[Federal Register Volume 87, Number 106 (Thursday, June 2, 2022)]
[Rules and Regulations]
[Pages 33415-33423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10903]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

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. 

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

[[Page 33415]]



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.

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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, <a href="/cdn-cgi/l/email-protection#304259435358475142444a70767479731e575f46"><span class="__cf_email__" data-cfemail="72001b01111a05130006083234363b315c151d04">[email protected]</span></a>; Michael P. Farrell, 
Counsel, Legal Division, 202-898-3853, <a href="/cdn-cgi/l/email-protection#9ff2f9feededfaf3f3dfd9dbd6dcb1f8f0e9"><span class="__cf_email__" data-cfemail="224f44435050474e4e6264666b610c454d54">[email protected]</span></a>, 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. 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\
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    \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).
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    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. 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. 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\
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    \4\ 85 FR 10997 (Feb. 26, 2020).
    \5\ 85 FR 14678 (Mar. 13, 2020).
    \6\ 86 FR 18528 (April 9, 2021).
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The Proposed Rule

    On May 10, 2021, the FDIC published a notice of proposed rulemaking 
(NPR)

[[Page 33416]]

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).
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    \7\ 86 FR 24770 (May 10, 2021).
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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.
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    \8\ Of the comments received, some comments were identical.
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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\
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    \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.
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    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. 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.
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    \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. 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.
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D. Section 328.102(b)(3)(ii)
    The FDIC received ten comments related to proposed Sec.  
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.
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    \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.''
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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 Sec.  328.103, which allows any ``person'' to submit 
complaints, and the definition of ``person'' under proposed Sec.  
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 Sec.  328.104. The FDIC interprets this phrase to mean any 
person who is actually known to the

[[Page 33417]]

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\
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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. 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.
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    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.
    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 Sec.  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\
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    \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).
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    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 Sec.  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 Sec.  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 Sec.  
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 
Sec.  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. Omission of this 
information could impact the insurability of the deposited funds to the 
consumer's detriment.\14\
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    \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. 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.
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    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

[[Page 33418]]

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. Accordingly, the FDIC is amending proposed Sec.  
328.102(b)(3)(ii) and has created a new Sec.  328.102(b)(5) to 
accommodate and address these competing concerns.\16\
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    \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 Sec.  328.102(b)(5) that was included in the NPR has 
likewise been redesignated as Sec.  328.102(b)(6).
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    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 insurance 
provided.
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    \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. 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.
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    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 Sec.  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 Sec.  328.102(b)(3)(ii), adding a new Sec.  328.102(b)(5), and 
redesignating Sec.  328.102(b)(5) as Sec.  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 Sec.  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 Sec.  
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 Sec.  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. 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.
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    \20\ Call Report data, June 30, 2021.
    \21\ See FDIC 2019 Annual Report, p. 38; FDIC 2020 Annual 
Report, p. 47.
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    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

[[Page 33419]]

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. 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. 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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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, Sec.  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, Sec.  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 Sec.  328.102(b)(5) related to such third-
party disclosures until the information collection request is approved 
by the OMB.
---------------------------------------------------------------------------

    \26\ 4 U.S.C. 3501-3521.
---------------------------------------------------------------------------

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

[[Page 33420]]

``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. 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.
---------------------------------------------------------------------------

    \27\ 12 U.S.C. 4802(a).
    \28\ Id.
---------------------------------------------------------------------------

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

0
1. Revise the authority citation for part 328 to read as follows:

    Authority:  12 U.S.C. 1818, 1819 (Tenth), 1820(c), 1828(a).


0
2. Revise the heading for part 328 to read as set forth above.

0
3. Designate Sec. Sec.  328.0 through 328.4 as subpart A and add a 
heading for subpart A to read as follows:

Subpart A--Advertisement of Membership

0
4. Amend Sec.  328.3 by revising paragraphs (a) and (e)(1)(i) and (ii) 
to read as follows:


Sec.  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.
    (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.
* * * * *


Sec. Sec.  328.5 through 328.99   [Reserved]

0
5. Add reserved Sec. Sec.  328.5 through 328.99.

0
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


Sec.  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
    (d) Aids or abets another in any of the foregoing listed in 
paragraphs (a) through (c) of this section.


Sec.  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 Sec.  328.1; the Official Advertising Statement, 
as set forth in Sec.  328.3(b); any similar images; and any other signs 
and

[[Page 33421]]

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 Sec.  
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 Sec.  
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.


Sec.  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.
    (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:
    (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:
    (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

[[Page 33422]]

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;
    (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:
    (i) Has made false or misleading representations regarding deposit 
insurance;
    (ii) Has been advised by the FDIC in an advisory letter, as 
provided in Sec.  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.


Sec.  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).


Sec.  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.


Sec.  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;
    (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.


Sec.  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 Sec.  328.102(a), or may be making false or misleading 
representations regarding deposit insurance in violation of Sec.  
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

[[Page 33423]]

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 
Sec.  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 Sec.  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.


Sec.  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)). 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 Sec.  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 (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).


Sec.  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.


Sec.  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. 2022-10903 Filed 6-1-22; 8:45 am]
BILLING CODE 6714-01-P


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