Remarks by
Donna Tanoue
Chairman
Federal Deposit Insurance Corporation
Before A
Luncheon
Sponsored
by
the
Milwaukee Hispanic Chamber of Commerce
Milwaukee, Wisconsin
September 30, 1999
You get a call from a person who identifies himself as a bank employee who says he is
testing your ATM card for the Year 2000 and he asks you to give him your ATM account
number and Personal Identification Number over the phone so that the bank can make
the account Y2K ready. Would you? Some people do.
For most of us, the Year 2000 date change is a technical challenge for computer
systems - a challenge that technicians are addressing. For some people - scam artists -
it is an opportunity to cash in on people's fears about the unknown.
The Federal Deposit Insurance Corporation - and other banking regulators, as well as
bankers - have heard stories about how these scam artists are operating - including
here in Wisconsin - as the Wisconsin Bankers Association will tell you.
I'm here today to talk about: One, the most common scams - and others we have heard
about.
Two, why the fear on which these scams are based is unfounded.
And, three, what consumers should do to protect themselves from Y2K scams.
Usually, it seems, the scam artists take an age-old scam and put a Y2K twist to it.
Sometimes, they use their creativity to come up with something new. Let's look at some
of these scams.
First, there is the "Trojan Horse" Book Safe. This "safe" is an ordinary hardcover book
with a large mid-section of pages cut out. Inside the cutout is a money tray that holds up
to 100 bills. The product is being offered to consumers as a way to hide their cash - the
cash that they take out of federally-insured financial institutions such as banks and
savings institutions.
The companies that produce these book safes ship them directly to the customer's
home - and I've heard that one even markets the safe on the Internet. Of course, the
Donna Tanoue
Chairman
Federal Deposit Insurance Corporation
Before A
Luncheon
Sponsored
by
the
Milwaukee Hispanic Chamber of Commerce
Milwaukee, Wisconsin
September 30, 1999
You get a call from a person who identifies himself as a bank employee who says he is
testing your ATM card for the Year 2000 and he asks you to give him your ATM account
number and Personal Identification Number over the phone so that the bank can make
the account Y2K ready. Would you? Some people do.
For most of us, the Year 2000 date change is a technical challenge for computer
systems - a challenge that technicians are addressing. For some people - scam artists -
it is an opportunity to cash in on people's fears about the unknown.
The Federal Deposit Insurance Corporation - and other banking regulators, as well as
bankers - have heard stories about how these scam artists are operating - including
here in Wisconsin - as the Wisconsin Bankers Association will tell you.
I'm here today to talk about: One, the most common scams - and others we have heard
about.
Two, why the fear on which these scams are based is unfounded.
And, three, what consumers should do to protect themselves from Y2K scams.
Usually, it seems, the scam artists take an age-old scam and put a Y2K twist to it.
Sometimes, they use their creativity to come up with something new. Let's look at some
of these scams.
First, there is the "Trojan Horse" Book Safe. This "safe" is an ordinary hardcover book
with a large mid-section of pages cut out. Inside the cutout is a money tray that holds up
to 100 bills. The product is being offered to consumers as a way to hide their cash - the
cash that they take out of federally-insured financial institutions such as banks and
savings institutions.
The companies that produce these book safes ship them directly to the customer's
home - and I've heard that one even markets the safe on the Internet. Of course, the
companies then have the customer's home address. And, of course, come January 1,
they will know where the money is - not in the bank, where it is insured and secure - but
on the bookshelf, where it is neither.
Second, there is the credit card "sticker" shock. The scam artist calls, posing as a
service representative from your bank or your credit card company. The caller says that
the company is sending out a magnetic strip to go on the back of your credit card to
make it ready for Y2K. And the caller also says that anyone who doesn't have this
replacement strip will be unable to use his or her credit card come January 1. The caller
then asks for your credit card number for verification. If you give it, he - or she - will
order a new credit card and go on a shopping spree.
In a variation, the caller may say that, as part of a Year 2000 fix of the bank's
computers, you must confirm your bank account number. The caller then orders new
checks in your name - and goes shopping.
Third, there are variations on one of the oldest scams around - "I'll hold your money so it
will be safe." For example, the caller gives you an unsolicited offer to "hold" your money
until after January 1, 2000, in a special "bond" account that he or she says is Year 2000
ready. Or the scam artist targets the retired by calling and claiming to be from the
federal government and then warns that they will not get their Social Security checks
and that paper money won't be any good. He tells them to empty their bank accounts
and send the cash to him. He'll turn it into gold, he says, and will send it back to them.
The cash disappears - into the caller's pocket. Finally - the "PC" scam. We have heard
of callers who claim that they will make your personal computer Y2K ready, but who
might be scam artists who, once they are in your computer, steal bank account
information from your software or even introduce a program that will transfer your
money to them later.
Again, all these - and other - scam artists are trading on fear - the fear of the unknown.
But - when it comes to banking and the Year 2000 - we've nothing to fear but fear itself.
Federal and state banking regulators have spent years working with banks and savings
institutions to get them ready for the century date change. All FDIC-insured financial
institutions have had at least two thorough Y2K on-site exams, and we've found that
more than 99.7 percent of FDIC-insured financial institutions are prepared for Y2K. That
is to say, we have rated more than 99.7 percent as satisfactory.
As of September 15, there were 27 FDIC-insured financial institutions that had less than
satisfactory Year 2000 assessments - 27 out of the 10,273 banks and savings
institutions that we insure. Of the 27, only seven are rated unsatisfactory, with 20 rated
"needs improvement." In other words, 10,246 banks and savings institutions were rated
satisfactory.
they will know where the money is - not in the bank, where it is insured and secure - but
on the bookshelf, where it is neither.
Second, there is the credit card "sticker" shock. The scam artist calls, posing as a
service representative from your bank or your credit card company. The caller says that
the company is sending out a magnetic strip to go on the back of your credit card to
make it ready for Y2K. And the caller also says that anyone who doesn't have this
replacement strip will be unable to use his or her credit card come January 1. The caller
then asks for your credit card number for verification. If you give it, he - or she - will
order a new credit card and go on a shopping spree.
In a variation, the caller may say that, as part of a Year 2000 fix of the bank's
computers, you must confirm your bank account number. The caller then orders new
checks in your name - and goes shopping.
Third, there are variations on one of the oldest scams around - "I'll hold your money so it
will be safe." For example, the caller gives you an unsolicited offer to "hold" your money
until after January 1, 2000, in a special "bond" account that he or she says is Year 2000
ready. Or the scam artist targets the retired by calling and claiming to be from the
federal government and then warns that they will not get their Social Security checks
and that paper money won't be any good. He tells them to empty their bank accounts
and send the cash to him. He'll turn it into gold, he says, and will send it back to them.
The cash disappears - into the caller's pocket. Finally - the "PC" scam. We have heard
of callers who claim that they will make your personal computer Y2K ready, but who
might be scam artists who, once they are in your computer, steal bank account
information from your software or even introduce a program that will transfer your
money to them later.
Again, all these - and other - scam artists are trading on fear - the fear of the unknown.
But - when it comes to banking and the Year 2000 - we've nothing to fear but fear itself.
Federal and state banking regulators have spent years working with banks and savings
institutions to get them ready for the century date change. All FDIC-insured financial
institutions have had at least two thorough Y2K on-site exams, and we've found that
more than 99.7 percent of FDIC-insured financial institutions are prepared for Y2K. That
is to say, we have rated more than 99.7 percent as satisfactory.
As of September 15, there were 27 FDIC-insured financial institutions that had less than
satisfactory Year 2000 assessments - 27 out of the 10,273 banks and savings
institutions that we insure. Of the 27, only seven are rated unsatisfactory, with 20 rated
"needs improvement." In other words, 10,246 banks and savings institutions were rated
satisfactory.