The FINRA Investor Education Foundation has issued an investor alert regarding promotions about certificates of deposit (CDs) promising interest rates that are substantially higher than current averages. FINRA has observed offers for “low-risk” products with outsized returns. Investors should be wary of unsolicited emails and calls that offer outsized interest from financial institutions, including banks and brokerage firms, particularly those with which you have not had a business relationship.

In one instance of suspected email fraud, the pitch appeared to come from a large U.S. bank that supposedly was promoting a CD offered by an international banking partner. At a time when most CDs at U.S. banks and credit unions were offering just over one percent for a comparable term, this pitch offered a CD with a 15 percent yield, and contained instructions on how to wire funds.

In another instance of suspected phishing fraud, a caller posed as a representative from a legitimate brokerage firm and claimed to offer information about CDs that were well above the best rates in the market. The offer appeared to be an attempt to gather personal financial information.

Red flags that indicate 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.”
  • Promotions that claim to be directed at “best customers” and that require extremely high minimum investments (for example, $100,000 U.S. Dollars).

For more information, FINRA’s bulletin can be found at www.saveandinvest.org.