Why savings clubs are not securities
Under the Howey Test (the legal standard for determining whether something is a security), a savings club fails to meet the criteria because members do not invest with an expectation of profit from the efforts of others. Members contribute to acquire a specific asset.
| Security / Investment | Savings Club | |
|---|---|---|
| Primary purpose | Generate returns for investors through capital appreciation or dividends | Acquire a specific, tangible asset (vehicle, home, equipment) through cooperative savings |
| What you receive | A financial instrument (stock, bond, fund share) with no guaranteed return | A purchasing voucher for a real asset you choose and own |
| Profit expectation | Yes. investors expect to profit from the efforts of others | No. members expect to acquire an asset, not earn a return |
| Pooled funds usage | Invested in markets, businesses, or financial instruments | Held in FDIC-insured trust and used exclusively to purchase member assets |
| Risk of loss | You can lose your entire investment | Your contributions are held in an irrevocable trust. Protected even if the company fails. |
| Regulatory body | SEC (Securities and Exchange Commission) | CFPB, FTC, and applicable federal consumer protection laws |
| Howey Test | Meets all four prongs: investment of money, common enterprise, expectation of profits, from efforts of others | Fails the Howey Test: no expectation of profit, no reliance on efforts of others for returns |
Eight layers of member protection
Your funds are held in trust by multiple independent safeguards. not just one.
Irrevocable Trust Structure
Member contributions are held in an irrevocable trust managed by an independent trustee (Jackson Hole Trust Company). Funds are held at US Bank (FDIC insured). Even if Savings.Club ceases operations, member funds are protected.
Independent Trustee
Jackson Hole Trust Company serves as the independent trustee, ensuring that trust assets are managed solely in the interest of members. The trustee operates independently of Savings.Club management.
Member Governing Board
Each savings club has a Member Governing Board that audits compliance, reviews financial reports, and ensures the trust operates according to its charter. Members have visibility into club operations.
FDIC Insurance
Member funds held at US Bank are protected by FDIC insurance up to $250,000 per depositor. the same federal protection that covers any bank deposit.
Fidelity Bonds & Insurance
Savings.Club maintains fidelity bonds and insurance coverage to protect member funds against fraud, theft, and mismanagement.
Full Transparency
Members can monitor their club's financial status, contribution history, Savings Score, ranking, and projected award timeline through their member dashboard. No black boxes.
7-Day Money-Back Guarantee
New members can cancel within 7 days of enrollment for a full refund. No questions asked.
Hardship Provisions
Members facing financial hardship can freeze contributions, switch to half-pay, or transfer their membership. without penalties or credit damage.
Have questions about our consumer protection practices? Read the FAQ or contact Compliance at compliance@savings.club.