[Federal Register Volume 86, Number 67 (Friday, April 9, 2021)]
[Notices]
[Pages 18528-18531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07356]


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FEDERAL DEPOSIT INSURANCE CORPORATION

RIN 3064-ZA14


Request for Information on FDIC Official Sign and Advertising 
Requirements and Potential Technological Solutions

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Request for information and comment.

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SUMMARY: As banks and savings associations adjust their business models 
to innovate and remain competitive, and as such digital transformation 
continues to accelerate, the FDIC is renewing its effort to consider 
how to revise and clarify its official sign and advertising rules 
related to FDIC deposit insurance. The FDIC is issuing this Request for 
Information (RFI) to inform FDIC efforts to align the policy objectives 
of its rules with how today's banks and savings associations offer 
deposit products and services and how consumers connect with banks and 
savings associations, including through evolving channels. The FDIC 
also requests information about how technological or other solutions 
could be leveraged to help consumers better distinguish FDIC-insured 
banks and savings associations from entities that are not insured by 
the FDIC (nonbanks), particularly across web and digital channels.

DATES: Comments must be received by May 24, 2021.

ADDRESSES: You may submit comments, identified by RIN 3064-ZA14, by any 
of the following methods:
     Agency Website: https://www.fdic.gov/regulations/laws/federal/. Follow the instructions for submitting comments on the agency 
website.
     Email: [email protected]. Include RIN 3064-ZA14 in the 
subject line of the message.
     Mail: James P. Sheesley, Assistant Executive Secretary, 
Attention: Comments-RIN 3064-ZA14, Federal Deposit Insurance 
Corporation, 550 17th Street NW, Washington, DC 20429.
     Hand Delivery/Courier: Comments may be hand-delivered to 
the guard station at the rear of the 550 17th Street NW, building 
(located on F Street) on business days between 7:00 a.m. and 5:00 p.m., 
EST.
    All comments received must include the agency name and RIN 3064-
ZA14 for this rulemaking.
    Public Inspection: All comments received will be posted without 
change to https://www.fdic.gov/regulations/laws/federal/--including any 
personal information provided--for public inspection. Paper copies of 
public comments may be ordered from the FDIC Public Information Center, 
3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226 by telephone 
at (877) 275-3342 or (703) 562-2200.

FOR FURTHER INFORMATION CONTACT: David Friedman, Senior Policy Analyst, 
Division of Depositor and Consumer Protection, (202) 898-7168, 
[email protected]; Edward Hof, Senior Consumer Affairs Specialist, 
Division of Depositor and Consumer Protection, (202) 898-7213, 
[email protected]; or Richard M. Schwartz, Counsel, Legal Division, (202) 
898-7424, [email protected].

SUPPLEMENTARY INFORMATION: The FDIC is an independent federal agency 
with a mission of maintaining stability and public confidence in the 
nation's financial system by insuring bank deposits, examining and 
supervising financial institutions for safety and soundness and 
consumer protection, making large and complex financial institutions 
resolvable, and managing receiverships. Today, there are approximately 
five thousand FDIC-insured banks and savings associations

[[Page 18529]]

in the United States. The FDIC insures money deposited in FDIC-insured 
banks and savings associations, and FDIC deposit insurance is backed by 
the full faith and credit of the United States.
    On February 26, 2020, the FDIC published a notice in the Federal 
Register (85 FR 10997) seeking input regarding potential modernization 
of its official sign and advertising rules to reflect that deposit-
taking via physical branch, digital, and mobile banking channels 
continues to evolve since the FDIC last significantly updated its rules 
in 2006. On March 13, 2020, the FDIC published an extension of the 
comment period in the Federal Register (85 FR 14678). However, on April 
16, 2020, in light of COVID-19, the FDIC announced that it was 
temporarily postponing its efforts to modify its official sign and 
advertising requirements. The FDIC noted that the agency remains 
committed to modernizing these rules at a future date to better reflect 
how banks and savings associations are transforming their business 
models to take deposits via physical branches, digital, and mobile 
banking channels. This notice is substantially the same as the notice 
published on February 26, 2020, with the exception of the issue of 
misrepresentations about deposit insurance, as discussed below.
    As banks and savings associations adjust their business models to 
innovate and remain competitive, and as such digital transformation 
continues to accelerate, the FDIC is renewing its effort to consider 
how to revise and clarify its official sign and advertising rules 
related to FDIC deposit insurance. The FDIC is issuing this Request for 
Information (RFI) to inform FDIC efforts to align the policy objectives 
of its rules with how today's banks and savings associations offer 
deposit products and services and how consumers connect with banks and 
savings associations, including through evolving channels. The FDIC 
also requests information about how technological or other solutions 
could be leveraged to help consumers better distinguish FDIC-insured 
banks and savings associations from entities that are not insured by 
the FDIC (nonbanks), particularly across web and digital channels.
    Although the February 26, 2020, RFI also sought input on how to 
address misrepresentations about deposit insurance, that subject is not 
addressed in this RFI. On an ongoing basis, pursuant to its statutory 
authority, the FDIC actively seeks to protect depositors by ensuring 
the FDIC's name, seal, and logo are appropriately used and limited to 
being associated with insured depository institutions. In light of an 
increasing number of instances where people or entities have misused 
the FDIC's name or logo or have made misrepresentations that would 
falsely suggest to the public that their products are FDIC-insured, the 
FDIC expects to issue a notice of proposed rulemaking seeking comment 
on a proposed rule regarding misrepresentations about deposit insurance 
and misuse of the FDIC's name or logo. The FDIC intends to engage in 
its efforts to modernize the FDIC official sign and advertising 
requirements and its rulemaking regarding misrepresentations about 
deposit insurance in tandem and on a coordinated basis.

FDIC Official Sign and Advertising Statement Requirements

    The FDIC's official sign and advertising statement regulations (12 
CFR part 328) require banks to continuously display the FDIC sign where 
insured deposits are usually and normally received in the bank's 
principal place of business and at all of its branches and to use an 
official advertising statement, such as ``Member FDIC,'' when 
advertising deposit products and services. Official sign and 
advertising statement requirements are set forth in in section 18(a) of 
the Federal Deposit Insurance Act (FDI Act) and have been in place 
since 1935.\1\ The last major changes to the regulations were made in 
2006 \2\ and the rules do not reflect evolving banking channels and 
operations.
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    \1\ 12 U.S.C. 1828(a). See Banking Act of 1935, Public Law 74-
305, section 101(v) (Aug. 23, 1935).
    \2\ 71 FR 40440 (July 17, 2006).
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Technology and Innovation

    The FDIC has begun a number of initiatives focused on innovation 
and technology. For example, the FDIC established the FDIC Tech Lab 
(FDiTech) to foster innovation across the banking sector, while 
simultaneously protecting consumers, markets, and the Deposit Insurance 
Fund. FDiTech is undertaking a number of activities to promote 
innovation under four broad themes: Inclusion, Resilience, 
Amplification and Protecting the Future. In February 2021, the FDIC 
appointed its first Chief Innovation Officer.
    Technology has advanced the business of banking in many ways, 
including how and where depositors interface with banks and savings 
associations when making deposits. The internet, through online and 
mobile banking, smart phone applications (apps), digital wallets, and 
other tools, has had a profound effect on the way banking and deposit-
taking is conducted. Some banks have no physical branches. Other banks 
with physical branches are also increasingly offering ways to open and 
manage accounts online or through mobile apps. Remote deposit capture 
for depositing checks, introduced in the early 2000s, has become a 
common feature of many banking apps. In addition, some banks have moved 
away from the traditional branch/bank teller models to electronically-
staffed kiosks and pop-up facilities and teller-less cafes where 
deposits can be accepted on tablets. In addition, some consumers 
``deposit'' funds with prepaid account providers and technologically-
focused financial companies (fintechs), some of which are not 
themselves FDIC-insured banks.\3\ In some cases, consumers have 
difficulty distinguishing FDIC-insured banks from nonbank fintechs when 
they look online for places to put their money. This can also occur 
when the nonbank fintech advertises deposit products from FDIC-insured 
banks and savings associations.
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    \3\ Some uninsured companies enter into deposit arrangements 
with FDIC-insured banks, which may, under some circumstances, result 
in ``pass-through'' deposit insurance being applied per customer. 
See generally, 12 CFR part 330.
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    Given these banking industry developments, the FDIC is seeking 
information on its official sign and advertising requirements to align 
with how banks offer products through various deposit-taking channels 
and how consumers interact with banks.

Request for Comment

    The FDIC encourages comments from all interested parties, including 
but not limited to insured banks and savings associations, technology 
companies and fintechs, other financial institutions or companies, 
depositors and financial consumers (of both FDIC-insured and uninsured 
institutions), consumer groups, researchers, trade associations, and 
other members of the financial services industry. In particular, the 
FDIC requests input on the following topics and questions:

Official Sign

    The FDI Act requires that insured depository institutions display a 
sign relating to the insurance of deposits at each place of business 
maintained by that institution in accordance with regulations issued by 
the FDIC.\4\ The implementing regulation, 12 CFR 328.2(a), requires the 
sign to be displayed continuously at each station or window where 
insured deposits are usually and normally received in the depository 
institution's principal place

[[Page 18530]]

of business and at all of its branches.\5\ The official sign must be 
7'' x 3'' with black lettering on a gold background.\6\ The official 
sign is permitted--but not required--to be displayed in other locations 
\7\ and on or at ``Remote Service Facilities.'' \8\ In lieu of the 
official sign, banks may vary the sign subject to the minimum standards 
set for the sign.\9\ Non-English equivalent signs must be approved by 
the FDIC.
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    \4\ See 12 U.S.C. 1828(a)(1)(A).
    \5\ Part 328 does not apply to uninsured offices or branches of 
insured depository institutions located outside the United States. 
12 CFR part 328.
    \6\ 12 CFR 328.1(a).
    \7\ 12 CFR 328.2(a)(1)(i).
    \8\ 12 CFR 328.2(a)(1)(ii). ``Remote Service Facilities'' are 
defined as including ``any automated teller machine, cash dispensing 
machine, point-of-sale terminal, or other remote electronic facility 
where deposits are received.''
    \9\ 12 CFR 328.2(a)(2).
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    The FDIC seeks comments on all aspects of the sign regulation, 
including the following specific questions:
    1. Should the rule continue to require the sign be a minimum size 
and a specific color? Is this needed to ensure consumers understand 
``deposit insurance?''
    2. Should the rule continue to link the placement of the sign to 
each teller station or window where insured deposits are usually and 
normally received?
    3. Should the rule take into account changes in places where 
deposits are ``usually and normally received'' by banks? How?
    4. Should the FDIC's current approach of allowing for permissive or 
optional placement and use of signage be broadened? How?
    5. Does the rule's definition of ``Remote Service Facility'' 
appropriately reflect current banking practices? For example, should 
the list of facilities (any automated teller machine, cash dispensing 
machine, point-of-sale terminal, or other remote electronic facility 
where deposits are received) be broadened? If so, what other 
``facilities'' should be included?
    6. Are FDIC-insured institutions currently displaying a digital 
representation of the FDIC sign or logo on their websites/mobile apps 
at account opening? If not, should they do so?
    7. Are FDIC-insured institutions currently displaying a digital 
representation of the FDIC sign or logo on their websites/mobile apps 
each time a consumer deposits funds? If not, should they do so?
    8. Are alternative means of displaying an official FDIC sign, 
beyond a two-dimensional placard, appropriate in places such as bank 
``cafes'' and through digital means? How might this be implemented for 
different delivery channels (e.g., brick-and-mortar, website, app-
based)?
    9. As noted above, the current regulation requires that the 
official FDIC sign be displayed continuously at each station or window 
where insured deposits are usually and normally received in the 
depository institution's principal place of business and at all of its 
branches. Should the rule continue to require that the sign be 
displayed continuously, or should it allow for digital displays or 
representations that are not continuously displayed?
    10. To what extent do the existing rules enable consumers to 
distinguish between FDIC-insured institutions and uninsured entities? 
Are there data, surveys, and studies on this issue?

Official Advertising Statement

    The current rule requires bank advertisements \10\ that promote 
deposit products and services or promote non-specific banking products 
and services offered by the institution to state that the bank is a 
``Member of the Federal Deposit Insurance Corporation,'' ``Member of 
FDIC,'' or ``Member FDIC,'' or that the bank use the FDIC's symbol 
(taken from the official sign).\11\ This advertising statement seeks to 
enable consumers to recognize FDIC-insured deposit products, as 
contrasted with non-deposit investment products that are not insured. 
Size, print legibility and proportions are prescribed.\12\ Insured and 
uninsured (foreign) branches must be identified.\13\
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    \10\ ``Advertisement'' is defined as ``a commercial message, in 
any medium, that is designed to attract public attention or 
patronage to a product or business.'' 12 CFR 328.3(a).
    \11\ 12 CFR 328.3(c)(1).
    \12\ 12 CFR 328.3(b)(2).
    \13\ 12 CFR 328.3(c)(2).
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    Insured depository institutions may not include the official 
advertising statement or other statements that imply Federal deposit 
insurance in any advertisement relating solely to ``non-deposit 
products'' or ``hybrid products.'' \14\ With ``mixed'' advertisements 
for both insured deposit products and uninsured or hybrid products, the 
official advertising statement must be segregated within the ad.\15\ 
``Hybrid product'' means ``a product or service that has both deposit 
product features and non-deposit product features.'' \16\ ``Non-deposit 
products'' are defined to include ``insurance products, annuities, 
mutual funds and securities'' but not credit products.\17\
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    \14\ 12 CFR 328.3(e)(2) and (e)(3).
    \15\ 12 CFR 328.3(e)(4).
    \16\ 12 CFR 328.3(e)(1)(ii).
    \17\ 12 CFR 328.3(e)(1)(i).
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    The FDIC seeks comments on all aspects of the official advertising 
statement regulation, including the following specific questions:
    11. Can the regulation be better clarified regarding which types of 
advertising require the inclusion of the official advertising 
statement? Should some forms of advertising currently subject to the 
requirement be made exempt? Are there newer forms of advertising that 
do not now but should include the official advertising statement?
    12. How do banks currently provide the advertising statement when 
promoting deposit products through non-traditional channels?
    13. If a bank is identified in a nonbank's promotion or 
advertisement for a deposit product or service, should the advertising 
statement be required, or conversely, should it be prohibited given 
that the advertisement is from an uninsured entity?

Technological Solutions

    The FDIC regularly receives reports of fraudulent communications 
made to consumers that appear to be from FDIC-insured entities, but 
actually originate from fraudsters. These types of scams may involve a 
variety of electronic communication channels, including emails, 
websites, text messages, and social media posts. Some scam messages 
might ask the recipient to ``confirm'' or ``update'' confidential 
personal financial information, such as bank account numbers, Social 
Security numbers, dates of birth and other valuable details. Other 
scams might ask for payments or deposits to be sent, for example, by 
money order, Automated Clearing House (ACH) credit, wire transfer 
service, peer-to-peer payment service, gift cards, or digital currency. 
Banks also face risks that fraudsters may be using their names and 
brands to perpetrate such frauds.
    The FDIC is exploring whether technological or other solutions 
might enable consumers to validate when they are interacting with a 
FDIC-insured financial institution when visiting websites and using 
apps on mobile devices. The FDIC seeks comments on how technology might 
be utilized to allow consumers to distinguish FDIC-insured banks and 
savings association from nonbanks across various web and digital 
channels, including the following specific questions:
    14. Do consumers look for the FDIC name or logo when using 
financial

[[Page 18531]]

institution websites and apps to confirm the validity of insured 
institutions' authenticity? Do they look for the logo when deciding to 
open new deposit accounts? During every interaction?
    15. What technological options or other approaches could be 
utilized to allow consumers to distinguish FDIC-insured banks and 
savings associations from nonbanks across web and digital channels? 
What are the benefits and drawbacks of each approach? Is it necessary 
or desirable for the FDIC to try to ``solve'' this by rule, or can 
private sector initiatives better address this issue?
    16. If the FDIC develops a technological solution to allow 
consumers to distinguish FDIC-insured banks and savings associations 
from nonbanks across web and digital channels, what challenges would 
institutions have in implementing such solutions? How would any 
solution work with third parties that have established legitimate 
business relationships with banks or savings associations?
    17. If the FDIC develops a technological solution to allow 
consumers to distinguish FDIC-insured banks and savings associations 
from nonbanks across web and digital channels, should its use be 
limited to FDIC-insured banks, or should third parties that market or 
facilitate access to deposit products (e.g., prepaid program managers, 
fintechs) be permitted or required to use such a logo in certain 
circumstances?

Federal Deposit Insurance Corporation.

    Dated at Washington, DC, on April 5, 2021.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2021-07356 Filed 4-8-21; 8:45 am]
BILLING CODE 6714-01-P