On May 17, 2022, the FDIC issued a Final Rule on False Advertising, Misrepresentation of Insured Status and Misuse of the FDIC’s Name or Logo. The important thing to note is that this Final Rule really does not affect banks directly. The rules banks had before, when it comes to use of the FDIC official statement and/or logo in advertising, any exceptions, etc., have not changed. What the FDIC did was reorganize this section of the Regulation (12 CFR 328) and create a new Subpart B. Subpart B applies primarily to non-banks and other financial service providers.
The FDIC noted it had seen an uptick of financial services providers misusing the FDIC’s name and/or logo in ways that seem to imply that a non-insured financial product or service is FDIC insured. The Final Rule lays out:
- The process by which the FDIC will identify and investigate conduct that may violate the prohibitions against misuse and misrepresentation;
- The standards under which such conduct will be evaluated; and,
- The procedures that the FDIC will follow when formally and informally enforcing these prohibitions.
Keep in mind; however, this could apply to any affiliated non-bank financial service providers.
After the FDIC issued this Final Rule, the CFPB chimed in and doubled down by issuing a Circular 2022-02 which is clear that material misrepresentations are “deceptive” practices in violation of the Consumer Financial Protection Act (aka UDAAP). CFPB Director Chopra stated, People know and trust the FDIC name and logo, and firms must not prey on that trust by making deceptive representations about deposit insurance….Companies undermine competition, erode confidence in the deposit insurance system, and threaten our hard-earned savings when they engage in false marketing or advertising”.
The Final Rule is effective July 5, 2022.
Need to brush up on the FDIC signage and advertising requirements for banks? Be sure to check out our Advertising webinar which is available now OnDemand. Topics include:
- Truth in Lending Act
- FDIC Signage & Rules
- Fair Housing Act
- Truth in Savings Act (including Bonuses)
- Nondeposit Investment Products
- UDAAP
- Website Compliance (relevant to the referenced items above)
- Lobby Disclosures, Rate Sheets & Much More!
Published
2022/06/16
