the
FDIC's Division of Compliance
and Consumer Affairs in
Washington. One possible
exception: If you use ATMs a lot,
you may find yourself running up
significant fees, especially if
you're not using your own
institution's machines.
What else makes cash so popular?
It's accepted by other consumers
as well as by all merchants,
including businesses that won't
always take your check, credit
card or debit card. You can't get
in debt using cash because it's
money you already have. And, if
privacy is a concern, cash allows
you to pay for something
anonymously.
Potential Problems
Cash doesn't provide the solid
consumer protections that exist
for other forms of payment. (See
next section.) If you don't keep
good records and receipts, you
won't have a paper trail to help
resolve disputes or help you track
your spending for money
management purposes. Bills and
coins also can easily be lost or
stolen.
Consumer Protections
With cash, there are no specific
state, federal or industry
protections if you pay for a
product or service that turns out
to be a dud. However, you may be
protected by general laws in your
state governing business and
trade, according to FDIC
attorney Patrick. "The fact that
you paid in cash wouldn't negate
the applicability of laws against
unfair trade practices," he says.
Example: If you paid cash for a
bad product and you've got a
receipt, you might have a case
under state law that there was a
You can't stop payment (as with a
check) or dispute payment (as
with a credit card) if you run into
a problem with the person or
company that sold you the goods.
That's especially a problem with
big-ticket items.
More Words of Wisdom
Always get and keep receipts,
written warranties and other
documentation. Without them,
it's your word against the
merchant's in a dispute, and those
battles can be hard to win.
Don't depend on the merchant to
get you the right backup records
if there's a question about a
payment. "Under state law, if
there's a dispute between a buyer
and a seller over a payment, the
burden of proof is on the buyer,
and not the other way around,"
says FDIC attorney Patrick.
Don't carry too much cash or
leave it in your home or office,
even if you find a nice hiding
place for it. If you need more
cash, you should be able to get it
from a nearby ATM.
Personal Checks
The Most Popular Paymen~ Award Goes To ...
What's the #1 payment of choice for American consumers-cash,
check, credit card or debit card?
The answer: Cash, by far. A recent article by economist Stuart
E. Weiner of the Federal Reserve Bank of Kansas City says that
an estimated 50 percent or more of the total number of
transactions in the U.S. involve cash.
Checks are the second most popular form of payment. The
article reports that checks totaled 72 percent of the non-cash
transactions in the U.S. in 1997, far ahead of credit cards at
18 percent, Automated Clearing House transactions (such as
automatic bill payments) at five percent, and debit cards at
four percent.
2
breach of contract or a breach of
warranty. But even so, Patrick
adds, "if you can't resolve this on
your own you might have to go to
court," which can be costly, timeconsuming and frustrating.
FDIC Consumer News
How They Work - JIL \i!li';.c
You write a checkessentially an order
instructing your
bank to pay a particular merchant
a specified sum of money, using
funds in your account at that
bank. To collect the money, the
merchant probably will deposit
the check. It'll take about one to
five business days before the
money is transferred out of your
account. However, there are new
ways for merchants and other
vendors to process checks
electronically and reduce the time
Spring 2000
Paper or Plastic?
it takes for the funds to be
deducted from your account.
Consumer News
Consumer Protections
Published by the Federal Deposit
Insurance Corporation
Major Pluses
Checks are familiar and easy to
use or mail. They also are
routinely accepted by merchants
as well as by utilities, landlords,
mortgage lenders, credit card
companies, and other major
service providers, although
sometimes with limits. As with
cash, checks also are widely
accepted by other individuals.
Paying by check can be a good
way to avoid overextending your
family finances and to build a
good payment history. Checks
also are good for people who just
aren't comfortable with newer
forms of electronic payment, such
as debit cards.
Checks also create a paper trail
that can be followed if there's a
dispute over who got paid or how
much. If your bank doesn't
routinely return canceled checks
but you need some for your
records, you have a couple of
options, according to Cynthia
Bonnette, a bank examination
specialist with the FDIC in
Washington. "You can make a
special request for copies of
checks, possibly for a fee," she
says. "Or, if you bank at home by
personal computer, your checks'
images may be offered as part of
that service."
A few types of checking accounts
also earn interest. And last but
not least, checking accounts, as
with any other deposit accounts,
are protected up to the $100,000
insurance limit at federally
insured institutions (by the FDIC
for banks and savings institutions,
or the National Credit Union
Administration for credit unions).
Potential Problems
Some merchants don't accept
personal checks. You can't take
extra time to pay, as with credit
cards. Writing and mailing checks
FDIC
also takes time and money.
Checks also can easily be lost or
stolen.
Most of the consumer protections
for checking accounts are covered
by state laws under the Uniform
Commercial Code (UCC),
although these "uniform" laws
can vary by state. Payments by
check are not covered by the
consumer protections in the Fair
Credit Billing Act applicable to
credit card purchases (see Page 5).
What can you expect under state
laws? They may, for example,
limit your losses if someone steals
your checks and forges your
signature. You also have the right
under the UCC to stop payment
on a check, but you have to act
quickly (before your check clears)
and be prepared to defend your
action when the merchant
demands payment.
More Words of Wisdom
Do some comparison-shopping
every few years to make sure
you're still getting a good deal on
your checking account, in terms
of fees, minimum balance
requirements, and so on. Many
banks offer special deals if you
arrange for direct deposit of your
paycheck (which also can help
prevent bounced checks because
the money goes into your account
at the earliest possible date).
Use your checking account
responsibly. Keep your checkbook
balanced so you don't mistakenly
overdraw your account (which can
result in fees and a bad mark in
your payment history).
Monitoring your account also can
help you spot errors or
unauthorized transactions. And,
on the topic of unauthorized
transactions, take simple
precautions to keep thieves away
from your checks. Examples:
Don't carry more checks than you
need, and keep extra checks in a
secure place.
Donna Tanoue, Chairman
Phil Battey, Acting Director ,
Office of Corporate
Communications (OCC)
Elizabeth Ford, Assistant
Director, OCC
Jay Rosenstein, Writer-Editor
Tommy Ballard, Graphic Design
FDIC Consumer News is
produced by the FDIC Office of
Corporate Communications, in
cooperation with other FDIC
Divisions and Offices. It is
intended to present information
in a nontechnical way and is not
intended to be a legal
interpretation of FDIC
regulations and policies. Mention
of a product, service or company
does not constitute an
endorsement. This newsletter
may be reprinted in whole or in
part. Please credit material used
to FDIC Consumer News.
Send comments, suggestions or
questions to: Jay Rosenstein,
FDIC, 550 17th Street, Nw,
Washington, DC 20429
E-mail: jrosenstein@fdic.gov
Fax: (202) 898-3870
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requests or address changes to:
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Phone: (800) 276-6003 or
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E-mail: publicinfo@fdic.gov
Fax: (202) 416-2076
On the Internet
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continued on next page
3
Paper or Plastic?
by individuals and some s~all
businesses, however.) Credit cards
also can be especially helpful in
How They Work
an emergency, such as paying for
unexpected medical care and
Using a credit card is much like
expensive auto repairs. In
taking out a loan when you buy
addition,
card issuers often throw
goods and services. When you
in
freebies
for using their card,
present your card to a
including
cash rebates, bonus
merchant, the cashier
CREDIT Ct.Rn
points
good
toward airplane
will electronically
•
tickets,
and
even
automatic
contact your card
of
manufacturer
extensions
issuer (generally a
bank or other financial
institution) through the card
Among the other big pluses of
network (Visa or MasterCard, for
credit cards: They offer excellent
example) to verify your account
consumer protections. (See the
number, expiration date and
next column.) You can consolidate
credit availability. If everything
multiple purchases into one
checks out, the card network will
monthly bill that you can pay
authorize the transaction. The
with just one check. They're less
merchant will collect the money
bulky and safer to carry than a
from the card network, which will
wad of cash. (If you want more of
collect the money from your card
the green stuff, you can even use
issuer, which will bill you for the
your credit card to get a cash
money in your next statement.
advance from a financial
There also are charge cards
institution or an ATM, but this is
offered by retailers, oil companies
a loan that also comes with a fee.)
and other corporations, primarily
Credit cards also are easy to
limited to purchases you make
replace if lost or stolen, even if
from them.
you're far from home. The same
can't be said for cash or checks.
Depending on your personal
situation or the repayment terms
Potential Problems
of the card you carry, you'll either
pay your credit card bill in full
Interest charges, fees and
each month and (usually) be
penalties can add up, especially if
charged no interest, or you'll
you don't understand how your
carry a balance on the card from
card works. "Too many
one month to the next and pay
consumers think that every bank
interest on that debt.
gives them 20 or 30 days before
charging interest, but that's not
Major Pluses
the case with many banks today,"
warns
the FDIC's Nagle.
With credit cards, you can buy
Professor
Garman of Virginia
goods and services now and pay
Tech
adds
that consumers who
for them later-much later than
pay interest on credit card
with a check or debit card. That's
purchases forget that they_ are
a big plus if you want to buY: a
paying more money than 1f they
big-ticket item (such as furruture
used
cash or a check. "After
or a computer) and you want to
adding in the finance charges,
pay for it over time, even if it
which are typically 18 percent,
means interest charges.
you have the opposite of buying
Credit cards are easy to use and
things on sale," he says. "It's like
are widely accepted-when
marking up your purchases an
buying in other cities and
additional 18 percent, if not
countries, on the Internet,
more." Consumers who make
through the mail or over the
only the minimum payment on
telephone. (They're not accepted
their credit card bill also can add
Credit Cards
4
FDIC Consumer News
significantly to their interest
charges.
Consumer Protections
Credit cards may offer your best
legal remedies against billing
errors, damaged merchandise and
other woes that buyers encounter.
The federal Truth in Lending Act
(TILA) limits your losses to a
maximum of $50 if your credit
card is lost or stolen. The Fair
Credit Billing Act (FCBA), part of
the TILA, protects you against
billing mistakes and unauthorized
charges. It also allows you t~
withhold payment on defective
goods until the problem has been
corrected, provided certain
conditions are met. (See the box
on the next page for more
details.) The FCBA is a big
reason why most experts advise
consumers to use credit cardsnot cash, checks or debit cardswhen paying for big ticket items
or services that you want to know
will work as promised.
More Words of Wisdom
The credit card is one of the best
innovations of the 20th century,
but you have to be smart in how
you use it.
If at all possible, pay off your
credit card balances each month
so you can avoid or minimize
interest charges. If you expect to
carry a balance most months,
consider using a card with a low
Annual Percentage Rate (APR)
and a grace period for new
purchases before finance charges
are imposed. And do your best to
be aware of fees and service
charges so you don't trigger them
by accident.
Many people wonder if they
should use their credit card to pay
for small, everyday living
expenses, such as gas or groceries.
Here's one possible approach: If
you're going to pay off your
credit card bill each month and
Spring 2000
Paper or Plastic?
you can do so without incurring
an interest payment, using your
card for small purchases may be a
convenient way to consolidate
your payments. But if you're
unlikely to pay off your card
balance each month, many experts
say you'd be better off using cash,
checks or debit cards, because
those small purchases will cost
significantly more once you add
in the interest charges.
Remember that there's always the
potential to become
"overextended" with debt, from
credit cards or any other loans. If
you think you've got a debt
problem, think twice before using
your credit card, and find ways to
spend less and save more. For
more suggestions, see our money
management tips on Page 13.
Also, do your part to prevent
credit card fraud. Some simple
Your Rights When a Bill Is Wrong
The following federal laws protect you from mistakes on credit
card bills and bank account statements. Depending on the
situation, consumer protections also may exist in state laws.
The Truth in Lending Act (TILA) sets a $50 maximum loss if
your credit card is lost or stolen. You're not responsible for any
charges made after you report the credit card lost or stolen.
The Fair Credit Billing Act (FCBA), part of the TILA, protects
against inaccurate credit card bills, including a wrong dollar
amount or a charge for something you didn't buy. This law also
allows you to withhold payments on defective goods or services
purchased with a credit card, provided certain conditions are
met. In general, the purchase must be for more than $50 from a
merchant in your home state or within 100 miles of your home.
To dispute a billing error, you must report the problem to the
creditor in writing-a phone call isn't sufficient-and your
complaint must be received within 60 days after the creditor sent
you the statement being questioned.
The Electronic Fund Transfer Act (EFTA) protects you against
accounting errors and unauthorized withdrawals via an ATM,
debit card, home computer or other electronic transaction:
• If you believe there's an error on your statement, you must
contact your financial institution within 60 days after the
statement containing the problem was sent. Your institution also
must promptly investigate the matter and resolve it generally
within 45 days. (In some cases, the bank may take up to 90 days
to resolve your problem.)
• If a thief has used your ATM card or debit card, the law limits
your losses to $50 if you report an unauthorized withdrawal
within two business days of discovering the loss or theft of your
debit card. However, you could lose as much as $500 if you wait
longer than two days. If you wait more than 60 days after
receiving a bank statement that includes an unauthorized
transfer, the law doesn't require your bank to reimburse you for
any losses due to unauthorized transfers made after the 60-day
period. (Note: The banking industry has voluntarily put a $50
liability limit on "off-line" debit card transactions, which do not
require a PIN number for extra protection.) In all cases, you're
not responsible for money withdrawn after you notify your bank
about a lost or stolen card.
precautions: Keep your card safe,
and be sure to sign the back of
the card as soon as it arrives.
Debit Cards
How They Work
Debit cards look like
credit cards but work
more like checks because the
money is deducted directly from
your checking or savings account.
The consumer or merchant runs
the card through a scanner that
enables the bank or bank network
to electronically verify that the
funds are available and approve
the transaction. There are
basically two kinds of debit cards,
although many cards function as
both types:
• An "on-line" card deducts the
money from your account almost
immediately and, for safety
reasons, requires the use of a
Personal Identification Number
(commonly known as a PIN
number). You also can use this
type of debit card to withdraw
money from an ATM.
• An "off-line" card doesn't
always immediately deduct the
money from your account-the
funds may not be transferred for a
few days-and you sign a receipt
instead of using a PIN number.
The off-line card also is known as
a "check card" because of its
similarity to the way a check is
signed and paid.
Debit cards also have other
features of a checking account,
including overdraft protection
(for a fee) and a monthly
statement listing your use of the
card.
Major Pluses
Using a debit card is easier and
faster than writing a check. It's
also a good way to pay for small
or routine purchases without
having to pay interest charges.
continued on next page
FDIC Consumer News
Spring 2000
5
.P.ap~r or.Plastic?
....... \ ... -
Debit cards are widely accepted
by merchants, including in far. away cities and countries. Even a
merchant who won't accept your
check may accept a debit card,
because there's a greater assurance
that the payment will go through.
Note: Your ability to use a card at
any specific store or ATM,
though, will depend on the type
of debit card and the card
"network" your financial
institution belongs to.
Potential Problems
Consumer protections for debit
cards generally aren't as strong as
those for credit cards. (See next
section.) Also, because funds are
deducted from your account very
quickly, don't expect to have the
option to stop payment in a
dispute or replenish your account
if your balance is low. Debit cards
also are not accepted as payment
by individuals and some small
businesses.
Consumer Protections
The Electronic Fund Transfer Act
(EFTA) offers protections if you
believe there's an accounting
· .. 1.....
•
error or if a thief uses your debit
card or card number. However, in
the event of an unauthorized
transfer from your account, it's
important to promptly notify
your card issuer. If you wait too
long, there's even the potential for
unlimited loss on unauthorized
transfers made more than 60 days
after receiving a bank statement
with the first signs of theft. "That
means you could lose all the
money in your account plus your
maximum overdraft line of credit,
if you have one," says Jeanne
Hogarth of the Federal Reserve
Board's consumer affairs staff in
Washington.
One break for consumers,
though, came when the banking
industry agreed recently to
voluntarily limit the liability for
off-line debit cards (those that
don't require the use of a PIN),
generally to the same $50 limit
that exists for credit cards. (See
the box on Page 5 for more
details about the EFTA.)
More Words of Wisdom
Immediately deduct your debit
card transactions and fees from
Computer Banking: Also known as "home banking" and
"online banking." This service allows you to pay bills, move
money, or do other banking 24 hours a day using your computer.
Direct Payment: A way to automatically pay bills (such as your
mortgage or health club dues) without writing and mailing
checks. It usually involves giving a voided check and written
permission to withdraw from your account electronically.
Telephone Banking: Enables you to pay bills any time using a
touch-tone phone. Dial in and then enter your account number,
personal identification number (PIN), a code for the company
you want paid, and the dollar amount.
Telephone Debit: Over the phone, you authorize a merchant to
electronically withdraw from your checking account, and you
provide your bank routing and checking account numbers off
your check. This payment method can prevent late fees on bills
or speed the delivery of goods. (Note: Only give this information
to reputable merchants when you initiate the call, and not in
response to unsolicited calls, which may be fraudulent.)
6
FDIC Consumer News:-~·~.;· ·- - .
the balance in your checkbook,
and balance your checkbook
regularly so you don't overdraw
your account. Also, keep your
debit card receipts so you can
compare them to your bank
statement.
How can you protect your
account against unauthorized
transactions by a thief? We
gathered these tips:
• Understand your card's security
features and the different
consumer protections that apply
to the different types of cards. "A
card that is only protected by a
signature requirement, if lost or
stolen, can more easily be used
for unauthorized transactions,"
says the FDIC's Bonnette.
• Safeguard your account number
and PIN. "Just knowing your card
number can be enough for a
crook, perhaps in conjunction
with a dishonest retail employee,
to make purchases in your name
and gradually drain your bank
account," says Steve White, a
fraud investigator for the FDIC
in Washington. His
recommendations: Take home
your receipts (which may have
account numbers printed on
them) instead of leaving them in
the trash. Shred the receipts after
you've verified the accuracy of
your monthly statement. Don't
write your PIN number on your
card or leave it in your purse or
wallet-memorize the number
instead. And, always stand so that
no one can see the keypad at the
ATM or checkout counter where
you punch in your PIN number.
• Check your monthly bank
statement and balance your
accounts each month in order to
spot an unauthorized transfer.
Federal Reserve staffer Hogarth
also suggests that, between bank
statements, you should look at the
account balance printed on your
ATM receipts. A suspicious drop
in your balance could be a sign
that a thief has tapped into your
account. iilli
Spring 2000
Paper or Plastic?
Shopping at
"Home Safe Home"
Shopping and buying from
home-on the Internet, over the
phone, through mail order
catalogs or door-to-door sales-is
certainly convenient. But there
also are potential risks, including
invasions of privacy and brushes
with fraud artists and
irresponsible vendors. How can
you protect yourself? The
following tips were developed by
the Federal Trade Commission
(ITC) in cooperation with other
government agencies and
consumer groups for National
Consumer Protection Week
(February 14-20, 2000):
• Know who you're dealing
with. Fraudulent people and
companies masquerading as
reputable ones are increasingly
taking advantage of consumers
who shop from home. Anyone
can create a flashy Web site or
send what appears to be a friendly
e-mail, so buy from companies
you know are legitimate. There's
no fail-safe way to check up on an
unfamiliar seller, but you might
want to ask friends, your local
consumer protection agency, the
state's Attorney General's office or
the Better Business Bureau.
• Protect your privacy. Provide
personal information only if you
know who's collecting it, why and
how it's going to be used.
• Pay with a credit card. If the
product doesn't arrive or if you
believe it was misrepresented to
you, you're legally entitled to
specific protections if you paid
with a credit card. In addition, if
you have an unauthorized charge
on your credit card bill, your
liability under federal law is
limited to $50.
• Think it through. Don't act
on impulse or buckle under to
high-pressure tactics. Legitimate
vendors won't push you to make
an on-the-spot decision.
FDIC Co11rn111er News
• Keep records of your
purchase. Write down or print
out information about the
transaction, including the seller's
name, address and phone number,
plus the name of the person you
spoke with. Get a complete
description of the terms of the
transaction, shipping and
handling costs, and the return
policy in case you're not satisfied.
• Take extra precautions when
shopping on the Internet. Deal
with a vendor that posts its
privacy policies online and offers
you options about how your
personal information (such as
details about your buying habits)
may be shared or sold to other
marketers. In most cases, the
password you establish with the
vendor, your credit card number
and your delivery address should
be enough information for a seller
to take your order. Look for
symbols (such as a locked padlock
or unbroken key) on the screen
that mean the information you
are sending is encrypted (or
turned into secret code) and that
your credit card information is
protected. It's also a good idea to
choose a different password every
time you register with a new Web
site.
• Seek help if you run into a
problem. If you can't resolve a
dispute on your own, contact
your state Attorney General's
office, the Better Business Bureau
or the ITC's toll-free help line at
877-ITC-HELP (382-4357).
For more tips, contact the ITC
at the toll-free number listed
above, write the Consumer
Response Center, FTC, 600
Pennsylvania Avenue, Nw,
Washington, DC 20580, or visit
http://www.consumer.gov/ncpw/
index.html. i
For More Information About Payment Options
• Financial Regulators of Depository Institutions. These
agencies, listed on Page 15, offer publications, Internet sites, staff
and other resources that can help answer your questions about
checking accounts, credit cards and other bank products.
• The Federal Trade Commission. The ITC enforces a variety
of consumer protection laws, especially those involving unfair or
deceptive sales practices, and it publishes many brochures for
consumers. Call toll-free 1-877-382-4357; write to the ITC's
Consumer Response Center, 600 Pennsylvania Avenue, Nw,
Washington, DC 20580; or go to its www.ftc.gov Web site.
• State Governments. Many consumer protections, especially
those involving checking accounts, are based on state laws.
Contact your state's Attorney General's office or consumer
protection office as listed in your phone book or other
directories.
• The Better Business Bureau: A private, non-profit
organization that provides information that can help consumers
make buying decisions. It also often helps consumers and
businesses resolve disputes. Start by contacting the local Bureau
listed in the phone book or go to www.bbb.org on the Web.
• Your Financial Institution. Call the local or toll-free number
for the customer service department as listed in your phone
book, on your monthly statement or on the back of your credit
card or debit card. These institutions also may have useful Web
sites.
Spring 2000
7
Deposit Insurance
The Top 1O Mistakes That Cost Depositors Money When a Bank
Fails ... and How to Avoid Them
No one has ever lost a penny of FDIC-insured funds, but some people occasionally lose
money over the insurance limit. While many of these consumers knew that their
deposits exceeded the insurance limit, some did not. We want you to learn from them.
When a bank fails, insured deposits are completely
safe. Historically, more than 99 percent of the
deposits in FDIC-insured bank failures have been
fully protected. But that also means that some
depositors occasionally have lost money because they
had accounts over the insurance limit. (In one
extreme example from a recent bank failure, a
customer with $1.4 million in deposits found out that
his accounts were only insured for $415 ,000-a loss of
nearly $1 million.) Sadly enough, uninsured depositors
could have had their money fully protected if they
had been more careful to keep their deposits within
the insurance limit.
"The hardest part of my job is telling depositors they
have lost money, and the more they will lose, the
harder it is to tell them," says Kathleen Halpin, an
FDIC insurance claims agent based in Dallas, Texas.
"This is one part of my job that does not get easier
the more I do it."
Fortunately, you don't need to worry about your
deposit insurance coverage if you or your family have
less than $100,000 in all your accounts combined at
the same insured institution. But if your accounts
total $100,000 or more, and having all of your funds
protected by FDIC insurance is important to you, it
makes sense to be sure they're within the insurance
limit. (Yes, it's possible under the rules to have more
than $100,000 on deposit, even far more, and still be
fully protected.)
To help you avoid repeating the mistakes of others,
FDIC Consumer News has compiled the following
list of the "Top 10" situations in which depositors
have lost money in a bank or savings institution
failure.
This informal survey, based in part on discussions
with FDIC insurance specialists around the country,
shows that the rules governing joint accounts and
"The hardest part of my job is telling
depositors they have lost money,
and the more they will lose, the
harder it is to tell them."
revocable trust accounts (a type of payable-on-death
or "POD" account) still seem to present the most
problems even though the FDIC revised the rules for
these two accounts in April 1999 to make them easier
to understand.
1
~erestimating the insurance coverage of
JOtnt accounts.
Depositors incorrectly assume that they can establish
multiple joint accounts with different parties and have
each account separately insured. While the FDIC
simplified the joint account rules in 1999, there still
are important limits for you to understand. Under the
new rules, the FDIC looks at each person's share in
all the joint accounts he or she owns at one institution
and insures that sum up to $100,000, no matter how
many joint accounts or co-owners there may be.
For example, suppose you have two joint accounts at
a bank-one with your spouse for $140,000 (with
your share presumed to be $70,000), and a separate
joint account with your brother for $120,000 (your
share being $60,000). Your total insurance coverage
for joint accounts would be $100,000, leaving $30,000
(your remaining share of the two joint accounts)
uninsured.
To clarify another misconception about joint
accounts, the insurance coverage isn't increased by
such things as whose Social Security number or name
is listed first. You also can't increase your joint
account coverage by varying your name, such as by
showing James on one account and Jim on another.
You also can't increase coverage by using "or"
between the names rather than "and."
Before leaving our discussion of joint accounts, here
are some words of caution: Make sure all co-owners
sign the account's signature card, if there is one.
Also, if you intend to add another person to your
individually owned account as a "convenience signer,"
perhaps to give someone else the right to withdraw
money on your behalf in an emergency, make sure
that distinction is reflected in the deposit records. If
that intention is not specified, the account may be
insured as a joint account and that could possibly
decrease your deposit insurance coverage.
Kathleen Halpin, FDIC insurance claims agent
8
FDIC Consumer News
Sprin 2000
Deposit Insurance
2
Not understanding the insurance coverage
of revocable trust accounts.
Revocable trust accounts give you the use of the
money during your lifetime as the account owner, but
the funds pass to specific beneficiaries when you die.
They're also known by other names, including
testamentary, payable-on-death, tentative, Totten
trust, and "In Trust For" accounts.
Under the FDIC's rules, which were amended in
1999, each "qualifying" beneficiary's interest in a
depositor's revocable trust accounts is insured up to
$100,000, separately from any individual or joint
accounts that you or your beneficiaries may have in
the same institution, but only if certain conditions are
met. In particular, the qualifying beneficiaries must be
your spouse, children, grandchildren, parents or
siblings. Other relatives, in-laws or friends do not
qualify.
So, a $300,000 revocable trust account payable on
death to a spouse, a parent and a sibling would be
fully insured ($100,000 for each beneficiary). But if
you named a non-qualifying beneficiary, such as a
nephew, a sister-in-law, a great-grandchild or a friend,
the portion payable to the non-qualifying beneficiary
would be insured as your individually owned funds,
limited to $100,000. Example: A $300,000 revocable
trust you own that's payable to three friends would be
combined with your individual accounts and insured
only up to $100,000, not to $300,000.
Some consumers make deposits pursuant to formal
revocable "living trust" agreements. The problem is
that most living trust accounts don't qualify for
$100,000 of insurance per beneficiary because the
trust agreements place conditions on the interests of
the beneficiaries. Examples: The beneficiary must get
a college degree, or any payments to the beneficiary
will be at the discretion of the trustee. These
conditions mean that each beneficiary may or may
not receive funds after the owner dies. In these cases,
the money will be insured up to $100,000 as the
grantor's individually owned funds, along with any
other individual funds he or she held at the same
bank, and not up to $100,000 per beneficiary.
3
Confusing joint accounts with revocable trust
accounts.
In a recent closing, many depositors thought they had
established joint accounts when in fact they had
established revocable trust accounts, resulting in some
funds being over the insurance limit. A possible
example: A father opens a $300,000 account payable
on death to a son and daughter, believing it's a joint
account with the son and daughter insured to
$300,000. But the father really has established a
revocable trust or POD account, insured up to
FDIC Consumer News
$100,000 for each child. Here, the $300,000 balance
is insured up to $200,000 ($100,000 for the son and
$100,000 for the daughter), leaving $100,000
uninsured. (Note: In this example, because the only
designated beneficiaries are qualifying beneficiaries,
the excess amount of $100,000 is not insured with the
father's individually owned funds.)
"This unfortunate error caused many depositors to
lose a lot of money," says Lesylee Sullivan, another
Dallas-based FDIC claims agent.
deposits without your
knowledge.
4 Third-party
Suppose an attorney, real estate agent or some other
person handling funds on your behalf makes a deposit
into an escrow-type account at an institution where
you already have accounts. That could happen, for
example, when you sell your house or when you
receive money from a lawsuit or an insurance claim. If
the institution fails, those deposits would be
combined with your other accounts and perhaps put
you over the $100,000 limit. If you think a third-party
deposit is going to be made, find out the details and
make alternate arrangements, if necessary.
5
Not allowing for official checks to
"clear."
If customers hear reports that a financial institution is
about to fail, they may attempt to bring their
accounts below the insurance limit by obtaining a
"cashier's check" or some other "official check" drawn
on that institution. But, until that check is cashed and
clears through the check payment system, it is still
legally considered a deposit at the failed bank. That
check and any other deposits at the closed institution
would be added together for insurance purposes.
Also, if you decide to close your accounts and
combine them into one "official" check (one drawn
on the bank) with you as the sole payee, keep in mind
that the check will be insured as your individual
deposit and only insurable to $100,000. The FDIC
will not base its insurance determination on where the
funds came from. That means, for example, if you
receive an official check made payable to you alone
for money that previously had been in a joint account
insured to $200,000, it now would only be protected
to $100,000 along with your other individually owned
accounts.
Believing that interest earned is separately
6 insured.
Many depositors believe that if they deposit $100,000
in a certificate of deposit (CD) and it earns $600 of
continued on next page
Spring 2000
9
Deposit Insurance
interest, each portion would be separately insured.
But under the rules, principal and interest are added
together and insured to a maximum of $100,000.
Some depositors receive their earned interest in a
separate check. For example, a person might have a
$100,000 CD for which the depositor receives a $600
check at the end of each month. But suppose the
depositor does nothing with these interest checks for
five months and then the unthinkable happens-the
bank fails. Instead of having just a $100,000 CD and a
few days' accrued interest, the depositor has that plus
$3,000 in uncashed interest checks that, under the
rules, must be combined for insurance purposes.
Again, because the checks weren't cleared through the
banking system, they are still considered to be on
deposit and are added together with the other
deposits you own.
7
Not adjusting accounts in a timely manner
after a depositor dies.
The FDIC's insurance regulations were amended in
July 1998 to ease the potential financial hardship on
depositors who have lost a loved one. For six months
after someone's death, the FDIC will insure that
person's accounts as if he or she were still alive.
During this grace period, the insurance coverage of
the deposit owner's accounts will not change unless
the accounts are restructured by those authorized to
do so. The FDIC applies the grace period only if its
application would increase, rather than decrease,
deposit insurance coverage.
Still, many people fail to act within the six-month
grace period. Here's an example of what would
happen: Joint accounts between a husband and wife
would automatically become part of the surviving
spouse's individual accounts at the bank unless a
change was made within six months. That could put
the survivor's individual accounts over the $100,000
insurance limit, potentially resulting in a financial
hardship for a family already in grief.
Believing that IRAs and Keoghs are fully
8 insured
regardless of the deposit balance.
FDIC claims agents have recently encountered
situations where depositors at failed institutions had
Individual Retirement Accounts (IRAs) or Keogh plan
accounts (similar to an IRA but for the self-employed)
totaling well beyond $100,000. "Most of these IRA
and Keogh depositors have been surprised to find
themselves uninsured," says the FDIC's Sullivan.
"The misconception is that retirement accounts are
fully insured regardless of the amount, which is not
the case."
10
Here's a quick overview of the FDIC's rules for
retirement savings:
• IRAs and self-directed Keogh funds are separately
protected from any non-retirement funds you may
have at an insured institution, and they are added
together and insured up to $100,000 in total.
• The Roth IRA created by Congress in 1997 is
treated the same as a traditional IRA for deposit
insurance purposes.
• The new Education IRA is not considered an IRA
for deposit insurance purposes. Because of its
features, the Education IRA is insured as an
"irrevocable trust account." Such accounts may be
insured up to $100,000 per beneficiary, but often
they are insured only up to $100,000 for the entire
trust. Some or all of the funds in an irrevocable
trust account may even be insured as the depositor's
single ownership funds. The coverage depends on
the terms of the trust.
understanding the potential problems
9 Not
when depositing funds through a broker.
Many folks use deposit brokers to place funds for
them in various FDIC-insured financial institutions.
Typically, the broker will pool funds from many
clients and make a single deposit in a financial
institution on behalf of the many customers. While
this arrangement is permissible, you still need to be
careful.
Example: Your broker may put some of your funds in
an institution where you, on your own, have made
deposits. "If you find that out only after the
institution has failed, you could have some money
uninsured," Halpin says. That's because your deposits
from both sources would be added together and
insured only to the federal limit, which is generally
$100,000.
Chris Hencke, an FDIC attorney in Washington who
specializes in deposit insurance matters, points to
another potential concern: You need to be sure you're
dealing with a reputable company. "The FDIC does
not examine, approve or insure deposit brokers," he
says. "If a broker collects money from you but fails to
place those funds at an FDIC-insured institution,
your money will not be protected by the FDIC."
How can you check out a deposit broker? Try the
National Association of Securities Dealers at (800)
289-9999 for "registered" broker/dealers. Or, contact
the state government agency that regulates businesses
in your state (if it requires brokers to register in order
to do business there).
Hencke also says that, before you commit funds to a
broker, ask how it will title the account at the bank.
Why? Because if the bank fails, the FDIC looks at
FDIC Consumer News
·
_
Spring 2000
Deposit Insurance
how the institution's records say
the account is owned. You want
the account records to indicate
that the broker is acting only as an
agent for customers like you, so
each depositor can qualify for
$100,000 of FDIC coverage.
Otherwise, the entire account
would be protected to just
$100,000 in total. "If the account
is titled 'ABC Brokerage
Company,' and nothing else, the
FDIC would view the broker as the
sole owner of that deposit, with
insurance limited to $100,000,"
Beneke explains. "But if it's titled
something like 'ABC Brokerage
Company as Custodian for
Customers,' you and the other
customers would qualify for your
own $100,000 of protection."
Overestimating the
coverage of funds
deposited for a deceased
person's estate.
10
For More FDIC Insurance Information
To be sure your savings are fully protected, consider these
sources of FDIC information:
• Get a copy of the most recent (1999) edition of the FDIC
booklet "Your Insured Deposit," which is available free of charge
from insured banks and savings institutions as well as the FDIC's
Public Information Center (call toll-free 800-276-6003, write to
801 17th Street, Nw, Room 100, Washington, DC 20434, oremail publicinfo@fdic.gov).
• Check out the insurance information at
http://www.fdic.gov/deposit/deposits/index.html on the FDIC's
Web site. The offerings include "Your Insured Deposit," the
FDIC's interactive "Electronic Deposit Insurance Estimator"
service (which allows you to check whether your accounts are
fully insured), and answer common questions about revocable
trust accounts, including living trusts.
• Contact the deposit insurance experts in the FDIC's Division of
Compliance and Consumer Affairs. Call 800-934-3342, write to
550 17th Street, Nw, Washington, DC 20429, or e-mail
consumer@fdic.gov to get answers to specific questions.
Many executors or administrators erroneously believe
that the funds they deposit for a deceased person's
estate are insured for some unlimited amount or, at
the least, up to $100,000 per beneficiary. (For
example, if a surviving spouse and child eventually are
to receive the deposited money, the estate's manager
could mistakenly believe the funds are entitled to
$200,000 of insurance protection.) But FDIC
attorney Beneke says that under the rules, the funds
are still insured to the deceased person, not to the
heirs. "It's only after those distributions are made that
the money is insured to the heirs," says Beneke. "Of
course, this assumes that the heirs place the money in
accounts at FDIC-insured depository institutions."
In addition, Beneke notes that if the executor or
administrator deposits the money into a bank where
the deceased person already had funds, all of that
money would be combined for insurance purposes
under the same $100,000 limit. What's the lesson
here for executors? "Be aware of the $100,000 limit
prior to making distributions of the funds to the heirs
or beneficiaries," he says.
Final Thoughts
If you're concerned about your insurance coverage,
periodically take some time to review your account
balances and the FDIC rules that apply. It's especially
important to review your coverage if there's been a
big change in your life (such as a death in the family,
a divorce, or if you deposit the proceeds from a home
FDIC Co11su111er News
sale) or if you have accounts at two institutions that
merge. Those events could put some money over the
federal limit. If after reviewing your situation you find
your deposits are over the $100,000 federal insurance
limit, you have several options for protecting yourself.
One option is to restructure your accounts at your
institution (as described in this article). Another
option is to move some of your funds to a second
insured depository institution.
It also helps to remind yourself what federal deposit
insurance does and doesn't cover. For example,
remember that deposit insurance applies only to
deposits and only in the event of an institution's
failure. It does not, for example, cover the contents of
your safe deposit box or any investments in mutual
funds you purchased from an FDIC-insured bank.
We know that the insurance rules can be confusing.
So, for more help or information, contact the FDIC
as shown in the box above. We think you and your
loved ones will agree it's worth taking the extra time
to ensure that you are insured. i
Review your coverage if theres been a
big change in your life (such as a death
in the family, a divorce, or ifyou
deposit the proceeds from a home sale)
or ifyou have accounts at two
institutions that merge.
Spring 2000
11
Deposit Insurance
Is My Bank Healthy?
Thanks to deposit insurance, most consumers don't need to worry about their bank's
financial condition, but some people should be generally aware of their bank's strength.
At one time or another you've
probably asked yourself: "Is my
bank healthy?" Fortunately, most
consumers don't need to worry
about their bank's financial
condition if their funds are
deposited in an FDIC-insured
institution and are within the
$100,000 federal limit. Most
banks are very healthy now and
aren't in danger of failing. Even
so, there are some consumers who
should try to be aware of their
bank's stability, even if the
institution is federally insured.
Among them:
• Consumers or businesses that
have chosen to deposit more than
the $100,000 insurance limit and
thus could lose some of their
money in a bank failure;
• Business owners concerned that
if their bank fails they will
temporarily lose their "line of
credit" (a way for companies to
quickly borrow money up to a
pre-arranged limit) until they can
find a new lender;
• People who own stock in a
bank and risk losing their
investment if the institution fails;
and
• Administrators of employee
benefit plans, such as pension or
profit-sharing plans, who deposit
funds at banks. (See the box on
the right.)
Predicting when or if a bank will
fail is tricky business, especially if
you're not a trained financial
analyst. Basic data for each
federally insured bank and savings
institution can be obtained free of
charge at www.fdic.gov/bank/
individual/index.html on the
FDIC's Web site or, for a fee, it
can be ordered by calling 800945-2186. The average person
may have difficulty understanding
this financial information. The
12
FDIC does, however, make
available a list of private
companies that provide their
ratings and analyses of individual
banks and savings institutions,
often for a fee. The FDIC posts
this information on our Web site
at www.fdic.gov/bank/individual/
bank/index.html as a public
service and not as an endorsement
or confirmation of the companies
or their conclusions. If you don't
have access to the Internet at your
home or office, your local library
or a friend or relative with
Internet access can print out the
list for you.
You may wonder why the FDIC
and the other banking regulators
don't give out their ratings that
indicate whether an individual
bank is in good shape or not. It's
because the government tries to
get ailing banks to correct their
problems and return to health.
Disclosing the name of an
institution having financial
troubles could cause nervous
depositors to remove their funds
and, in turn, trigger bank failures
that could have been prevented.
"The FDIC is very strict about
who has access to the regulators'
bank ratings," says Serena Owens,
an examination specialist with the
FDIC's Division of Supervision in
Washington. "Even FDIC
employees can't get rating
information on individual banks
unless they need it to do their
jobs." lllil
Keeping Workers' Nest Eggs Safe
If you are an administrator of an employee benefit plan-perhaps
a 401(k), pension or profit-sharing plan for a corporation, small
business or professional office-you may have a special reason to
be concerned about a bank or savings institution's financial
condition.
By law, if the institution meets the capital levels specified in the
FDIC's deposit insurance rules-and most do-each employee's
share in these accounts at any one institution is covered for up to
$100,000, even if the total account itself equals much more than
that amount. But, if the institution doesn't have enough capital
(as defined by the institution's primary federal regulator) and it
later is closed by the government, those retirement funds will
qualify for much less insurance coverage-up to $100,000 in
total, not $100,000 for each person in the plan.
"The FDIC requires each insured institution to disclose to
administrators, in writing, whether it has met the necessary
capital levels and whether the maximum insurance coverage is
provided to those deposits," says Joe DiNuzzo, a Washingtonbased FDIC attorney. "If a banker you're dealing with is unaware
of these rules or fails to provide the required disclosures, you
may want to consider taking the money somewhere else."
The rules governing employee benefit plan accounts can be
complicated, so we encourage interested parties to contact the
FDIC's Division of Compliance and Consumer Affairs (listed on
Page 15 of this newsletter) with any questions or concerns.
FDIC Consumer News
Spring 2000
A New You for the New Millennium
Consider the start of the 21st century a good reason to fine-tune your finances. Here's
a simple plan.
Many of us make new year's
resolutions with good intentions,
only to see our plans fizzle. The
FDIC can't advise you on how to
eat better or exercise more, but
we can suggest ways to get your
finances in shape. And, we think
your chances for financial success
will be better in 2000 if you start
with a simple plan and the
attitude that it's a new you for the
new millennium.
FDIC Consumer News has put
together the following tips to help
get (or keep) your financial house
in order. We deliberately kept
our list short and our advice
manageable.
"If you want to be successful-to
make progress with your financial
resolutions by year's end-a plan
shouldn't be too broad or too
demanding," says Mike Turpenoff
of the FDIC's Office of the
Ombudsman in Washington.
"Most financial consultants will
tell people that even basic, easyto-take steps can improve
personal finances without using a
lot of time and energy."
Here's what we suggest you
consider:
1. Organize your financial
records.
Start by sorting your financial and
legal papers into categories for
easy reference.
Information about your savings
accounts (checking account,
certificates of deposit, etc.) and
investments (stocks, bonds,
mutual funds and the like) could
go into one "savings and
investment" portfolio.
Outstanding bills could go into
another folder that's easy to
remember and find. Documents
such as mortgage papers and old
FDIC Consumer News
tax returns could go into yet
another file. It also helps to label
your files clearly and even put
them in alphabetical order.
To further save time and reduce
confusion, shred and toss away
old bills, canceled checks, and
other documents that have no real
use for tax or other purposes. (For
example, most people probably
only need to keep old tax returns
and canceled checks for seven
years. You may want to discuss
specifics with your attorney,
accountant or another advisor.)
Good examples of your savings or
investment options:
• Federally insured, interestearning accounts at banks,
savings and loan associations,
and credit unions.
• Payroll deduction programs
offered by your employer that
enable you to invest in U.S.
Savings Bonds, tax-deferred
retirement accounts (typically
through mutual funds), or other
savings or investment plans.
Arranging and updating your files
also will help your family locate
important documents, such as
wills and insurance policies, in an
emergency.
Remember: Only deposits are
insured by the FDIC or, for credit
unions, the National Credit
Union Administration.
Investments are not protected by
the government against loss.
2. Find ways to spend less and
save more.
3. Choose and use credit cards
carefully.
Here's one easy way to get
started. On one side of a piece of
paper, jot down ways you might
be able to reduce your expenses.
(Examples: "Eat out less."
"Carpool to work instead of
driving alone.") On the other
side, mark down ways you can
increase income. ("Work overtime
once in a while." "Have a yard
sale.") Give this some serious
thought, and try to identify the
ideas that seem most likely to
work for you.
First, shop around for a good
deal. "All credit cards are not
created equal," says Kathleen
Nagle, a Senior Consumer Affairs
Specialist with the FDIC in
Washington. "There may be
substantial differences in interest
rates, fees, grace periods and
other terms." In general, if you
expect to carry a balance on your
card most months, try to find one
with a low interest rate (also
known as the Annual Percentage
Rate or "APR").
After you begin reducing expenses
and earning more money, take a
large chunk of that extra cash and
put it into savings accounts and, if
possible, into investments. "Many
financial consultants tell their
clients to consistently save money
on a defined schedule-even if it's
only $5 a week," says Turpenoff.
"You may be surprised how fast
savings will grow when you save a
specific amount on a specific
schedule."
You also have to manage your
credit cards responsibly. Some
suggestions: Try to pay all or
much of your credit card bill each
month. While it might be
tempting to pay only the
minimum monthly payment,
you're simply taking more time to
pay off your debt and paying far
more (perhaps thousands of
dollars) in interest charges.
continued on next page
Spring 2000
13
You may be able to reduce the
amount of interest you pay by
consolidating several credit card
debts into one or two cards that
offer a low interest rate.
To avoid paying extra fees, pay
your bill on time and never
exceed your credit limit. For
more about your card's fees and
rules, see your card contract or
speak to a customer service
~epresentative from the card
issuer.
Final Thoughts
Some people may have serious
debt problems, for any number of
reasons. They especially need to
have a reasonably accurate idea of
their expenses and a plan for
better reducing their debts.
If you've got serious money
management troubles and you
can't solve them on your own,
consider enlisting the help of
your banker, lawyer or
accountant. There also are
respected organizations that, for
free or at low cost, advise people
with debt and budgeting
problems, and even help negotiate
repayment plans with lenders.
To find a legitimate debt
counselor-and avoid "credit
repair clinics" that charge
excessive fees for questionable
services-start by contacting your
local government's consumer
affairs department or a nearby
Better Business Bureau.
If you follow a good number of
our suggestions, we'll offer one
more bit of advice. Congratulate
yourself. You should feel better
knowing that you've done some
simple things that could
dramatically improve the way yol1
manage your personal finances. ill!!
It's the Year 2000. Now What?
Errors and glitches, Y2K-related or not, can always
occur, so keep paying attention to your finances
It's well beyond midnight, January
1, 2000, and so far, so good. In
fact, very good! The Year 2000
(Y2K) date change came and went
without serious disruptions for
banking customers, thanks to
preparations by the financial
industry and guidance from
government regulators that
ensured institutions' computers
would work smoothly and that
isolated glitches would be
addressed.
While credit cards, debit cards,
checks, automated teller machines
and other banking services appear
to be working normally, it's still
important to check for the
occasional error. (That was true
before Y2K, too.) What do we
recommend?
As always, keep bank statements,
receipts and other records of your
deposits, investments, ATM
transactions, loan payments and
other business. In the unlikely
event there are errors, these
documents will help your bank
and you resolve them.
Continue to pay attention to your
finances. Balance your checkbook
regularly. Review your bank
statements, credit card bills and
similar mailings, to make sure
they're accurate. Contact your
institution immediately if, for any
reason, there's a discrepancy in
your records or if you notice
something suspicious, such as a
missing payment or an
unauthorized withdrawal.
Remember that thieves can be
very creative and convincing in
order to trick people into handing
over cash or divulging valuable
information. So, be wary of
anyone who contacts you
claiming to be a bank employee, a
police officer or some similar
professional needing to "verify"
that all is well with your bank
account. It may really be a scam
to get you to send money or
provide personal details, such as
your Social Security number or
bank account numbers, which a
crook could use to remove money
from your accounts or order new
credit cards in your name.
Finally, if you have any Y2K
question or problem not resolved
by your financial institution,
contact the appropriate
government regulator listed on
the next page of this newsletter. lilli
Coming Soon ...
Readers of FDIC Consumer News know that
Congress recently passed legislation in response to
public concern over the adequacy of consumer privacy
laws. Watch for future coverage of:
• Upcoming rules from federal banking regulators
implementing the new privacy laws
• An overview of what technological advances such as
Internet banking and commerce mean for consumer privacy
• Tips and information to help you protect yourself
14
FDIC Consumer News
Spring 2000
For More
Information
For ques-tions about
consumer or dvil rights laws, or
complaints involving a spedfic
institution: First attempt to resolve
the matter with the institution. If you
still need assistance, write to the
institution's primary regulator listed
on this page. Although the FDIC
insures nearly all banks and savings
associations in the United States, the
FDIC may not be the primary
regulator of a particular institution.
For questions about
deposit insurance coverage:
The FDIC insures deposits up to
$100,000 at federally insured banks
and savings associations. For more
information, contact the FDIC's
Division of Compliance and
Consumer Affairs. The National
Credit Union Administration insures
deposits up to $100,000 at federally
insured credit unions. Addresses
and phone numbers are listed
on this page.
Federal Deposit
Insurance Corporation
Supervises state-chartered banks that
are not members of the Federal
Reserve System. Insures deposits at
banks and savings associations.
For information about consumer
protections, including deposit
insurance:
For ques-tions, concerns or complaints
about the Federal Deposit Insurance
Corporation:
FDIC Division of Compliance and
Consumer Affairs
550 17th Street, NW
Washington, DC 20429
FDIC Office of the Ombudsman
550 17th Street, NW
Washington, DC 20429
FDIC
550 17th Street, NW
Washington, DC 20429
Home Page: www.fdic.gov
Phone: (800) 934-3342
TTY: (800) 925-4618
Phone: (800) 250-9286
Fax: (202) 942-3040
E-mail: ombudsman@fdic.gov
Fax: (202) 942-3427
E-mail: consumer@fdic.gov
Office of the Comptroller
of the Currency
Charters and supervises
national banks. (The word
"National" appears in the
name of a national bank, or
the initials "N. A." follow
its name.)
Customer Assistance Unit
1301 McKinney Street
Suite 3710
Houston, TX 77010
Phone: (800) 613-6743
Fax: (713) 336-4301
Home Page:
www.occ.treas.gov
E-mail:
consumer.assistance
@occ.treas.gov
Federal Reserve System
Supervises state-chartered
banks that are members of
the Federal Reserve System.
Division of Consumer
and Community Affairs
20th Street and
Constitution Ave., NW
Washington, DC 20551
Phone: (202) 452-3693
Fax: (202) 728-5850
Home Page:
www.federalreserve.gov
National Credit Union
Administration
Charters and supervises
federal credit unions.
Insures deposits at federal
credit unions and many
state credit unions.
Office of Public and
Congressional Affairs
177 5 Duke Street
Alexandria, VA 22314
Phone: (703) 518-6330
Fax: (703) 518-6409
Home Page:
www.ncua.gov
E-mail:
pacamail@ncua.gov
Office of Thrift
Supervision
Supervises federally and
state-chartered savings
associations plus federally
chartered savings banks.
(The names generally
identify them as savings and
loan associations, savings
associations or savings
banks. Federally chartered
savings associations have
the word "Federal" or the
initials "FSB" or "FA" in
their names.)
Consumer Affairs Office
1700 G Street, NW
Washington, DC 20552
Phone: (800) 842-6929 or
(202) 906-6237
Home Page:
www.ots.treas.gov
Some banking matters may involve state laws. For assistance, contact the appropriate
state financial institution regulatory agency or state Attorney General listed in your
telephone book and other directories.
FDIC Co11m111er News
Sprin 2000
E-mail:
consumer.complaint
@ots.treas.gov
FDII
Federal Deposit Insurance Corporation
Washington, DC 20429-9990
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