FDIC Issues Final Rule on FDIC Misrepresentations

On May 17, 2022, the FDIC issued a final rule implementing its statutory authority to prohibit any person or organization from making misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo. The FDIC has observed an increasing number of instances where financial services providers or other entities or individuals have misused the FDIC’s name or logo or have made false or misleading representations about deposit insurance. The final rule establishes the process, standards, and procedures for investigating potential violations of the Federal Deposit Insurance Act and enforcing necessary provisions of the law.

The final rule, which will take effect 30 days after publication in the Federal Register,  will primarily affect non-bank entities and individuals who are potentially misusing the FDIC’s name or logo or are making misrepresentations about deposit insurance.

In relation to the final rule, the CFPB released an enforcement memorandum that addresses prohibited practices on claims about FDIC insurance. The circular provides guidance to consumer protection enforcers on the potential misuse of the name or logo of the FDIC or engagement in false advertising or making material misrepresentations to the public about deposit insurance. Specifically, the Circular emphasizes that:

  • Misrepresenting the FDIC logo or name will typically be a material misrepresentation;

  • Misrepresentation or misuse of the FDIC name or logo harms customers and puts them at significant risk of unexpected losses.; and

  • Misuse of the FDIC name or logo harms honest companies. 

Read the FDIC’s press release here.

The Final Rule can be found here.

The full CFPB’s press release can be found here.

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