U.S. Treasury Reports Surge in Savings Bond Fraud

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The California and Nevada Credit Union Leagues recently met with the U.S. Department of the Treasury regarding a surge in fraudulent or counterfeit U.S. savings bonds being redeemed at credit unions and other financial institutions across the country. It’s been estimated that between $30 million and $50 million in losses have been incurred since 2020 when this issue first surfaced.

Here is what is known so far:

  • The scam often begins with a new member opening an account and soon after presents several savings bonds for redemption at a branch location. However, recently there has been an increase in fraudsters creating mule accounts using stolen identities to redeem bonds. 
  • The members withdraw the funds before the credit union is made aware of a debit adjustment from the U.S. Treasury indicating the savings bonds are fraudulent.
     

What credit unions should do:
The U.S. Treasury announced that it updated the Guide to Cashing Savings Bonds (the Guide)—formerly the Treasury Identification Guide for Cashing United States Savings Bonds—to give credit unions and other financial institutions greater flexibility to prevent bond fraud, including:

  • Credit unions do not have to redeem bonds for non-members. Non-members should instead be referred to the U.S. Treasury Cashing (Redeeming) EE or E Savings Bonds website for validation and redemption.
  • Credit unions can determine how long to wait before redeeming new or existing member savings bonds. The U.S. Treasury recommends a waiting period of at least 12 months.   
  • If a loss is experienced due to a fraudulent bond transaction, credit unions should notify the Fiscal Service immediately and an investigation will be launched to determine eligibility for reimbursement for these losses. 
  • Any bond transaction that seems suspicious, regardless of membership status, should be directed to the U.S. Treasury office for validation.

For more information, please refer to the June 29 Risk Alert

 

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