Loans and Investments

Investing

There is no easy way to make money. Above-market rates with little or no risk do not exist. Higher returns come with higher risks. In general, this means that the more an investment promises to pay, the more likely you are to lose a portion of that investment. Accordingly, before making an investment, you should determine whether you can afford to lose the money you are investing. If you are counting on the money for retirement, you should only put it in a safe and reliable place. You should also research the seller as much as possible, and check with regulatory agencies (listed below) to see if the seller is properly licensed. For more information and tips to consider when investing, see our flyer entitled "Don't Throw Your Retirement Savings Down the Drain."

Investment Fraud

Investment scams have bilked people out of their life savings. One of the more common investment scams in the marketplace involves a con artist who calls you and offers to sell you an “investment opportunity.” But in order to get in on this great “deal,” the con artist states that you must send him money that day (usually via a wire transfer or reloadable card). Once you send the money, the con artist disappears and you never see any returns on the “investment.” See our flyer entitled "Don't Throw Your Retirement Savings Down the Drain" for more information on investment fraud.

Annuities

Annuities are complicated investments that can have complex features of both insurance and securities products. Annuities can be structured in many different ways, including fixed annuities, variable annuities, immediate annuities, deferred annuities, etc. Before investing in an annuity, you should determine which, if any, of these products suit your future plans and financial needs. You should also review the terms and shop around before agreeing to invest. Be on guard against unscrupulous agents who may misrepresent the terms of their annuities or attempt to sell you annuities that you cannot afford or are otherwise not suitable for your situation. More information on annuities is available in our flyers entitled "Annuities: Beware of Unsuitable Investments for Seniors" and "Internet Loans."

Reverse Mortgages

A reverse mortgage is a loan that allows homeowners 62 and older to borrow against their home equity without having to repay the money until the home is sold or they move. The homeowner may receive the money in a lump sum or installments. If you are considering a reverse mortgage, carefully evaluate whether a reverse mortgage is suitable given your needs and circumstances and consider whether there are other alternatives that may work better for you. Avoid those who may want to steer you into a high-cost loan or sell you a reverse mortgage to get at your money. For more information, view our "Reverse Mortgages" flyer.

Payday Loans

A payday loan is a short-term, high interest loan often for $500 or less, targeted at people who need money between paychecks. The contract typically requires the borrower to pay back the loan in 14 days, when their next paycheck arrives. People interested in payday loans should be wary of who they are borrowing from because some payday lenders do not follow Minnesota law and charge interest rates far greater than those allowed in Minnesota. People should also be wary about giving their information out to unknown companies online because this can expose them to potential privacy and identity theft risks, and a disreputable Internet company could use their bank account information to drain their bank account. More information on this topic is available in our "Payday Loans" flyer.

Cosigning a Loan

Because credit is so important to people who are trying to purchase a home or car for the first time, or to finance a college education, relatives often want to help family members get their start by cosigning a loan. While cosigning is a generous gift, it comes with potentially serious consequences. For example, when you cosign a loan, you become legally obligated to repay the loan if the borrower does not pay it, or somehow defaults on the agreement. Accordingly, you should only cosign a loan if you have the ability and willingness to pay off the loan in the event of default. For more information and tips to consider when deciding to cosign a loan, view our flyer entitled "Cosigning a Loan."

Student Loans

One of the most common and available options to finance a college education is a student loan. To help people navigate the student loan application process, we have prepared a "Student Loan Handbook" which contains an overview of the types of loans available to students (and their parents). More information on repaying student loans is available on our Students webpage

Advance Fee Loan Scams

Under this scam, you receive a call or email from a purported lender, or apply for a loan on a website. The purported lender offers you a loan, but requires you to send cash up-front (usually via a wire transfer or a reloadable card) under the guise of a down payment, insurance fee, or some other expense. After the money is sent, the purported lender disappears and the person never receives the loan. More information on this scam is available in our flyer entitled "Advance Fee Loan Schemes & Other Financial Scams."

If you have a question or experience a problem related to a loan or investment, or have been targeted by a financial scam, we want to hear from you. You may call us at (651) 296-3353 (Twin Cities Calling Area) or (800) 657-3787 (Outside the Twin Cities), or submit a Consumer Assistance Request Form.

Additional Resources

The Minnesota Attorney General’s Office offers the following materials, which are designed to provide information to Minnesotans on issued related to loans and investments:

Minnesota Department of Commerce

The Minnesota Department of Commerce is the state agency that licenses state-chartered banks, payday lenders, and other state-chartered financial institutions in Minnesota. The Commerce Department also has the authority to regulate financial advisors and securities, including companies that issue securities, securities brokers, and securities agents. For more information or to file a complaint, contact the Commerce Department as follows:

Minnesota Department of Commerce
85 7th Place East, Suite 280
St. Paul, MN 55101
(651) 539-1500 (local)
(800) 657-3602 (Greater MN only)
www.mn.gov/commerce

Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau is a federal agency that has authority to enforce various federal regulations and laws and to advocate on behalf of consumers as it relates to problems with banks, mortgages, credit cards, and financial institutions. For more information or to file a complaint, contact the Consumer Financial Protection Bureau as follows:

Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552
(855) 411-2372
www.consumerfinance.gov

The Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency is the federal agency with authority to license and regulate national banks. For more information or to file a complaint against a national bank, contact the Office of the Comptroller of the Currency as follows:

Office of the Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street, Suite 3450
Houston, TX 77010
(800) 613-6743
www.occ.gov

The Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (“FDIC”) is a federal agency with the authority to regulate state-chartered banks that do not join the federal reserve system. For more information or to file a complaint about a state-chartered bank that is not a member of the federal reserve system, contact the FDIC as follows:

Federal Deposit Insurance Corporation
Consumer Response Center
1100 Walnut Street Box #11
Kansas City, MO 64106
(877) 275-3342
www.fdic.gov

Board of Governors of the Federal Reserve System

The Federal Reserve Board of Governors is a federal agency with the authority to regulate state-chartered banks that are members of the Federal Reserve System. For more information or to file a complaint against a state-chartered bank that is a member of the Federal Reserve System, contact the Board of Governors as follows:

Board of Governors of the Federal Reserve System
Federal Reserve Consumer Help Center
P.O. Box 1200
Minneapolis, MN 55480
(888) 851-1920
www.federalreserveconsumerhelp.gov

National Credit Union Administration

The National Credit Union Administration is the federal agency with authority to license and regulate credit unions. For more information or to file a complaint about a credit union, contact the National Credit Union Administration as follows:

National Credit Union Administration
Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, VA 22314
(703) 518-6330
www.ncua.gov

U.S. Securities and Exchange Commission

The U.S. Securities and Exchange Commission (SEC) is federal agency with authority to regulate the securities industry and investigate complaints about securities sellers. For more information or to file a complaint, contact the SEC as follows:

U.S. Securities and Exchange Commission
100 F Street Northeast
Washington, DC 20549
(202) 942-8088
www.sec.gov

Financial Industry Regulatory Authority

The Financial Industry Regulatory Authority (FINRA) is a non-governmental regulator that has authority under federal law to discipline securities firms and individuals in the securities industry. FINRA maintains a list of registered investment advisors and securities brokers. For more information or to file a complaint, contact FINRA as follows:

Financial Industry Regulatory Authority (FINRA)
1735 K Street
Washington DC, 20006
(301) 590-6500
www.finra.org

United States Commodity Futures Trading Commission

The U.S. Commodity Futures Trading Commission (CFTC) is a federal agency with the authority to regulate futures and options markets. For more information or to file a complaint, contact the CFTC as follows:

United States Commodities Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington D.C. 20581
(202) 418-5000
www.cftc.gov

Federal Trade Commission

The Federal Trade Commission (FTC) is the federal agency that has authority to take action against deceptive, fraudulent and unfair business practices in the marketplace. For more information or to file a complaint, contact the FTC as follows:

Federal Trade Commission
Bureau of Consumer Protection
600 Pennsylvania Avenue NW
Washington, DC 20580
(877) 382-4357
TTY: (866) 653-4261
www.consumer.ftc.gov