Be wary of high-yield Internet offers
By Laura Bruce • Bankrate.com

Update, Feb. 2, 2007: Earlier this week we published this story about a suspicious Web site offering an "Internet-only offer" for an "Internet term certificate" with an 8.85 percent yield. In the story, we noted that after a week's worth of phone calls and e-mails to the company, none of which were responded to, the site was removed from the Web.

Well, it's back, under the URL www.federalsavingsllc.com. This is how it looks as of today:

Federal Savings as of Feb. 2, 2007

Notice that the FDIC logo, described in the original story, has been removed from the corner of the home page.

Laura Bruce is making phone calls again to try to speak with someone at this institution. But in the meantime, we want to alert readers to hold off on submitting information to the site. The site is not secure, and it asks for everything from your Social Security number and driver's license to mother's maiden name. We'll keep you posted on this Web site as Laura continues to report on it.

Here's a tale that's solidly from the "if it sounds too good to be true ..." category. A Web site has been offering a high-yield investment that was nearly 3 percent higher than other institutions were offering. An offer this enticing, though, needs to be checked out carefully.

The offer was for an 8.85 percent, six-month, "Internet term certificate" from an entity called Federal Savings. To an unsuspecting consumer or someone who's perusing ads too quickly, the ad looked like scores of online ads you might see from banks, thrifts or credit unions looking to boost deposits or gain customers by offering a very attractive yield on a certificate of deposit. OK, the yield was suspiciously high, but some people might think they've stumbled on something terrific and chase it.

The site and the investment were brought to our attention by an e-mail from a reader who wondered whether the bank and the offer were "for real." Maybe the offer was legitimate, maybe not. But enough red flags were raised while researching the site that we thought it worthwhile to pass the information on to you.

Take a look at this image of the home page from the day we first saw it.

Federal Savings USA Web site

Federal Savings nicknamed itself "the unbank." That's appropriate, considering we couldn't find a bank matching its description in any federal banking regulatory database. The institution's Web site address was Federal Savings USA; no luck searching for that either.

A consumer might confuse this "term certificate" with a bank CD, which is covered by FDIC insurance if bought from an FDIC-insured institution. Glance quickly at the lower right corner and you'll see the letters FDIC, but it's not the FDIC logo. Instead it's just a link to a page telling you what's not covered by the FDIC.