On May 10, 2021, the Federal Deposit Insurance Corporation (FDIC) proposed a rule to implement section 18(a)(4) of
the Federal Deposit Insurance Act, which prohibits any person from making false or misleading representations about deposit insurance or from using the FDIC’s name or logo in a manner that would imply an uninsured financial product is insured or guaranteed by the FDIC. The FDIC issued this proposal in light of the increasing number of instances where financial services providers or other entities or individuals have misused the FDIC’s name or logo.

Specifically, the regulation is proposed to provide as follows:

  • Scope (328.100) – Identifies the scope of the rule, which would apply to any person who makes certain FDIC misrepresentations.
  • Definitions (328.101) – Establishes definitions for the rule.
  • Prohibition (328.102) – Prohibits misrepresentations regarding the use of the FDIC name or logo, including misrepresentations regarding:
    • The use of the FDIC name or logo for “Uninsured Financial Products,” including “Non-Deposit Products” and “Hybrid Products.”
    • Whether, and to the extent, a product is insured by the FDIC.
    • Complaint, Investigation, Resolution Process (328.103 through 328.108) –– Establish the process by which persons can submit complaints and the actions that the FDIC can take while investigating and resolving potential violations.
  • Inquiries and Complaints – Provides a contact for persons who have reason to believe a violation has or is occurring or has questions regarding the accuracy of representations.
  • Investigations of Potential Violations – States the FDIC General Counsel has authority to investigate violations and how such investigations will be conducted.
  • Referral to Appropriate Authority – Provides for FDIC actions when another Federal banking agency is the primary examiners.
  • Informal Resolution – Establishes that the FDIC may provide advisory letters to those that it has reason to believe is violating the rules.
  • Formal Enforcement Actions – Establishes that the FDIC General Counsel may bring administrative enforcement actions against any person, in the same manner and extent to which the FDIC can proceed against state non-member insured banks.
  • Appeals Process – Establishes the appeals process.

This proposal overlaps with the FDIC’s request for information regarding the FDIC’s Sign and Official Advertising Requirements proposal, in which the FDIC is soliciting information on the modernization of the FDIC’s advertising requirements and related topics. While questions related to misrepresentation and misuse have been removed from that proposal, there remains a degree of overlap between the two proposed rules and responses may provide information that is relevant to consideration of the other proposed rule. See FDIC Seeks Input on How to Modernize Sign and Advertising Requirements article below.

The proposal may be currently accessed at: https://www.gov-info.gov/content/pkg/FR-2021-05-10/pdf/2021-08690.pdf.