[Federal Register Volume 87, Number 244 (Wednesday, December 21, 2022)]
[Proposed Rules]
[Pages 78017-78037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27349]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 328
RIN 3064-AF26
FDIC Official Sign and Advertising Requirements, False
Advertising, Misrepresentation of Insured Status, and Misuse of the
FDIC's Name or Logo
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Notice of proposed rulemaking and request for comment.
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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is seeking
comment on a proposal to modernize the rules governing use of the
official FDIC sign and insured depository institutions' (IDIs)
advertising statements to reflect how depositors do business with IDIs
today, including through digital and mobile channels. The proposed rule
also would clarify the FDIC's regulations regarding misrepresentations
of deposit insurance coverage by addressing specific scenarios where
consumers may be misled as to whether they are doing business with an
IDI and whether their funds are protected by deposit insurance. The
proposal is intended to enable consumers to better understand when they
are doing business with an IDI and when their funds are protected by
the FDIC's deposit insurance coverage.
DATES: Comments must be received by the FDIC no later than February 21,
2023.
ADDRESSES: Interested parties are invited to submit written comments,
identified by RIN 3064-AF26, by any of the following methods:
Agency Website: https://www.fdic.gov/resources/regulations/federal-register-publications/. Follow the instructions for
submitting comments on the agency website.
Email: [email protected]. Include RIN 3064-AF26 in the
subject line of the message.
Mail: James P. Sheesley, Assistant Executive Secretary,
Attention: Comments--RIN 3064-AF26, Federal Deposit Insurance
Corporation, 550 17th Street NW, Washington, DC 20429.
Hand Delivery: Comments may be hand delivered to the guard
station at the rear of the 550 17th Street NW building (located on F
Street NW) on business days between 7 a.m. and 5 p.m.
Public Inspection: Comments received, including any
personal information provided, may be posted
[[Page 78018]]
without change to https://www.fdic.gov/resources/regulations/federal-register-publications/. Commenters should submit only information that
the commenter wishes to make available publicly. The FDIC may review,
redact, or refrain from posting all or any portion of any comment that
it may deem to be inappropriate for publication, such as irrelevant or
obscene material. The FDIC may post only a single representative
example of identical or substantially identical comments, and in such
cases will generally identify the number of identical or substantially
identical comments represented by the posted example. All comments that
have been redacted, as well as those that have not been posted, that
contain comments on the merits of the proposed rule will be retained in
the public comment file and will be considered as required under all
applicable laws. All comments may be accessible under the Freedom of
Information Act.
FOR FURTHER INFORMATION CONTACT: Division of Depositor and Consumer
Protection: Luke H. Brown, Associate Director, 202-898-3842,
[email protected]; Meron Wondwosen, Senior Policy Analyst, 202-898-7211,
[email protected]; Edward J. Hof, Senior Policy Analyst, 202-898-
7213, [email protected]; Legal Division: James Watts, Counsel, 202-898-
6678, [email protected]; Vivek Khare, Counsel, 202-898-6847,
[email protected].
SUPPLEMENTARY INFORMATION: The FDIC is proposing to amend part 328 of
its regulations, which includes requirements for use of the official
FDIC sign and IDIs' advertising statements, as well as
misrepresentations of insured status and misuse of the FDIC's name or
logo. The proposed rule would generally: (1) modernize and amend the
rules governing the display of the official sign in branches, to, for
example, apply the rules to non-traditional IDI branches; (2) require
the use of the FDIC official sign, a new digital sign, and other signs
differentiating deposits and non-deposit products across all banking
channels, including automated teller machines (ATMs) and evolving
digital channels (which functionally serve as digital teller windows);
(3) clarify the FDIC's rules regarding misrepresentations of deposit
insurance coverage by addressing specific scenarios where information
provided to consumers may be misleading; (4) amend definitions of
``non-deposit product'' to include crypto-assets; and (5) require IDIs
to maintain policies and procedures addressing compliance with part
328. As explained below, the proposal is intended to enable consumers
to better understand when they are doing business with an IDI and when
their funds are protected by the FDIC's deposit insurance coverage.
Policy Objectives
In recent years there have been significant changes in the banking
landscape, including continued evolution of bank branches and their
role in serving depositors, substantially increased reliance on
internet and mobile banking channels to access IDI banking services,
and growth in financial technology (fintech) companies that seek to
offer new options for accessing banking products and services. While
these developments are beneficial, they may make it more difficult for
depositors and consumers to understand when they are doing business
with an IDI and when their funds are protected by the FDIC's deposit
insurance. In addition, the FDIC has observed increased misleading
representations about deposit insurance in internet banking channels,
which can result in consumer confusion and harm. These types of
misleading statements create uncertainty and could dilute and weaken
the confidence that underpins banks and our nation's broader financial
system.
To keep pace with the ongoing market and technological
developments, the proposed amendments to part 328 are intended to
promote several policy goals. Specifically, the FDIC hopes to bring the
certainty and confidence historically provided by the FDIC sign at
traditional IDI branch teller windows to the varied and evolving
digital channels through which depositors are increasingly handling
their banking needs today. These channels serve as the digital teller
windows of the modern banking landscape, and it is critical that they
provide clear, consistent, and accurate information about deposit
insurance upon which consumers, businesses, and other entities may base
their financial decisions.
The proposed rule would establish sign requirements across all
banking channels, including evolving digital channels, to align with
marketplace developments. The proposed sign requirements are also
intended to more clearly distinguish insured deposits from non-deposit
products, and to better distinguish IDIs from non-banks in the digital
space. The proposed rule would allow consumers, businesses, and other
entities to better understand when their funds are protected by the
FDIC's deposit insurance. At the same time, the proposed sign
requirements are intended to permit flexibility for IDIs and other
firms in the marketing of their products and services.
The proposed amendments to the FDIC's rules regarding
misrepresentations of deposit insurance coverage are intended to
address specific scenarios where information provided to consumers may
be misleading with respect to deposit insurance coverage. In
particular, the FDIC is concerned that certain business relationships
between IDIs and non-banks may be confusing to consumers, and proposes
to require clear disclosures that would better inform consumers as to
when their funds are protected by FDIC deposit insurance. Further
clarity in this area would be beneficial for both consumers and the
industry.
Background
The FDIC is an independent agency that maintains stability and
public confidence in the nation's financial system by, among other
things, insuring the deposits of all IDIs. The FDIC has helped to
maintain public confidence in the nation's banking system in times of
financial turmoil, including the period from 2008 to 2013, when the
United States experienced a severe financial crisis, and more recently
during the financial stress associated with the COVID-19 pandemic. The
FDIC has proactively sought to protect consumers,\1\ promote public
confidence in insured deposits, and prevent false and misleading
representations about the manner and extent of FDIC deposit insurance.
Today, there are nearly 5,000 IDIs in the United States.\2\
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\1\ As used in this document, the term ``consumer'' means any
current or potential depositor, including natural persons,
organizations, corporate entities, and governmental bodies. See 12
CFR 328.101.
\2\ FDIC's BankFind Suite, available at: https://banks.data.fdic.gov/bankfind-suite/bankfind.
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Statutory Authority and Regulations
Sign and advertising statement requirements for IDIs date back to
the Banking Act of 1935, and are now set forth in section 18(a) of the
Federal Deposit Insurance Act (FDI Act).\3\ Section 18(a) grants the
FDIC authority to prescribe regulations with respect to these
requirements, which are currently contained in subpart A to 12 CFR part
328.\4\
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\3\ 12 U.S.C. 1828(a)(1). Section 9 of the FDI Act provides the
FDIC the authority to prescribe rules and regulations as it may deem
necessary to carry out the provisions of this Act or of any other
law which it has the responsibility of administering or enforcing.
12 U.S.C. 1819(a) Tenth.
\4\ See subpart A to 12 CFR part 328 (Sec. Sec. 328.0 through
328.5-328.99).
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[[Page 78019]]
The FDIC's official sign and advertising statement regulations
require banks to continuously display the FDIC official 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.\5\
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\5\ See generally, 12 CFR part 328.
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The agency last made major amendments to these regulations in
2006.\6\ The current text of the FDIC's sign regulations refer to an
IDI's physical premises and Remote Service Facilities, but does not
specify other banking channels that have since developed.\7\
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\6\ 71 FR 66098 (Nov. 13, 2006).
\7\ See 12 CFR 328.2. ``Remote Service Facility'' includes any
automated teller machine, cash dispensing machine, point-of-sale
terminal, or other remote electronic facility where deposits are
received. 12 CFR 328.2(a)(1)(ii).
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In addition, section 18(a)(4) of the FDI Act prohibits any person
from misusing the name or logo of the FDIC or from engaging in false
advertising or making knowing misrepresentations about deposit
insurance.\8\ The FDIC has broad statutory authority in this area, and
earlier this year, issued specific regulations in subpart B to 12 CFR
part 328 regarding false representations related to FDIC insurance and
the misuse of the FDIC name and logo.\9\ Since the new subpart B
regulations took effect, the FDIC has observed additional misconduct by
entities misusing the FDIC's name or logo and misrepresenting the
extent of FDIC insurance coverage.
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\8\ 12 U.S.C. 1828(a)(4). Section 18(a)(4) also 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. 12 U.S.C. 1828(a)(4)(C)-(D). Further, 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.
\9\ 87 FR 33415 (June 2, 2022); Subpart B to 12 CFR part 328
(Sec. Sec. 328.100 through 328.109). Subpart B establishes the
process by which the FDIC will identify and investigate conduct that
may violate section 18(a)(4), the standards under which such conduct
will be evaluated, and the procedures which the FDIC will follow
when formally and informally enforcing the provisions of section
18(a)(4).
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Developments in Consumer Access to Banking and Financial Services
In recent years, there have been significant changes in the banking
landscape, including the evolution of bank branches and their role in
serving consumers, the proliferation of digital channels as a critical
and fundamental mechanism to access banking and financial services, and
an increasingly broad array of financial products offered through
banking channels, including access to non-deposit products. The
following overview of these trends is intended to provide context for
the proposed rule, which seeks to enable consumers to better understand
when they are doing business with an IDI and when their funds are
protected by FDIC deposit insurance coverage.
Many bank branches retain a traditional physical branch footprint,
serving depositors primarily at teller windows or stations. According
to the FDIC's 2021 National Survey of Unbanked and Underbanked
Households (Household Survey), roughly 63.4 percent of all banked
households used a bank teller to access their accounts at least once in
the last 12 months, including 57.8 percent of the youngest banked
households between the ages of 15 to 24, and 72.2 percent of the oldest
banked households aged 65 or older.\10\ However, IDIs have increasingly
begun operating branches with different styles and designs. These
locations may include electronically-staffed kiosks, interactive ATMs
that provide remote assistance with a teller, and teller-less
caf[eacute]s where deposits can be accepted on tablets or through ATMs.
The FDIC's existing sign rules, which focus on display of the official
sign at teller windows or stations, have not kept pace with these
developments.
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\10\ Federal Deposit Insurance Corporation (FDIC), 2021 National
Survey of Unbanked and Underbanked Households (October 2022).
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The existing sign rules also do not reflect evolving digital
channels, which have become an increasingly important means of access
to banking products and services. While some consumers continue to
visit branches, others rely on ATM access and digital channels such as
online banking and mobile banking. For these consumers, an IDI's ATM,
website, or mobile application effectively serves as a digital teller
window. The results of the Household Survey show that the proportion of
banked households that used mobile banking as their primary method of
bank account access increased from 34.0 percent in 2019 to 43.5 percent
in 2021.\11\ The proportion of banked households that used online
banking as their primary method of bank account access was similar in
2019 (22.8 percent) and 2021 (22.0 percent).\12\ Combined, 65.4 percent
of banked households in 2021 used mobile or online banking as their
primary method of bank account access, up from 56.8 percent in
2019.\13\ Given that nearly two-thirds of banked households primarily
access banking products through phones, computers, and other devices,
the FDIC believes it is critical to update and provide consistent sign
requirements for digital channels.
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\11\ Id.
\12\ Id.
\13\ Id.
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Banking customers are also offered an increasingly wide array of
products and services, regardless of whether they are in a branch,
using an ATM, or connecting with an IDI through digital channels. In
many instances, IDIs offer both deposits and non-deposit products to
consumers. For example, IDIs might allow depositors in their branches
to consult with an investment adviser and purchase securities or mutual
funds. Options to purchase non-deposit products are continuing to
evolve, with some IDIs offering ATM or digital banking customers the
ability to purchase crypto-assets with their funds. Absent adequate
signs or disclosures, simultaneous offering of both insured deposits
and non-deposit products may lead consumers (who are aware that the IDI
is insured by the FDIC) to mistakenly conclude that all of the products
being offered are insured. Some of these uninsured products may be
speculative.
Growth in the fintech sector has also served to blur the
distinction between IDIs and non-banks in the eyes of many consumers,
increasing the potential for confusion regarding deposit insurance
coverage. Business arrangements between IDIs and non-banks can take
many forms and continue to evolve at a rapid pace. For example, an IDI
might enter into an arrangement with the fintech company to offer the
IDI's products to the fintech company's customers. In other instances,
fintech companies might deposit their customers' funds at an IDI. In
such cases, the fintech company might state to its customers that their
funds are FDIC-insured, or that they are insured by the FDIC on a
``pass-through'' basis, without an accurate explanation of what this
means. The proliferation of relationships and disclosures may confuse
consumers as to whether they are dealing with an IDI, whether their
funds are insured by the FDIC, and the risks they are protected
against.
Industry Outreach--Request for Information
In February 2020 and April 2021, the FDIC published Requests for
Information (collectively, the ``RFIs'') in the Federal Register to
seek public input regarding potential modernization
[[Page 78020]]
of the official sign and advertising rules to reflect changes in
deposit-taking via physical branch, digital, and mobile banking
channels.\14\ In response to the RFIs, the FDIC received 20 comments
from trade associations, IDIs, and others.\15\ In addition, FDIC staff
met with representatives from IDIs, a technology service provider, and
consumer groups. Commenters generally recognized the importance and
value of displaying FDIC signs and the advertising statement, and some
commenters stressed that depositors place significant trust in FDIC
signs.
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\14\ 85 FR 18528 (Feb. 26, 2020); 86 FR 18528 (Apr. 9, 2021).
\15\ Comments to the RFIs can be found on the FDIC's website,
available at https://www.fdic.gov/resources/regulations/federal-register-publications/2020/2020-rfi-fdic-sign-and-advertising-requirements-3064-za14.html and https://www.fdic.gov/resources/regulations/federal-register-publications/2021/2021-rfi-fdic-official-sign-and-advertising-requirements-3064-za14.html.
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The majority of comments recognized the need for updating FDIC sign
and advertising requirements in response to changes in industry
practice and the increasingly significant role played by digital and
mobile banking. At the same time, commenters generally favored greater
flexibility in terms of the size, design, and location of the official
FDIC sign at IDIs' branches. Several commenters proposed requiring a
single, conspicuous physical or digital display in the teller area as
opposed to smaller signs placed at each window. Some commenters
suggested amending the continuous display requirement to allow for
rotating digital disclosures.
Commenters also indicated that consumers assume products offered
through IDIs are insured and emphasized the importance of enabling
consumers to identify uninsured products and understand the role of
third parties in offering such products.
Commenters also suggested that the FDIC clarify how sign
requirements apply to digital and mobile banking channels. While some
requested clarity on the size and location of the FDIC sign on web
pages and mobile applications, others urged the FDIC to adopt a
flexible policy that better accounts for technological limitations and
preservation of user experience. Similarly, several commenters
requested clarity on how teller window sign requirements apply to
digital banking channels and revisions to the definition of Remote
Service Facility to incorporate digital and mobile banking. Some IDIs
also indicated that they voluntarily display the FDIC advertising
statement on their digital pages.
One commenter noted the increase in uninsured entities offering
products and services similar to banks, and indicated the risk of
consumer confusion will likely increase. This commenter suggested a
clear articulation by the FDIC regarding the obligations that non-banks
have with respect to offering these products and services, whether
insured or not, can promote consumer understanding and mitigate the
risk of consumer confusion.
With respect to advertising requirements, many commenters sought
clarification on which products and services require the advertising
statement. Some commenters proposed permitting advertisements to host
the required statement ``one click away'' in order to permit greater
flexibility in advertising format, while others expressed concern that
such an arrangement would lead to greater consumer confusion about
whether advertised products qualify for deposit insurance.
The FDIC carefully considered comments received in response to the
RFIs in formulating this proposal, and remains committed to considering
further public input on the modernization of its sign and advertising
requirements through this document and comment process. Certain
commenters' suggestions are discussed in further detail in the
``Alternatives Considered'' section of this document.\16\
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\16\ See infra Section IV.
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Previous Rulemaking
On May 17, 2022, the FDIC issued a final rule adding a new subpart
B to 12 CFR part 328. The final rule describes: (1) the process by
which the FDIC will identify and investigate conduct that may violate
the prohibitions against misuse and misrepresentation; (2) the
standards under which such conduct will be evaluated; and (3) the
procedures that the FDIC will follow when formally and informally
enforcing these prohibitions.
While this rulemaking was an important step, the FDIC has observed
an increase in the number of instances where financial services
providers or other entities or individuals have misused the FDIC's name
or logo or have made misrepresentations about FDIC insurance. This has
caused continuing challenges for consumers in determining whether they
are doing business with an IDI and whether their funds are protected by
the FDIC's deposit insurance coverage. The FDIC believes that further
clarification of subpart B may be helpful to address these challenges,
particularly to address specific situations where consumers may be
misled as to whether an entity is insured by the FDIC or the nature and
extent of deposit insurance coverage.
Description of the Proposed Rule
As explained above, the FDIC is proposing to modernize its sign and
advertising requirements to reflect current banking practices,
including updating the rules to reflect that deposit-taking via
physical branch, digital, and mobile banking channels has evolved since
the FDIC last significantly updated its rules in 2006. While various
channels are used to access bank products, the FDIC aims to establish
sign and advertising requirements that enable IDIs' customers to
clearly understand when their funds are protected by the FDIC's deposit
insurance coverage. The proposed changes to the sign rules include
requirements for physical bank premises, digital channels such as
online banking websites and mobile applications, and automated teller
machines and similar devices. For simplicity, requirements applicable
to each of these channels are set forth in separate sections of the
proposed rule.
The proposed rule's sign requirements include three distinct signs
relating to deposit insurance. The first is the FDIC's official sign,
which is currently displayed at IDIs' principal place of business and
branches. Second, the proposed rule would require the display of a
digital sign on IDIs' digital deposit-taking channels, such as online
banking websites and mobile applications. The digital sign, which would
be an abbreviated version of the FDIC's official sign, would promote a
clear understanding by consumers of when they are interacting with an
IDI rather than a non-bank and when their funds are insured by the
FDIC. Third, the proposed rule includes a non-deposit sign requirement
that would address the potential for consumer confusion where an IDI
offers both insured deposits and non-deposit products through the same
channel (e.g., insured deposits and non-deposit products are both
offered at a branch). In such instances, the IDI's display of the
official FDIC sign could lead consumers to believe that the non-deposit
products are insured, absent additional information. Although sold via
IDI banking channels, these products: are not insured by the FDIC; are
not deposits; and may lose value. This non-deposit sign requirement is
intended to be generally consistent with practices described in the
longstanding interagency guidance on the retail sale
[[Page 78021]]
of non-deposit investment products \17\ that many institutions already
follow, and thus should be familiar to many consumers.
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\17\ See Interagency Statement on Retail Sales of Nondeposit
Investment Products, FIL-9-94 (Feb. 17, 1994).
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The FDIC is also proposing limited amendments to its official
advertising statement requirements. These updates would provide IDIs
with an additional option for a shortened official advertising
statement, and include technical corrections to address the statutory
increase of the deposit insurance amount that has occurred since the
regulation was last amended.
In addition, the FDIC is proposing to amend the provisions of
subpart B to provide further clarity on the application of the
misrepresentation statute in specific situations where consumers may
misunderstand or be misled as to whether an entity is insured by the
FDIC or the nature and extent of deposit insurance coverage. The
proposed rule is described in further detail below.
Official Sign for IDIs
The proposed rule would retain the existing design of the official
sign, which, in addition to prominently bearing the name of the FDIC,
includes statements indicating that each depositor is insured up to at
least $250,000 and that the FDIC's deposit insurance is backed by the
full faith and credit of the U.S. government. Also consistent with
current regulations, the proposed rule would define the ``symbol'' of
the FDIC as the portion of the official sign that consists of ``FDIC''
and the statements ``Each depositor insured to at least $250,000'' and
``Federal Deposit Insurance Corporation www.fdic.gov.''
The proposed rule would retain an IDI's ability to procure physical
versions of the official sign from the FDIC for official use at no
charge, or to procure similar signage from commercial suppliers at
their own expense. Any IDI that promptly submits a written request for
an official sign to the FDIC would not be deemed to have violated the
rule by failing to display the official sign, unless the IDI fails to
display the official sign after receiving it.
Sign Requirements on IDIs' Physical Premises
Section 328.3 of the proposed rule would govern signage within an
IDI's premises. Consistent with current regulations, all IDIs would be
required to continuously, clearly, and conspicuously display the
official sign in their principal place of business and all their U.S.
branches.\18\ To accommodate evolving styles and footprints of
branches, however, the proposed rule would provide separate
requirements for traditional footprint branches and non-traditional
branches or other places of business, such as caf[eacute]-style
branches.
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\18\ The term ``branch'' would be defined by reference to the
FDI Act's definition of ``domestic branch,'' 12 U.S.C. 1813(o). The
FDI Act broadly defines ``domestic branch'' to include any branch
bank, branch office, branch agency, additional office, or branch
places of business at which deposits are received or checks paid, or
money lent. The FDIC believes this definition would generally also
include non-traditional footprint branches where customers can
receive customer assistance from bank personnel to perform these
core banking functions.
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Official Sign in Traditional Branches
IDIs have traditionally received deposits at teller windows or
stations, and the proposed rule would continue to provide for display
of the official sign at traditional footprint branches in a manner
consistent with current regulations. If deposits are usually and
normally received at teller windows or stations, IDIs would generally
be required to display the official sign at each teller window or
station in a size of 7'' by 3'' or larger, with black lettering on a
gold background. The FDIC believes, however, that it is appropriate to
allow additional flexibility with respect to display of the official
sign in instances where the IDI only offers deposit products on the
premises. In such cases, the requirement to display the official sign
could be satisfied by displaying the official sign in one or more
locations visible from the teller windows or stations, in a size large
enough to be legible from anywhere in that area. If the IDI also offers
non-deposit products on the premises, display of the official sign at
each teller window would be required, consistent with current
regulations. Under the proposed rule, non-deposit signage would also be
required as described below.
Official Sign in Non-Traditional Branches
The proposed rule also would include sign requirements that
accommodate the non-traditional footprint branches operated by some
IDIs. For example, some IDIs operate caf[eacute]-style branches that
include open areas where customers work with bankers. These branches
may, or may not, include traditional teller windows or stations. Under
the proposed rule, if insured deposits are usually and normally
received in areas of the premises other than teller windows or
stations, the IDI would be required to display the official sign in one
or more locations in a size large enough to be legible anywhere in
those areas. The FDIC believes that such signage would ensure that
customers are aware that their deposits are protected by deposit
insurance. If the IDI also offers non-deposit products on the premises,
under the proposed rule, non-deposit signage would also be required as
described below.
Non-Deposit Signs on IDIs' Premises
The FDIC is proposing a new requirement for non-deposit signs when
both insured deposits and non-deposit products are offered within the
IDI's premises. In such instances, an IDI would be required to
physically segregate the areas where non-deposit products are offered
from areas where insured deposits are usually and normally accepted,
and display a sign in the non-deposit areas indicating that non-deposit
products: are not insured by the FDIC; are not deposits; and may lose
value.\19\ This non-deposit sign would be required to be continuously,
clearly, and conspicuously displayed; however, the proposed rule does
not include specific design or size requirements. To minimize the
potential for consumer confusion, the proposed rule would prohibit
display of non-deposit signs in close proximity to the official FDIC
sign. The proposed rule's non-deposit sign requirements would apply to
both traditional footprint branches and non-traditional footprint
branches. IDIs that do not offer non-deposit products through
traditional or non-traditional branches would not be impacted by this
part of the proposal.
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\19\ As noted above, this requirement is intended to be
generally consistent with longstanding interagency guidance on the
retail sale of non-deposit investment products that many
institutions already follow, and thus should be familiar to many
consumers.
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Use of Electronic Media or Varied Signs To Satisfy Official Sign and
Non-Deposit Sign Requirements on IDIs' Premises
The proposal also provides IDIs the flexibility to utilize
electronic media to satisfy sign requirements on an IDI's premises.
Electronic signs have become increasingly common in retail
environments, and the proposed rule includes a provision expressly
permitting the use of electronic media to display required signs. This
would apply to both display of the official sign and non-deposit
signage, where required. However, where the proposed rule requires
``continuous'' display of signs, this applies equally to signs
[[Page 78022]]
utilizing electronic media. Accordingly, a rotating display that
includes the required sign periodically would not satisfy the
``continuous'' requirement.
The proposed rule also would retain certain provisions of current
regulations that provide IDIs with flexibility in displaying the
official sign. IDIs would have the option to display the official sign
in locations on the premises other than those required under the rule,
except for in areas where non-deposit products are offered. For
locations where display of the official sign is required, IDIs could
choose to display signs that vary from the official sign in size,
color, or material, provided that the sign is no smaller than the
official sign, has the same color for the text and graphics, and
includes the same content.
New Institutions
Also consistent with current regulations, an IDI would be required
to display the official sign at its premises no later than its twenty-
first calendar day of operation as an insured institution, unless it
promptly requested the official sign from the FDIC but did not receive
the official sign before that date.
Sign Requirements for IDIs' Digital Channels
As explained above, consumers are increasingly using IDIs' websites
and mobile banking applications to open deposit accounts, deposit and
transfer funds, and buy and sell non-deposit products. For many
consumers, an IDI's website and applications are the primary method of
accessing banking products and, in turn, these platforms functionally
serve as a digital teller window. Given these developments, the FDIC
believes it is important to require signage with respect to IDIs'
digital deposit-taking channels that is consistent with in-branch
signage, to the extent feasible. This would promote a clear
understanding by consumers of when they are interacting with an IDI and
when their funds are protected by the FDIC's deposit insurance
coverage.
The proposed rule aims to establish sign requirements applicable to
any medium through which deposits are usually and normally received.
These changes are intended to enhance consistency of signage between
IDIs' digital deposit-taking channels and other traditional channels,
providing helpful clarity for consumers.
Digital Deposit-Taking Channels
Section 328.5 of the proposed rule would define ``digital deposit-
taking channels'' to mean any electronic communications methods through
which an IDI accepts insured deposits. This would include, but not be
limited to, IDI websites, web-based applications, and mobile
applications that offer consumers access to insured deposits at IDIs.
The FDIC intends that the proposed rule would apply to digital channels
where insured deposits are received that are analogous to the
traditional teller windows or stations that consumers interact with at
an IDI's physical premises. The language of the proposed rule is
intended to accommodate the ongoing evolution of internet and mobile
application infrastructure.
Digital Sign Requirement for Digital Deposit-Taking Channels
Under the proposed rule, an IDI would be required to clearly,
continuously, and conspicuously display a digital sign on the IDI's
homepage, landing and login pages or screens, and transactional pages
or screens involving deposits, to the extent applicable. This digital
sign would be intended to visually communicate to consumers that they
are doing business with an IDI rather than a non-bank entity. As the
homepage and landing page are generally the primary point of
interaction between IDIs and consumers, such display would prominently
disclose to consumers that the entity is FDIC-insured. The FDIC also
believes it is appropriate to require the digital sign on the login
page so consumers are informed before signing up for or signing into an
online account that such an account is associated with an IDI rather
than a non-bank entity. Display of the digital sign also would be
required on pages where the customer transacts with insured deposits.
IDIs would be required to display the digital sign clearly,
continuously, and conspicuously on the relevant pages or screens under
the proposed rule. To be clear and conspicuous, the digital sign must
be displayed in a continuous manner, near the top of the relevant page
or screen, in close proximity to the IDI's name. Display of the digital
sign at the footer of the relevant page or a similar location would not
satisfy the clear and conspicuous standard.
It may be helpful to consumers if IDIs link the digital sign to the
FDIC's online BankFind tool. Such a link would take the consumer to
FDIC's BankFind web page and make consumer due diligence easier than it
is currently, which in turn would help consumers differentiate IDIs
from non-banks.\20\ This is not a requirement under the proposed rule,
however, and IDIs would have the discretion to include such a link when
displaying the digital sign.
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\20\ The FDIC intends to update its online BankFind page with
useful deposit insurance information for consumers as well as
instructions on how to use BankFind so consumers could more easily
verify that an entity is FDIC-insured.
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Digital Sign Design
The FDIC recognizes that IDIs may not as easily display the
official FDIC sign, described above, on websites and application pages
and is therefore proposing to require a digital sign that would be an
abbreviated version of the official sign. The FDIC expects that a
digital sign would prominently bear the name of the FDIC and the
statement that insured deposits are backed by the full faith and credit
of the U.S. Government. The proposed rule does not include, and the
FDIC is soliciting comment on, a design for the digital sign that
includes these elements.
Digital Deposit-Taking Channels Are Not Advertisements
The FDIC does not intend for the proposed digital sign requirement
to overlap with the general advertising statement requirements that
apply to IDIs. As discussed above, the proposed digital sign would be
displayed on an IDI's homepage, landing and login pages, and
transactional pages involving insured deposits. The FDIC views these
pages as environments where the customer may interact directly with the
IDI, rather than as ``advertisements'' as defined in the rule's
advertising statement requirements.\21\ To the extent these pages can
be considered ``advertisements,'' the inclusion of the digital sign on
these pages would make clear that the IDI is insured by the FDIC,
making use of the official advertising statement unnecessary under
proposed Sec. 328.6(d)(10). IDIs, however, would remain responsible
for complying with the official advertising statement requirements for
other qualifying advertisements, including those contained on other web
pages.
Non-Deposit Digital Signage Requirements When Non-Deposit Products and
Deposit Products Are Offered Through Same Digital Deposit-Taking
Channel
The FDIC believes there is an increased risk of consumer confusion
regarding deposit insurance coverage when both deposits and non-deposit
products are offered through the same digital deposit-taking channel.
Under the proposed rule, if a digital deposit-taking channel offers
both access to deposits and non-deposit products, the
[[Page 78023]]
IDI would be required to clearly and conspicuously display signage
indicating that the non-deposit products are: (1) not insured by the
FDIC; (2) are not deposits; and (3) may lose value. IDIs would be
required to display this non-deposit signage via a one-time
notification when consumers initially access such a page. Such
notification would provide an initial, prominent display of the non-
deposit signage to alert consumers that they are dealing with non-
deposit products that are not subject to FDIC-insurance. Moreover,
consumers would need to take action to dismiss the notification before
accessing the relevant page or screen. This could include, for example,
an IDI using a ``pop-up,'' \22\ ``speedbump,'' \23\ or ``overlay'' \24\
that displays a notification to the consumer that the consumer must
dismiss before accessing the content related to non-deposit products.
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\22\ A ``pop-up'' refers to a screen generated when a consumer
clicks on particular hyperlink.
\23\ A ``speedbump'' refers to an intermediate page that
appears, requiring the user to take action to transition to the next
page.
\24\ An ``overlay'' refers to a content box that appears on a
web page or screen and obscures the background content.
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In addition, the proposed rule would require the continuous display
of the non-deposit signage on each page relating to non-deposit
products and prohibit displaying the non-deposit signage in close
proximity to the digital FDIC sign. The FDIC would expect the non-
deposit signage to be in a prominent place, in an appropriate size, and
displayed in a continuous manner for a consumer accessing the page to
notice.\25\ The FDIC believes, however, that institutions should have
flexibility in the way they market non-deposit products and is not
proposing specific design or size requirements for this non-deposit
signage.
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\25\ Some IDIs currently display non-deposit disclosures in
small font near the bottom of web pages and application screens.
Consumers are unlikely to notice such disclosures and may mistakenly
believe that non-deposits products are covered by FDIC-insurance.
Such display of non-deposit disclosures would not satisfy the clear,
continuous, and conspicuous display requirement of the proposed
rule.
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Automated Teller Machines and Similar Devices
Section 328.4 of the proposed rule governs signage requirements for
IDIs' automated teller machines (ATMs) and other remote electronic
facilities that receive deposits. The FDIC seeks to ensure that
depositors receive necessary disclosures regarding deposit insurance as
banks continue to devise new ways to provide services outside of
physical branches. The proposed rule intends to capture banking kiosks
and other devices currently defined as ``Remote Service Facilities''
\26\ that receive deposits. This section of the proposed rule is not
intended to address online and mobile banking channels, which are
considered ``digital deposit-taking channels'' under the proposed rule.
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\26\ ``Remote Service Facility'' includes any automated teller
machine, cash dispensing machine, point-of-sale terminal, or other
remote electronic facility where deposits are received. 12 CFR
328.2(a)(1)(ii).
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Under current regulations governing ATMs and like devices, IDIs
have the option to display the physical official FDIC sign. The FDIC
believes, however, that accurate signage across digital, mobile, and
physical banking channels is critical to providing clear information on
deposit insurance coverage to depositors. The proposed rule would
require display of the official FDIC sign on IDIs' ATMs and like
devices. The FDIC recognizes that requiring a physical sign may lead to
formatting issues, maintenance costs, and difficulty in updating
devices when signage requirements change. In order to accommodate those
concerns, the proposed rule would require the electronic display of the
official sign on the ATM or like device.
The proposed rule provides that the official FDIC sign must be
electronically displayed clearly and conspicuously. ATMs and like
devices must, at a minimum, display the official FDIC sign on the home
page or screen and each transaction page or screen relating to
deposits.
While ATMs and similar devices offer less of an opportunity to
physically separate deposit products from non-deposit products, the
proposed rule nevertheless distinguishes these products to reduce the
potential for consumer confusion. Clear signage can be important in
this setting because customers often interact with ATMs alone,
including when bank branches are otherwise closed, without an
opportunity to ask clarifying questions or for a bank representative to
ensure that customers fully understand disclosures. As such, the
proposed rule would require electronic non-deposit signs where an ATM
or like device both receives deposits for an IDI and offers access to
non-deposit products.\27\ The ATM or like device would be required to
clearly, continuously, and conspicuously display electronic disclosures
indicating that non-deposit products: are not insured by the FDIC; are
not deposits; and may lose value. The proposed rule would require the
display of these disclosures on each transaction page or screen
relating to non-deposit products.
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\27\ The FDIC would not view postage stamps sold at ATMs to
require these disclosures.
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Official Advertising Statement for IDIs
The FDIC is proposing limited amendments to the advertisement
statement requirements. The proposed rule would expand IDIs' options
for use of a short advertising statement.
Currently, IDIs must include the official advertising statement in
all advertisements that promote deposit products. The term
advertisement means a commercial message in any medium that is designed
to attract public attention or patronage to a product or business.\28\
The FDIC views this definition to include advertising published through
social media channels.
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\28\ 12 CFR 328.3(a), (c).
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The current regulation allows IDIs to use the short title ``Member
of FDIC,'' ``Member FDIC,'' or a reproduction of the symbol of the
corporation (defined in Sec. 328.2(b)). In addition to these options,
to provide additional flexibility, the proposed rule would allow the
use of ``FDIC-insured.''
The FDIC also proposes to make a technical correction to the
reference to the deposit insurance limit found in paragraph (d)(10) of
the current regulation, which states that ``deposits or depositors are
insured by the Federal Deposit Insurance Corporation to at least
$100,000 for each depositor.'' As a technical correction, the proposed
rule would instead reference the standard maximum deposit insurance
amount defined in Sec. 330.1 of the FDIC's regulations, currently
$250,000.
Misrepresentations and Material Omissions by Any Person
The FDIC believes that it may be beneficial to provide further
clarity on the application of the misrepresentation statute in specific
situations where consumers may be misled as to whether an entity is
insured by the FDIC or the nature and extent of deposit insurance
coverage. The FDIC is proposing to amend subpart B to expressly address
these situations, making clear when specific statements or omissions
constitute a misrepresentation under section 18(a)(4).
Use of the Official Advertising Statement or FDIC-Associated Terms or
Images
Consumers have historically identified the use of the official
advertising statement (such as ``Member FDIC'') and FDIC-Associated
Terms or FDIC-Associated Images to signify that they are dealing with
an IDI and will
[[Page 78024]]
receive the protection of deposit insurance. As noted above, however,
the official advertising statement and FDIC-Associated Terms and FDIC-
Associated Images have increasingly been used by non-banks that purport
to deposit their customers' funds at IDIs. The FDIC believes that use
of the official advertisement or FDIC-Associated Terms or FDIC-
Associated Images in such instances presents a high risk of confusing
consumers as to whether they are dealing with an IDI and whether
deposit insurance applies to their funds.
To address this risk, the proposed rule would amend Sec.
328.102(a) to clarify specific circumstances under which use of the
official advertising statement, FDIC-Associated Terms, or FDIC-
Associated Images by a non-bank would constitute a misrepresentation of
insured status. The FDIC believes that use of the official advertising
statement, FDIC-Associated Terms, or FDIC-Associated Images by a non-
bank may inaccurately imply that the non-bank is FDIC-insured. For
example, a non-bank's use of the ``Member FDIC'' logo on its website or
in its marketing materials would be a misrepresentation unless that
logo is next to the name of one or more IDIs. As another example, a
non-bank's use of either the official FDIC sign or the digital sign
that IDIs would be required to display through their digital deposit-
taking channels (under proposed Sec. 328.5) would be a
misrepresentation if it inaccurately implies that the non-bank is
insured by the FDIC and backed by the full faith and credit of the U.S.
government. Similarly, a non-bank's use of FDIC-Associated Terms in
statements suggesting that the non-bank is insured by the FDIC would
constitute a misrepresentation.\29\
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\29\ These examples are intended to be illustrative, rather than
an exhaustive list of ways in which a non-bank might misrepresent
its insured status. Any use of the official advertising statement,
FDIC-Associated Terms, or FDIC-Associated Images that inaccurately
states or implies that the non-bank is insured by the FDIC would
violate the proposed rule.
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Failure To Disclose That a Person Is a Non-Bank Is a Material Omission
When a Statement Is Made Regarding Deposit Insurance
Non-banks that purport to deposit their customers' funds at IDIs
sometimes make statements regarding deposit insurance coverage for
those funds. Absent additional context, such statements misrepresent
the insured status of the non-bank and suggest that the FDIC's deposit
insurance will protect consumers in the event of the non-bank's
insolvency. To minimize risk of consumer confusion, the proposed rule
provides that if a non-bank makes statements regarding deposit
insurance for its customers, it is a material omission for the non-bank
to fail to clearly and conspicuously disclose that it is not itself an
FDIC-insured institution and that the FDIC's deposit insurance coverage
only protects against the failure of an FDIC-insured depository
institution. In the FDIC's view, this additional disclosure is
necessary to prevent consumers from misinterpreting a non-bank's
assertions regarding deposit insurance coverage. The FDIC notes that
some non-banks already include such language on their websites, often
identifying the partner IDI through which banking services are
provided.\30\ The proposed rule does not prescribe specific disclosure
language; however, it explains that a statement that a person is not an
FDIC-insured bank and deposit insurance covers the failure of an
insured bank would be considered a clear statement for purposes of this
provision. This approach gives non-banks that wish to make statements
regarding deposit insurance coverage some flexibility in how they
communicate the required information.
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\30\ For example, ``ABC Co. is not an FDIC-insured depository
institution; banking services provided by XYZ Bank, Member FDIC.''
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Failure To State That Non-Deposit Products Are Not Insured by the FDIC
Is a Material Omission When a Statement Is Made Regarding Deposit
Insurance
The FDIC's experience suggests that deposits and non-deposit
products are increasingly being offered to consumers in ways that fail
to distinguish which products are insured by the FDIC. For instance,
marketing materials might emphasize the deposit insurance protection
that applies to some products while failing to make clear that not all
of the products offered are FDIC-insured. In other instances, firms
have represented to their consumers that non-deposit products are
eligible for deposit insurance coverage, which has led consumers to
believe, mistakenly, that their money or investments are protected by
deposit insurance. The FDIC believes that where banks or non-banks make
statements regarding deposit insurance in a context where deposits and
non-deposit products are involved, additional information is necessary
to ensure that consumers understand which products are subject to
deposit insurance. To prevent consumer confusion, the proposed rule
provides that if a person makes statements regarding deposit insurance
in a context that involves both deposits and non-deposit products, it
is a material omission to fail to disclose that non-deposit products:
are not insured by the FDIC; are not deposits; and may lose value. For
example, if a non-bank's website offered customers the option to have
their funds deposited at an IDI and protected by deposit insurance or
invested in non-deposit products, it would be a material omission if
the non-bank's website failed to state that the non-deposit products
are not insured by the FDIC, are not deposits, and may lose value.
Failure To State That Requirements Apply To Pass-Through Deposit
Insurance
The FDIC has a long history of providing ``pass-through'' deposit
insurance coverage, meaning that deposits placed at an IDI by a party
on behalf of one or more owners are insured as if deposited directly at
the IDI by the owner(s). Pass-through insurance allows each owner of
the funds in such an arrangement to be separately insured up to the
statutory deposit insurance limit, currently $250,000, even if the
total deposit of all owners (in the aggregate) exceeds the $250,000
limit. Pass-through insurance only applies, however, if certain
regulatory requirements are satisfied.\31\
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\31\ See 12 CFR 330.5, 330.7. For pass-through deposit insurance
to apply: (1) the deposit account records of the IDI must disclose a
basis for pass-through coverage, such as a custodial or agency
relationship; (2) the identities and interests of the actual owners
of the funds must be ascertainable either from the records of the
IDI or records maintained in good faith and in the regular course of
business by another party; and (3) the relationship that provides
the basis for pass-through deposit insurance coverage must be
genuine, with the deposited funds actually owned by the named
owners. Additional requirements apply to arrangements involving
multiple levels of relationships.
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Arrangements that rely on pass-through insurance have become
increasingly common, with non-banks often claiming to provide the
protection of pass-through deposit insurance for consumers' funds. Such
representations, however, may be inaccurate and mislead consumers and
fail to apprise them of the risk they face in the event that the pass-
through deposit insurance requirements have not been satisfied. If the
pass-through requirements are not met, consumers' funds may not be
fully insured in the event the IDI where the funds have been deposited
were to fail. The FDIC believes that where parties make statements
regarding the application of pass-through deposit insurance, additional
disclosure is necessary to ensure that consumers are aware of this
risk.
[[Page 78025]]
The proposed rule provides that if a person makes statements
regarding pass-through deposit insurance for its customers' funds, it
is a material omission to fail to clearly and conspicuously disclose
that certain conditions must be satisfied for pass-through deposit
insurance coverage to apply. The proposed rule would not require a
person making a statement regarding pass-through deposit insurance to
list the specific conditions that must be satisfied; simply referencing
that conditions must be satisfied would be sufficient under the
proposed rule. The proposed rule also does not prescribe specific
disclosure language, providing flexibility in how parties may wish to
express the necessary information. For example, if a website for a
financial product were to state that consumers' funds are eligible for
pass-through deposit insurance, it would be a material omission to fail
to clearly and conspicuously state that certain conditions must be
satisfied in order for pass-through insurance to apply.
Policies and Procedures for IDIs
As described in this document, the FDIC is proposing changes to (1)
its signage and advertising statement requirements for IDIs under
subpart A and (2) clarifications to the misrepresentations rule under
subpart B. The proposed rule would require IDIs to establish written
policies and procedures related to these requirements that are
commensurate with the nature, size, complexity, scope, and potential
risk of the deposit-taking activities of the institution. As part of
these policies and procedures, IDIs would also need to include, as
appropriate, provisions related to monitoring and evaluating activities
of persons that provide deposit-related services to the IDI or offer
IDI's deposit-related products or services to other parties.
Signs, Advertising Statement, and Misrepresentations
Such policies and procedures could include, for example, measures
that an IDI would take to ensure compliance with the proposed sign and
advertising requirements when the IDI changes its advertising strategy
or engages with, or expands into, new physical or digital deposit-
taking channels. For example, this could include, if applicable,
establishing procedures to ensure that the IDI's technology (e.g.,
websites and mobile applications) is capable of implementing the
proposed sign and advertisement statement requirements across all
digital deposit-taking channels.
Ultimately, an institution's policies and procedures would need to
be commensurate with the nature, size, complexity, scope, and potential
risk of its deposit-taking activities. For instance, an IDI that offers
an array of non-deposit products and engages with consumers through a
variety of digital channels would be expected to have more detailed and
sophisticated policies and procedures in place than a traditional
community bank that has a smaller presence in such products and banking
channels.
Certain Third Party Relationships
The FDIC recognizes that IDIs have been increasingly entering into
business relationships with non-bank third parties to provide banking
products and other financial services to new customers and expand the
IDIs' access to deposits. For example, IDIs can connect with third-
party fintech companies or non-financial enterprises via application
programming interfaces (APIs) in a business relationships often
referred to as banking as a service (BaaS). In such cases, third
parties make available certain IDI products and services to offer those
products and services directly to customers. As part of these
relationships, third parties often use marketing materials that may
include representations about the availability of FDIC insurance for
certain products. In essence, from the customer's perspective, the
third parties perform the same functions that the bank would typically
perform through its own deposit-taking channels (e.g., branches, which
were contemplated under section 18(a)(1) of the FDI Act).\32\
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\32\ 12 U.S.C. 1828(a)(1).
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To the extent a third party has a business relationships with, and
is serving as a deposit-taking channel for, an IDI, sound risk
management would compel the IDI to be aware of the activities of the
third party to ensure that the availability of deposit insurance is not
being misrepresented. As such, under the proposed rule, and as
appropriate, IDIs would establish policies and procedures that include
provisions related to the deposit-related services that a third party
provides to the IDI or deposit-related products or services offered by
the third party to other parties. These policies and procedures would
include, as appropriate, provisions related to monitoring and
evaluating whether such third parties are in compliance with subpart B.
Having policies and procedures in place relating to certain third party
relationships is critical to mitigating the risks of consumer harm and
confusion, consistent with the statutory purpose underlying section
18(a) of the FDI Act, and the FDIC's mission to maintain and promote
public confidence in the banking system.
To the extent an IDI has a business relationship with a third party
that provides deposit related services, it would include reasonable
provisions in its policies and procedures to ensure the marketing and
advertising materials provided to prospective depositors by that third
party do not misrepresent the insurability of financial products. This
includes, for example, policies related to training staff to review the
marketing and advertising materials to evaluate whether such materials
contain misrepresentations about deposit insurance.
Further, as appropriate to the potential risk, an IDI should
consider policies and procedures related to steps that the IDI might
take to mitigate its risk were the third party to misrepresent deposit
insurance and therefore cause potential consumer confusion and harm
about a product provided by the IDI.
The policies and procedures related to certain third parties would
be commensurate with the nature, size, complexity, scope, and potential
risk of the deposit-taking activities. With regard to third party
relationships, IDIs would be expected to focus on the relationships
that pose a higher degree of risk to consumers. For example, there may
be third parties that have long-standing, well-established,
relationships with the IDI such that the third party has been offering
products and services on the IDI's behalf for many years. Moreover,
during this time, the third party has been appropriately representing
deposit insurance. In other cases, the IDI may be involved in nascent
relationships that are less established, and involve novel arrangements
such that consumers may not fully appreciate how deposit insurance may
or may not apply to the IDI products and services that are being
offered. Assuming all other relevant factors are equal, it would be
reasonable for an IDI to view the former relationship as lower risk
vis-[agrave]-vis the latter, which would be considered higher risk.
Accordingly, in this instance, it would be appropriate for an IDI to
focus its policies and procedures on the higher-risk relationship, as
the activities performed via that relationship pose a higher risk of
deposit insurance misrepresentation and potential consumer harm.
It would also be prudent for policies and procedures to include
ensuring that
[[Page 78026]]
third parties that provide marketing or joint marketing services, web
and other electronic channel design, or similar services, are aware of
the IDIs compliance policies under part 328.
Reservation of Authority
The proposed rule also provides that the FDIC would reserve the
authority to take appropriate actions, including supervisory or
enforcement actions, against any person that violates part 328. The
existence of adequate policies and procedures would not preclude the
FDIC from taking actions against IDIs or third parties to address
violations.
Crypto-Assets
Among other things, part 328 currently prohibits any person from
representing or implying that any Uninsured Financial Product is
insured or guaranteed by the FDIC.\33\ This prohibition applies to
advertisements, publications, and other disseminations of information.
The FDIC has recently noted a number of misrepresentations of insurance
coverage and crypto-assets,\34\ and believes that part 328 should be
amended to make clear that representations concerning crypto-assets
fall within its scope. Accordingly, the proposed rule would amend the
definitions of ``Non-Deposit Product'' and ``Uninsured Financial
Product'' in subpart B to include crypto-assets and define crypto-asset
as ``any digital asset implemented using cryptographic techniques.''
This would include a digital asset that is a digital representation of
value that functions as a medium of exchange, a unit of account, and,
or a store of value; as well as a digital asset that has an equivalent
value in and is convertible to real currency, or that acts as a
substitute for real currency and is not legal tender.
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\33\ ``Uninsured Financial Product'' is currently defined to
include non-deposit products, hybrid products, investments,
securities, obligations, certificates, shares, or financial products
other than insured deposits.
\34\ See FDIC Press Release PR-60-2022, FDIC Issues Cease and
Desist Letters to Five Companies for Making Crypto-Related False or
Misleading Representations About Deposit Insurance (Aug. 19, 2022).
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The proposed rule also includes crypto-assets in subpart A's
definition of ``non-deposit product,'' using the definition of
``crypto-asset'' described above. Accordingly, the non-deposit sign
requirements proposed in subpart A would apply to crypto-assets. For
example, if an IDI's ATM offered customers the ability to purchase
crypto-assets, the ATM would be required to clearly, continuously, and
conspicuously display disclosures indicating that the crypto-assets:
are not insured by the FDIC; are not deposits; and may lose value.
Expected Effects
Costs
The costs of the proposed rule would be incurred by IDIs, as well
as some non-bank entities that may need to update disclosures or
marketing materials. This section addresses these two groups
separately.
Costs to IDIs
According to data from recent Reports of Condition and Income (Call
Reports), the FDIC insures the deposits of 4,780 IDIs operating
approximately 80 thousand branches in the United States.\35\ These IDIs
are currently subject to the existing requirements of part 328, so the
costs incurred by these IDIs by the proposed rule would be limited to
activities to ensure compliance with the new provisions in the proposed
rule and ameliorated by the extent to which IDIs are already complying
with the new provisions. These activities include updating the display
of FDIC signs in both physical and digital locations where deposits are
normally received (including ATMs and websites), creating and
maintaining signs for non-deposit products, segregating areas related
to the sale of non-deposit products from areas where insured deposits
are normally received, and ensuring that FDIC signs are not displayed
in close proximity with non-deposit product signs.
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\35\ Call Reports as of June 30, 2022.
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Data on the costs of updating the displays of signs and segregating
physical areas within bank premises are unavailable, but the FDIC
expects these costs would depend on the number of branches operated by
each IDI as well as the complexities of each IDI's branches. The FDIC
expects that larger banks are more likely to have branches that are
nontraditional, complex, and/or offer both deposit and non-deposit
products. For purposes of the proposed rule, the FDIC estimates that
IDIs with less than $10 billion in assets would spend approximately one
hour per year to complete these activities at each branch while IDIs
with at least $10 billion in total consolidated assets (assets) would
spend approximately two hours per year per branch, for a total annual
burden of approximately 120 thousand hours per year across all IDIs
\36\ at an annual cost of approximately $10 million.\37\
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\36\ According to Call Reports as of June 30, 2022, there were
4,619 IDIs with assets less than $10 billion operating 33,895
branches and 161 IDIs with assets at least $10 billion operating
45,372 branches.
\37\ Dollar costs for this analysis are based on a $81.12 total
hourly cost of compensation, a weighted average of the 75th
percentile hourly wages reported by the Bureau of Labor Statistics
(BLS) National Industry-Specific Occupational Employment and Wage
Estimates (OEWS) across five occupational groups in the Depository
Credit Intermediation sector, as of May 2021, and adjusted by 1.51
to include non-wage compensation and 1.08 to account for the change
in the seasonally adjusted Employment Cost Index for the Credit
Intermediation and Related Activities sector (NAICS Code 522)
between March 2021 and June 2022. For this analysis, the FDIC uses
the following estimated occupational burden weights and occupational
hourly labor costs: 14.4 percent for executives and managers at
$132.10 per hour, 4.3 percent for lawyers at $163.63 per hour, 36.5
percent for compliance officers at $63.78 per hour, 25.5 percent for
IT professionals at $101.32 per hour, and 19.3 percent for clerical
workers at $37.34 per hour.
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The costs of complying with the proposed rule's requirements for
digital deposit-taking channels would also depend on the complexities
of each IDI's digital deposit-taking operations. The FDIC expects that
larger banks are more likely to have more complex digital operations or
offer both deposit and non-deposit products through their digital
deposit-taking operations. For purposes of the proposed rule, the FDIC
estimates that, on average, IDIs would incur a one-time burden of sixty
hours to update their digital operations to incorporate the
requirements in the proposed rule, at an approximately cost of $23
million for the industry.\38\ The FDIC also estimates that, in years
subsequent to the enactment of the proposed rule, IDIs with less than
$10 billion in assets would spend approximately ten additional hours
per year to comply with the digital deposit-taking operation
requirements of the proposed rule, while IDIs with at least $10 billion
in assets would spend approximately twenty additional hours per year,
at an annual cost of approximately $4 million for the industry.\39\
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\38\ According to Call Reports as of June 30, 2022. $23 million
= 4,780 IDIs x 60 hours per IDI x $81.12 per hour.
\39\ According to Call Reports as of June 30, 2022. $4 million =
4,619 IDIs x 10 hours per IDI x $81.12 per hour + 161 IDIs x 20
hours per IDI x $81.12 per hour.
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Finally, all IDIs must update their policies and procedures to
comply with the proposed rule. These policies and procedures would
include, as appropriate, provisions related to monitoring and
evaluating whether certain third parties are in compliance with subpart
B. The FDIC recognizes that the costs to implement and maintain these
policies and procedures will vary across IDIs in ways that depend on
the specifics of each IDI's operations or relationships with certain
third parties. For purposes of the proposed rule, the FDIC estimates
that, on average, IDIs would incur a one-time
[[Page 78027]]
burden of eighty hours to update their policies and procedures to
incorporate the requirements in the proposed rule, at an approximately
cost of $31 million for the industry.\40\ The FDIC also estimates that,
in years subsequent to the enactment of the proposed rule, IDIs would
spend, on average, approximately seventeen additional hours per year to
ensure that their policies and procedures maintain compliance with the
proposed rule,\41\ at an annual cost of approximately $7 million for
the industry.\42\ Based on the preceding analysis, the FDIC expects
that, if the proposed rule were to be adopted, the banking industry
would incur approximately $64 million in the first year after adoption
and approximately $21 million in each subsequent year to comply with
the proposed amendments to part 328.
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\40\ According to Call Reports as of June 30, 2022. $31 million
= 4,780 IDIs x 80 hours per IDI x $81.12 per hour.
\41\ The FDIC estimates that twelve of the seventeen hours are
recordkeeping costs under the Paperwork Reduction Act. The five
remaining hours are regulatory costs of compliance that are not
under the Paperwork Reduction Act.
\42\ According to Call Reports as of June 30, 2022. $7 million =
4,780 IDIs x 17 hours per IDI x $81.12 per hour.
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Costs to Non-Bank Entities
The FDIC does not have direct data on the number of non-bank
entities that would be affected by the proposed rule. FDIC staff
believe that the non-bank entities affected by the requirement would
generally be classified in the following North American Industry
Classification System (NAICS) industries: Miscellaneous Financial
Investment Activities (NAICS Code 523999), Financial Transaction
Processing, Reserve & Clearinghouse Activities (NAICS Code 522320),
Computer System Design and Related Services (NAICS Code 5415), and
Investment Advice (NAICS Code 523930). According to recent Census data,
there were 144,556 firms in these NAICS industries in 2019, the most
recent year for which such data is available.\43\ However, not all of
these firms enter into agreements with IDIs or otherwise engage in
operations related to insured deposits; FDIC staff believe that the
number of non-bank entities engaged in such operations would be
considerably less than the number of IDIs. For purposes of the proposed
rule, the FDIC estimates that the number of affected non-bank entities
would be approximately one percent of firms in the NAICS industries
listed above. Therefore, the FDIC estimates that approximately 1,500
non-bank entities would be affected by the proposed rule.
---------------------------------------------------------------------------
\43\ (1,110 + 3,163 + 120,070 + 20,213 = 144,556) 2019 County
Business Patterns. See number of firms available at: https://www.census.gov/data/tables/2019/econ/susb/2019-susb-annual.html,
last retrieved on June 30, 2022.
---------------------------------------------------------------------------
Nonbanks have been statutorily prohibited from falsely representing
that uninsured financial products are FDIC-insured for many years.
Thus, the proposed rule would not create a new prohibition on such
misrepresentations, but would clarify the types of communications that
can materially misrepresent deposit insurance coverage. The nonbank
entities affected by the proposed rule may need to update their
disclosures and marketing materials to ensure that they neither mis-use
the FDIC's official sign or any FDIC-associated terms or images, nor
omit or fail to clearly and conspicuously disclose material information
that could lead to a reasonable consumer being unable to understand the
extent or manner of deposit insurance provided. For purposes of the
proposed rule, the FDIC estimates that, on average, each nonbank entity
would spend an additional thirty minutes per year to comply with the
proposed amendments to subpart B., for a total cost of approximately
$60 thousand per year across all nonbank entities affected by the
rule.\44\
---------------------------------------------------------------------------
\44\ $7 million = 1,500 non-bank entities x 0.5 hours per IDI x
$81.12 per hour.
---------------------------------------------------------------------------
Benefits
Provided that affected entities are not already complying with
certain aspects of the proposed rule, it would, if adopted, produce
benefits for the banking industry as well as the general public by
providing clarity, and requiring affected entities to provide such
clarity, to consumers about the extent to which or the manner in which
products are insured by the FDIC. This clarity would help consumers to
more clearly understand when they are conducting business with IDIs and
when their funds are protected by the FDIC's deposit insurance, thereby
helping them avoid incurring financial losses as a result of investing
in products they mistakenly thought were FDIC-insured. The proposed
rule would reduce ambiguity about the nature of deposit insurance in
situations where non-deposit products are offered by IDIs, where
insured deposits are advertised by non-bank entities, or where both
non-deposit products and deposit products are offered at the same
premise. The proposed rule would also extend these benefits to digital
deposit-taking channels where physical segregation is not possible. The
proposed rule would also require the clear, conspicuous, and consistent
use of the official FDIC sign and symbol in both physical and digital
locations. These requirements would facilitate consumers' recognition
of the FDIC's guarantee and reassure them of the nature of deposit
insurance for those products. This effect will reinforce the role of
FDIC deposit insurance and bolster confidence in the U.S. banking
sector.
As discussed previously, the proposed rule would further clarify
the FDIC's procedures for evaluating potential violations of section
18(a)(4). The proposed rule would generally be consistent with existing
practices used by the FDIC with respect to these matters. Furthermore,
the proposed rule, if adopted, would not affect the application of
related criminal prohibitions under 18 U.S.C. 709. Therefore, the FDIC
believes that this aspect of the proposed rule is unlikely to have any
significant effect on formal or informal enforcement of the section
18(a)(4) prohibitions.
By providing the clarity described above, the FDIC believes the
proposed rule would curtail instances in which IDIs or non-bank
entities potentially misuse or misrepresent the FDIC's name or
logo.\45\ When such an instance is made public,\46\ the resulting
public discourse may increase consumer uncertainty as to whether their
own funds are protected by the FDIC's deposit insurance. Consumers'
uncertainty as to the safety of their funds may weaken the confidence
that underpins banks and our nation's broader financial system. The
proposed rule would reduce the frequency of these types of instances
going forward. The FDIC does not have the data to quantity the cost
savings of this effect, but expects that the reduction in such
instances would strengthen public confidence in the FDIC deposit
insurance and the nation's banking system.
---------------------------------------------------------------------------
\45\ There have been at least 165 such instances recently--see
FDIC 2019 Annual Report, p. 38 and FDIC 2020 Annual Report, p. 47.
\46\ See, for example, a recent incident of a misrepresentation
of FDIC deposit insurance status at https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20220728a1.pdf.
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The FDIC invites comments on all aspects of this Expected Effects
section. In particular, are there any effects of the proposed rule that
have not been identified?
Alternatives Considered
The FDIC has considered a number of alternatives to the proposed
rule that could meet its objectives in this rulemaking, including
proposals
[[Page 78028]]
suggested by commenters in response to the 2020 and 2021 RFIs. Some of
these alternatives are described below. For the reasons described, the
FDIC views the proposed rule as the most appropriate and effective
means of achieving its policy objectives with respect to part 328.
Alternatives to Digital Official Sign for Digital Deposit-Taking
Channels
With respect to digital deposit-taking channels, the FDIC
considered alternatives to the digital official sign required by the
proposed rule, including plain text signage and disclosure
requirements.\47\ As discussed above, the proposed digital sign is
intended to quickly and visually convey to consumers that they are
dealing directly with an IDI rather than a non-bank entity. This
distinction is critical to understanding the risks a consumer faces,
and the FDIC believes that it warrants a requirement for consistent
visual signage. Plain text signage or disclosures would not achieve
this objective as effectively.
---------------------------------------------------------------------------
\47\ See e.g., Hancock Whitney Bank Comment Letter to 2021 RFI
(May 24, 2021); Kasasa Comment Letter to 2020 RFI (March 24, 2020)
(stating that the official sign should not be required on an IDI's
website or mobile applications but suggests requiring, at minimum,
the FDIC advertising statement on certain pages).
---------------------------------------------------------------------------
Official Advertising Statement Requirements--Allow ``One-Click-Away''
Disclosures
Some commenters recommended that the FDIC adopt a ``one click
away'' approach for electronic or digital advertisements (where the
advertising statement may not be immediately visible to consumers but
could be reached through one mouse click) in order to permit greater
flexibility in advertising formats.\48\ The FDIC believes that the
proposed rule better meets its objectives, as a ``one click away''
approach places the burden on consumers to obtain the necessary
information and makes it less likely that they will do so. In addition,
the advertising statement options available to IDIs under the proposed
rule allow significant flexibility in advertising formats, as IDIs
could use short titles including ``Member of FDIC,'' ``Member FDIC,''
or ``FDIC-insured.'' The FDIC believes that these options would be
sufficient to permit advertising flexibility.
---------------------------------------------------------------------------
\48\ See Hancock Whitney Bank Comment Letter to 2021 RFI (May
24, 2021); American Bankers Association and Bank Policy Institute
joint comment letter to 2021 RFI (May 21, 2021); Kasasa Comment
Letter to 2020 RFI (March 24, 2020).
---------------------------------------------------------------------------
Administrative Law Matters
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires an agency,
in connection with a proposed rule, to prepare and make available for
public comment an initial regulatory flexibility analysis that
describes the impact of a proposed rule on small entities.\49\ 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. The Small Business
Administration (SBA) has defined ``small entities'' to include banking
organizations with total assets of less than or equal to $750
million.\50\ 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 described below, the FDIC certifies that the proposed rule will
not have a significant economic impact on a substantial number of small
entities.
---------------------------------------------------------------------------
\49\ 5 U.S.C. 601 et seq.
\50\ The SBA defines a small banking organization as having $750
million or less in assets, where an organization'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 FR 18627, effective May 2, 2022). In its
determination, the ``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 covered entity is ``small'' for the purposes
of RFA.
---------------------------------------------------------------------------
As described in the Expected Effects section, the proposed rule is
expected to affect all institutions whose deposits are insured by the
FDIC, as well as non-bank entities who may potentially use the official
FDIC sign, advertising statements, or otherwise make representations
that their products are insured or guaranteed by the FDIC. According to
recent Call Reports, there are 4,780 FDIC-insured IDIs.\51\ Of these,
approximately 3,394 would be considered small entities for the purposes
of RFA.\52\ These small IDIs operate approximately 13 thousand deposit-
taking offices. The number of deposit-taking offices for each IDI range
from 1 to 21. As discussed in the Expected Effects section, the FDIC
expects affected IDIs with less than $10 billion in assets, which are
likely to have less complex deposit-taking operations and fewer offices
than larger IDIs, would spend, on average, 60 hours to update their
digital operations, 80 hours to implement policies and procedures, and
seven hours to update physical signage at branches in the first year.
At average labor costs of $81.12 per hour, the expected first-year
costs of complying with the proposed rule would average less than a
percent of the small IDIs' total annual salaries and benefits. These
expected first-year costs would exceed five percent of the total annual
salaries and benefits for only 20 small IDIs (comprising less than one
percent of the total number of affected small IDIs). For subsequent
years, the costs of maintaining compliance are even smaller. Thus, the
proposed rule would not significantly affect a substantial numbers of
small IDIs.
---------------------------------------------------------------------------
\51\ FDIC Call Reports, June 30, 2020.
\52\ Id.
---------------------------------------------------------------------------
As described in the Expected Effects section, the FDIC estimates
that 1,500 non-bank entities would be affected by this proposed rule.
The FDIC does not have data on the number of non-bank entities that
would be considered small entities for the purposes of RFA. As a
conservative estimate, the FDIC assumes all 1,500 affected non-bank
entities are small. As discussed in the Expected Effects section, the
FDIC estimates that each non-bank entity would incur an additional 30
minutes per year to comply with the proposed amendments to subpart B.
At an estimated compensation rate of $81.12, the expected costs of
complying with the proposed rule would be less than $100 per year per
non-bank small entity.
The proposed rule may also affect private individuals who may
potentially misuse the FDIC name or logo or may potentially
misrepresent the nature of deposit insurance. Private individuals are
not considered ``small entities'' under the RFA.
Given that the expected costs of the proposed rule would be
relatively small, the FDIC certifies that the proposed rule would not
have a significant economic impact on a substantial number of small
entities. The FDIC invites comments on all aspects of the supporting
information provided in this RFA section. In particular, would this
proposed rule have any significant effects on small entities that the
FDIC has not identified?
Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA) (44 U.S.C. 3501-3521), the FDIC may not conduct or
sponsor, and a respondent is not required to respond to, an information
collection unless it displays a currently valid Office of Management
and Budget (OMB) control
[[Page 78029]]
number. Certain provisions of the proposed rule contain ``collection of
information'' requirements within the meaning of the PRA.\53\ The
information collection requirements (IC) contained in this notice of
proposed rulemaking have been submitted to OMB for review and approval
by FDIC under section 3507(d) of the PRA and Sec. 1320.11 of OMB's
implementing regulations (5 CFR part 1320) as a new information
collection.
---------------------------------------------------------------------------
\53\ Information collection is defined under OMB's regulations
at 5 CFR 1320(c). Certain requirements in part 328 for public
disclosure of the FDIC name and/or logo are not information
collections. See 5 CFR 1320(c)(2).
---------------------------------------------------------------------------
Title of Proposed Information Collection: Disclosure, Recordkeeping
and Reporting Requirements Related to FDIC's Official Sign and
Advertising Requirements, False Advertising, Misrepresentation of
Insured Status, and Misuse of the FDIC's Name or Logo.
OMB Control Number: 3064-[NEW].
Affected Public: Businesses or other for-profit.
Respondents: Any FDIC-insured depository institution and persons
that provide deposit-related services to insured depository
institutions or offer insured depository institution's deposit-related
products or services to other parties.
Estimated Annual Burden:
The proposed rule contains the following ten (10) information
collection requirements:
1. Signs within Institution Premises--Banks <$10B, 12 CFR 328.3
(Third-Party Disclosure; Mandatory). Proposed Sec. 328.3 would impose
PRA third-party disclosure burden governing signage within the premises
of insured depository institutions. This burden is associated with the
display of signage for non-deposit products, segregating areas offering
non-deposit products, and the use of electronic media. The FDIC
believes the hourly burden for these activities differ among
respondents. For purposes of PRA, the FDIC would split the burden into
two information collection categories: one for banks with less than $10
billion in total consolidated assets (assets) and one for banks with at
least $10 billion in assets. This IC captures the burden for the former
group.
2. Signs within Institution Premises--Banks $10B, 12 CFR
328.3 (Third-Party Disclosure; Mandatory). Proposed Sec. 328.3 would
impose PRA third-party disclosure burden governing signage within the
premises of insured depository institutions. This burden is associated
with the display of signage for non-deposit products, segregating areas
offering non-deposit products, and the use of electronic media. The
FDIC believes the hourly burden for these activities differ among
respondents. For purposes of PRA, the FDIC would split the burden into
two ICs: one for banks with less than $10 billion in total consolidated
assets (assets) and one for banks with at least $10 billion in assets.
This IC captures the burden for the latter group.
3. Signage for ATMs and Digital Deposit-taking Channels--
Implementation, 12 CFR 328.4 and 328.5 (Third-Party Disclosure;
Mandatory). Proposed Sec. Sec. 328.4 and 328.5 would impose PRA third-
party disclosure burden governing signs for ATMs as well as digital
deposit-taking channels. This burden is associated with the display of
signage for both deposit and non-deposit products. The FDIC believes
banks will incur burdens in the first year to update their digital
channels to incorporate the amended requirements in the proposed rule.
This IC captures the burden for these implementation activities.
4. Signage for ATMs and Digital Deposit-taking Channels--Banks
<$10B-Ongoing, 12 CFR 328.4 and 328.5 (Third-Party Disclosure;
Mandatory). Proposed Sec. Sec. 328.4 and 328.5 would impose PRA third-
party disclosure burden governing signs for ATMs as well as digital
deposit-taking channels. This burden is associated with the display of
signage for deposit and non-deposit products. The FDIC believes that,
in years subsequent to implementation, banks would incur ongoing
burdens to update and maintain their digital channels to ensure
continual compliance with the requirements in the proposed rule. For
purposes of PRA, the FDIC would split this ongoing burden into two ICs:
one for banks with less than $10 billion in total consolidated assets
(assets) and one for banks with at least $10 billion in assets. This IC
captures the burden for the former group.
5. Signage for ATMs and Digital Deposit-taking Channels--Banks
=$10B-Ongoing, 12 CFR 328.4 and 328.5 (Third-Party
Disclosure; Mandatory). Proposed Sec. Sec. 328.4 and 328.5 would
impose PRA third-party disclosure burden governing signs for ATMs as
well as digital deposit-taking channels. This burden is associated with
the display of signage for deposit and non-deposit products. The FDIC
believes that, in years subsequent to implementation, banks would incur
ongoing burdens to update and maintain their digital channels to ensure
continual compliance with the requirements in the proposed rule. For
purposes of PRA, the FDIC would split the burden into two ICs: one for
banks with less than $10 billion in total consolidated assets (assets)
and one for banks with at least $10 billion in assets. This IC captures
the burden for the latter group.
6. Policies and Procedures--Implementation, 12 CFR 328.8
(Recordkeeping; Mandatory). Proposed Sec. 328.8 would require IDIs to
establish and maintain written policies and procedures to achieve
compliance with part 328 including provisions related to monitor and
evaluate the activities of persons that provide deposit-related
services to the IDI or offer the IDI's deposit-related products or
services to other parties. The FDIC believes the hourly burden for
these activities can be categorized into two distinct ICs covering (1)
implementation burdens incurred in the first year in which the policies
and procedures are implemented and (2) ongoing burden incurred every
subsequent year to maintain compliance. This IC captures the
implementation burden.
7. Policies and Procedures--Ongoing, 12 CFR 328.8 (Recordkeeping;
Mandatory). Proposed Sec. 328.8 would require IDIs to establish and
maintain written policies and procedures to achieve compliance with
part 328 including provisions related to monitoring and evaluating the
activities of persons that provide deposit-related services to the
Insured Depository Institution or offer the Insured Depository
Institution's deposit-related products or services to other parties.
The FDIC believes the hourly burden for these activities can be
categorized into two distinct ICs covering (1) implementation burdens
incurred in the first year in which the policies and procedures are
implemented and (2) ongoing burden incurred every subsequent year to
maintain compliance. This IC captures the ongoing burden.
8. Insured Depository Institution Relationships--Implementation 12
CFR 328.102(b)(5) (Third-Party Disclosure; Mandatory). Proposed Sec.
328.102(b)(5) would require covered non-bank entities to ensure that
their public statements regarding deposit insurance comply with the
requirements in part 328. The FDIC believes the hourly burden for these
activities can be categorized into two distinct ICs covering (1)
implementation burdens incurred in the first year in which the public
statements are amended and (2) ongoing burden incurred every subsequent
year to ensure continual compliance. This IC captures the
implementation burden.
9. Insured Depository Institution Relationships--Ongoing 12 CFR
[[Page 78030]]
328.102(b)(5) (Third-Party Disclosure; Mandatory). Proposed Sec.
328.102(b)(5) would require covered non-bank entities to ensure that
their public statements regarding deposit insurance comply with the
requirements in part 328. The FDIC believes the hourly burden for these
activities can be categorized into two distinct ICs covering (1)
implementation burdens incurred in the first year in which the public
statements are amended and (2) ongoing burden incurred every subsequent
year to ensure continual compliance. This IC captures the ongoing
burden.
10. Request for Consent to Use Non-English Language Advertising
Statement--12 CFR 328.3(f), proposed 12 CFR 328.6(f) (Reporting;
Required to Obtain or Retain a Benefit). Existing Sec. 328.3(f), which
the proposed rule moves to Sec. 328.6(f), requires IDIs to obtain
prior written approval of the FDIC before using a non-English
equivalent of the official FDIC advertising statement in an
advertisement.
Methodology and Assumptions
Estimated Annual Number of Respondents
ICs 1-7 and IC 10 capture PRA burdens incurred by insured
depository institutions (IDIs). According to recent Reports of
Condition and Income (Call Reports), the FDIC supervised approximately
4,780 insured depository institutions (FDIC-supervised IDIs).\54\ These
include 161 IDIs with assets at least $10 billion and 4,619 IDIs
entities with assets less than $10 billion. Of these, 3,394 IDIs are
considered small entities for purposes of the Regulatory Flexibility
Act.\55\
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\54\ See FDIC Call Reports, June 30, 2022.
\55\ The SBA defines a small banking organization as having $750
million or less in assets, where an organization'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 FR 18627, effective May 2, 2022). In its
determination, the ``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 an IDI's affiliated and acquired
assets, averaged over the preceding four quarters, to determine
whether the IDI is ``small'' for the purposes of RFA.
---------------------------------------------------------------------------
IC 1 captures PRA burdens incurred by all IDIs with less than $10
billion in assets, and IC 2 captures PRA burdens incurred by all IDIs
with at least $10 billion in assets. Using the Call Report data
summarized above, FDIC estimates 4,169 annual respondents for IC 1 and
161 annual respondents for IC 2.
ICs 3 and 6 capture implementation burdens incurred by all 4,780
IDIs. Implementation burdens are incurred in the first year after the
proposed rule would become effective. Given that this information
collection request (ICR) covers PRA burdens over three years, FDIC
annualize the counts of respondents by dividing the total number of
respondents by three. Thus, FDIC estimates 1,593 annual respondents for
ICs 3 and 6.
ICs 4, 5, and 7 capture the ongoing PRA burdens incurred by the
4,169 IDIs with less than $10 billion in assets, the 161 IDIs with at
least $10 billion in assets, and all 4,780 IDIs, respectively. Ongoing
burdens are incurred in two of the three years after the proposed rule
would become effective. FDIC annualizes the counts of respondents
accordingly. Thus, FDIC estimates 3,080 annual respondents for IC 4,
107 annual respondents for IC 5 and 3,187 annual respondents for IC 7.
ICs 8 and 9 capture PRA requirements incurred by non-bank entities.
The FDIC does not have direct data on the number of non-bank entities
that would be subject to part 328. FDIC assumes that the affected non-
bank entities would generally be classified in the following North
American Industry Classification System (NAICS) industries:
Miscellaneous Financial Investment Activities (NAICS Code 523999),
Financial Transaction Processing, Reserve & Clearinghouse Activities
(NAICS Code 522320), Computer System Design and Related Services (NAICS
Code 5415), and Investment Advice (NAICS Code 523930). According to
recent Census data, there were 144,556 firms in these NAICS industries
in 2019, the most recent year for which such data is available.\56\
However, not all of these firms enter into agreements with IDIs or
otherwise engage in operations related to insured deposits; FDIC
assumes that the number of non-bank entities engaged in such operations
would be considerably less than the number of IDIs. For purposes of
this estimation, the FDIC assumes that the number of covered non-bank
entities would be approximately one percent of firms in the NAICS
industries listed above. Therefore, FDIC estimates that approximately
1,500 non-bank entities would incur burdens associated with part 328.
ICs 8 and 9 are implementation and ongoing burdens, respectively. FDIC
annualizes the count of respondents accordingly. Thus, FDIC estimates
500 annual respondents for IC 8 and 1,000 annual respondents for IC 9.
---------------------------------------------------------------------------
\56\ (1,110 + 3,163 + 120,070 + 20,213 = 144,556) 2019 County
Business Patterns. See number of firms at https://www.census.gov/data/tables/2019/econ/susb/2019-susb-annual.html, last retrieved on
June 30, 2022.
---------------------------------------------------------------------------
IC 10 captures PRA requirements incurred by IDIs that submit
requests to the FDIC for the use of a non-English equivalent of the
official FDIC advertising statement. The FDIC does not have data on the
historical annual number of such requests submitted. However, the FDIC
has not handled such a request since at least January 1, 2021 and
believes it is unlikely that such a request from an IDI would be
received within the next three years. Since OMB's system of record for
PRA burdens does not allow non-positive respondent counts, FDIC uses an
annual respondent of one for IC 10 to preserve the estimated burden
calculations.
Estimated Annual Number of Responses per Respondent
ICs 1 and 2 capture the activities that respondents undertake at
each of their branches to comply with the PRA requirements in 12 CFR
328.3. For purposes of this ICR, FDIC designates the activities at a
single branch as a single response by the respondent. According to
recent Call Reports, IDIs with assets less than $10 billion operate
approximately 7 branches each, on average, while IDIs with assets of at
least $10 billion have approximately 282 branches each, on average.\57\
Accordingly, FDIC estimates 7 responses per year for IC 1 and 282
responses per year for IC 2.
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\57\ According to Call Reports as of June 30, 2022, there were
4,619 banks with assets less than $10 billion operating 33,895
branches and 161 IDIs with assets at least $10 billion operating
45,372 branches.
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For ICs 3-10, the activities that respondents undergo throughout
the year to comply with the PRA requirements in each IC can all be
considered part of a single annual response to that IC. Therefore, FDIC
uses one as the number of annual responses per respondent for these
ICs.
Estimated Burden Hours per Response
ICs 1 and 2 capture the third-party disclosure burden of ensuring
that signage within the premises of insured depository institutions
comply with part 328. Data on this burden are unavailable. The FDIC
assumes that larger banks are more likely to have branches that are
nontraditional, complex, and/or offer both deposit and non-deposit
products. While smaller IDIs are more likely to operate simple branches
that offer only deposit products and may not require extensive
revisions of signage, those that do may require updates to their
designated areas. For purposes of this ICR, FDIC
[[Page 78031]]
estimates the burden would be approximately one hour per branch, on
average, for institutions with less than $10 billion in assets and
approximately two hours per branch, on average, for institutions with
at least $10 billion in assets. Accordingly, FDIC estimates burdens as
one hour per response for IC 1 and two hours per response for IC 2.
ICs 3, 4, and 5 capture the third-party disclosure burden of
ensuring that signs for ATMs and digital deposit-taking channels with
part 328. Data on this burden are unavailable. The FDIC assumes that
larger banks are more likely to have more complex digital operations or
offer both deposit and non-deposit products through their digital
deposit-taking operations. However, these larger banks may also have
permanent IT teams in place that could facilitate and/or reduce the
hourly burden of these changes. Conversely, for smaller banks relying
on third-party web service providers, many may be seeking compliance
through the same channel as others, which could create a backlog of
work on the third party web service providers, making it so other small
banks experience a delay in compliance timelines. For purposes of this
ICR, FDIC assumes that each IDI will spend 60 hours, on average, in the
first year to implement the changes to its ATM and digital deposit-
taking channels to comply with part 328. In subsequent years, IDIs with
less than $10 billion in assets would spend approximately 10 additional
hours per year, on average, to maintain ongoing compliance, while IDIs
with at least $10 billion in assets would spend approximately 20
additional hours per year, on average, to maintain ongoing compliance.
As such, FDIC estimates burdens as 60 hours per response for IC 3, 10
hours per response for IC 4, and 20 hours per response for IC 5.
ICs 6 and 7 capture the recordkeeping burden of ensuring that the
IDIs' policies and procedures comply with part 328. FDIC assumes the
recordkeeping burden imposed relates to documenting the development of
policies and procedures by compliance officers and senior management
that would be appropriate to the institution's risk profile. This
program would then be reviewed, revised, and then approved by the board
of directors or other executives at the institution. In addition, part
238 requires that IDIs monitor and evaluate certain third parties to
ensure that these third parties are also in compliance with part 328.
Additional recordkeeping burden would be incurred in documenting the
results of such monitoring activities. Data on the hourly burden of
these activities are unavailable. For purposes of this ICR, the FDIC
assumes that each IDI, on average, would spend approximately 80 hours
in the first year to establish and/or implement policies and
approximately 12 hours in each subsequent year to revise and update
these documents. FDIC estimates burdens as 80 hours per response for IC
6 and 12 hours per response for IC 7.
ICs 8 and 9 capture the burden of ensuring that covered non-bank
entities' third-party disclosures comply with part 328. Data on this
burden are unavailable. The FDIC assumes each covered non-bank entity,
on average, would spend approximately two and one-half hours in the
first year to implement these procedures and approximately one hour in
each subsequent year to revise and maintain ongoing compliance. FDIC
estimates burdens as 2.5 hours per response for IC 8 and 1 hour per
response for IC 9.\58\
---------------------------------------------------------------------------
\58\ Note that these hourly burden estimates are higher than the
corresponding estimates in the notice and request for comment
published in the Federal Register on September 8, 2022. The increase
reflects the additional requirements in the proposed rule's
amendments to 12 CFR 328.102(b)(5).
---------------------------------------------------------------------------
IC 10 captures the reporting burden incurred when an IDI requests
approval from the FDIC to use the non-English equivalent of the
official advertising statement in any of its advertisements. The FDIC
believes that an IDI would spend approximately two hours per year, on
average, to prepare and submit such requests.
Estimated Annual Burden Summary
The estimated PRA burdens for the proposed rule are summarized in
the Summary of Estimated Annual Burden table below. For each IC, the
burden table lists the estimated annual number of responses per
respondent and estimated time per response, as described in the
sections above. Note that the counts of annual respondents for ICs 3-9
have been annualized to reflect a three year PRA cycle in which
respondents incur implementation costs in the first year and ongoing
costs in the second and third years.
Summary of Estimated Annual Burden
----------------------------------------------------------------------------------------------------------------
Type of burden Number of Time per
Information collection (frequency of Number of responses per response Annual burden
(obligation to respond) response) respondents respondent (HH:MM) (Hours)
----------------------------------------------------------------------------------------------------------------
1. Signs within Institution Third-Party 4619 7 1:00 32,333
Premises--Banks <$10B, 12 CFR Disclosure
328.3 (Mandatory). (Annual).
2. Signs within Institution Third-Party 161 282 2:00 90,804
Premises--Banks >=$10B, 12 CFR Disclosure
328.3 (Mandatory). (Annual).
3. Signage for ATMs and Digital Third-Party 1593 1 60:00 95,580
Deposit-taking Channels-- Disclosure
Implementation, 12 CFR 328.4 (Annual).
and 328.5 (Mandatory).
4. Signage for ATMs and Digital Third-Party 3080 1 10:00 30,800
Deposit-taking Channels--Banks Disclosure
<$10B-Ongoing, 12 CFR 328.4 (Annual).
and 328.5 (Mandatory).
5. Signage for ATMs and Digital Third-Party 107 1 20:00 2,140
Deposit-taking Channels--Banks Disclosure
>=$10B-Ongoing, 12 CFR 328.4 (Annual).
and 328.5 (Mandatory).
6. Policies and Procedures-- Recordkeeping 1593 1 80:00 127,440
Implementation, 12 CFR 328.8 (Annual).
(Mandatory).
7. Policies and Procedures-- Recordkeeping 3187 1 12:00 38,244
Ongoing, 12 CFR 328.8 (Annual).
(Mandatory).
[[Page 78032]]
8. Insured Depository Third-Party 500 1 2:30 1,250
Institution Relationships-- Disclosure
Implementation 12 CFR (Annual).
328.102(b)(5) (Mandatory).
9. Insured Depository Third-Party 1000 1 1:00 1,000
Institution Relationships-- Disclosure
Ongoing 12 CFR 328.102(b)(5) (Annual).
(Mandatory).
10. Request for Consent to Use Reporting (On 1 1 2:00 2
Non-English Language occasion).
Advertising Statement--
existing 12 CFR 328.3(f),
proposed 12 CFR 328.6(f)
(Required to Obtain or Retain
a Benefit).
---------------------------------------------------------------
Total Annual Burden (Hours) ............... .............. .............. .............. 419,593
----------------------------------------------------------------------------------------------------------------
Source: FDIC.
Note: The annual burden estimate for a given collection is calculated in two steps. First, the total number of
annual responses is calculated as the whole number closest to the product of the annual number of respondents
and the annual number of responses per respondent. Then, the total number of annual responses is multiplied by
the time per response and rounded to the nearest hour to obtain the estimated annual burden for that
collection. This rounding ensures the annual burden hours in the table are consistent with the values recorded
in the OMB's regulatory tracking system.
Comments are invited on:
Whether the collection of information is necessary for the
proper performance of the functions of the agency, including whether
the information has practical utility;
The accuracy of the agency's estimate of the burden of the
collection of information;
Ways to enhance the quality, utility, and clarity of the
information to be collected;
Ways to minimize the burden of the collection on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
Estimates of capital or start-up costs and costs of
operation, maintenance, and purchase of services to provide
information.
Riegle Community Development and Regulatory Improvement Act
Section 302 of the Riegle Community Development and Regulatory
Improvement Act of 1994 (RCDRIA) requires that the Federal banking
agencies, including the FDIC, in determining the effective date and
administrative compliance requirements of new regulations that impose
additional reporting, disclosure, or other requirements on insured
depository institutions, 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 subject to
certain exceptions, new regulations and amendments to regulations
prescribed by a Federal banking agency which impose additional
reporting, disclosures, or other new requirements on insured depository
institutions shall take effect on the first day of a calendar quarter
which begins on or after the date on which the regulations are
published in final form.
Plain Language
Section 722 of the Gramm-Leach-Bliley Act 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 invites your comments on how to make this proposal easier to
understand. For example:
Has the FDIC organized the material to suit your needs? If
not, how could the material be better organized?
Are the requirements in the proposed regulation clearly
stated? If not, how could the regulation be stated more clearly?
Does the proposed regulation contain language or jargon
that is unclear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation easier to
understand?
Request for Comment
The FDIC invites comment on all aspects of this proposed
rulemaking. In particular, the FDIC seeks feedback on the scope of the
proposed rule and its requirements, and responses to the following
specific questions:
Physical Signage
(1) Are there any aspects of the proposed rule's on-premises
signage requirements that would be challenging to satisfy in a non-
traditional footprint branch? How could the proposed rule be modified
to better accommodate signage needs in such branches while also
satisfying the FDIC's objectives?
(2) With respect to the proposed rule's non-deposit signage
requirements, are there better alternative methods by which IDIs might
help consumers distinguish insured deposits from non-deposit products?
(3) Would it be beneficial to consumers to standardize the design
of the proposed rule's non-deposit signage? If a standard design were
required, which design elements would minimize any potential challenges
associated with integrating it into an IDI's other non-deposit product
marketing materials?
Digital Channels
(4) Are there any particular aspects of a potential design or the
placement of the digital sign that might improve its presentation or
readability for consumers, or minimize the any potential technical
challenges of introducing this sign into digital interfaces?
(5) Would it be beneficial to consumers to require the digital sign
on other pages in addition to the homepage, application, landing,
login, and transactional pages of an IDI's digital channels, including
websites and mobile applications?
(6) Should the proposed rule require, rather than permit, IDIs to
link the digital sign to the FDIC BankFind tool? Would IDIs face any
unique technological challenges in complying with such a requirement?
(7) Does the proposed rule sufficiently address the risk of
confusion where
[[Page 78033]]
consumers interact with deposits and non-deposit products through the
same digital channels? Are there any additional or alternative
requirements that would draw a clear distinction between deposits and
non-deposit products on digital channels?
ATMs and Similar Devices
(8) Does the proposed rule's requirement to display the digital
version of the FDIC official sign on ATMs and similar devices present
technical challenges? If so, are there ways to address those challenges
while still displaying clear signage on deposit insurance coverage for
consumers?
(9) Do the proposed rule's disclosure requirements for ATMs and
similar devices sufficiently differentiate between deposits and non-
deposit products? If not, please suggest better alternative methods.
(10) Given potential requirements for signs in physical branches,
ATMs, and digital channels, how long would it take to revise systems
and process for the purposes of complying with a rule; what should the
compliance date(s) for the rule be?
IDI Policies and Procedures
(11) With respect to the proposed requirement for IDI's to
establish policies and procedures to comply with part 328, are there
additional, or more specific, criteria that institutions should
consider as part of its policies and procedures?
Official Advertising Statement
(12) In addition to ``FDIC-insured'', are there other options for
the short advertising statement that the proposed rule should allow?
Misrepresentations and Material Omissions
(13) Are there additional practices or scenarios that the FDIC
should clarify as being misrepresentations of deposit insurance?
Non-Deposit Products
(14) Is the proposed definition of crypto-asset in subparts A and B
appropriate?
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 proposes to amend 12 CFR part 328 as follows:
PART 328--ADVERTISEMENT OF MEMBERSHIP, FALSE ADVERTISING,
MISREPRESENTATION OF INSURED STATUS, AND MISUSE OF THE FDIC'S LOGO
0
1. The authority citation for part 328 continues to read as follows:
Authority: 12 U.S.C. 1818, 1819 (Tenth), 1820(c), 1828(a).
0
2. Revise subpart A to read as follows:
Subpart A--Advertisement of Membership
Sec.
328.0 Purpose.
328.1 Definitions.
328.2 Official sign.
328.3 Signs within institution premises and offering of non-deposit
products within institution premises.
328.4 Signage for automated teller machines and like devices.
328.5 Signs for digital deposit-taking channels.
328.6 Official advertising statement requirements.
328.7 Prohibition against receiving deposits at same teller station
or window as noninsured institution.
328.8 Policies and Procedures.
Sec. 328.0 Purpose.
Subpart A of this part describes the official sign and advertising
statement and prescribes their use by insured depository institutions,
as well as other signs to prevent customer confusion in the event non-
deposit products are offered by an insured depository institution.
Subpart A applies to insured depository institutions, including insured
branches of foreign banks, but does not apply to non-insured offices or
branches of insured depository institutions located in foreign
countries.
Sec. 328.1 Definitions.
Branch has the same meaning as the term ``domestic branch'' as set
forth under section 3(o) of the Federal Deposit Insurance Act, 12
U.S.C. 1813(o).
Corporation means the Federal Deposit Insurance Corporation.
Crypto-asset means any digital asset implemented using
cryptographic techniques.
Deposit has the same meaning as set forth under section 3(l) of the
Federal Deposit Insurance Act, 12 U.S.C. 1813(l).
Digital deposit-taking channel means any electronic communications
method through which an insured depository institution accepts
deposits.
Hybrid product means 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.
Insured depository institution has the same meaning as set forth
under section 3(c)(2) of the Federal Deposit Insurance Act, 12 U.S.C.
1813(c)(2).
Non-deposit product means any product that is not a ``deposit'',
including, but not limited to: stocks, bonds, government and municipal
securities, mutual funds, annuities (fixed and variable), life
insurance policies (whole and variable), savings bonds, and crypto-
assets. For purposes of this definition, a credit product is not a non-
deposit product.
Sec. 328.2 Official sign.
(a) Design. The official sign has the following design:
[[Page 78034]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.030
(b) Symbol. The ``symbol'' of the Corporation, as used in this
subpart, shall be that portion of the official sign consisting of
``FDIC'' and the two lines of smaller type above and below ``FDIC.''
(c) Procuring signage. An insured depository institution may
procure the official sign from the Corporation for official use at no
charge. Information on obtaining the official sign is posted on the
FDIC's internet website, https://www.fdic.gov. Alternatively, insured
depository institutions may, at their expense, procure from commercial
suppliers signs that vary from the official sign in size, color, or
material. Any insured depository institution which has promptly
submitted a written request for an official sign to the Corporation
shall not be deemed to have violated this subpart by failing to display
the official sign, unless the insured depository institution fails to
display the official sign after receipt thereof.
(d) Required changes in signage. The Corporation may require any
insured depository institution, upon at least thirty (30) days' written
notice, to change the wording of the official sign in a manner deemed
necessary for the protection of depositors or others.
Sec. 328.3 Signs within institution premises and offering of non-
deposit products within institution premises.
(a) Scope. This section governs signage within the premises of
insured depository institutions and the offering of non-deposit
products within the premises of insured depository institutions.
(b) Display of official sign. Insured depository institutions must
continuously, clearly, and conspicuously display the official sign in
its principal place of business and all of its branches (except
branches excluded from the scope of this subpart under Sec. 328.0) in
the manner described in this paragraph (b).
(1) Deposits received at teller windows or stations. If deposits
are usually and normally received at teller windows or stations, the
insured depository institution must display the official sign:
(i) At each teller window or station where deposits are usually and
normally received, in a size of 7'' by 3'' or larger with black
lettering on a gold background; or
(ii) If the insured depository institution does not offer non-
deposit products on the premises, at one or more locations visible from
the teller windows or stations in a manner that ensures a copy of the
official sign is large enough so as to be legible from anywhere in that
area.
(2) Deposits received in areas other than teller windows or
stations. If insured deposits are usually and normally received in
areas of the premises other than teller windows or stations, the
insured depository institution must display the official sign in one or
more locations in a manner that ensures a copy of the official sign is
large enough so as to be legible from anywhere in those areas.
(3) Other locations within the premises. An insured depository
institution may display the official sign in locations at the
institution other than those required by this section, except for areas
where non-deposit products are offered.
(4) Varied signs. An insured depository institution may display
signs that vary from the official sign in size, color, or material at
any location where display of the official sign is required or
permitted under this paragraph. However, any such varied sign that is
displayed in locations where display of the official sign is required
must not be smaller in size than the official sign, must have the same
color for the text and graphics, and includes the same content.
(5) Newly insured institutions. An insured depository institution
shall display the official sign as described in this section no later
than its twenty-first calendar day of operation as an insured
depository institution, unless the institution promptly requested the
official sign from the Corporation, but did not receive it before that
date.
(a) Non-deposit products offered on IDI premises--(1) Segregated
areas. If non-deposit products are offered within the premises, those
products must be physically segregated from areas where insured
deposits are usually and normally accepted. The institution must
identify areas where activities related to the sale of non-deposit
investment products occur and clearly delineate and distinguish those
areas from the areas where insured deposit-taking activities occur.
(2) Non-deposit signage. At each location within the premises where
non-deposit products are offered, an insured depository institution
must continuously, clearly, and conspicuously display signage
indicating that the non-deposit products: are not insured by the FDIC;
are not deposits and may lose value. Such signage may not be displayed
in close proximity to the official sign.
(d) Electronic media. Insured depository institutions may use
electronic media to display the official sign and non-deposit sign
required by this section.
Sec. 328.4 Signage for automated teller machines and like devices.
(a) Scope. This section governs signage for IDI's automated teller
machines or other remote electronic facilities that receive deposits.
(b) Display of official sign. An IDI's automated teller machine or
like device that receives deposits for an insured
[[Page 78035]]
depository institution must clearly, continuously, and conspicuously
display a digital version of the official sign on its home page or
screen and on each transaction page or screen relating to deposits.
(c) Non-deposit signage. If an IDI's automated teller machine or
like device receives deposits for an insured depository institution and
offers access to non-deposit products, the machine must clearly,
continuously, and conspicuously display electronic disclosures
indicating that such non-deposit products: are not insured by the FDIC;
are not deposits; and may lose value. These disclosures must be
displayed on each transaction page or screen relating to non-deposit
products.
Sec. 328.5 Signs for digital deposit-taking channels.
(a) Scope. This section governs signage for digital deposit-taking
channels, including insured depository institutions' websites and web-
based or mobile applications that offer the ability to make deposits
electronically and access to deposits at insured depository
institutions.
(b) Design. The digital sign required by the provisions of this
section has the following design: [Image of sign for digital deposit-
taking channels that FDIC expects would prominently bear the name of
the FDIC and the statement that insured deposits are backed by the full
faith and credit of the U.S. Government TBD]
(c) Display of digital sign. An insured depository institution must
clearly, continuously and conspicuously display the digital sign
specified in paragraph (b) of this section on its digital deposit
taking channels in the following pages or screens:
(1) The initial or homepage of the website or application;
(2) Landing or login pages; and
(3) Pages where the customer may transact with deposits.
(4) A digital sign continuously displayed near the top of the
relevant page or screen in close proximity to the IDI's name would be
considered clear and conspicuous.
(d) Non-deposit signage. If a digital deposit-taking channel offers
both access to deposits at an insured depository institution and non-
deposit products, the insured depository institution must clearly and
conspicuously display signage indicating that the non-deposit products:
are not insured by the FDIC; are not deposits and may lose value. This
signage must be displayed:
(1) Via a one-time notification that is dismissed by an action of
the user, when the page is initially accessed; and
(2) Continuously on each page relating to non-deposit products.
This non-deposit signage may not be displayed in close proximity to the
digital sign required by paragraph (c) of this section.
Sec. 328.6 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.
(b) Official advertising statement. The official advertising
statement shall be in substance as follows: ``Member of the Federal
Deposit Insurance Corporation.''
(1) Optional short title and symbol. The short title ``Member of
FDIC,'' ``Member FDIC,'' ``FDIC-insured,'' or a reproduction of the
symbol of the Corporation (as described in Sec. 328.2(b)), may be used
by insured depository institutions at their option as the official
advertising statement.
(2) Size and print. The official advertising statement shall be of
such size and print to be clearly legible. If the symbol of the
Corporation is used as the official advertising statement, and the
symbol must be reduced to such proportions that the two lines of
smaller type above and below ``FDIC'' are indistinct and illegible,
those lines of smaller type may be blocked out or dropped.
(c) Use of official advertising statement in advertisements--(1)
General requirement. Except as provided in paragraph (d) of this
section, each insured depository institution shall include the official
advertising statement prescribed in paragraph (b) of this section in
all advertisements that either promote deposit products and services or
promote non-specific banking products and services offered by the
institution. For purposes of this section, an advertisement promotes
non-specific banking products and services if it includes the name of
the insured depository institution but does not list or describe
particular products or services offered by the institution. An example
of such an advertisement would be, ``Anytown Bank, offering a full
range of banking services.''
(2) Foreign depository institutions. When a foreign depository
institution has both insured and noninsured U.S. branches, the
depository institution must also identify which branches are insured
and which branches are not insured in all of its advertisements
requiring use of the official advertising statement.
(3) Newly insured institutions. A depository institution shall
include the official advertising statement in its advertisements no
later than its twenty-first day of operation as an insured depository
institution.
(d) Types of advertisements which do not require the official
advertising statement. The following types of advertisements do not
require use of the official advertising statement:
(1) Statements of condition and reports of condition of an insured
depository institution which are required to be published by State or
Federal law;
(2) Insured depository institution supplies such as stationery
(except when used for circular letters), envelopes, deposit slips,
checks, drafts, signature cards, deposit passbooks, certificates of
deposit, etc.;
(3) Signs or plates in the insured depository institution offices
or attached to the building or buildings in which such offices are
located;
(4) Listings in directories;
(5) Advertisements not setting forth the name of the insured
depository institution;
(6) Entries in a depository institution directory, provided the
name of the insured depository institution is listed on any page in the
directory with a symbol or other descriptive matter indicating it is a
member of the Federal Deposit Insurance Corporation;
(7) Joint or group advertisements of depository institution
services where the names of insured depository institutions and
noninsured institutions are listed and form a part of such
advertisements;
(8) Advertisements by radio or television, other than display
advertisements, which do not exceed thirty (30) seconds in time;
(9) Advertisements which are of the type or character that make it
impractical to include the official advertising statement, including,
but not limited to, promotional items such as calendars, matchbooks,
pens, pencils, and key chains; and
(10) Advertisements which contain a statement to the effect that
the depository institution is a member of the Federal Deposit Insurance
Corporation, or that the depository institution is insured by the
Federal Deposit Insurance Corporation, or that its deposits or
depositors are insured by the Federal Deposit Insurance Corporation to
at least the standard maximum deposit insurance amount (as defined in
Sec. 330.1(o)) for each depositor.
[[Page 78036]]
(e) Restrictions on using the official advertising statement when
advertising non-deposit products--(1) Non-deposit product
advertisements. Except as provided in paragraph (e)(3) of this section,
an insured depository institution shall not include the official
advertising statement, or any other statement or symbol which implies
or suggests the existence of Federal deposit insurance, in any
advertisement relating solely to non-deposit products.
(2) Hybrid product advertisements. Except as provided in paragraph
(e)(3) of this section, an insured depository institution shall not
include the official advertising statement, or any other statement or
symbol which implies or suggests the existence of Federal deposit
insurance, in any advertisement relating solely to hybrid products.
(3) Mixed advertisements. In advertisements containing information
about both insured deposit products and non-deposit products or hybrid
products, an insured depository institution shall clearly segregate the
official advertising statement or any similar statement from that
portion of the advertisement that relates to the non-deposit products.
(f) Official advertising statement in non-English language. The
non-English equivalent of the official advertising statement may be
used in any advertisement, provided that the translation has had the
prior written approval of the Corporation.
Sec. 328.7 Prohibition against receiving deposits at same teller
station or window as noninsured institution.
(a) Prohibition. An insured depository institution may not receive
deposits at any teller station or window where any noninsured
institution receives deposits or similar liabilities.
(b) Exception. This section does not apply to deposits received at
an automated teller machine or other remote electronic facility that
receives deposits for an insured depository institution, or to deposits
facilitated through a digital deposit-taking channel.
Sec. 328.8 Policies and Procedures.
(a) Policies and Procedures. An Insured Depository Institution must
establish and maintain written policies and procedures to achieve
compliance with this part. Such policies and procedures must be
commensurate with the nature, size, complexity, scope, and potential
risk of the deposit-taking activities of the Insured Depository
Institution and must include, as appropriate, provisions related to
monitoring and evaluating activities of persons that provide deposit-
related services to the Insured Depository Institution or offer the
Insured Depository Institution's deposit-related products or services
to other parties.
(b) Reservation of authority. Nothing in this section shall be
construed to limit the FDIC's authority to address violations of this
part, the FDIC's authority to interpret the rules in this part, or any
other authority the FDIC has pursuant to any other laws or regulations.
0
3. Amend Sec. 328.101 by adding the definitions for ``Crypto-asset''
and ``Deposit'' in alphabetical order, and revising the definitions for
``FDIC-Associated Images'', ``Hybrid Product'', ``Non-Deposit
Product'', and ``Uninsured Financial Product'' to read as follows:
Subpart B--False Advertising, Misrepresentation of Insured Status,
and Misuse of the FDIC's Name or Logo
Sec. 328.101 Definitions.
* * * * *
Crypto-asset means any digital asset implemented using
cryptographic techniques.
Deposit has the same meaning as set forth under section 3(l) of the
Federal Deposit Insurance Act, 12 U.S.C. 1813(l).
* * * * *
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. 328.2; the digital sign set forth in Sec.
328.5; the Official Advertising Statement, as set forth in Sec. 328.6;
any similar images; and any other signs and 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.
* * * * *
Hybrid Product has the same meaning as set forth under Sec. 328.1.
* * * * *
Non-Deposit Product means any product that is not a ``deposit'',
including, but not limited to: stocks, bonds, government and municipal
securities, mutual funds, annuities (fixed and variable), life
insurance policies (whole and variable), savings bonds, and crypto-
assets. For purposes of this definition, a credit product is not a non-
deposit product.
* * * * *
Uninsured Financial Product means any Non-Deposit Product, Hybrid-
Product, investment, security, obligation, certificate, share, crypto-
asset or financial product other than an ``Insured Deposit'' as defined
in this section.
0
4. Amend Sec. 328.102 by adding paragraph (a)(3)(viii) and revising
paragraphs (b)(3)(ii), (b)(4)(i), (b)(5), and (b)(6)(ii) to read as
follows:
Sec. 328.102 Prohibition.
(a) * * *
(3) * * *
(viii) Use of FDIC-Associated Terms or FDIC-Associated Images, in a
manner that inaccurately states or implies that a person other than an
Insured Depository Institution is insured by the FDIC.
(b) * * *
(3) * * *
(ii) The statement omits or fails to clearly and conspicuously
disclose material information that would be necessary to prevent a
reasonable consumer from being misled, regardless of whether any such
consumer was actually misled.
(4) * * *
(i) A person or Uninsured Financial Products are insured or
guaranteed by the FDIC;
* * * * *
(5) Without limitation, a statement regarding deposit insurance
will be deemed to omit or fail to clearly and conspicuously disclose
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. Examples of such material
information include, but are not limited to, the following:
(i) A statement made by a person other than an Insured Depository
Institution that represents or implies that an advertised product is
insured by the FDIC that fails 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;
(ii) A statement made by a person that is not an insured depository
institution regarding deposit insurance that fails to clearly and
conspicuously disclose that the person is not an FDIC-insured
depository institution and that FDIC insurance only covers the failure
of the FDIC-insured depository institution. A statement that a person
is not an FDIC-insured bank and deposit insurance covers the failure of
an insured bank would be considered a clear statement for purposes of
this provision.
[[Page 78037]]
(iii) A statement made by a person regarding deposit insurance in a
context where deposits and non-deposit products are involved that fails
to clearly and conspicuously differentiate between Insured Deposits and
Non-Deposit Products by disclosing that Non-Deposit Products: are not
insured by the FDIC; are not deposits; and may lose value.
(iv) A statement made by a person regarding pass-through deposit
insurance coverage that fails to clearly and conspicuously disclose
that certain conditions must be satisfied for pass-through deposit
insurance coverage to apply.
(6) * * *
(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
Bureau of Consumer Financial Protection, the U.S. Department of
Justice, or a state bank supervisor, that such representations are
false or misleading; and
* * * * *
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on December 13, 2022.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2022-27349 Filed 12-20-22; 8:45 am]
BILLING CODE 6714-01-P