31682 Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Rules and Regulations 

1See (http://www.ftc.gov/os/comments/FDICIA/ 

index.shtm). 

be accessed through the BIS Web site at 

www.bis.doc.gov. 

* * * * * 

PART 774—[AMENDED] 

■ 19. The authority citation for part 774 

continues to read as follows: 

Authority: 50 U.S.C. app. 2401 et seq.; 50 

U.S.C. 1701 et seq.; 10 U.S.C. 7420; 10 U.S.C. 

7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et 

seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 

42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 

1354; 46 U.S.C. app. 466c; 50 U.S.C. app. 5; 

22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 

13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 

228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 

Comp., p. 783; Notice of August 13, 2009 (74 

Fed. Reg. 41,325 (August 14, 2009)). 

■ 20. In Supplement No. 1 to part 774, 

Category 2, Export Control Classification 

Number 2B001, revise the ‘‘Controls’’ 

paragraph of the ‘‘License 

Requirements’’ section to read as 

follows: 

Supplement No. 1 to Part 774—The 

Commerce Control List 

* * * * * 

2B001 Machine tools and any combination 

thereof, for removing (or cutting) metals, 

ceramics or ‘‘composites’’, which, according 

to the manufacturer’s technical 

specifications, can be equipped with 

electronic devices for ‘‘numerical control’’; 

and specially designed components as 

follows (see List of Items Controlled). 

License Requirements 

Reason for Control: NS, NP, AT 

Control(s) Country chart 

NS applies to entire entry ................................................................................................................................................................. NS Column 1. 

NP applies to 2B001.a, .b, .c, and .d, EXCEPT: (1) turning machines under 2B001.a with a capacity no greater than 35 mm 

diameter; (2) bar machines (Swissturn), limited to machining only bar feed through, if maximum bar diameter is equal to or 

less than 42 mm and there is no capability of mounting chucks. (Machines may have drilling and/or milling capabilities for 

machining parts with diameters less than 42 mm); or (3) milling machines under 2B001.b.with x-axis travel greater than two 

meters and overall ‘‘positioning accuracy’’ on the x-axis more (worse) than 0.030 mm..

NP Column 1. 

AT applies to entire entry ................................................................................................................................................................. AT Column 1. 

* * * * * 

■ 21. In Supplement No. 1 to part 774, 

Category 4, the Technical Note on 

‘‘Adjusted Peak Performance’’ (‘‘APP’’) 

that appears at the end of Category 4, 

revise the definition of ‘‘APP’’ that 

appears under the heading 

‘‘Abbreviations Used in This Technical 

Note’’ to read as follows: 

Supplement No. 1 to Part 774—The 

Commerce Control List 

* * * * * 

Category 4—Computers 

* * * * * 

Technical Note on ‘‘Adjusted Peak 

Performance’’ (‘‘APP’’) 

* * * * * 

Abbreviations Used in This Technical Note 

* * * * * 

APP is expressed in Weighted TeraFLOPS 

(WT) in units of 1012 adjusted floating point 

operations per second. 

* * * * * 

Dated: May 24, 2010. 

Kevin J. Wolf, 

Assistant Secretary for Export 

Administration. 

[FR Doc. 2010–13243 Filed 6–3–10; 8:45 am] 

BILLING CODE 3510–33–P 

FEDERAL TRADE COMMISSION 

16 CFR Part 320 

RIN 3084-AA99 

Disclosures for Non-Federally Insured 

Depository Institutions Under the 

Federal Deposit Insurance Corporation 

Improvement Act (FDICIA) 

AGENCY: Federal Trade Commission 

(FTC or Commission). 

ACTION: Final rule. 

SUMMARY: The Federal Deposit 

Insurance Corporation Improvement Act 

of 1991 (FDICIA) directs the 

Commission to prescribe the manner 

and content of certain mandatory 

disclosures for depository institutions 

that lack federal deposit insurance. On 

March 13, 2009, the Commission 

published a supplemental notice of 

proposed rulemaking seeking comment 

on disclosure rules for such institutions. 

After reviewing comments received in 

response, the Commission now 

publishes a final rule. 

DATES: This final rule will become 

effective on July 6, 2010. 

ADDRESSES: Copies of this document are 

available from: Public Reference Branch, 

Room 130, Federal Trade Commission, 

600 Pennsylvania Avenue, NW, 

Washington, DC 20580. The complete 

record of this proceeding is also 

available at that address. Relevant 

portions of the proceeding, including 

this document, are available at (http:// 

www.ftc.gov). 

FOR FURTHER INFORMATION CONTACT: 

Hampton Newsome, (202) 326-2889, 

Attorney, Division of Enforcement, 

Bureau of Consumer Protection, Federal 

Trade Commission, 600 Pennsylvania 

Avenue, NW, Washington, DC 20580. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

In 1991, as part of the Federal Deposit 

Insurance Corporation Improvement Act 

(FDICIA), Congress directed the 

Commission to prescribe certain 

disclosures for depository institutions 

lacking federal deposit insurance. 

Congress then prohibited the FTC from 

spending resources on FDICIA’s 

disclosure requirements until 2003. 

After Congress lifted that ban, the 

Commission published proposed 

disclosures consistent with FDICIA’s 

statutory directives (70 FR 12823 

(March 16, 2005)). Many commenters 

raised concerns with the proposal.1

Thereafter, Congress passed the 

Financial Services Regulatory Relief Act 

of 2006 (FSRRA) (Pub. L. 109-351) 

amending FDICIA. The FSRRA 

amendments addressed almost all of the 

concerns raised by commenters about 

the FTC’s proposed rule. The 

Commission published a supplemental 

notice on March 13, 2009 (74 FR 10843) 

seeking comments on a proposal 

consistent with the FSRRA 

amendments. The Commission has 

reviewed the comments received in 

response and now publishes a final rule. 

II. Background 

Under existing law, all federally 

chartered and most state-chartered 

depository institutions must have 

federal deposit insurance. Federal 

deposit insurance funds currently 

guarantee all deposits at federally 


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Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Rules and Regulations 31683 

2On October 3, 2008, the enactment of the 

Emergency Economic Stabilization Act of 2008 

(Pub. L. No. 110-343) raised the basic limit on 

federal deposit insurance coverage from $100,000 to 

$250,000 per depositor. The Helping Families Save 

Their Homes Act of 2009 (Pub. L. No. 111-22) 

extended the $250,000 coverage until December 31, 

2013. 

3See 12 CFR Part 328 and 12 CFR Part 740. 

4A 2003 U.S. Government Accountability Office 

(GAO) report indicated that eight states had credit 

unions that purchased private deposit insurance in 

lieu of federal insurance. An additional nine states 

allowed private deposit insurance but did not have 

any privately insured credit unions. All other states 

required credit unions to have federal deposit 

insurance. ‘‘Federal Deposit Insurance Act: FTC 

Best Among Candidates to Enforce Consumer 

Protection Provisions,’’ GAO-03-971 (Aug. 2003), 6- 

7. The Commission understands that there are a 

small number of state banks and savings 

associations that do not have federal deposit 

insurance. 

5 ‘‘Depository institutions’’ lacking federal 

insurance include credit unions, banks, and savings 

associations that are not either: a) insured 

depository institutions as defined under the FDIA; 

or b) insured credit unions as defined in Section 

101 of the Federal Credit Union Act (FCUA) (12 

U.S.C. 1752). The FDIA defines ‘‘insured depository 

institution’’ as any bank or savings association the 

deposits of which are insured by the FDIC pursuant 

to this chapter (12 U.S.C. 1813(c)). The FCUA 

defines ‘‘insured credit union’’ to mean ‘‘any credit 

union the member accounts of which are insured 

by the National Credit Union Administration’’ (12 

U.S.C. 1752). 

6Congress passed these amendments as part of 

FDICIA. See Pub. L. No. 102-242, 105 Stat. 2236 

(1991) (Section 151 of FDICIA, Subtitle F of Title 

1, S. 543). Section 43 was initially designated as 

Section 40 of the FDIA. See also S. Rep. No. 167, 

102 Cong., 1stSess., at 61 (1992). 

7The definition of ‘‘depository institution’’ in 

Section 43(f)(2) includes any entity that, as 

determined by the FTC, engages in the business of 

receiving deposits and could reasonably be 

mistaken for a depository institution by the entity’s 

current or prospective customers (i.e., ‘‘look-alike’’ 

institutions). The Commission has not identified 

any ‘‘look-alike’’ institutions to date and is not 

addressing the issue in this proceeding. If, in the 

future, the Commission or commenters identify 

‘‘look-alike’’ institutions of concern that are not 

subject to existing legal requirements, the FTC will 

consider whether to develop requirements for such 

entities. 

8 12 U.S.C. 1831t(b). 

9 Id. 

10Making Appropriations for Agriculture, Rural 

Development, Food and Drug Administration, and 

Related Agencies, for the Fiscal Year Ending 

September 30, 2004, and for Other Purposes, H.R. 

Conf. Rep. No. 108-401, Cong., 1stSess., at 88 

(2003). 

11The Commission received 162 comments in 

response to the NPRM. See comments at (http:// 

www.ftc.gov/os/comments/FDICIA/index.shtm). 

12The FSRRA amendments did not alter the basic 

content of the required disclosures. Section 43 

continues to require depository institutions lacking 

federal deposit insurance affirmatively to disclose 

that fact to their depositors or members. (12 U.S.C. 

1831t(b)). 

13The Commission received 29 comments in 

response to the supplemental notice. See comments 

at (http://www.ftc.gov/os/comments/ 

fdiciasupplement/index.shtm). 

14 12 U.S.C. 1831t(b)(2). 

insured institutions up to and including 

$250,000 per depositor.2 Federally 

insured banks and credit unions must 

display signs disclosing this guarantee 

at each station or window where 

insured deposits are normally received 

in the depository institution’s principal 

place of business and in all its 

branches.3

Although the vast majority of 

depository institutions have federal 

deposit insurance, there are some 

exceptions. For example, the Puerto 

Rican government provides deposit 

insurance for non-federal credit unions 

located in Puerto Rico. In addition, 

approximately 170 state-chartered credit 

unions in approximately nine states do 

not have federal deposit insurance, and 

seek to protect their customers through 

private deposit insurance.4

In response to incidents affecting the 

safety of deposits at certain financial 

institutions lacking federal deposit 

insurance, Congress amended the 

Federal Deposit Insurance Act (FDIA) in 

1991 by adding Section 43 (12 U.S.C. 

1831t), which imposes several 

requirements on non-federally insured 

institutions5 and private deposit 

insurers.6 In general, Section 43(b), as 

amended by FSRRA, mandates that 

depository institutions lacking federal 

deposit insurance provide certain 

disclosures to consumers.7 Specifically, 

in all periodic statements, signature 

cards, passbooks, and share certificates, 

the institution must disclose that it does 

not have federal deposit insurance and 

that, if the institution fails, the federal 

government does not guarantee that 

depositors will receive their money back 

(hereinafter ‘‘required long disclosure’’).8

Moreover, in most advertising and at 

deposit windows, principal places of 

business, and branches, the institution 

must disclose that it is not federally 

insured (hereinafter ‘‘required short 

disclosure’’).9

For many years after FDICIA’s 

passage, Congress prohibited the 

Commission from using FTC resources 

to enforce the law’s requirements. In 

2003, Congress lifted this prohibition for 

certain provisions of FDICIA, including 

the disclosure provisions of Section 

43.10 Subsequently, the Commission 

published a Notice of Proposed 

Rulemaking (NPRM) seeking comments 

on its proposed implementation of 

Section 43 (70 FR 12823 (March 16, 

2005)). In response, the Commission 

received numerous comments raising 

serious concerns with the proposal.11

In October 2006, Congress 

substantially addressed the commenter 

concerns directly by amending Section 

43 as part of FSRRA. These new 

amendments rendered significant 

portions of the Commission’s proposed 

Rule obsolete. In particular, the new 

statutory provisions: (1) significantly 

altered Section 43(b)(3) (12 U.S.C. 

1831t(b)(3)), which requires institutions 

to obtain signed acknowledgments from 

depositors related to the lack of federal 

deposit insurance; (2) established 

specific exemptions to the advertising 

disclosure requirements; (3) modified 

the requirements for disclosures on 

periodic statements and account records 

and at depository locations; and (4) 

limited some of the FTC’s authority 

under the law and provided state 

regulators with specific enforcement 

authority.12

In response to the FSRRA 

amendments, the Commission 

published a supplemental notice of 

proposed rulemaking which discussed 

the FSRRA amendments in detail, 

proposed conforming rule changes in 

light of the FSRRA amendments, and 

sought comments on these changes. The 

Commission has reviewed the 

comments received in response13 and, 

as discussed in detail below, now issues 

its final rule. 

III. Comment Analysis 

The comments on the supplemental 

rule notice raised two substantive 

issues: 1) disclosure requirements for 

institutions participating in shared 

branching networks and service centers; 

and 2) the timing of signed 

acknowledgment requirements. 

A. Shared Branching Networks and 

Service Centers 

Background: Under FDICIA, nonfederally insured institutions must post 

required disclosures wherever ‘‘deposits 

are normally received.’’14 Such locations 

could include places that are not owned 

or controlled by the non-federally 

insured institution. For instance, the 

Commission indicated in its 

supplemental notice (74 FR at 10846) 

that disclosures should appear at credit 

union service centers (independent 

facilities that provide services for a 

group of institutions) to the extent such 

facilities contain stations where 

deposits of non-federally insured 

institutions ‘‘are normally received.’’ 

The statute does not define the term 

‘‘normally received.’’ 

Issue and Comments: In response to 

the supplemental notice, many 

commenters raised concerns about 

whether the disclosure requirements 

apply to shared branching networks. 

Shared branching allows participating 

institutions to accept deposits and 

provide additional services for members 

of other institutions in the network. 

Shared branching arrangements 

typically involve hundreds of 


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15For a general discussion of shared branching 

networks, see comments from American Share 

Insurance (# 540033-00003). 

16 Id. 

17 Id. 

18See, e.g., Honda Federal Credit Union (# 

540033-00004); International Harvester Employee 

Credit Union (# 540033-00028). 

19See, e.g., AurGroup Financial Credit Union (# 

540033-00011), Christian Community Credit Union 

(# 540033-00015); Cincinnati Central Credit Union 

(# 540033-00025); Firefighters Community Credit 

Union (# 540033-00009). 

20ASI (# 540033-00003). 

21See 12 U.S.C. 1831t(b)(2)(A). 

22 Id. The NCUA regulations for federally insured 

institutions require posting ‘‘at each station or 

window where insured account funds or deposits 

are normally received in its principal place of 

business and in all its branches ....’’ See 12 C.F.R. 

740.4(c) (emphasis added). In comparison, FDICIA 

states that the disclosure should appear ‘‘at each 

station or window where deposits are normally 

received, its principal place of business and all its 

branches where it accepts deposits or opens 

accounts (excluding automated teller machines or 

point of sale terminals), and on its main Internet 

page.’’ See 12 U.S.C. 1831t(b)(2)(a). 23 74 FR 9347 (March 4, 2009) (NCUA 

regulations). See, e.g., Atlantic Regional Federal 

Credit Union (# 540033-00030); Coast Hills Federal 

Credit Union (# 540033-00013); Mazuma Credit 

Union (# 540033-00027); and ASI (# 540033-00003). 

24NCUA’s disclosure reads: ‘‘This credit union 

participates in a shared branch network with other 

credit unions and accepts share deposits for 

members of those other credit unions. While this 

credit union is federally insured, not all of these 

other credit unions are federally insured. If you 

need information on the insurance status of your 

credit union, please contact your credit union 

directly.’’ 12 C.F.R. 740.4(c)(1). 

25 12 U.S.C. 1831t(b)(2)(a). 

26The record does not identify, nor is the 

Commission aware of, any federally insured 

institutions in a shared branching network that 

constitute locations where the deposits of nonfederally insured institutions are ‘‘normally’’ 

received. 

27See ASI (# 540033-00003). 

28The acknowledgments and notices must 

indicate that the institution is not federally insured 

and that the federal government does not guarantee 

that depositors will recover their money if the 

institution fails. See 12 U.S.C. 1831t(b)(2). 

29CUNA (# 540033-00022). 

institutions, both federally and nonfederally insured.15 Three such 

networks exist nationwide involving 

approximately 3,700 locations.16 The 

vast majority of institutions in these 

networks have federal deposit 

insurance.17

Many commenters raised concern that 

the FTC will require federally insured 

institutions in shared branching 

networks to post FDICIA disclosures on 

behalf of each of the non-federally 

ensured entities in those networks. Both 

federally and non-federally insured 

institutions argued that such a 

requirement would be unreasonable. 

Federally insured institutions warned 

that disclosures at their facilities would 

confuse consumers and may even lead 

some to believe their institutions lack 

federal insurance.18 Non-federally 

insured institutions argued that such a 

requirement may limit or prevent their 

participation in these networks because 

federally insured institutions may refuse 

to post such disclosures.19

American Share Insurance (ASI), a 

private insurer for depository 

institutions, agreed that such 

disclosures would confuse consumers 

and also argued that Congress did not 

intend to require disclosures at such 

locations.20 ASI argued that deposit 

locations at institutions in a shared 

branching network are analogous to 

deposits at ATM’s (which, in some 

cases, do allow deposits from other 

institutions). It then reasoned that, 

because Congress exempted ATM’s from 

FDICIA’s disclosure requirements, 

participants in shared branching 

networks should receive similar 

treatment.21 ASI also stated that 

Congress intended FDICIA’s 

requirements to match National Credit 

Union Administration (NCUA) 

regulations which require disclosures 

only at facilities owned or controlled by 

the regulated institution.22

Several other commenters also 

suggested that the Commission rely on 

recent disclosure requirements issued 

by the NCUA for such networks in lieu 

of imposing a separate disclosure 

requirement.23 Recently, NCUA 

addressed the signage requirements for 

institutions participating in shared 

branching networks (74 FR 9347 (March 

4, 2009)). For federally insured 

institutions and facilities operated by a 

non-credit union entity, the new rules 

require a general disclosure that not all 

institutions in the network are federally 

insured.24 Commenters argued that the 

NCUA disclosure provides a clear 

explanation to consumers and that any 

FTC disclosure could cause confusion. 

Discussion: Under the statute, 

disclosures must appear at ‘‘each station 

or window where deposits are normally 

received’’ (emphasis added).25 By its 

plain language, the law does not limit 

such locations to those owned or 

controlled by the institution. At the 

same time, the law does not require 

disclosures at every station or window 

that could conceivably receive a 

deposit. Instead, the law covers 

locations that ‘‘normally’’ receive 

deposits, which the Commission 

interprets to include locations that 

operate as the functional equivalent of 

stations or windows at the institution’s 

own facilities. Whether a location 

‘‘normally’’ receives deposits for a nonfederally insured institution likely 

depends on factors such as the volume 

of deposits, the frequency of deposits, 

the signage at the receiving institution, 

and whether the receiving institution is 

in the same city as the non-federally 

insured institution.26

Service centers present a different 

issue than shared networks. 

Specifically, these entities are 

independent facilities operated on 

behalf of specific institutions that share 

costs and ownership.27 Therefore, it 

seems likely that these facilities 

‘‘normally’’ receive deposits for 

participating non-federally insured 

institutions. Accordingly, absent 

circumstances demonstrating that a 

particular shared center does not 

‘‘normally’’ receive deposits (as 

discussed above) for a non-federally 

insured institution, the required 

disclosures should appear at the service 

center to ensure the institution complies 

with FDICIA. 

B. Timing for Signed Acknowledgments 

Issue: FDICIA requires institutions 

without federal deposit insurance to 

obtain signed statements from their 

depositors acknowledging that the 

institution does not have federal deposit 

insurance. The law, however, allows 

institutions under certain circumstances 

to provide notices to depositors in lieu 

of obtaining signed acknowledgments.28

Specifically, for depositors who joined 

the institution before October 13, 2006 

(i.e., ‘‘current’’ depositors), an institution 

either must obtain a signed 

acknowledgement, or make two 

attempts to obtain such a signed 

acknowledgement through notices to 

depositors. Under the statute, 

institutions must transmit the first of 

these notices to current depositors not 

later than three months after October 13, 

2006, and the second not less than thirty 

days, but not more than three months, 

after the first. 

Comment: The Credit Union National 

Association (CUNA) 29 urged the FTC to 

change the threshold date from October 

13, 2006 to the date the Commission’s 

rule becomes effective. It reasoned that 

the 2006 date is now impossible to 

meet. 

Discussion: Congress set the October 

13, 2006 date and the Commission has 

no discretion to change it. Importantly, 

the FSRRA amendments were 

immediately enforceable upon 

enactment. Therefore, the date was 

binding on covered institutions at that 

time. Complaints about retroactive 

application of the law, therefore, are 

misplaced. If an institution has not 

already sent notices to persons who 

were depositors as of October 13, 2006 

pursuant to the statute, the law requires 

it to obtain a signed acknowledgment 

from that depositor before accepting a 


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Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Rules and Regulations 31685 

30The final rule contains non-substantive 

editorial changes in Sections 320.2, 320.3, 320.4(a) 

& (b), and 320.5(a), (b), & (c). 

31See, e.g., 12 U.S.C. 222 (national banks); Cal. 

Fin. Code 5606(a) (California savings associations); 

and 12 U.S.C. 3104(c)(1) (state and federal branches 

of foreign banks receiving deposits of less than 

$100,000). 

32Consistent with the statute, the rule applies to 

non-federally insured credit unions in any State, 

the District of Columbia, the several territories and 

possessions of the United States, the Panama Canal 

Zone, and the Commonwealth of Puerto Rico (see 

12 U.S.C. 1781). The Commission understands that 

many credit unions in Puerto Rico do not have 

federal deposit insurance but, instead, operate 

under a Puerto Rican government-backed deposit 

insurance system. Section 43 imposes disclosure 

requirements specifically on institutions that do not 

have federal deposit insurance and does not exempt 

institutions operating under non-federal insurance 

systems. Accordingly, Puerto Rico credit unions are 

subject to the rule’s requirements. 

33See, e.g., Thompson Medical Co., 104 F.T.C. 

648, 797-98 (1984); The Kroger Co., 98 F.T.C. 639, 

760 (1981). 

34For the purposes of the rule, advertising 

includes, but is not limited to, advertising in print, 

electronic, Internet, or broadcast media. 

35 12 U.S.C. 1821(a)(1). 

36See 70 FR 12823, 12825 (Mar. 16, 2005) and 74 

FR 10843, 10846 (Mar. 13, 2009). The statute 

indicates that the FTC should not consider ‘‘money 

received in connection with any draft or similar 

instrument issued to transmit money’’ to be a 

deposit for the purposes of this exemption. In 2006, 

Congress amended the exception language by 

changing the threshold from ‘‘$100,000’’ to ‘‘an 

amount equal to the standard maximum deposit 

insurance amount.’’ Public Law 109-173 (Feb. 26, 

2006). 

37The National Association of Federal Credit 

Unions (NAFCU) (# 515567-00121) and the Greater 

Cincinnati Credit Union (# 515567-00081) opposed 

the proposed exception. The Navy Federal Credit 

Union (# 515567-00083) supported the proposed 

exception. 

38OCC (#515567-00201). 

deposit. The Commission cannot alter 

this mandate. 

Finally, in issuing the FSRRA 

amendments, the Commission notes that 

Congress used the term ‘‘current 

depositor’’ to cover depositors obtained 

on or before October 13, 2006. As that 

date becomes more remote, the term 

‘‘current depositor’’ may cause confusion 

because some may incorrectly assume 

the term applies to depositors obtained 

more recently than 2006. To address 

this concern, the Commission has 

changed the title of Section 320.5(c) to 

‘‘Depositors Obtained On Or Before 

October 13, 2006’’ instead of ‘‘Current 

Depositors.’’ 

IV. Summary of Final Rule 

Generally, the final rule incorporates 

the language of the statute, in many 

cases repeating the law’s language 

verbatim. Like the statute, the final rule 

addresses disclosure requirements for 

periodic statements and account 

records, advertising, and locations that 

receive deposits; signed 

acknowledgment requirements; and an 

exception to these requirements for 

certain depository institutions. The final 

rule is identical in substance to that 

published in the supplemental notice.30

The following summarizes the final 

rule’s basic provisions. 

A. Scope of the Final Rule 

Section 320.1 of the rule indicates 

that the FTC’s new requirements apply 

to depository institutions (e.g., banks, 

savings association, and credit unions) 

that do not have federal deposit 

insurance. Consistent with Section 

43(f)(3)(B) of the FDIA, a depository 

institution lacks federal deposit 

insurance if it is neither an insured 

depository institution as defined in the 

FDIA (12 U.S.C. 1813(c)(2)), nor an 

insured credit union as defined in 

Section 101 of the FCUA, 12 U.S.C. 

1752. Most banks and savings 

associations must have federal deposit 

insurance under state or federal law.31

Accordingly, the rule applies apply to 

only a small number of state-chartered 

banks and savings associations.32

B. Disclosures in Periodic Statements 

Consistent with the statute (12 U.S.C. 

§ 1831t(b)(1)), Section 320.3 requires 

covered depository institutions to 

conspicuously disclose in all periodic 

statements and account records that the 

institution is not federally insured, and 

that, if the institution fails, the federal 

government does not guarantee that 

depositors will recoup their money. 

Section 320.3 offers model language that 

depository institutions may use to 

satisfy this requirement. The 

Commission will evaluate whether 

disclosures are conspicuous according 

to well-established FTC law.33

C. Disclosures in Advertising 

Under Section 320.4, covered 

depository institutions must disclose in 

advertising consistent with 12 U.S.C. 

§ 1831t(b)(2) that the institution is not 

federally insured.34 As dictated by the 

statute (12 U.S.C. § 1831t(b)(2)(B)), the 

rule also contains specific exemptions 

to this advertising disclosure 

requirement. In particular, the required 

short disclosure (that the institution is 

not federally insured) need not appear 

in a sign, document, or other item that 

has the institution’s name but no 

information about the institution’s 

products or services or information 

otherwise promoting the institution. 

Consistent with the law, the rule also 

exempts from the disclosure 

requirement, ‘‘[s]mall utilitarian items 

[e.g., common pens and key chains] that 

do not mention deposit products or 

insurance if inclusion of the notice 

would be impractical.’’ 

D. Disclosures at Deposit Locations 

Section 320.4 requires covered 

institutions to clearly and 

conspicuously disclose that the 

institution is not federally insured ‘‘at 

each station or window place where 

deposits are normally received, its 

principal place of business and all 

branches where it accepts deposits or 

opens accounts (excluding automated 

teller machines or point of sale 

terminals), and on its main Internet page 

....’’ This section tracks the language in 

12 U.S.C. 1831t(b)(2)(A). 

E. Disclosure Acknowledgment 

Sections 320.5 and 320.6 require 

covered institutions to obtain signed 

acknowledgments of the fact that the 

institution is not federally insured from 

new depositors. The rule language 

tracks the 12 U.S.C. 1831t(b)(3) 

requirements. For certain customers 

(e.g., those obtained through a merger), 

the rule, consistent with the statute, 

provides an alternative notice 

requirement which allows institutions 

to send notifications attempting to 

obtain signed acknowledgments no later 

than 45 days after the merger or 

conversion to customers in lieu of 

obtaining signatures. 

F. Exception for Certain Depository 

Institutions 

Section 43(d) of the FDIA 

(‘‘Exceptions for institutions not 

receiving retail deposits’’) provides the 

Commission with discretion to except 

certain institutions from the disclosure 

requirements. Specifically, the FDIA 

allows the Commission to exempt 

depository institutions that do not 

receive initial deposits of less than ‘‘an 

amount equal to the standard maximum 

insurance amount’’ from individuals 

who are citizens or residents of the 

United States.35 That amount is 

currently $250,000. The Commission’s 

2005 proposed rule and the 2009 

supplemental notice contained such an 

exception.36 The Commission reasoned 

that customers of institutions that 

handle only large initial deposits are 

sufficiently sophisticated that they do 

not need disclosures. Some commenters 

supported the proposed exemption 

while others raised concerns.37 For 

example, the Office of the Comptroller 

of the Currency (OCC) urged the 

Commission to expand the proposed 

exception to include uninsured national 

trust banks and federal and state 

branches of foreign banks altogether 

because these institutions do not accept 

retail deposits.38 NAFCU, on the other 


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39NAFCU (# 515567-00121). 

40 In addition, the record did not identify any 

credit unions that only receive initial deposits of 

more than $100,000. Although there are 

approximately two dozen ‘‘corporate’’ credit unions 

which serve only other credit unions and may have 

such initial deposit policies, these institutions 

already have federal deposit insurance and thus 

would not fall under the FDICIA disclosure 

requirements. See, e.g., (http://www.ncua.gov/ 

DataServices/FindCU.aspx) (National Credit Union 

Administration database). 41 5 CFR 1320.3(c)(2). 

hand, opposed the provision arguing 

that some customers with initial 

deposits over the standard maximum 

insurance amount at federal credit 

unions do not understand how their 

funds are insured.39 In its supplemental 

notice, the Commission continued to 

propose the exception and sought 

further comment on the issue. The 

Commission received none. 

The final rule contains the exception. 

The Commission continues to believe 

that customers who make large deposits 

($250,000 or more) at institutions that 

refuse initial deposits under $250,000 

do not need the FDICIA disclosures 

because they are sufficiently 

sophisticated and likely understand the 

institution’s deposit insurance status. 

The rule also defines ‘‘standard 

maximum insurance amount’’ to mean 

the maximum amount of deposit 

insurance as determined under Section 

11(a)(1) of the FDIA (12 U.S.C. 

1821(a)(1)). 

This exception addresses one of the 

two issues raised by the OCC. 

Specifically, the OCC expressed concern 

about the application of FDICIA 

disclosure requirements to uninsured 

national trust banks even though they 

do not accept deposits. Because these 

institutions accept no deposits, they by 

definition do not accept initial deposits 

of under $250,000, and are therefore, 

exempt from the rule’s requirements. 

The OCC also expressed concern that 

the rule would cover federal and state 

branches of foreign banks. While 

Congress has already granted these 

institutions an exemption from federal 

deposit insurance requirements (12 

U.S.C. 3104(c)), FDICIA contains no 

such exception from its disclosure 

requirements. Therefore, if such 

institutions accept initial deposits of 

less than $250,000, they have to comply 

with the rule’s disclosure requirements. 

Finally, the Commission notes that 

NAFCU raised concerns about persons 

making large initial deposits at credit 

unions and not receiving the 

disclosures. The record did not identify 

any credit unions serving individuals 

(i.e., natural persons) that only receive 

initial deposits of more than $250,000.40

Any credit unions receiving initial 

deposits under $250,000 must make the 

disclosures even if some depositors 

happen to open accounts with $250,000 

or more. Accordingly, the Commission 

does not expect that the exception will 

apply to any credit unions. 

V. Paperwork Reduction Act 

The disclosures and written 

acknowledgment statements do not 

constitute a ‘‘collection of information’’ 

under the Paperwork Reduction Act of 

1995 (44 U.S.C. 3501-3520) because they 

are a ‘‘public disclosure of information 

originally supplied by the government 

to the recipient for the purpose of 

disclosure to the public’’ as indicated in 

Office of Management and Budget 

regulations.41

VI. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. 601-612, requires that the 

Commission provide an Initial 

Regulatory Flexibility Analysis (IRFA) 

with a proposed rule and a Final 

Regulatory Flexibility Analysis (FRFA), 

if any, with the final rule, unless the 

Commission certifies that the rule will 

not have a significant economic impact 

on a substantial number of small 

entities. See 5 U.S.C. 603-605. The 

Commission published an IRFA 

pursuant to the RFA in its March 16, 

2005 proposed rule notice (70 FR 

12823). 

The Commission does not anticipate 

that the final rule will have a significant 

economic impact on a substantial 

number of small entities. The 

Commission recognizes that many of the 

affected depository institutions may 

qualify as small businesses under the 

relevant threshold ( i.e., assets that do 

not exceed $150 million) and that the 

economic impact of the rule on a 

particular small entity could be 

significant. Overall, however, the rule 

likely will not have a significant 

economic impact on a substantial 

number of small entities. The 

Commission staff estimates that these 

requirements apply to fewer than 400 

credit unions, banks, and savings 

associations. These depository 

institutions have been required to make 

the applicable disclosures for more than 

ten years under Section 43 of the FDIA. 

In addition, the Commission expects 

that most covered entities make 

disclosures about their deposit 

insurance as a matter of course. The 

Commission does not expect that the 

disclosures specified in the rule will 

have a significant impact on these 

entities. Accordingly, this document 

serves as notice to the Small Business 

Administration of the agency’s 

certification of no effect. Although the 

Commission certifies under the RFA 

that the rule in this notice will not have 

a significant impact on a substantial 

number of small entities, the 

Commission has determined, 

nonetheless, to publish a FRFA to 

explain the impact of the rule on small 

entities as follows: 

A. Statement of the need for, and 

objectives of, the amendments 

The Federal Trade Commission is 

charged with enforcing the requirements 

of 12 U.S.C. 1831t(b) and prescribing the 

manner and content of disclosures 

required by the law. 

B. Issues raised by comments in 

response to the Initial Regulatory 

Flexibility Analysis 

Public comments raised various 

issues about the impacts of the initial 

proposed rule. However, as detailed in 

the supplemental notice, the FSRRA 

amendments addressed these concerns. 

Section III of this notice discusses in 

detail the issues raised in response to 

the supplemental notice. 

C. Estimate of the number of small 

entities to which the amendments will 

apply 

As described above, the rule applies 

to depository institutions lacking federal 

deposit insurance, including statechartered credit unions, banks, and 

savings associations, many of which 

may be small entities. According to the 

GAO, in 2003 there were 212 credit 

unions in the 50 states that chose to use 

private deposit insurance instead of 

federal insurance. The Commission 

estimates that this number is smaller 

now. The Commission estimates that, in 

addition to this number, there are 

approximately 150 credit unions in 

Puerto Rico that do not have federal 

deposit insurance. In addition, the 

Commission estimates that there are 

fewer than 20 banks and savings 

associations that would be covered by 

the rule. The Commission assumes that 

few of these depository institutions have 

assets exceeding $150 million. 

D. Projected reporting, recordkeeping, 

and other compliance requirements 

The law requires affected institutions 

to comply regardless of the existence of 

an FTC rule. Nevertheless, the 

Commission recognizes that the law, 

and thus the FTC rule, involves some 

costs for affected depository 

institutions. Most of these costs are in 

the form of printing costs for account 

statements, signature cards, and other 

printed material requiring the 

disclosures. It is unlikely that 


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Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Rules and Regulations 31687 

compliance involves any significant 

costs associated with legal, other 

professional, or training costs to 

determine the nature of the disclosure 

because the rule provides the 

information required to be disclosed to 

the public. The Commission does not 

expect that the disclosure requirements 

impose significant incremental costs for 

websites or other advertising. Adding 

the required disclosure to various 

materials imposes on the depository 

institutions some printing costs and 

perhaps minimal initial design or layout 

costs. A precise estimate of such costs 

is difficult to determine without data 

regarding the required volume of such 

materials. 

E. Alternatives 

The amendments closely track the 

prescriptive requirements of the statute, 

and thus leave little room for significant 

alternatives to decrease the burden on 

regulated entities. In addition, the 

statutory requirements reflected in this 

final rule already apply to the affected 

entities. Accordingly, alternatives such 

as extending the effective date of the 

rule would have no effect on burden. 

List of Subjects in 16 CFR Part 320 

Credit unions, Depository institutions, 

Federal Deposit Insurance Act, Federal 

Trade Commission Act, and Federal 

deposit insurance. 

■ For the reasons stated in the preamble, 

the Federal Trade Commission adds Part 

320 to 16 CFR chapter I, subchapter C 

as set forth below: 

PART 320—DISCLOSURE 

REQUIREMENTS FOR DEPOSITORY 

INSTITUTIONS LACKING FEDERAL 

DEPOSIT INSURANCE 

320.1 Scope. 

320.2 Definitions. 

320.3 Disclosures in periodic statements 

and account records. 

320.4 Disclosures in advertising and on the 

premises. 

320.5 Disclosure acknowledgment. 

320.6 Exception for certain depository 

institutions. 

320.7 Enforcement. 

Authority: 12 U.S.C. 1831t; 15 U.S.C. 41 et 

seq 

§ 320.1 Scope. 

This part applies to all depository 

institutions lacking federal deposit 

insurance. It requires the disclosure of 

certain insurance-related information in 

periodic statements, account records, 

locations where deposits are normally 

received, and advertising. This part also 

requires such depository institutions to 

obtain a written acknowledgment from 

depositors regarding the institution’s 

lack of federal deposit insurance. 

§ 320.2 Definitions. 

(a) Depository institution means any 

bank or savings association as defined 

under 12 U.S.C. 1813, or any credit 

union organized and operated according 

to the laws of any State, the District of 

Columbia, the several territories and 

possessions of the United States, the 

Panama Canal Zone, or the 

Commonwealth of Puerto Rico, which 

laws provide for the organization of 

credit unions similar in principle and 

objectives to federal credit unions. 

(b) Lacking federal deposit insurance 

means the depository institution is 

neither an insured depository 

institution as defined in 12 U.S.C. 

1813(c)(2), nor an insured credit union 

as defined in Section 101 of the Federal 

Credit Union Act, 12 U.S.C. 1752. 

(c) Standard maximum deposit 

insurance amount means the maximum 

amount of deposit insurance as 

determined under Section 11(a)(1) of the 

Federal Deposit Insurance Act (12 

U.S.C. 1821(a)(1)). 

§ 320.3 Disclosures in periodic statements 

and account records. 

Depository institutions lacking federal 

deposit insurance must include a notice 

disclosing clearly and conspicuously 

that the institution is not federally 

insured, and that if the institution fails, 

the Federal Government does not 

guarantee that depositors will get back 

their money, in all periodic statements 

of account, on each signature card, and 

on each passbook, certificate of deposit, 

or share certificate. For example, a 

notice would comply with the 

requirement if it conspicuously stated: 

‘‘[Institution’s name] is not federally 

insured. If it fails, the Federal 

Government does not guarantee that you 

will get your money back.’’ The 

disclosures required by this section 

must be clear and conspicuous and 

presented in a simple and easy to 

understand format, type size, and 

manner. 

§ 320.4 Disclosures in advertising and on 

the premises. 

(a) Required disclosures. Each 

depository institution lacking federal 

deposit insurance must include a clear 

and conspicuous notice disclosing that 

the institution is not federally insured: 

(1) At each station or window where 

deposits are normally received, its 

principal place of business and all its 

branches where it accepts deposits or 

opens accounts (excluding automated 

teller machines or point of sale 

terminals), and on its main Internet 

page; and 

(2) In all advertisements except as 

provided in paragraph (c) of this 

section. 

(b) Format and type size. The 

disclosures required by this section 

must be clear and conspicuous and 

presented in a simple and easy to 

understand format, type size, and 

manner. 

(c) Exceptions. The following need 

not include a notice that the institution 

is not federally insured: 

(1) Any sign, document, or other item 

that contains the name of the depository 

institution, its logo, or its contact 

information, but only if the sign, 

document, or item does not include any 

information about the institution’s 

products or services or information 

otherwise promoting the institution; and 

(2) Small utilitarian items that do not 

mention deposit products or insurance, 

if inclusion of the notice would be 

impractical. 

§ 320.5 Disclosure acknowledgment. 

(a) New depositors obtained other 

than through a conversion or merger. 

With respect to any depositor who was 

not a depositor at the depository 

institution on or before October 13, 

2006, and who is not a depositor as 

described in paragraph (b) of this 

section, a depository institution lacking 

federal deposit insurance may receive a 

deposit for the account of such 

depositor only if the institution has 

obtained the depositor’s signed written 

acknowledgement that: 

(1) The institution is not federally 

insured; and 

(2) If the institution fails, the Federal 

Government does not guarantee that the 

depositor will get back the depositor’s 

money. 

(b) New depositors obtained through a 

conversion or merger. With respect to a 

depositor at a federally insured 

depository institution that converts to, 

or merges into, a depository institution 

lacking federal insurance after October 

13, 2006, a depository institution 

lacking federal deposit insurance may 

receive a deposit for the account of such 

depositor only if: 

(1) The institution has obtained the 

depositor’s signed written 

acknowledgement described in 

paragraph (a) of this section; or 

(2) The institution makes an attempt, 

sent by mail no later than 45 days after 

the effective date of the conversion or 

merger, to obtain the acknowledgment. 

In making such an attempt, the 

institution must transmit to each 

depositor who has not signed and 

returned a written acknowledgement 

described in paragraph (a) of this 

section: 


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(i) A conspicuous card containing the 

information described in paragraphs 

(a)(1) and (a)(2) of this section, and a 

line for the signature of the depositor; 

and 

(ii) Accompanying materials 

requesting the depositor to sign the 

card, and return the signed card to the 

institution. 

(c) Depositors obtained on or before 

October 13, 2006. Any depository 

institution lacking federal deposit 

insurance may receive any deposit after 

October 13, 2006, for the account of a 

depositor who was a depositor on or 

before that date only if: 

(1) The depositor has signed a written 

acknowledgement described in 

paragraph (a) of this section; or 

(2) The institution has transmitted to 

the depositor: 

(i) A conspicuous card containing the 

information described in paragraphs 

(a)(1) and (a)(2) of this section, and a 

line for the signature of the depositor; 

and 

(ii) Accompanying materials 

requesting that the depositor sign the 

card, and return the signed card to the 

institution. 

NOTE TO PARAGRAPH (C): The 

institution must have made the 

transmission described in paragraph 

(c)(2) of this section via mail not later 

than three months after October 13, 

2006. The institution must have made a 

second identical transmission via mail 

not less than 30 days, and not more than 

three months, after the first transmission 

to the depositor in accordance with 

paragraph (c)(2) of this section, if the 

institution has not, by the date of such 

mailing, received from the depositor a 

card referred to in paragraph (c)(1) of 

this section which has been signed by 

the depositor. 

(d) Format and type size. The 

disclosures required by this section 

must be clear and conspicuous and 

presented in a simple and easy to 

understand format, type size, and 

manner. 

§ 320.6 Exception for certain depository 

institutions. 

The requirements of this part do not 

apply to any depository institution 

lacking federal deposit insurance and 

located within the United States that 

does not receive initial deposits of less 

than an amount equal to the standard 

maximum deposit insurance amount 

from individuals who are citizens or 

residents of the United States, other 

than money received in connection with 

any draft or similar instrument issued to 

transmit money. 

§ 320.7 Enforcement. 

Compliance with the requirements of 

this part shall be enforced under the 

Federal Trade Commission Act, 15 

U.S.C. 41 et seq. 

By direction of the Commission. 

Donald S. Clark 

Secretary 

[FR Doc. 2010–13085 Filed 6–3–10: 10:48 am] 

[Billing Code: 6750–0–1–S] 

CONSUMER PRODUCT SAFETY 

COMMISSION 

[CPSC Docket No. CPSC–2009–0064] 

16 CFR Part 1215 

Third Party Testing for Certain 

Children’s Products; Infant Bath Seats: 

Requirements for Accreditation of 

Third Party Conformity 

AGENCY: Consumer Product Safety 

Commission. 

ACTION: Notice of Requirements. 

SUMMARY: The Consumer Product Safety 

Commission (CPSC or Commission) is 

issuing a notice of requirements that 

provides the criteria and process for 

Commission acceptance of accreditation 

of third party conformity assessment 

bodies for testing pursuant to specific 

CPSC regulations relating to infant bath 

seats. The Commission is issuing this 

notice of requirements pursuant to 

section 14(a)(3)(B)(vi) of the Consumer 

Product Safety Act (CPSA) (15 U.S.C. 

2063(a)(3)(B)(vi)). 

DATES: Effective Date: The requirements 

for accreditation of third party 

conformity assessment bodies to assess 

conformity with 16 CFR part 1215 are 

effective upon publication of this notice 

in the Federal Register. 

Comments in response to this notice 

of requirements should be submitted by 

July 6, 2010. Comments on this notice 

should be captioned ‘‘Notice of 

Requirements for Accreditation of Third 

Party Conformity Assessment Bodies to 

Assess Conformity with Part 1215 of 

Title 16, Code of Federal Regulations.’’ 

ADDRESSES: You may submit comments, 

identified by Docket No. CPSC–2009– 

0064 by any of the following methods: 

Electronic Submissions: Submit 

electronic comments in the following 

way: 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

To ensure timely processing of 

comments, the Commission is no longer 

accepting comments submitted by 

electronic mail (e-mail) except through 

http://www.regulations.gov. 

Written Submissions: Submit written 

submissions in the following ways: 

Mail/Hand delivery/Courier (for 

paper, disk, or CD–ROM submissions) 

preferably in five copies, to: Office of 

the Secretary, Consumer Product Safety 

Commission, Room 820, 4330 East West 

Highway, Bethesda, MD 20814; 

telephone (301) 504–7923. 

Instructions: All submissions received 

must include the agency name and 

docket number for this notice. All 

comments received may be posted 

without change to http:// 

www.regulations.gov, including any 

personal information provided. Do not 

submit confidential business 

information, trade secret information, or 

other sensitive or protected information 

(such as a Social Security Number) 

electronically; if furnished at all, such 

information should be submitted in 

writing. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Robert ‘‘Jay’’ Howell, Assistant Executive 

Director for Hazard Identification and 

Reduction, U.S. Consumer Product 

Safety Commission, 4330 East West 

Highway, Bethesda, Maryland 20814; email rhowell@cpsc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

Section 14(a)(3)(B)(vi) of the CPSA, as 

added by section 102(a)(2) of the 

Consumer Product Safety Improvement 

Act of 2008 (CPSIA), Public Law 110– 

314, directs the CPSC to publish a 

notice of requirements for accreditation 

of third party conformity assessment 

bodies to assess children’s products for 

conformity with ‘‘other children’s 

product safety rules.’’ Section 14(f)(1) of 

the CPSA defines ‘‘children’s product 

safety rule’’ as ‘‘a consumer product 

safety rule under [the CPSA] or similar 

rule, regulation, standard, or ban under 

any other Act enforced by the 

Commission, including a rule declaring 

a consumer product to be a banned 

hazardous product or substance.’’ Under 

section 14(a)(3)(A) of the CPSA, each 

manufacturer (including the importer) 

or private labeler of products subject to 

those regulations must have products 

that are manufactured more than 90 

days after the Federal Register 

publication date of a notice of the 

requirements for accreditation, tested by 

a third party conformity assessment 

body accredited to do so, and must issue 

a certificate of compliance with the 

applicable regulations based on that 

testing. Section 14(a)(2) of the CPSA, as 


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