As I was surfing around the Office of the Comptroller of the Currency (OCC), I came across a list of unauthorized banking alerts. One from last year caught my eye. Here's the alert:
RE: First National Bank of Bedrock
The Office of the Comptroller of the Currency (OCC) has identified a Web site claiming to be associated with a national bank named First National Bank of Bedrock. Please be advised that neither the OCC nor any state banking authority has authorized the above-mentioned entity to operate as a bank or to conduct any kind of banking activities.
The Web site is being used to offer deposit accounts, investments, debit cards, and credit cards. The operator of this site is unknown, and the contact information listing Bedrock, Colorado could not be verified.
I would be willing to bet that no one gave this site their personal information. The alert and closure of this site by federal regulators even made the news.
For this Bedrock online bank case, anyone should have been able to tell that this was a joke (except perhaps the person reporting it to the feds and the feds themselves). But this does highlight a worry for many about online banks. How do you really know that the online bank website is legitimate?
If you stick with the major online banks that have been followed by web forums and the media, you should be safe. A serious scam website may be able to exist for a few days, but before long it will be found out and shut down.
But it would be nice if there were a system to ensure online bank websites are legit. The FDIC does have a bank find tool that allows you to locate a FDIC-insured institution. It also provides the web address of the institution. However, the web address is for the parent bank, not its online unit. For example, for Emigrant Savings (the parent of EmigrantDirect.com) it lists the web address www.emigrant.com. How do we know if EmigrantDirect.com is really part of Emigrant.com? Could someone register EmigrantDir.com and claim to be part of Emigrant.com?
One useful check is to see who has registered the domain. For example at godaddy.com it shows the registrant of emigrantdirect.com to be Emigrant Savings Bank. I don't think this really proves the link either, but at least it's another check.
But as I mentioned previously, when you see a website referenced by many places (such as by searching for it on Google), and the FDIC and domain registrant information check out, it's a pretty safe bet that the site is legit. The FDIC also has some tips about safe internet banking. Hopefully, the FDIC will eventually include the web addresses of the online bank unit with the each bank.