Washington, D.C – The Consumer Financial Protection Bureau (CFPB) today issued an enforcement memorandum addressing prohibited practices in claims related to Federal Deposit Insurance Corporation (FDIC) insurance. In particular, corporations may not misuse the FDIC name or logo or make misleading claims about deposit insurance. The issue has regained prominence with the advent of financial technologies – such as crypto assets, including stablecoins – and the risks to consumers if they are lured into these or other financial products or services by misrepresentation or false advertising.
“People know and trust the FDIC name and logo, and companies must not exploit that trust by making misleading claims about deposit insurance,” said CFPB Director Rohit Chopra. “Companies undermine competition, undermine trust in the deposit insurance system and threaten our hard-earned savings when they engage in false marketing or false advertising.”
The Consumer Financial Protection Act prohibits fraudulent acts and practices, including fraudulent representations using the name or logo of the FDIC or deposit insurance company, by covered entities. Deposit insurance has long been a means of promoting confidence in the banking system and a misrepresentation of this protection undermines consumer confidence and competition in the marketplace. The most common form of deposit insurance is administered by the FDIC. Currently, the FDIC insures deposits at FDIC-insured banks and thrifts up to $250,000 per depositor, per FDIC-insured bank, and for each category of account holder.
That Circular on consumer financial protection The filing issued today provides consumer protection agencies with guidance that affected companies are likely to be in violation of the Consumer Financial Protection Act’s prohibition on deception if they misuse the FDIC name or logo or engage in false advertising or provide the public with material misrepresentation about deposit insurance, regardless of: whether such conduct (including misrepresenting insurance status) is knowingly committed. The Consumer Financial Protection Act is enforced by the CFPB, banking regulators and the states.
especially the Circular emphasizes:
- Misrepresentation of the FDIC logo or name is usually a material misrepresentation. Material misrepresentations are deceptive practices that violate the Consumer Financial Protection Act. Representations made by insured businesses to consumers about FDIC insurance are typically material. Abusing the FDIC name or logo or engaging in false advertising or misrepresenting to consumers about deposit insurance, whether such behavior is knowingly, is likely to be misleading.
- Misrepresentation or misuse of the FDIC name or logo harms customers and exposes them to significant risk of unexpected losses. Clients may be at risk of loss if they find their assets uninsured in a time of financial distress. Due to their relatively recent entry into the consumer market, emerging financial products and services – such as digital assets, including crypto assets – can pose particularly acute risks for consumers. Claims that financial products or services are “regulated” by the FDIC or “insured” or “eligible” for FDIC insurance are likely to be misleading if such claims express or imply that the product or service is FDIC-insured is, although this is not the case.
- Misuse of the FDIC name or logo harms honest businesses. A Covered Company that misleadingly advertises that its products or services are FDIC insured may persuade individuals to purchase that company’s products or services when the individuals have selected otherwise similar products or services from one of the company’s competitors, who engage in honest advertising and marketing.
That Circular on consumer financial protection was issued in connection with the passage by the FDIC of an regulation implementing a statute prohibiting any person or entity from falsely advertising or misusing the FDIC name or logo, or making false statements as to the amount or nature and way of making FDIC deposit insurance. The CFPB will exercise its powers to ensure that the public is protected from risk and harm caused when firms misleadingly use the FDIC logo or name, or make misleading false statements about deposit insurance, whether or not such false statements are knowingly made be made.
Read FDIC Board Member CFPB Director Chopra’s statement on the Final Rule Regarding False Advertising, Misrepresentation of Insurance Status, and Misuse of the FDIC Name or Logo.
Read today’s Circular on consumer financial protection, Misleading representations of the name or logo of the FDIC or the deposit insurance company.
Read the CFPB Blog, CFPB introduces new system to encourage consistent enforcement of consumer financial protectionslearn more about it Circular on consumer financial protection.
Consumers may file complaints about deposit products or other consumer financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
The Consumer Financial Protection Bureau is a 21st-century agency that implements and enforces federal consumer finance laws and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information visit ConsumerFinance.gov.