FINRA issued an investment alert regarding advertisements promoting high yield CDs that offer rates significantly higher than other bank products, warning investors that such an ad may instead be a marketing ploy and sales pitch for a potentially risky investment.
According to FINRA, the promotional ploy may require investors to show up at an office or branch and interact with a salesperson or other representative, who will try to sell an alternative product different from a CD. The promotion may also require a notable minimum investment, such as $25,000.
In this bait-and-switch scheme, the alternative, non-CD product being pitched—often an annuity—is typically riskier and subject to significant fees and commissions that otherwise wouldn't have plagued an actual FDIC-insured CD product.
FINRA also notes that even after declining the annuity product and opting for a "high yield CD," the "high yield" be comprised of a "bonus" plus the CD's actual average percentage yield (APY). If the CD itself advertises a certain yield, for instance, investors may be wise to confirm that the entirety—or significant majority—of that the published percentage is indeed the CD's actual APY.
If you have invested with a broker, financial adviser or firm whose high-yield CD advertisement turned into a bait-and-switch scheme that has proven harmful to your investments or interests through the accumulation of excessive or unnecessary fees or commissions, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
News Release: FINRA Warns High-Yield CD Offers Can Be Bait for High-Commission Investments (FINRA)