Summary:
On May 17, 2022, the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a final rule implementing section 18(a)(4) of the Federal Deposit Insurance Act (Section 18(a)(4)), which prohibits any person from: making false or misleading representations about deposit insurance, using the FDIC’s name or logo in a manner that would imply that an uninsured financial product is insured or guaranteed by the FDIC, or knowingly misrepresenting the extent and manner of deposit insurance. The final rule describes the process the FDIC will use to exercise its authority to enforce Section 18(a)(4), as well as the standards that the FDIC will use to evaluate conduct that may violate the statute.
Statement of Applicability: The contents of, and material referenced in, this FIL apply to all FDIC-insured financial institutions.
Highlights:
- Section 18(a)(4) prohibits any person from making false or misleading representations about deposit insurance, using the FDIC’s name or logo in a manner that would imply that an uninsured financial product is insured or guaranteed by the FDIC, or knowingly misrepresenting the extent or manner of deposit insurance. Under Section 18(a)(4), the FDIC has authority to investigate violations and take action to enforce these prohibitions.
- In recent years, 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 misrepresentations about FDIC insurance.
- The final rule describes: (1) the process by which the FDIC will identify and investigate conduct that may violate the prohibitions against misuse and misrepresentation; (2) the standards under which such conduct will be evaluated; and (3) the procedures that the FDIC will follow when formally and informally enforcing these prohibitions.
- The rule will be effective 30 days after publication in the Federal Register .