Verifying Internet Banks with the Help of the FDIC

Last week the FDIC released its Fall 2014 consumer news. Thanks to DA member Pearlbrown for reporting on this in the DA forum. One of the topics in the consumers news I found very interesting. It’s about how to verify an institution's true identity. When you see a web site that appears to be an internet bank offering competitive deposit rates, how can you be sure it’s a legitimate bank that’s FDIC insured? This can be difficult due to banks that have multiple web sites and trade names.

Last year I described the complications of verifying internet banks in my post "Understanding the Banks Behind the Internet Banks". For some internet banks, it’s easy to verify that it’s an FDIC member. For example, you can verify CIT Bank by searching for "CIT Bank" at the FDIC Bank Find tool. This will take you to a FDIC page for CIT Bank that will list the FDIC certificate number (35575) and its website address (bankoncit.com). This website address takes you to the bank. This gives confidence that bankoncit.com is legitimate and is a FDIC member.

It can be difficult to verify some internet banks. Incredible Bank is one example. You won’t find "Incredible Bank" using the FDIC Bank Find tool. Incredible Bank’s website (incrediblebank.com) does say that Incredible Bank is a division of River Valley Bank. However, River Valley Bank’s website (rivervalleybank.com) has no mention of Incredible Bank.

DepositAccounts.com has verified Incredible Bank and other internet banks. We have separate bank pages for each internet bank, and these bank pages will list the parent bank and its FDIC information. You can use our bank find page to search for these internet banks.

Including the internet banks and internet bank web site addresses in a database appears what the FDIC is working on. According to the FDIC article:

The good news is that the FDIC is collecting from all insured banking institutions the official Web addresses for all public sites they use to solicit deposits from consumers. With that information, an FDIC Deposit Insurance Specialist can confirm if a Web site belongs to an insured bank by another name. If the Web address provided by the consumer does not belong to an insured bank, the site may be affiliated with a nonbank financial organization. Or, it could be a fraudulent site set up by criminals to entice people into transferring money or disclosing personal information for use in committing identity theft.

In the future, you should be able to find an internet bank from the FDIC web site. According to the FDIC, "until then, you can call the FDIC at 1-877-275-3342 and ask to speak to a Deposit Insurance Specialist who will help to make sure you are fully insured." I gave this a try, and an FDIC agent wasn’t able to verify an internet bank’s web site address. She instructed me to find the bank mentioned on the web site, and call the bank to confirm the internet bank web site. Hopefully, the FDIC will soon have its web site updated to allow us to find internet banks.

This issue of internet banks and trade names does not only apply to banks. It also applies to credit unions. There are a few credit unions in the nation that operate internet credit unions. For example, Quabbin Online Credit Union (quabbinocu.com) is a division of Athol Credit Union (www.atholcreditunion.com), and there is no mention of Quabbin at the Athol Credit Union web site. In addition to internet banks, several credit unions operate branches under different trade names. This is often due to acquisitions. For example, Chartway Federal Credit Union operates Heritagewest Credit Union that’s located in Utah. It was merged into Chartway Federal Credit union in 2010 after being liquidated by the NCUA. Chartway decided to maintain the trade name "Heritagewest" and its web site address heritagewestcu.com.

Like the FDIC, the NCUA’s credit union research tool currently can’t be used to find internet credit union names and trade name.