FDIC finalizes rule to investigate misuse of agency name, logo

The FDIC today approved a final rule establishing a process by which the agency will identify and investigate any conduct involving the misuse of its name or logo. The FDIC noted that the final rule “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,” adding that it has observed “an increasing number of instances” of such conduct.

The final rule establishes an investigations process for conduct that may violate Section 18(a)(4) of the Federal Deposit Insurance Act, standards under which such conduct will be evaluated and procedures the FDIC will follow when formally and informally enforcing the provisions of Section 18(a)(4). The rule will take effect 30 days after publication in the Federal Register.

The CFPB also issued a circular regarding deceptive representations involving the FDIC’s name and logo or information about deposit insurance and when they might constitute a deceptive act or practice in violation of the Consumer Financial Protection Act. The CFPB in a blog post yesterday said it would begin releasing these circulars as part of “a new system to provide guidance to other agencies with consumer financial protection responsibilities on how the CFPB intends to enforce federal consumer financial law.”

“Covered persons or service providers likely violate the CFPA’s prohibition on deception if they misuse the name or logo of the FDIC or engage in false advertising or make misrepresentations to consumers about deposit insurance, regardless of whether such conduct (including the misrepresentation of insured status) is engaged in knowingly,” the CFPB said in the notice. “Representations made by covered persons or service providers about FDIC insurance will typically be material. Accordingly, for example, if a person engages in or purports to engage in deposit-taking activity by accepting (or offering to accept) funds for use by consumers, and that person misrepresents that such funds are insured by the FDIC, that person likely violates the CFPA’s prohibition on deception, even if the misrepresentation was not made knowingly.”