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News Release: 03-03

GRAY DAVIS, Governor
Date:

DEMETRIOS A. BOUTRIS, Commissioner

California Regulators Warn Seniors to Beware of High-Yield CD Bait-and-Switch Scheme

**INVESTOR ALERT**

 

Sacramento, March 20, 2003 — The Department of Corporations today warned consumers to beware of a bait-and-switch scam using CDs to lure seniors into buying risky financial products.

"If it sounds too good to be true, it probably is," said California Corporations Commissioner Demetrios A. Boutris. "We are seeing a rash of unsavory vendors luring consumers to their offices with the promise of high-yield CDs and then delivering a hard sell on financial products that are much less sound."

Because CDs are a favored investment tool for seniors, ads have been placed around the state offering impossibly high rates on CDs that are purported to be FDIC-insured. Potential customers who respond to the ads are told that they must go to the company office and obtain more information in person. Once there, the value of the advertised CD is downplayed and a risky, uninsured financial instrument is offered instead.

Before purchasing any financial product, prospective investors are advised to visit the Department of Corporations' Web site at www.corp.ca.gov or to call 1-866-ASK-CORP to find out if the company offering the investment is licensed.

The Department of Corporations is California's Investment and Financing Authority, reporting to the Business, Transportation and Housing Agency and the Governor. The Department is responsible for the regulation, enforcement and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending and residential mortgage lending. For further information or to obtain a complaint form, see the Department's Web site at www.corp.ca.gov or call 1-866-ASK-CORP (1-866-275-2677).

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