Wash. Regulator Is Investigating Alleged Bogus CU Scam

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It calls itself Zurich CU in advertisements in Washington state but is based here in Georgia, but there is no record of any such credit union being regulated by either the Georgia or Washington state regulators, nor does NCUA have any record of any credit union bearing the Zurich name. And no one can find them.

"They are not chartered here, and they are not federally insured," said Linda Jekel, director of the CU Division. "We first found out about this when one of our credit unions in Everett called and said, 'have you ever heard of this credit union?' after they saw an ad in a local newspaper for Zurich Credit Union. We contacted the newspaper, and they have pulled the ad, and they gave us an address in Ontario, Canada, so we are checking in with the Ontario regulator."

American Share Insurance does not have a Zurich CU among its clients, according to ASI's Dennis Adams.

When The Credit Union Journal called the toll-free number for Zurich CU to find out what its field of membership is, the person answering the phone didn't know what a "field of membership" is and explained that Zurich CU doesn't actually make any loans-it's a loan referral service.

If the scenario sounds familiar, it's because there was a similar scam in which someone allegedly attempted to steal the identity of Century CU, St. Louis-right down to its logo and website.

Reported to Everyone

"We've reported this to everyone we can think of," said Amy McLard, vp- public/legislative affairs at the Missouri CU Association. "In fact, the paper in California (that ran one of the bogus Century CU ads) has reported on it, too. They did a story about it when they realized that the ad was bought with a stolen credit card. We've gotten the word out to everyone we possibly can, the FTC, the FBI, the local police, you name it. But it's a very slow-moving process."

Indeed, the toughest part is tracking down the people who are billing themselves as a credit union, she noted. "Sure, (investigators) would send out cease-and-desist letters to them, but they don't know where to be sending them," she explained. "It's a frustrating endeavor."

The Washington League's Linda Wagener Padden echoed those sentiments. "Until we get an address, we can't send a cease-and-desist letter, and we can't find it," she told The CU Journal.

And the situation definitely isn't regional in nature, given that the WCUL heard from a consumer all the way from Virginia. "We think she might have thought she was calling Washington, D.C., instead of Washington state, but the bottom line is, she's lost money," Wagener Padden related. "Apparently she was answering an ad she saw in her local newspaper in Virginia. When she tried to apply for a loan, she was told that her credit history was so bad that she'd have to send them money first."

Nearly $1,000 later, that consumer still hasn't gotten her loan or heard back from the company she believed to be a credit union.

There has even been talk of connections to the Canadian mob, she added.

Bank of America Branch Reached In Error

Ironically enough, the phone number that the DFI tried to call was off by just one number-and was for a Bank of America branch, Jekel related.

"We're going through the research before we report this to the FBI, but that will be the next step," she offered. "Finding them is always the hard part. And we don't want to tip our hand too soon, or they'll just change their name, and we'll have to start all over again."

Website Shut Down

At press time, the alleged CU's website had been shut down by the provider. But the Washington league reported that the site had been a shell home page with nonworking links and advertised a 7.9% annual percentage rate on loans as low as $5,000 and compared that rate to several banks: Egg Loan, Abbey National, Halifax, First Direct, and HSBC.

In the Century CU case, the firm, which also goes by Century Credit Service, gave an address in Lakeland, Fla. But when a nearby Florida credit union offered to go check out the address for Century CU in St. Louis, the address turned out to be that of a local newspaper with no ties to Century Credit Service.

NCUA has faxed a cease-and-desist letter to the fax number listed in the Century CU advertisement because in copying the real Century CU's website, the firm used the NCUA insured logo without the agency's permission.

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