FDIC Issues Final Rule Relating to False Advertising, Misrepresentations About Insured Status, and Misuse of the FDIC’s Name or Logo

This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations

Federal Register

33415

Vol. 87, No. 106

Thursday, June 2, 2022

1 As used in this regulation, the term ‘‘consumer’’

is broadly defined to encompass all current and

potential depositors, including natural persons,

organizations, corporate entities, and governmental

bodies.

2 Under Federal law, it is also criminal offense to

misuse the FDIC name or make false representations

regarding deposit insurance. See 18 U.S.C. 709.

3 12 U.S.C. 1828(a)(4)(C)–(D).

4 85 FR 10997 (Feb. 26, 2020).

5 85 FR 14678 (Mar. 13, 2020).

6 86 FR 18528 (April 9, 2021).

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 328

RIN 3064–AF71

False Advertising, Misrepresentation

of Insured Status, and Misuse of the

FDIC’s Name or Logo

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Final rule.

SUMMARY: The Federal Deposit

Insurance Corporation is adopting a

final rule to implement section 18(a)(4)

of the Federal Deposit Insurance Act.

The final rule establishes the process by

which the Federal Deposit Insurance

Corporation will identify and

investigate conduct that may violate

section 18(a)(4) of the Federal Deposit

Insurance Act, the standards under

which such conduct will be evaluated,

and the procedures which the Federal

Deposit Insurance Corporation will

follow when formally and informally

enforcing the provisions of section

18(a)(4) of the Federal Deposit Insurance

Act.

DATES: The rule is effective on July 5,

2022.

FOR FURTHER INFORMATION CONTACT:

Richard M. Schwartz, Counsel, Legal

Division, 202–898–7424, rischwartz@

FDIC.gov; Michael P

conduct will be evaluated,

and the procedures which the Federal

Deposit Insurance Corporation will

follow when formally and informally

enforcing the provisions of section

18(a)(4) of the Federal Deposit Insurance

Act.

DATES: The rule is effective on July 5,

2022.

FOR FURTHER INFORMATION CONTACT:

Richard M. Schwartz, Counsel, Legal

Division, 202–898–7424, rischwartz@

FDIC.gov; Michael P. Farrell, Counsel,

Legal Division, 202–898–3853,

mfarrell@FDIC.gov, Federal Deposit

Insurance Corporation, 550 17th Street

NW, Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Policy Objectives

Section 18(a)(4) of the Federal Deposit

Insurance Act, 12 U.S.C. 1828(a)(4),

(Section 18(a)(4)) prohibits any person

from misusing the name or logo of the

Federal Deposit Insurance Corporation

(FDIC) or from engaging in false

advertising or making knowing

misrepresentations about deposit

insurance. 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. To provide

transparency into how the FDIC will

address these and similar concerns, the

FDIC is adopting regulations to further

clarify its procedures for identifying,

investigating, and where necessary

taking formal and informal action to

address potential violations of Section

18(a)(4). The regulations also establish a

point-of-contact for receiving

complaints and inquiries about

potential misrepresentations regarding

deposit insurance. Although the FDIC is

not required to promulgate regulations

to implement section 18(a)(4), the FDIC

nonetheless believes that the final rule

establishes a more transparent process

that will benefit all parties and

promotes stability and confidence in

FDIC deposit insurance and the nation’s

financial system.

II

and inquiries about

potential misrepresentations regarding

deposit insurance. Although the FDIC is

not required to promulgate regulations

to implement section 18(a)(4), the FDIC

nonetheless believes that the final rule

establishes a more transparent process

that will benefit all parties and

promotes stability and confidence in

FDIC deposit insurance and the nation’s

financial system.

II. Background

The FDIC has steadfastly and

proactively sought to protect

consumers 1 by limiting the use of the

FDIC’s name, seal, and logo to insured

depository institutions (IDIs) and

preventing false and misleading

representations about the manner and

extent of FDIC deposit insurance

(deposit insurance). Section 18(a)(4) of

the Federal Deposit Insurance Act (FDI

Act), 12 U.S.C. 1828(a)(4) (Section

18(a)(4)), prohibits any person from

engaging in false advertising by

misusing the name or logo of the FDIC

or from making knowing

misrepresentations about the existence

of or the extent or manner of deposit

insurance.2 Section 18(a)(4) provides

the FDIC independent authority to

investigate and take administrative

enforcement actions, including the

power to issue cease and desist orders

and impose civil money penalties,

against any person who misuses the

FDIC name or logo or makes

misrepresentations about deposit

insurance.3

Although the FDIC has broad

statutory authority in this area, the FDIC

has never issued specific regulations

regarding false representations related to

deposit insurance or the misuse of the

FDIC’s name or logo. Recently, the FDIC

has observed an increasing number of

instances where financial service

providers or other entities or

individuals have misused the FDIC’s

name or logo or have made false or

misleading representations about

deposit insurance

FDIC

has never issued specific regulations

regarding false representations related to

deposit insurance or the misuse of the

FDIC’s name or logo. Recently, the FDIC

has observed an increasing number of

instances where financial service

providers or other entities or

individuals have misused the FDIC’s

name or logo or have made false or

misleading representations about

deposit insurance. Therefore, the FDIC

adopts the following rule, which

provides certain procedures the FDIC

will follow for identifying, investigating,

and taking formal and informal action to

address potential violations of Section

18(a)(4). The rule also provides for an

established point-of-contact responsible

for receiving complaints about potential

violations of Section 18(a)(4) and

responding to inquiries about deposit

insurance coverage representations.

III. Requests for Information, The

Proposed Rule, and Comments

Received

Requests for Information

On February 26, 2020, the FDIC

published a Request for Information

(2020 RFI) related to potential

modernization of its signage and

advertising rules set out in part 328 of

the FDIC regulations.4 Some of the

questions in the 2020 RFI related to the

deposit insurance misrepresentations

addressed in this final rule. The

comment period for the 2020 RFI was

extended on March 13, 2020,5 but

efforts to modify the rules under part

328 of the FDIC regulations were

postponed in light of the COVID–19

national emergency

ge and

advertising rules set out in part 328 of

the FDIC regulations.4 Some of the

questions in the 2020 RFI related to the

deposit insurance misrepresentations

addressed in this final rule. The

comment period for the 2020 RFI was

extended on March 13, 2020,5 but

efforts to modify the rules under part

328 of the FDIC regulations were

postponed in light of the COVID–19

national emergency. Subsequently, the

FDIC published a new Request for

Information in the Federal Register on

April 9, 2021 (2021 RFI) which focused

on soliciting information on the FDIC’s

advertising requirements applicable to

IDIs and related topics, and removed

specific questions relating to

misrepresentations and misuse.6

The Proposed Rule

On May 10, 2021, the FDIC published

a notice of proposed rulemaking (NPR)

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7 86 FR 24770 (May 10, 2021).

8 Of the comments received, some comments

were identical.

9 The draft regulation defined the term ‘‘IAP’’ to

mean an ‘‘institution-affiliated party’’ under section

3(u) of the FDI Act, 12 U.S.C. 1813(u). As discussed

more fully below, the term ‘‘known IAP’’ was not

defined in the proposed regulation.

10 The ‘‘one-click’’ rule is found in the official

interpretation to Regulation Z and Regulation DD

and deals with how certain advertising disclosures

may be provided. See 12 CFR part 1026, supp. I,

Comment 16(c)(1)–2, and 12 CFR part 1030, supp.

I, Comment 8(a)–9. Generally, under these

regulations, when a triggering term is mentioned in

an advertisement, additional disclosures may be

required

e ‘‘one-click’’ rule is found in the official

interpretation to Regulation Z and Regulation DD

and deals with how certain advertising disclosures

may be provided. See 12 CFR part 1026, supp. I,

Comment 16(c)(1)–2, and 12 CFR part 1030, supp.

I, Comment 8(a)–9. Generally, under these

regulations, when a triggering term is mentioned in

an advertisement, additional disclosures may be

required. In the case of electronic advertisements,

these regulations allow the additional disclosures to

be located on a separate web page, so long as the

triggering term is accompanied by a link that

directly takes the consumer to the additional

information.

11 The term ‘‘Deposit Placement Network’’ is a

defined term under section 29(g) of the FDI Act (12

U.S.C. 1831f(g)) in relation to brokered deposits.

Although the commenters used the term ‘‘deposit

placement networks’’ in their comment letters, their

comments appeared intended to apply more

broadly to any deposit network administered by a

non-bank entity (referred to here as a ‘‘deposit

network sponsor’’) that, through a network of IDIs

with which it has business relationships, arranges

or facilitates the placement of deposits. To

distinguish these broader networks from ‘‘Deposit

Placement Networks,’’ as described in section 29(g)

of the FDI Act, the FDIC will refer to the former as

merely ‘‘deposit networks.’’

to implement Section 18(a)(4).7 The

NPR proposed a regulation

redesignating the existing regulations in

part 328 as subpart A to part 328 and

establishing a new subpart B to part 328,

entitled ‘‘False Advertising,

Misrepresentation of Insured Status, and

Misuse of the FDIC’s Name or Logo.’’

The proposed subpart described certain

procedures by which the FDIC would

identify and investigate conduct that

may violate Section 18(a)(4), the

standards under which such conduct

would be evaluated, and the procedures

which the FDIC would follow when

formally and informally enforcing the

provisions of Section 18(a)(4)

entation of Insured Status, and

Misuse of the FDIC’s Name or Logo.’’

The proposed subpart described certain

procedures by which the FDIC would

identify and investigate conduct that

may violate Section 18(a)(4), the

standards under which such conduct

would be evaluated, and the procedures

which the FDIC would follow when

formally and informally enforcing the

provisions of Section 18(a)(4).

Comments on the Proposed Rule

A. Overview

The FDIC issued the NPR on May 10,

2021, with a 60-day comment period. In

the NPR, the FDIC also stated that it

would consider any relevant comments

submitted in response to the 2021 RFI.

The FDIC received nineteen comments

in response to the NPR.8 Commenters

included trade associations, insured

depository institutions, advocacy

groups, and other interested parties. All

of the commenters expressed support

for the proposed rule. Some noted that

they have seen similar trends of misuse

in the industry that the proposal is

meant to combat. Several commenters

applauded the FDIC’s efforts to prevent

false and misleading statements

regarding deposit insurance and

promote public confidence in FDIC-

insured institutions. Additionally,

commenters stated that the proposal

sufficiently identifies situations that

present potential risks related to false or

misleading representations regarding

deposit insurance coverage and the

misuse of the FDIC’s name or logo.

Further, commenters stated that the

proposed informal and formal

enforcement processes were adequate.

Additionally, the FDIC received two

comments in response to the 2021 RFI

that contained comments relevant to

this rulemaking, one from a trade

association and one from an IDI. These

comments generally echoed the FDIC’s

concerns about consumers’ ability to

understand whether and how funds

placed with non-IDIs are insured.

B. Requests for Clarification

Many commenters requested certain

changes to clarify specific elements of

the proposed rule

e to the 2021 RFI

that contained comments relevant to

this rulemaking, one from a trade

association and one from an IDI. These

comments generally echoed the FDIC’s

concerns about consumers’ ability to

understand whether and how funds

placed with non-IDIs are insured.

B. Requests for Clarification

Many commenters requested certain

changes to clarify specific elements of

the proposed rule. For example, a

number of commenters asked that the

FDIC clarify that IDIs have the authority

to submit complaints of possible

violations. Other commenters requested

that the FDIC define certain terms in the

proposed rule. For example, in regard to

12 CFR 308.147, one commenter

requested the FDIC to clarify the

meaning of the phrase ‘‘a known IAP’’

of an IDI.9

Additionally, in reviewing the

comments, the FDIC noted that

commenters used differing terms to refer

to those impacted by potential

misrepresentations. Some commenters

referred to these as ‘‘consumers.’’ Others

referred to them as ‘‘consumers or

depositors.’’ Others used the terms,

‘‘depositors or prospective depositors.’’

Finally, one commenter noted that

‘‘individuals . . . local governments,

charitable organizations, corporations,’’

and others could be impacted.

C. Suggested Alternatives

Commenters also suggested the FDIC

take additional actions beyond the

proposal. For example, commenters

suggested the FDIC adopt a ‘‘one-click

rule’’ for social media and internet

advertising,10 adopt standard disclosure

language, create a closed database

accessible to IDIs that lists IAPs who

have violated these regulations, and

adopt a voluntary public register of

FDIC-insured products. Additionally,

one commenter suggested the FDIC

implement an information sharing

mechanism designed to notify states of

any formal or informal actions taken

against an individual or entity in their

jurisdiction

sclosure

language, create a closed database

accessible to IDIs that lists IAPs who

have violated these regulations, and

adopt a voluntary public register of

FDIC-insured products. Additionally,

one commenter suggested the FDIC

implement an information sharing

mechanism designed to notify states of

any formal or informal actions taken

against an individual or entity in their

jurisdiction. Additionally, some

comments submitted in response to the

NPR and the 2021 RFI suggested that the

FDIC mandate that non-IDIs make

certain affirmative statements regarding

deposit insurance, including affirmative

statements that non-insured products

are not insured and statements

explaining how and when deposits

placed with IDIs by third parties are

insured.

D. Section 328.102(b)(3)(ii)

The FDIC received ten comments

related to proposed § 328.102(b)(3)(ii),

which provided that, if a non-bank

entity makes claims regarding the

insured-status of its products, the failure

to identify the name(s) of the IDI(s)

which would be receiving deposits

would be a material omission in

violation of the rule. The commenters,

mostly trade associations, recommended

that the FDIC clarify the provision

because they argued it could constrain

the dissemination of information by and

about so-called ‘‘deposit placement

networks.’’ 11 They explained that a

deposit network may involve many IDIs,

making it difficult to name the specific

IDI(s) in the network that will receive a

deposit until the deposit is placed. The

commenters urged the FDIC to modify

or remove this requirement in the final

rule.

E. Hybrid Products

Two commenters requested that the

FDIC clarify the advertising and

marketing requirements applicable to

non-deposit and hybrid products. One

commenter asked in particular how the

proposed rule and the 2020 RFI would

work together, and how the FDIC will

consider and investigate complaints and

statements regarding hybrid products

move this requirement in the final

rule.

E. Hybrid Products

Two commenters requested that the

FDIC clarify the advertising and

marketing requirements applicable to

non-deposit and hybrid products. One

commenter asked in particular how the

proposed rule and the 2020 RFI would

work together, and how the FDIC will

consider and investigate complaints and

statements regarding hybrid products.

Responses to Comments

With respect to requests that the FDIC

clarify that IDIs can submit complaints

under the proposed rule, the FDIC

reviewed the language of proposed

§ 328.103, which allows any ‘‘person’’ to

submit complaints, and the definition of

‘‘person’’ under proposed § 328.101,

which specifically includes Regulated

Institutions like IDIs. The FDIC believes

these provisions make it sufficiently

clear that IDIs can submit complaints,

and therefore is not making any changes

to these sections of the proposed rule.

Similarly, the FDIC does not believe

it is necessary to amend the proposed

rule to further define the phrase ‘‘known

IAP’’ as it is used in proposed § 328.104.

The FDIC interprets this phrase to mean

any person who is actually known to the

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12 As noted in the NPR, the standards governing

this rule were adapted in part from those applicable

to deception under Section 5 of the Federal Trade

Commission Act, 5 U.S.C. 45 (Section 5). The FDIC

recognizes that, in some but not all cases, Section

18(a)(4)’s prohibitions only apply to ‘‘knowing’’

misrepresentations, while Section 5 more broadly

prohibits any material misrepresentations in

commerce without regard to the advertising party’s

intent or knowledge

art from those applicable

to deception under Section 5 of the Federal Trade

Commission Act, 5 U.S.C. 45 (Section 5). The FDIC

recognizes that, in some but not all cases, Section

18(a)(4)’s prohibitions only apply to ‘‘knowing’’

misrepresentations, while Section 5 more broadly

prohibits any material misrepresentations in

commerce without regard to the advertising party’s

intent or knowledge. Regardless of any difference

this presents, the FDIC believes that Section 5,

which prohibits unfair or deceptive acts or practices

in commerce offers a valuable framework for

evaluating misrepresentations under Section

18(a)(4). Accordingly, the FDIC has looked to the

standards governing deception under Section 5 to

inform its understanding of what constitutes a

misrepresentation that violates Section 18(a)(4).

Similarly, the FDIC believes that Section 5 is useful

in defining who Section 18(a)(4) protects, and

Federal courts have concluded that the protections

offered by Section 5 extend broadly to

‘‘consumers,’’ including natural persons,

businesses, and not-for profit organizations. See,

e.g., FTC v. IFC Credit Corp., 543 F.Supp.2d 925,

934 (N.D.Ill. 2008). The FDIC believes similarly

broad protection is appropriate here and consistent

with the statute.

13 For example, to the extent a misrepresentation

about deposit insurance was made by an IDI or IAP,

the FDIC would also be able to pursue the matter

under section 8 of the FDI Act, 12 U.S.C. 1818, as

well as Section 18(a)(4).

14 For example, assume an individual consumer

had $50,000 on deposit at Bank A. If the consumer

saw an advertisement by a non-bank entity that

promised full FDIC deposit insurance on large

certificates of deposit (CDs), and the consumer

obtained a $250,000 CD from the non-bank entity,

the consumer would not necessarily receive the full

value of the promised deposit insurance if the non-

bank entity placed the consumer’s funds at Bank A

had $50,000 on deposit at Bank A. If the consumer

saw an advertisement by a non-bank entity that

promised full FDIC deposit insurance on large

certificates of deposit (CDs), and the consumer

obtained a $250,000 CD from the non-bank entity,

the consumer would not necessarily receive the full

value of the promised deposit insurance if the non-

bank entity placed the consumer’s funds at Bank A.

Assuming these deposits, totaling $300,000, were

held in the same capacity at Bank A, they would

only be insured for up to $250,000.

FDIC to be an IAP, as defined under 12

U.S.C. 1813(u), either because the FDIC

is aware that the person is a director,

officer, employee or controlling

shareholder of an IDI, or because the

FDIC has already made a determination

that the person is an IAP. The FDIC

believes that this interpretation is

consistent with the plain language of the

phrase ‘‘known IAP.’’

Based upon the comments received,

the FDIC recognizes the need to define

a single term to describe those that may

be adversely impacted by violations of

Section 18(a)(4). To provide

clarification, the FDIC has added a

defined term, ‘‘Consumer,’’ to include

all current or potential depositors,

including natural persons,

organizations, corporate entities, and

governmental bodies.12

With regard to the suggestion that the

FDIC implement standard disclosures

and a ‘‘one-click’’ rule for social media

and internet advertising, the FDIC does

not believe it is advisable to adopt these

suggestions in light of the pace of

technological change in these areas. The

FDIC believes any formats prescribed at

this time could quickly become obsolete

or even counterproductive as

technology continues to evolve.

Accordingly, the FDIC believes the

proposed rule as currently drafted,

which sets forth standard-based

requirements as opposed to prescribing

specific formats, is more appropriate

ions in light of the pace of

technological change in these areas. The

FDIC believes any formats prescribed at

this time could quickly become obsolete

or even counterproductive as

technology continues to evolve.

Accordingly, the FDIC believes the

proposed rule as currently drafted,

which sets forth standard-based

requirements as opposed to prescribing

specific formats, is more appropriate.

With regard to the suggestion that the

FDIC create a database of IAPs who have

potentially violated the proposed rule,

the FDIC believes that such a database

could risk reputational harm to

individuals who have not yet been

found to have engaged in a violation.

Further, to the extent the FDIC pursues

formal enforcement action under the

proposed rule, a public notice of charges

or order will be issued. The FDIC

believes that the publication of such

notices and orders would be generally

sufficient to provide IDIs with

information about any individual who

the FDIC believes has violated section

18(a)(4) or the implementing regulation.

With regard to the suggestion of a

voluntary register of FDIC-insured

products, the FDIC does not believe

such a register would be advisable. The

voluntary nature of such a register

would limit its usefulness. Moreover,

the FDIC resources that would be

required to maintain such a register

would likely be significant and

outweigh any benefit it may have.

With regard to the proposal that the

FDIC institute an information sharing

system with state authorities, the FDIC

does not believe any changes to the

proposed rule are necessary. Proposed

§ 328.105 authorizes the FDIC to notify

other authorities (including state

regulators) of conduct that may fall

within their jurisdiction. The FDIC

recognizes the importance of working

with other state and Federal agencies to

address false, misleading, or otherwise

deceptive representations regarding

deposit insurance

s not believe any changes to the

proposed rule are necessary. Proposed

§ 328.105 authorizes the FDIC to notify

other authorities (including state

regulators) of conduct that may fall

within their jurisdiction. The FDIC

recognizes the importance of working

with other state and Federal agencies to

address false, misleading, or otherwise

deceptive representations regarding

deposit insurance. Conduct that violates

Section 18(a)(4) may also violate other

statutory schemes, including but not

limited to Section 5 of the Federal Trade

Commission Act (FTC Act), 5 U.S.C. 45,

(Section 5) and Section 1031 of the

Dodd-Frank Act, 12 U.S.C. 5531

(Section 1031). Indeed, other laws or

regulations may encompass broader

conduct than that reached by Section

18(a)(4). For example, certain of Section

18(a)(4)’s prohibitions apply only to

knowing misrepresentations, while

several other statutes prohibiting

deception do not require that

misrepresentations be made knowingly.

Nothing contained in this regulation

should be read to limit the authority of

any state or Federal agency or

individual under any other law,

including but not limited to the

Consumer Financial Protection Bureau,

the Federal Trade Commission, the

Federal Reserve Board of Governors, the

U.S. Department of Justice, state

Attorneys General, and the FDIC itself.13

Based upon the facts and

circumstances presented in individual

cases, the FDIC anticipates that it will

work with other agencies to address

misrepresentations regarding deposit

insurance when appropriate. The FDIC

believes the referral authority currently

contained in § 328.105 adequately

provides for such cooperation. However,

to further clarify, conduct that violates

Section 18(a)(4) may at times violate

other statutory schemes as well. As

such, the FDIC is adding a new

§ 328.109 to expressly reiterate that the

FDIC’s authority under Section 18(a)(4)

does not bar any other action authorized

by law, by the FDIC or any other agency

rently

contained in § 328.105 adequately

provides for such cooperation. However,

to further clarify, conduct that violates

Section 18(a)(4) may at times violate

other statutory schemes as well. As

such, the FDIC is adding a new

§ 328.109 to expressly reiterate that the

FDIC’s authority under Section 18(a)(4)

does not bar any other action authorized

by law, by the FDIC or any other agency.

While this reservation of authority to

the FDIC and other agencies and

individuals is provided in the plain

language of Section 18(a)(4), the FDIC

believes it is helpful to reference it in

the final rule to avoid any confusion on

this point.

Finally, in response to the suggestions

that the FDIC require non-IDIs to make

certain affirmative statements related to

deposit insurance, the FDIC made

revisions to the proposed

§ 328.102(b)(3)(ii), discussed below. The

FDIC is not precluded from imposing

additional requirements to ensure

appropriate use of its official sign and

advertisement language if the facts and

circumstances warrant such action.

With respect to the comments

regarding the language of proposed

§ 328.102(b)(3)(ii), the FDIC’s aim in the

proposed rule was to address situations

in which non-bank entities were making

unsubstantiated claims about the

availability of deposit insurance without

directly or indirectly identifying the

IDIs with which these entities were

ostensibly doing business. In such cases,

consumers and the FDIC are unable to

effectively evaluate the accuracy of such

claims by non-bank entities. Moreover,

even if the non-bank entity actually

placed deposits at one or more IDIs,

information identifying the IDI(s) at

which such funds were being placed is

vital to understanding the extent and

manner of deposit insurance provided

were

ostensibly doing business. In such cases,

consumers and the FDIC are unable to

effectively evaluate the accuracy of such

claims by non-bank entities. Moreover,

even if the non-bank entity actually

placed deposits at one or more IDIs,

information identifying the IDI(s) at

which such funds were being placed is

vital to understanding the extent and

manner of deposit insurance provided.

Omission of this information could

impact the insurability of the deposited

funds to the consumer’s detriment.14

Commenters have pointed out that it

may not always be possible to identify

with specificity the IDI(s) that will

receive funds placed through a deposit

network until those funds are actually

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Federal Register / Vol. 87, No. 106 / Thursday, June 2, 2022 / Rules and Regulations

15 For example, if a customer places a deposit

through a deposit network, the deposit network

may be unable to tell the consumer in advance

whether the entirety of the deposit will be placed

at a single institution or whether it might be

divided and placed at multiple institutions.

16 The § 328.102(b)(5) that was included in the

NPR has likewise been redesignated as

§ 328.102(b)(6).

17 A non-bank entity may have an indirect

relationship with an IDI if it places deposits

through a deposit network.

18 As an example, a non-bank entity may identify

such IDIs by providing consumers with a link to a

current list on its website of the IDIs with which

it has existing business relationships for the

placement of deposits.

19 A non-bank entity may satisfy this requirement

by providing a link to a list it maintains

rect

relationship with an IDI if it places deposits

through a deposit network.

18 As an example, a non-bank entity may identify

such IDIs by providing consumers with a link to a

current list on its website of the IDIs with which

it has existing business relationships for the

placement of deposits.

19 A non-bank entity may satisfy this requirement

by providing a link to a list it maintains.

Alternatively, if the deposit network maintains a

current list of IDIs with which the deposit network

has existing business relationships on the deposit

network sponsor’s public website, the non-bank

entity may provide consumers with a link to such

a list on the deposit network’s website.

20 Call Report data, June 30, 2021.

21 See FDIC 2019 Annual Report, p. 38; FDIC 2020

Annual Report, p. 47.

deposited at the IDI(s).15 Nonetheless,

the FDIC continues to believe that in

order for a non-bank entity to avoid the

prohibition under Section 18(a)(4)

against making misrepresentations

about deposit insurance, a non-bank

entity cannot advertise that its products

are or will be FDIC-insured without

providing consumers with sufficient

information to adequately understand

the extent and manner of deposit

insurance provided. Such information

allows consumers to verify

representations about deposit insurance

directly with IDIs and also allows

consumers to avoid a situation where

their total combined deposits at a

particular IDI may exceed the maximum

deposit insurance amount

d without

providing consumers with sufficient

information to adequately understand

the extent and manner of deposit

insurance provided. Such information

allows consumers to verify

representations about deposit insurance

directly with IDIs and also allows

consumers to avoid a situation where

their total combined deposits at a

particular IDI may exceed the maximum

deposit insurance amount. Accordingly,

the FDIC is amending proposed

§ 328.102(b)(3)(ii) and has created a new

§ 328.102(b)(5) to accommodate and

address these competing concerns.16

Rather than requiring non-bank

entities that are advertising FDIC-

insured deposits to identify the specific

IDI(s) that will receive a consumer’s

deposit, the FDIC is adopting a final rule

that will require such non-bank entities

to identify the IDI(s) with which the

non-bank entities have existing direct or

indirect business relationships and into

which consumers’ deposits may be

placed.17 The use of the word ‘‘may’’

does not allow non-bank entities to

satisfy this requirement by merely

identifying IDIs with which such non-

bank entities might one day do business.

The final rule provides that such non-

bank entities must identify the IDIs with

which such an entity has an existing

direct or indirect business relationship

for the placement of deposits and into

which consumers’ deposits may be

placed.18 To the extent that a non-bank

entity places deposits through a deposit

network, it may satisfy this requirement

by identifying the deposit network and

each IDI in the deposit network or by

providing a hyperlink to a current list of

all the IDIs that are part of such a

network.19 The FDIC believes that the

final rule provides sufficient flexibility

for non-bank entities, which as a result

of relationships with deposit network

sponsors may not be able to directly

identify the IDI(s) that will receive

consumers’ deposits, while still

providing consumers with access to

adequate information about the extent

and manner of deposit in

that are part of such a

network.19 The FDIC believes that the

final rule provides sufficient flexibility

for non-bank entities, which as a result

of relationships with deposit network

sponsors may not be able to directly

identify the IDI(s) that will receive

consumers’ deposits, while still

providing consumers with access to

adequate information about the extent

and manner of deposit insurance

provided.

With respect to comments requesting

clarification relating to advertisements

for hybrid products, the FDIC does not

believe that any change to the proposed

rule is necessary. The proposed rule

prohibits misrepresentations about

deposit insurance in advertising related

to hybrid products. The proposed rule

adopts the definition of hybrid products

contained in subpart A, and its

prohibitions related to advertising of

hybrid products are consistent with the

requirements of subpart A. To the extent

that there are any future amendments to

subpart A that impact the proposed

rule’s provisions related to hybrid

products, the FDIC will address them at

that time.

IV. The Final Rule

For the reasons stated above, the final

rule adopts the proposed rule with

certain limited changes. The FDIC is

amending § 328.101 to add a definition

for the term ‘‘Consumer,’’ to identify

those intended to be protected under the

regulation. The FDIC is also amending

§ 328.102(b)(3)(ii), adding a new

§ 328.102(b)(5), and redesignating

§ 328.102(b)(5) as § 328.102(b)(6) in

order to clarify how marketing related to

deposit networks can comply with the

regulation.

Additionally, the FDIC is adding a

new § 328.109 to make clear that, in

accordance with the plain language of

Section 18(a), the existence of the

FDIC’s authority to pursue enforcement

actions under this subpart does not

impact the authority of any other state

or Federal agency or individual to

pursue any other action authorized by

any law

eposit networks can comply with the

regulation.

Additionally, the FDIC is adding a

new § 328.109 to make clear that, in

accordance with the plain language of

Section 18(a), the existence of the

FDIC’s authority to pursue enforcement

actions under this subpart does not

impact the authority of any other state

or Federal agency or individual to

pursue any other action authorized by

any law. The FDIC is also making a

minor, technical amendment to

§ 328.107 to provide clarity regarding

the General Counsel’s delegated

authority to initiate and prosecute

formal enforcement actions under the

final rule.

Finally, the FDIC is redesignating the

existing regulations in part 328 as

subpart A to part 328, entitled

‘‘Advertisement of Membership,’’ and is

establishing a new subpart B to part 328,

entitled ‘‘False Advertising,

Misrepresentation of Insured Status, and

Misuse of the FDIC’s Name or Logo’’

containing the new regulations

described herein. Finally, the FDIC is

making technical amendments to

§ 328.3, limiting the applicability of

definitions in that section to subpart A

of part 328, and not to part 328,

generally.

V. Expected Effects

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. The FDIC currently insures

4,960 depository institutions 20 that

could also be affected; however in

practice, the final rule will primarily

affect non-bank entities and private

individuals. Since the adoption of

Section 18(a)(4) in 2008, the FDIC has

issued only one formal enforcement

order against a non-bank entity for

misuse of the FDIC’s name or logo or for

misrepresentations or false advertising

in relation to deposit insurance

nstitutions 20 that

could also be affected; however in

practice, the final rule will primarily

affect non-bank entities and private

individuals. Since the adoption of

Section 18(a)(4) in 2008, the FDIC has

issued only one formal enforcement

order against a non-bank entity for

misuse of the FDIC’s name or logo or for

misrepresentations or false advertising

in relation to deposit insurance.

However, between January 1, 2019, and

December 31, 2020, the FDIC reached

informal resolutions regarding the

potential misuse of the FDIC’s name or

logo and/or misrepresentations relation

to deposit insurance in at least 165

instances.21 Based on this experience,

the FDIC estimates that the final rule

will apply to relatively few formal

enforcement actions and conservatively

estimates that it will affect fewer than

165 informal resolutions with non-bank

entities and individuals each year.

As discussed previously, the final rule

will clarify the FDIC’s procedures for

evaluating potential violations of

Section 18(a)(4). The final rule will

generally be consistent with existing

practices used by the FDIC with respect

to these matters. Further the rule will

not affect the application of related

criminal prohibitions under 18 U.S.C.

709. Therefore, the FDIC believes that

the final rule is unlikely to have any

significant effect on formal and informal

enforcement of the Section 18(a)(4)

prohibitions.

The final rule could pose some

indirect disclosure costs on non-

depository entities. The rule’s

description of ‘‘material omission’’

provides that a statement that a product

is insured or guaranteed by the FDIC

violates the rule if non-depository

entities who make representations about

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re costs on non-

depository entities. The rule’s

description of ‘‘material omission’’

provides that a statement that a product

is insured or guaranteed by the FDIC

violates the rule if non-depository

entities who make representations about

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Federal Register / Vol. 87, No. 106 / Thursday, June 2, 2022 / Rules and Regulations

22 5 U.S.C. 601, et seq.

23 The SBA defines a small banking organization

as having $750 million or less in assets, where ‘‘a

financial institution’s assets are determined by

averaging the assets reported on its four quarterly

financial statements for the preceding year.’’ See 13

CFR 121.201 (as amended by 87 FR18627, effective

May 2, 2022). ‘‘SBA counts the receipts, employees,

or other measure of size of the concern whose size

is at issue and all of its domestic and foreign

affiliates.’’ See 13 CFR 121.103. Following these

regulations, the FDIC uses a covered entity’s

affiliated and acquired assets, averaged over the

preceding four quarters, to determine whether the

FDIC-supervised institution is ‘‘small’’ for the

purposes of RFA.

24 FDIC Call Report data, June 30, 2021.

25 How to Comply with the Regulatory Flexibility

Act, August 2017, The U.S. Small Business

Administration, Office of Advocacy, https://

cdn.advocacy.sba.gov/wp-content/uploads/2019/

06/21110349/How-to-Comply-with-the-RFA.pdf.

26 4 U.S.C. 3501–3521.

deposit insurance fail to directly or

indirectly identify the IDIs into which

consumers’ deposits may be placed. As

described above, a non-bank entity may

comply with this provision by publicly

disclosing the name(s) of all IDI(s) with

which the entity has existing direct or

indirect business relationships for the

placement of deposits and into which

consumers’ deposits may be placed

21.

deposit insurance fail to directly or

indirectly identify the IDIs into which

consumers’ deposits may be placed. As

described above, a non-bank entity may

comply with this provision by publicly

disclosing the name(s) of all IDI(s) with

which the entity has existing direct or

indirect business relationships for the

placement of deposits and into which

consumers’ deposits may be placed. If

the non-bank entity places deposits

through a deposit network, it may

publicly disclose the name(s) of the IDIs

that are part of the deposit network.

Such a list could be provided in writing

or through a hyperlink to a website

containing this information. Such a

website could be maintained by the

non-bank entity or the deposit network.

In turn, the rule could result in deposit

networks making publicly available lists

of the IDIs with which they have

existing business relationships for the

placement of deposits, to the degree

those entities are not already doing so.

In either case, the FDIC believes that

any such costs are likely to be relatively

small.

The FDIC believes that the final rule

will benefit FDIC-insured institutions

and members of the public by further

clarifying what constitutes a violation of

Section 18(a)(4), by creating a process

by which institutions and members of

the public can report suspected

instances of false advertising, misuse, or

misrepresentation regarding deposit

insurance, and by establishing clear

procedures by which the FDIC will

investigate and, where necessary,

formally and informally resolve

potential violations of Section 18(a)(4).

Specifically, the added transparency on

the FDIC’s processes for investigating

potential instances of misuse or

misrepresentation and, if needed,

resolution are expected to benefit the

parties involved by establishing a

common understanding of those

processes.

VI

ch the FDIC will

investigate and, where necessary,

formally and informally resolve

potential violations of Section 18(a)(4).

Specifically, the added transparency on

the FDIC’s processes for investigating

potential instances of misuse or

misrepresentation and, if needed,

resolution are expected to benefit the

parties involved by establishing a

common understanding of those

processes.

VI. Alternatives

The FDIC has considered alternatives

to the rule but believes that adopting

subpart B to part 328 represents the

most appropriate option. As discussed

previously, Section 18(a)(4) establishes

prohibitions against the misuse of the

FDIC’s name or logo and prohibits

misrepresentations and false advertising

in relation to deposit insurance. The

FDIC considered the status quo

alternative of not adopting a regulation.

However, the FDIC believes that the

final rule is the most appropriate action

because it provides clarity for the public

regarding what constitutes misuse of

FDIC name or logo or misrepresentation

with respect to FDIC insurance, how the

FDIC will identify and investigate

suspected instances of misuse or

misrepresentation, and the process by

which the FDIC will pursue formal or

informal resolution of instances of

misuse or misrepresentation.

VII. Administrative Law Matters

A. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA),

requires that, in connection with a

notice of final rulemaking, an agency

prepare and make available for public

comment a final regulatory flexibility

analysis that describes the impact of the

final rule on small entities.22 However,

a regulatory flexibility analysis is not

required if the agency certifies that the

rule will not have a significant

economic impact on a substantial

number of small entities and publishes

its certification and a short explanatory

statement in the Federal Register

together with the rule

gulatory flexibility

analysis that describes the impact of the

final rule on small entities.22 However,

a regulatory flexibility analysis is not

required if the agency certifies that the

rule will not have a significant

economic impact on a substantial

number of small entities and publishes

its certification and a short explanatory

statement in the Federal Register

together with the rule. The Small

Business Administration (SBA) has

defined ‘‘small entities’’ to include

banking organizations with total assets

of less than or equal to $750 million.23

Generally, the FDIC considers a

significant effect to be a quantified effect

in excess of 5 percent of total annual

salaries and benefits per institution, or

2.5 percent of total noninterest

expenses. The FDIC believes that effects

in excess of these thresholds typically

represent significant effects for FDIC-

supervised institutions. For the reasons

provided below, the FDIC certifies that

the rule will not have a significant

economic impact on a substantial

number of small entities. Accordingly, a

regulatory flexibility analysis is not

required.

As of June 30, 2021, the FDIC insured

4,960 depository institutions, of which

3,374 are considered small banking

organizations for the purposes of RFA.24

Potential instances of misuse of the

FDIC name or logo, or

misrepresentations about deposit

insurance, by IDIs are usually addressed

under the normal supervisory authority

of the appropriate Federal financial

regulator; therefore although the final

rule could affect IDIs, in practice the

rule would primarily affect non-bank

entities and private individuals. Private

individuals are not considered ‘‘small

entities’’ under the RFA.25

Based on the information above, the

FDIC certifies that the rule would not

have a significant economic impact on

a substantial number of small entities.

B

inancial

regulator; therefore although the final

rule could affect IDIs, in practice the

rule would primarily affect non-bank

entities and private individuals. Private

individuals are not considered ‘‘small

entities’’ under the RFA.25

Based on the information above, the

FDIC certifies that the rule would not

have a significant economic impact on

a substantial number of small entities.

B. Paperwork Reduction Act

The Paperwork Reduction Act of 1995

(PRA) states that no agency may

conduct or sponsor, nor is the

respondent required to respond to, an

information collection unless it displays

a currently valid Office of Management

and Budget (OMB) control number.26

The FDIC’s OMB control number for its

‘‘Customer Assistance Forms’’

information collection is 3064–0134.

The final rule does not revise this

existing information collection pursuant

to the PRA and consequently, no

submission in connection with this

OMB control number will be made to

the OMB for review. However,

§ 328.102(b)(5) of the final rule imposes

third-party disclosure requirements

which will be addressed in a separate

Federal Register document. In

particular, § 328.102(b)(5) of the final

rule imposes disclosure requirements

for non-bank entities that make certain

types of statements regarding deposit

insurance. Under the PRA, no person

shall be subject to penalty for failing to

comply with a collection of information

if the collection of information is not

approved by the OMB. Consequently,

the FDIC will not subject anyone to

penalties for violations of

§ 328.102(b)(5) related to such third-

party disclosures until the information

collection request is approved by the

OMB.

C. Plain Language

Section 722 of the Gramm-Leach-

Bliley Act 48 requires the Federal

banking agencies to use plain language

in all proposed and final rulemakings

published in the Federal Register after

January 1, 2000. The FDIC invited

comment regarding the use of plain

language, but did not receive any

comments on this topic

l the information

collection request is approved by the

OMB.

C. Plain Language

Section 722 of the Gramm-Leach-

Bliley Act 48 requires the Federal

banking agencies to use plain language

in all proposed and final rulemakings

published in the Federal Register after

January 1, 2000. The FDIC invited

comment regarding the use of plain

language, but did not receive any

comments on this topic.

D. The Congressional Review Act

For purposes of Congressional Review

Act, the OMB makes a determination as

to whether a final rule constitutes a

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27 12 U.S.C. 4802(a).

28 Id.

‘‘major’’ rule. If a rule is deemed a

‘‘major rule’’ by the OMB, the

Congressional Review Act generally

provides that the rule may not take

effect until at least 60 days following its

publication. The Congressional Review

Act defines a ‘‘major rule’’ as any rule

that the Administrator of the Office of

Information and Regulatory Affairs of

the OMB finds has resulted in or is

likely to result in—(A) an annual effect

on the economy of $100,000,000 or

more; (B) a major increase in costs or

prices for consumers, individual

industries, Federal, State, or Local

government agencies or geographic

regions, or (C) significant adverse effects

on competition, employment,

investment, productivity, innovation, or

on the ability of United States-based

enterprises to compete with foreign-

based enterprises in domestic and

export markets. The OMB has

determined that the final rule is not a

major rule for purposes of the

Congressional Review Act.

As required by the Congressional

Review Act, the FDIC will submit the

final rule and other appropriate reports

to Congress and the Government

Accountability Office for review.

E

d States-based

enterprises to compete with foreign-

based enterprises in domestic and

export markets. The OMB has

determined that the final rule is not a

major rule for purposes of the

Congressional Review Act.

As required by the Congressional

Review Act, the FDIC will submit the

final rule and other appropriate reports

to Congress and the Government

Accountability Office for review.

E. Riegle Community Development and

Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the

Riegle Community Development and

Regulatory Improvement Act

(RCDRIA),27 in determining the effective

date and administrative compliance

requirements for new regulations that

impose additional reporting, disclosure,

or other requirements on insured

depository institutions (IDIs), each

Federal banking agency must consider,

consistent with principles of safety and

soundness and the public interest, any

administrative burdens that such

regulations would place on depository

institutions, including small depository

institutions, and customers of

depository institutions, as well as the

benefits of such regulations. In addition,

section 302(b) of RCDRIA requires new

regulations and amendments to

regulations that impose additional

reporting, disclosures, or other new

requirements on IDIs generally to take

effect on the first day of a calendar

quarter that begins on or after the date

on which the regulations are published

in final form.28 The FDIC has

determined that the final rule would not

impose any additional reporting,

disclosure, or other new requirements

on IDIs, and thus the requirements of

the RCDRIA do not apply.

List of Subjects in 12 CFR Part 328

Advertising, Bank deposit insurance,

Savings associations, Signs and

symbols

that begins on or after the date

on which the regulations are published

in final form.28 The FDIC has

determined that the final rule would not

impose any additional reporting,

disclosure, or other new requirements

on IDIs, and thus the requirements of

the RCDRIA do not apply.

List of Subjects in 12 CFR Part 328

Advertising, Bank deposit insurance,

Savings associations, Signs and

symbols.

Authority and Issuance

For the reasons stated in the

preamble, the Federal Deposit Insurance

Corporation amends 12 CFR part 328 as

follows:

PART 328—ADVERTISEMENT OF

MEMBERSHIP, FALSE ADVERTISING,

MISREPRESENTATION OF INSURED

STATUS, AND MISUSE OF THE FDIC’S

NAME OR LOGO

■1. Revise the authority citation for part

328 to read as follows:

Authority: 12 U.S.C. 1818, 1819 (Tenth),

1820(c), 1828(a).

■2. Revise the heading for part 328 to

read as set forth above.

■3. Designate §§ 328.0 through 328.4 as

subpart A and add a heading for subpart

A to read as follows:

Subpart A—Advertisement of

Membership

■4. Amend § 328.3 by revising

paragraphs (a) and (e)(1)(i) and (ii) to

read as follows:

§ 328.3

Official advertising statement

requirements.

(a) Advertisement defined. The term

‘‘advertisement,’’ as used in this

subpart, shall mean a commercial

message, in any medium, that is

designed to attract public attention or

patronage to a product or business.

*

*

*

*

*

(e) * * *

(1) * * *

(i) Non-deposit product. As used in

this subpart, the term ‘‘non-deposit

product’’ shall include, but is not

limited to, insurance products,

annuities, mutual funds, and securities.

For purposes of this definition, a credit

product is not a non-deposit product.

medium, that is

designed to attract public attention or

patronage to a product or business.

*

*

*

*

*

(e) * * *

(1) * * *

(i) Non-deposit product. As used in

this subpart, the term ‘‘non-deposit

product’’ shall include, but is not

limited to, insurance products,

annuities, mutual funds, and securities.

For purposes of this definition, a credit

product is not a non-deposit product.

(ii) Hybrid product. As used in this

subpart, the term ‘‘hybrid product’’ shall

mean a product or service that has both

deposit product features and non-

deposit product features. A sweep

account is an example of a hybrid

product.

*

*

*

*

*

§§ 328.5 through 328.99

[Reserved]

■5. Add reserved §§ 328.5 through

328.99.

■6. Add subpart B to read as follows:

Subpart B—False Advertising,

Misrepresentation of Insured Status, and

Misuse of the FDIC’s Name or Logo

Sec.

328.100

Scope.

328.101

Definitions.

328.102

Prohibition.

328.103

Inquiries and complaints.

328.104

Investigations of potential

violations.

328.105

Referral to appropriate authority.

328.106

Informal resolution.

328.107

Formal enforcement actions.

328.108

Appeals process.

328.109

Other actions preserved.

Subpart B—False Advertising,

Misrepresentation of Insured Status,

and Misuse of the FDIC’s Name or

Logo

§ 328.100

Scope.

This subpart applies to any person

who:

(a) Falsely represents, expressly or by

implication, that any deposit liability,

obligation, certificate, or share is FDIC-

insured by using the FDIC’s name or

logo;

(b) Knowingly misrepresents,

expressly or by implication, that any

deposit liability, obligation, certificate,

or share is insured by the FDIC if such

an item is not so insured;

(c) Knowingly misrepresents,

expressly or by implication, the extent

to which or the manner in which any

deposit liability, obligation, certificate,

or share is insured by the FDIC, if such

an item is not insured to the extent or

manner represented; or

by implication, that any

deposit liability, obligation, certificate,

or share is insured by the FDIC if such

an item is not so insured;

(c) Knowingly misrepresents,

expressly or by implication, the extent

to which or the manner in which any

deposit liability, obligation, certificate,

or share is insured by the FDIC, if such

an item is not insured to the extent or

manner represented; or

(d) Aids or abets another in any of the

foregoing listed in paragraphs (a)

through (c) of this section.

§ 328.101

Definitions.

For purposes of this subpart:

Advertisement means a commercial

message, in any medium, that is

designed to attract public attention or

patronage to a product, business, or

service.

Appropriate Federal Banking Agency

has the meaning set forth in section 3(q)

of the FDI Act (12 U.S.C. 1813(q)).

Consumer means any current or

potential depositor, including natural

persons, organizations, corporate

entities, and governmental bodies.

FDI Act means the Federal Deposit

Insurance Act, 12 U.S.C. 1811 et seq.

FDIC means the Federal Deposit

Insurance Corporation.

FDIC-Associated Images means the

Seal of the FDIC, alone or within the

letter C of the term FDIC; the Official

Sign and Symbol of the FDIC, as set

forth in § 328.1; the Official Advertising

Statement, as set forth in § 328.3(b); any

similar images; and any other signs and

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Seal of the FDIC, alone or within the

letter C of the term FDIC; the Official

Sign and Symbol of the FDIC, as set

forth in § 328.1; the Official Advertising

Statement, as set forth in § 328.3(b); any

similar images; and any other signs and

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symbols that may represent or imply

that any deposit, liability, obligation

certificate, or share is insured or

guaranteed in whole or in part by the

FDIC.

FDIC-Associated Terms means the

abbreviation ‘‘FDIC,’’ and the following

words or phrases: ‘‘Federal Deposit

Insurance Corporation,’’ ‘‘Federal

Deposit,’’ ‘‘Federal Deposit Insurance,’’

‘‘FDIC-insured,’’ ‘‘FDIC insurance,’’

‘‘insured by FDIC,’’ ‘‘member FDIC;’’

any similar words or phrases; or any

other terms that may represent or imply

that any deposit, liability, obligation

certificate, or share is insured or

guaranteed by the FDIC.

Federal Banking Agency has the

meaning set forth in section 3(z) of the

FDI Act, 12 U.S.C. 1813(z).

General Counsel means the General

Counsel of the FDIC or his or her

designee.

Hybrid Product has the same meaning

as set forth under § 328.3(e)(1)(ii).

Institution-Affiliated Party (IAP) has

the same meaning as set forth under

section 3(u) of the FDI Act, 12 U.S.C.

1813(u).

Insured Deposit has the same meaning

as set forth under section 3(m) of the

FDI Act, 12 U.S.C. 1813(m).

Insured Depository Institution has the

same meaning as set forth under section

3(c)(2) of the FDI Act, 12 U.S.C.

1813(c)(2).

Non-Deposit Product has the same

meaning as set forth under

§ 328.3(e)(1)(i)

he same meaning as set forth under

section 3(u) of the FDI Act, 12 U.S.C.

1813(u).

Insured Deposit has the same meaning

as set forth under section 3(m) of the

FDI Act, 12 U.S.C. 1813(m).

Insured Depository Institution has the

same meaning as set forth under section

3(c)(2) of the FDI Act, 12 U.S.C.

1813(c)(2).

Non-Deposit Product has the same

meaning as set forth under

§ 328.3(e)(1)(i).

Person means a natural person, sole

proprietor, partnership, corporation,

unincorporated association, trust, joint

venture, pool, syndicate, agency or other

entity, association, or organization,

including a ‘‘Regulated Institution’’ as

defined in this section.

Regulated Institution means any

institution for which the FDIC, the

Office of the Comptroller of the

Currency, or the Board of Governors of

the Federal Reserve System is the

‘‘appropriate Federal banking agency’’

under section 3(q) of the FDI Act, 12

U.S.C. 1813(q).

Third-Party Publisher means any

party that publishes, places, distributes,

or circulates advertising or marketing

materials, regardless of the platform or

media used for distribution, containing

FDIC-Associated Images, FDIC-

Associated Terms, or other claims

regarding FDIC insurance or guarantees.

Third-Party Publishers include, but are

not limited to: Publishers and

distributors of written, visual, or print

advertising; broadcasters of video or

audio advertisements; telemarketers;

internet or web-based distributors,

including internet service providers,

and email marketers; and direct mail

marketers and distributors.

Uninsured Financial Product means

any Non-Deposit Product, Hybrid-

Product, investment, security,

obligation, certificate, share, or financial

product other than an ‘‘Insured Deposit’’

as defined in this section.

§ 328.102

Prohibition.

elemarketers;

internet or web-based distributors,

including internet service providers,

and email marketers; and direct mail

marketers and distributors.

Uninsured Financial Product means

any Non-Deposit Product, Hybrid-

Product, investment, security,

obligation, certificate, share, or financial

product other than an ‘‘Insured Deposit’’

as defined in this section.

§ 328.102

Prohibition.

(a) Use of the FDIC name or logo. (1)

No person may represent or imply that

any Uninsured Financial Product is

insured or guaranteed by the FDIC by

using FDIC-Associated Terms as part of

any business name or firm name of any

person.

(2) No person may represent or imply

that any Uninsured Financial Product is

insured or guaranteed by the FDIC by

using FDIC-Associated Terms or by

using FDIC-Associated Images as part of

an Advertisement, solicitation, or other

publication or dissemination.

(3) This section applies, but is not

limited, to:

(i) An Advertisement for any

Uninsured Financial Product that

features or includes one or more FDIC-

Associated Terms or FDIC-Associated

Images, without a clear, conspicuous,

and prominent disclaimer that the

products being offered are not FDIC

insured or guaranteed.

(ii) An Advertisement for any

Uninsured Financial Product that may

be backed or guaranteed by an entity

other that the FDIC, but features or

includes one or more FDIC-Associated

Terms or FDIC-Associated Images,

without a clear, conspicuous,

prominent, and accurate explanation as

to the actual nature and source of the

guarantee.

(iii) An Advertisement for any Non-

Deposit Product or Hybrid Product by a

Regulated Institution that includes any

statement or symbol which implies or

suggests the existence of deposit

insurance relating to the Non-Deposit

Product or Hybrid Product.

Associated Images,

without a clear, conspicuous,

prominent, and accurate explanation as

to the actual nature and source of the

guarantee.

(iii) An Advertisement for any Non-

Deposit Product or Hybrid Product by a

Regulated Institution that includes any

statement or symbol which implies or

suggests the existence of deposit

insurance relating to the Non-Deposit

Product or Hybrid Product.

(iv) Publication or dissemination of

information, regardless of the media or

platform, that suggests or implies that

the party making the representation is

an FDIC-insured institution if this is not

in fact true.

(v) Publication or dissemination of

information, regardless of the media or

platform, that suggests or implies that

the party making the representation is

associated with an FDIC-insured

institution if the nature of the

association is not clearly,

conspicuously, prominently, and

accurately described.

(vi) Publication or dissemination of

information, regardless of the media or

platform, that suggests or implies that

the party making the representation is

the FDIC or any office, division, or

subdivision thereof, if this is not in fact

true.

(vii) Publication or dissemination of

information, regardless of the media or

platform, that suggests or implies that

the party making the representation is

associated with the FDIC or any office,

division, or subdivision thereof, if the

nature of the association is not clearly,

conspicuously, prominently, and

accurately described.

(b) False or misleading

representations regarding FDIC

insurance. (1) No person may

knowingly make false or misleading

representations about deposit insurance,

including:

the party making the representation is

associated with the FDIC or any office,

division, or subdivision thereof, if the

nature of the association is not clearly,

conspicuously, prominently, and

accurately described.

(b) False or misleading

representations regarding FDIC

insurance. (1) No person may

knowingly make false or misleading

representations about deposit insurance,

including:

(i) That any deposit liability,

obligation, certificate, or share is

insured under this subpart if such a

deposit is not so insured;

(ii) The extent to which any deposit

liability, obligation, certificate, or share

is insured under this subpart if such

item is not insured to the extent

represented; or

(iii) The manner in which any deposit

liability, obligation, certificate, or share

is insured under this subpart if such

item is not insured in the manner

represented.

(2) For the purposes of this section, a

statement is deemed to be a statement

regarding deposit insurance, if it:

(i) Includes any FDIC-Associated

Images or FDIC-Associated Terms;

(ii) Makes any representation,

suggestion, or implication about the

existence of FDIC insurance or the

extent or manner of coverage; or

(iii) Makes any representation,

suggestion, or implication about the

existence, extent, or effectiveness of any

guarantee by FDIC in the event of

financial distress by Insured Depository

Institutions, whether a specific Insured

Depository Institution or Insured

Depository Institutions generally,

including but not limited to bank

failure, insolvency, or receivership of

such institutions.

(3) For the purposes of this section, a

statement regarding deposit insurance

violates this section, if:

f any

guarantee by FDIC in the event of

financial distress by Insured Depository

Institutions, whether a specific Insured

Depository Institution or Insured

Depository Institutions generally,

including but not limited to bank

failure, insolvency, or receivership of

such institutions.

(3) For the purposes of this section, a

statement regarding deposit insurance

violates this section, if:

(i) The statement contains any

material representations which would

have the tendency or capacity to

mislead a reasonable consumer,

regardless of whether any such

consumer was actually misled; or

(ii) The statement omits material

information that would be necessary to

prevent a reasonable consumer from

being misled, regardless of whether any

such consumer was actually misled.

(4) Without limitation, a false or

misleading representation is deemed to

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Federal Register / Vol. 87, No. 106 / Thursday, June 2, 2022 / Rules and Regulations

be material if it states, suggests, or

implies that:

(i) Uninsured Financial Products are

insured or guaranteed by the FDIC;

(ii) Insured Deposits (whether

generally or at a particular Regulated

Institution) are not insured or

guaranteed by the FDIC;

(iii) The amount of deposit insurance

coverage is different (whether greater or

less) than actually provided under the

FDI Act;

(iv) The circumstances under which

deposit insurance may be paid are

different than actually provided under

the FDI Act;

by the FDIC;

(ii) Insured Deposits (whether

generally or at a particular Regulated

Institution) are not insured or

guaranteed by the FDIC;

(iii) The amount of deposit insurance

coverage is different (whether greater or

less) than actually provided under the

FDI Act;

(iv) The circumstances under which

deposit insurance may be paid are

different than actually provided under

the FDI Act;

(v) The requirements to qualify for

deposit insurance, or the process by

which deposit insurance would be paid,

are different from what is provided

under the FDI Act and its implementing

regulations in this chapter, including

false or misleading claims related to

actions required of consumers to qualify

for or obtain such insurance; or

(vi) Regulated Institutions may

convert Insured Deposits into another

form of liability that is not insured, such

as unsecured debt or equity.

(5) Without limitation, a statement

regarding deposit insurance will be

deemed to omit material information if

the absence of such information could

lead a reasonable consumer to believe

any of the material misrepresentations

set forth in paragraph (b)(4) of this

section or could otherwise result in a

reasonable consumer being unable to

understand the extent or manner of

deposit insurance provided. For

example, if a statement is made by a

person other than an Insured Depository

Institution that represents or implies

that an advertised product is insured or

guaranteed by the FDIC, it will be

deemed to be a material omission to fail

to identify the Insured Depository

Institution(s) with which the

representing party has a direct or

indirect business relationship for the

placement of deposits and into which

the consumer’s deposits may be placed.

(6) Without limitation, a

representation is deemed to have been

knowingly made if the person making

the representation:

, it will be

deemed to be a material omission to fail

to identify the Insured Depository

Institution(s) with which the

representing party has a direct or

indirect business relationship for the

placement of deposits and into which

the consumer’s deposits may be placed.

(6) Without limitation, a

representation is deemed to have been

knowingly made if the person making

the representation:

(i) Has made false or misleading

representations regarding deposit

insurance;

(ii) Has been advised by the FDIC in

an advisory letter, as provided in

§ 328.106(a), or has been advised by

another governmental or regulatory

authority, including, but not limited to,

another Federal banking agency, the

Federal Trade Commission, the U.S.

Department of Justice, or a state bank

supervisor, that such representations are

false or misleading; and

(iii) Thereafter, continues to make

these, or substantially-similar,

representations.

§ 328.103

Inquiries and complaints.

Should any person have reason to

believe that anyone is or may be acting

in violation of section 18(a) of the FDI

Act (12 U.S.C. 1828(a)) or this subpart,

or have questions regarding the

accuracy of deposit-related

representations, such individuals may

contact the FDIC at the FDIC

Information and Support Center, http://

ask.fdic.gov/

fdicinformationandsupportcenter/s/, or

by telephone at 1–877–275–3342 (1–

877–ASK–FDIC).

§ 328.104

Investigations of potential

violations.

(a) The General Counsel has delegated

authority to investigate potential

violations of section 18(a) of the FDI Act

(12 U.S.C. 1828(a)) and this subpart.

viduals may

contact the FDIC at the FDIC

Information and Support Center, http://

ask.fdic.gov/

fdicinformationandsupportcenter/s/, or

by telephone at 1–877–275–3342 (1–

877–ASK–FDIC).

§ 328.104

Investigations of potential

violations.

(a) The General Counsel has delegated

authority to investigate potential

violations of section 18(a) of the FDI Act

(12 U.S.C. 1828(a)) and this subpart.

(b) Such investigations will be

conducted as prescribed under section

10(c) of the FDI Act (12 U.S.C. 1820(c))

and subpart K of part 308 of this chapter

(12 CFR 308.144 through 308.150).

Notwithstanding the general

confidentiality provisions of 12 CFR

308.147, in cases that may pose a risk

of imminent harm to consumers, the

FDIC may disclose or confirm the

existence of an investigation that does

not involve an Insured Depository

Institution or a known IAP thereof. Such

disclosure must not disclose any

information obtained or uncovered

during the course of the investigation.

§ 328.105

Referral to appropriate authority.

(a) If, in connection with the receipt

of an inquiry or complaint, or during the

course of an investigation, informal

resolution, or formal enforcement under

this subpart:

(1) The FDIC becomes aware of

conduct by a Regulated Institution for

which another Federal banking agency

is the appropriate Federal banking

agency or an Institution-Affiliated Party

of such an institution, that appears to

violate section 18(a) of the FDI Act (12

U.S.C. 1828(a)), the FDIC may

recommend that the appropriate Federal

banking agency take appropriate

enforcement action. If the appropriate

Federal banking agency does not take

the recommended action within 30

days, the FDIC may pursue any and all

remedies available under section 18(a)

or the FDI Act (12 U.S.C. 1828(a)) and

this subpart;

ears to

violate section 18(a) of the FDI Act (12

U.S.C. 1828(a)), the FDIC may

recommend that the appropriate Federal

banking agency take appropriate

enforcement action. If the appropriate

Federal banking agency does not take

the recommended action within 30

days, the FDIC may pursue any and all

remedies available under section 18(a)

or the FDI Act (12 U.S.C. 1828(a)) and

this subpart;

(2) The FDIC becomes aware of

conduct that the FDIC has reason to

believe violates a civil law or

regulations within the jurisdiction of

another regulatory authority, the FDIC

may take steps to notify the appropriate

authority; and

(3) The FDIC becomes aware of

conduct that the FDIC has reason to

believe violates 18 U.S.C. 709, the FDIC

may notify FDIC’s Office of Inspector

General for referral to the appropriate

criminal law enforcement authority.

(b) To the extent that any records are

provided to a regulatory or criminal law

enforcement authority, as set forth in

paragraph (a) of this section, the

provision of such records will be made

in accordance with the requirements of

part 309 of this chapter. Where such

records were obtained during the course

of an investigation, informal resolution,

or formal enforcement action, the

General Counsel will be considered the

Director of the FDIC’s Division having

primary authority over records so

obtained.

§ 328.106

Informal resolution.

(a) If the FDIC has reason to believe

that any person may be misusing an

FDIC-Associated Image or FDIC-

Associated Term or otherwise violating

§ 328.102(a), or may be making false or

misleading representations regarding

deposit insurance in violation of

§ 328.102(b), the FDIC may issue an

advisory letter to such a person and/or

any person who aids or abets another in

such conduct, including any Third-

Party Publisher. Generally, such an

advisory letter will:

(1) Alert the recipient of advisory

letter of the basis for the FDIC’s

concerns;

(2) Request that the person and/or

Third-Party Publisher:

rding

deposit insurance in violation of

§ 328.102(b), the FDIC may issue an

advisory letter to such a person and/or

any person who aids or abets another in

such conduct, including any Third-

Party Publisher. Generally, such an

advisory letter will:

(1) Alert the recipient of advisory

letter of the basis for the FDIC’s

concerns;

(2) Request that the person and/or

Third-Party Publisher:

(i) Take reasonable steps to prevent

any violations of section 18(a) of the FDI

Act (12 U.S.C. 1828(a)) and this subpart;

(ii) Commit in writing to refrain from

such violations in the future; and

(iii) Notify the FDIC in writing that

the identified concerns have been fully

addressed and remediated; and

(2) Offer the person or Third-Party

Publisher the opportunity to provide

additional information, documentation,

or justifications to substantiate the

representations made or otherwise

refute the FDIC’s expressed concerns.

(b) Except in cases where the FDIC

has reason to believe that consumers or

Insured Depository Institutions may

suffer harm arising from continued

violations, recipients of advisory letters

described in paragraph (a) of this

section will be provided not less than

fifteen (15) days to provide the

requested commitment, explanation, or

justification.

(c) Where a recipient of an advisory

letter described in paragraph (a) of this

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Federal Register / Vol. 87, No. 106 / Thursday, June 2, 2022 / Rules and Regulations

section provides the FDIC with the

requested written commitments within

the timeframe specified in the letter,

and where any required remediation has

been verified by FDIC staff, the FDIC

will generally take no further

administrative enforcement against such

a party under § 328.107.

OD with RULES1

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Federal Register / Vol. 87, No. 106 / Thursday, June 2, 2022 / Rules and Regulations

section provides the FDIC with the

requested written commitments within

the timeframe specified in the letter,

and where any required remediation has

been verified by FDIC staff, the FDIC

will generally take no further

administrative enforcement against such

a party under § 328.107.

(d) Where a recipient of an advisory

letter described in paragraph (a) of this

section fails to respond to the letter,

fails to make the requested

commitments, or fails to provide

additional information, documentation,

or justifications that the FDIC, in its

discretion, finds adequate to

substantiate the representations made or

otherwise refute the concerns set forth

in the advisory letter, the FDIC may

pursue all remedies set forth in this

subpart.

(e) Nothing in this section will

prevent the FDIC from commencing a

formal enforcement action under

§ 328.107 at any time before or after the

issuance of an advisory letter under this

section if:

(1) The FDIC has reason to believe

that consumers or Insured Depository

Institutions may suffer harm arising

from continued violations; or

(2) The person to whom such an

advisory letter would be sent has

previously received a similar advisory

letter from the FDIC under paragraph (a)

of this section.

§ 328.107

Formal enforcement actions.

(a) Enforcement authority. For the

purpose of enforcing the requirements

of section 18(a)(4) of the FDI Act (12

U.S.C. 1818(a)(4)) and this subpart, the

General Counsel has delegated authority

to bring administrative enforcement

actions against any person under

sections 8(b), (c), (d), and (i) of the FDI

Act (12 U.S.C. 1818(b), 1818(c), 1818(d),

and 1818(i))

7

Formal enforcement actions.

(a) Enforcement authority. For the

purpose of enforcing the requirements

of section 18(a)(4) of the FDI Act (12

U.S.C. 1818(a)(4)) and this subpart, the

General Counsel has delegated authority

to bring administrative enforcement

actions against any person under

sections 8(b), (c), (d), and (i) of the FDI

Act (12 U.S.C. 1818(b), 1818(c), 1818(d),

and 1818(i)). In the case of conduct by

a Regulated Institution for which

another Federal banking agency is the

appropriate Federal banking agency or

an institution-affiliated party of such an

institution, the General Counsel may not

bring an enforcement action under this

subpart unless the FDIC has provided

the appropriate Federal banking agency

with notice as set forth in

§ 328.105(a)(1) and the appropriate

Federal banking agency failed to take

the recommended action.

(b) Venue. Unless the person who is

the subject of the enforcement action

consents to a different location, the

venue for an administrative action

commenced under section 18(a)(4) of

the FDI Act (12 U.S.C. 1818(a)(4)), will

be as follows:

(1) In a case where the person who is

the subject of the action is an Insured

Depository Institution or an IAP of an

Insured Depository Institution, in the

Federal judicial district or territory in

which the home office of the Insured

Depository Institution is located.

(2) In a case where the person who is

the subject of the action is not an

Insured Depository Institution or an IAP

of an Insured Depository Institution, the

Federal judicial district or territory

where the person who is the subject of

the action resides, if the subject resides

in the United States. If the subject of the

action does not reside in the United

States, the venue will be where the

subject of the action conducts business

or the Federal judicial district for the

District of Columbia.

(3) For the purposes of paragraph

stitution, the

Federal judicial district or territory

where the person who is the subject of

the action resides, if the subject resides

in the United States. If the subject of the

action does not reside in the United

States, the venue will be where the

subject of the action conducts business

or the Federal judicial district for the

District of Columbia.

(3) For the purposes of paragraph

(b)(1) of this section, a natural person is

deemed to reside in the Federal judicial

district where the natural person is

domiciled. A person other than a

natural person is deemed to reside in

the Federal judicial district where it is

headquartered or has its principal place

of business.

(c) Rules of practice and procedure.

All actions brought and maintained

under this section will be subject to the

FDIC’s Rules of Practice and Procedure

in subparts A through C of part 308 of

this chapter (12 CFR 308.1 through

308.109).

§ 328.108

Appeals process.

(a) A person who is the subject of a

final order issued after an

administrative action commenced

pursuant to this subpart may obtain

judicial review of such order in

accordance with the procedures set

forth in section 8(h)(2) of the FDI Act

(12 U.S.C. 1818(h)(2)).

(b) Petitions for review under this

section may be filed in the court of

appeals for the circuit where the hearing

was held or the United States Court of

Appeals for the District of Columbia

Circuit.

§ 328.109

Other actions preserved.

No provision of this subpart shall be

construed as barring any action

otherwise available, under the laws or

regulations of the United States or any

state, to any Federal or state agency or

person.

Federal Deposit Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on May 17, 2022.

James P. Sheesley,

Assistant Executive Secretary.

[FR Doc

ions preserved.

No provision of this subpart shall be

construed as barring any action

otherwise available, under the laws or

regulations of the United States or any

state, to any Federal or state agency or

person.

Federal Deposit Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on May 17, 2022.

James P. Sheesley,

Assistant Executive Secretary.

[FR Doc. 2022–10903 Filed 6–1–22; 8:45 am]

BILLING CODE 6714–01–P

FEDERAL HOUSING FINANCE

AGENCY

12 CFR Part 1240

RIN 2590–AB18

Enterprise Regulatory Capital

Framework—Public Disclosures for the

Standardized Approach

AGENCY: Federal Housing Finance

Agency.

ACTION: Final rule.

SUMMARY: The Federal Housing Finance

Agency (FHFA or the Agency) is

adopting a final rule (final rule) that

amends the Enterprise Regulatory

Capital Framework (ERCF) by

introducing new public disclosure

requirements for the Federal National

Mortgage Association (Fannie Mae) and

the Federal Home Loan Mortgage

Corporation (Freddie Mac, and with

Fannie Mae, each an Enterprise). The

requirements include quantitative and

qualitative disclosures related to risk

management, corporate governance,

capital structure, and capital

requirements and buffers under the

standardized approach.

DATES: This rule is effective August 1,

2022.

FOR FURTHER INFORMATION CONTACT:

Andrew Varrieur, Senior Associate

Director, Office of Capital Policy, (202)

649–3141, Andrew.Varrieur@fhfa.gov;

Christopher Vincent, Senior Financial

Analyst, Office of Capital Policy, (202)

649–3685, Christopher.Vincent@

fhfa.gov; or James Jordan, Associate

General Counsel, Office of General

Counsel, (202) 649–3075,

James.Jordan@fhfa.gov (these are not

toll-free numbers); Federal Housing

Finance Agency, 400 7th Street SW,

Washington, DC 20219. For TTY/TRS

users with hearing and speech

disabilities, dial 711 and ask to be

connected to any of the contact numbers

above.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction

II

ociate

General Counsel, Office of General

Counsel, (202) 649–3075,

James.Jordan@fhfa.gov (these are not

toll-free numbers); Federal Housing

Finance Agency, 400 7th Street SW,

Washington, DC 20219. For TTY/TRS

users with hearing and speech

disabilities, dial 711 and ask to be

connected to any of the contact numbers

above.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction

II. Overview of the Final Rule

III. General Overview of Comments on the

Proposed Rule

IV. Public Disclosure Requirements

A. General Requirements

B. Standardized Approach

C. Market Risk

V. Frequency of Disclosures

VI. Compliance Dates

VII. Location of Disclosures and Audit

Requirements

VIII. Proprietary and Confidential

Information

IX. Paperwork Reduction Act

X. Regulatory Flexibility Act

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