FDIC Proposes Rule to Strengthen Enforcement Against Misuse of FDIC Name
The FDIC proposed a rule to strengthen the agency's enforcement authority against "any person or organization from making misrepresentations about FDIC deposit insurance or misusing the FDIC’s name or logo." The proposed rule would allow the FDIC to bring formal enforcement actions, such as cease and desist orders or civil money penalties, against individuals or entities for violations.
The proposed rule would implement section Section 18(a)(4) (False advertising, misuse of FDIC names, and misrepresentation to indicate insured status) of the Federal Deposit Insurance Act. As described in the Notice, the regulation would add a new Subpart B to Part 328 ("Advertisement of Membership"), describing how the FDIC would identify and investigate potential misconduct, and how the FDIC would pursue informal and formal enforcement action.
The Notice mentions that the Request for Information the FDIC published in February 2020 and reissued on April 9, 2021, on the modernizing of FDIC signage and advertising rules, included questions regarding deposit insurance misrepresentation. The FDIC noted, "[i]n light of the increasing number of instances where financial services providers or other entities or individuals have misused the FDIC's name or logo," the FDIC has elected to propose this rule.
Comments on the proposal must be submitted within 60 days of its publication in the Federal Register.