Dedicated to Deposits: Deals, Data, and Discussion

Researching Federal Savings

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An investigation of the suspicious website, Federal Savings, was described in this Bankrate.com article. Here's how it summarized its findings:
without an extensive investigation there's no way for us to say whether Federal Savings's offer was legitimate. What we can say is that there are many signs pointing to potential problems and no answers to any questions.

It's interesting to note that this site recently changed its "certificate deal" from a 8.85% yield to a 6.25% yield which makes it sound more believable.

Just like my post from last week, the Bankrate article provides links to the FDIC and NCUA database. If you're looking for a CD or savings account, I highly recommend you stay with federally insured banks or credit unions. In that post I describe how you can confirm a website is connected to a federally insured institution. In most all my posts on deals, I provide a link to the FDIC or NCUA page with the information on the institution. If you're willing to take some risk for a potentially higher yield, I recommend sticking with the major brokerages like Fidelity, Vanguard, ETrade, etc.


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Comments
10 Comments.
Comment #1 by Anonymous posted on
Anonymous
I called Federal Saving several times and received their recording to leave a message. After reading the artricle from bankrate.com, and doing my own personal research, I would definitely stay away from this offering even though now the rate sounds more realistic. Are they operating out of some jail or work study release program? Could well be.

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Comment #2 by Anonymous posted on
Anonymous
There are a couple of threads on FatWallet about this scammer. The first one, with the most information (located on a boat dock in Seattle!!) is at http://www.fatwallet.com/forums/messageview.php?start=0&catid=52&threadid=694913

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Comment #3 by Anonymous posted on
Anonymous
In regards to the Federal Savings, not sure if it has been mentioned yet, but when opening the sign up page,where you enter your SS#, B-day, and so on...the site is not secure. As I am typing this,it mentions this offer is good till Feb,7 2007. This Web page has much to question and is a perfect example for all to see what to look for with every bank when investing. Be careful everyone!

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Comment #4 by Anonymous posted on
Anonymous
After filling out random info on the unsecured application, you get a pretty lengthy and long document/ agreement that looks nothing like a CD agreement at banks. Worse, it has statements about if the "maker" is in default. It also states it's governed in DE (the phone number they provide, 302area code, by reverse lookup goes to Wilmington DE, Cavalier Telephone provider, land line, unpublished; no name or corporation given.) The agreement states it’s in DE, but later says the governing law is in King County, in WA. So much of it is suspicious. The agreement certificate claims I have 2 days to send funds; by mail (to a WA address), or by wire (to Wells Fargo Bank, in Seattle WA, with account # and correct WellsFargo ABA#.) The website also says it's a subsidiary of First Bancshares Inc, and lists websites of several real banks that it claims are part of the First Bancshares Portfolio. The banks it lists include Peoples Bank (in CT), Northern Trust (IL), and few others that are clearly not. Even the name, federal savings “the unbank”. On the bottom of homepage, it states “a fixed-rate certificate does not represent a bank checking or savings account, federally insured deposit account, loan or security.” Then what is it??? What else??? A whois.net lookup on the website gives the following: federalsavingsllc.com (registered as private under domain-host dotster.com) and federalsavingscorp.com (private with network solutions). It registered its site with google ads, since it appears as sponsored-link with savings high yield or bank rate, or similar keyword search. Beware!!!

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Comment #5 by Banking Guy (anonymous) posted on
Banking Guy
Thanks for investigating this. There does seem to be many suspicious issues related to this business.

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Comment #6 by Anonymous posted on
Anonymous
I don't see anything here that shouts "scam", though there are definitely some curious aspects to how they present themselves. The lack of an SSL form is certainly a concern, and as far as translusence, you're left wondering about some things.

However, compared to other programs that come and go in a matter of days (your HYIP's for example), this looks much more harmless. No FDIC coverage means you have to accept the risk of not being insured if the company goes under. Considering the number of investment vehicles out there that are not insured (mutual funds, for one), this shouldn't be unfamiliar territory for your average investor.

The true test will be if people start being paid on certificates that reach maturity. If Federal Savings is still around in six months, you can probably lower the alert level from orange to yellow ;)

They appear to be at the top of the sponsored links for several google searches, so someone's got some money to spend here. That 'boat dock' mentioned above is actually some of Seattle's most expensive commercial waterfront property.

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Comment #7 by Banking Guy (anonymous) posted on
Banking Guy
In my opinion, the website needs to be more upfront in describing the investment. When you buy things like mutual funds, you can review a prospectus to get an understanding of the investment.

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Comment #8 by Anonymous posted on
Anonymous
The Fatwallet thread on Federal Savings reports that Washington State has issued a cease and desist order against Federal Savings, alleging violations of Washington law.

Do you realize that up to a few hours ago Federal Savings was running ads on this web site?

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Comment #9 by Banking Guy (anonymous) posted on
Banking Guy
Thanks for the info. Here's the link to the FW thread. I put in blocks to those ads a few weeks ago, but looks like they kept changing their web address (Ads can only be blocked by the URL).

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Comment #10 by Banking Guy (anonymous) posted on
Banking Guy
A reader just gave the URL to the Washington State Cease and Desist Order. Here's the state page.

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