Warning Signs of Phantom Banks

Federal regulators say there are warning signs that can tip off consumers to phantom, or phony, banks:

* Newspaper ads, letters or pitches for letters of credit, prime bank notes, or other investments that promise returns beyond current market rates.

* Ads for loans that consumers can obtain despite a bad credit rating.

* Loans or letters of credit that require up-front fees.

* Methods of obtaining loans or bank notes that are sketchy, or overly complex.

* Transaction involves the use of offshore accounts or financial institutions in the Caribbean.

* Name-dropping, or claims that the investments or loans are arranged or somehow backed by large, globally recognized financial institutions or a “big-name player.”

* Documentation looks amateurish, contains misspellings or grammatical errors.

* A bank is not listed or registered with state or federal agencies.

* A bank’s office is not at the address it gives out, and the phone number is either unlisted or out of service.