False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC's Name or Logo, 24770-24778 [2021-08690]

Download as PDF 24770 Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Proposed Rules removing ‘‘[BANKS]’’ and adding in its place ‘‘FDIC-supervised institutions’’, and removing ‘‘[BANK’s]’’ and adding in its place ‘‘FDIC-supervised institution’s’’, whenever it appears. ■ b. Removing ‘‘[AGENCY]’’ and adding in its place ‘‘FDIC’’ whenever it appears. Blake J. Paulson, Acting Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System. Ann E. Misback, Secretary of the Board. Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on April 21, 2021. James P. Sheesley, Assistant Executive Secretary. [FR Doc. 2021–09047 Filed 5–7–21; 8:45 am] BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 328 RIN 3064–AF71 False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo Federal Deposit Insurance Corporation. ACTION: Notice of proposed rulemaking and request for information. AGENCY: The Federal Deposit Insurance Corporation is seeking comment on a proposed rule to implement section 18(a)(4) of the Federal Deposit Insurance Act. Section 18(a)(4) of the Federal Deposit Insurance Act prohibits any person from making false or misleading representations about deposit insurance or from using the Federal Deposit Insurance Corporation’s name or logo in a manner that would imply that an uninsured financial product is insured or guaranteed by the Federal Deposit Insurance Corporation. The proposed rule would describe: The process by which the Federal Deposit Insurance Corporation will identify and investigate conduct that may violate section 18(a)(4) of the Federal Deposit Insurance Act; the standards under which such conduct will be evaluated; and the procedures which the Federal Deposit Insurance Corporation will follow when formally and informally enforcing the provisions of section 18(a)(4) of the Federal Deposit Insurance Corporation Act. khammond on DSKJM1Z7X2PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 16:59 May 07, 2021 Jkt 253001 Comments are due on or before July 9, 2021. Comments on the Paperwork Reduction Act burden estimates are due on or before July 9, 2021. ADDRESSES: You may submit comments, identified by RIN 3064–AF71, by any of the following methods: • FDIC website: https://www.fdic.gov/ regulations/laws/federal/. Follow instructions for submitting comments on the agency website. • FDIC Email: Comments@fdic.gov. Include RIN 3064–AF71 on the subject line of the message. • Mail: James P. Sheesley, Assistant Executive Secretary, Legal-ESS, Attention: Comments—RIN 3064–AF71, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. • Hand Delivery/Courier: Comments may be hand-delivered to the guard station at the rear of the 550 17th Street NW building (located on F Street) on business days between 7 a.m. and 5 p.m. Please include your name, affiliation, address, email address, and telephone number(s) in your comment. All statements received, including attachments and other supporting materials, are part of the public record and are subject to public disclosure. You should submit only information that you wish to make publicly available. DATES: Please note: All comments received will be posted generally without change to https:// www.fdic.gov/regulations/laws/federal/, including any personal information provided. FOR FURTHER INFORMATION CONTACT: Richard M. Schwartz, Counsel, Legal Division, (202) 898–7424; Michael P. Farrell, Counsel, Legal Division, (202) 898–3853, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. SUPPLEMENTARY INFORMATION: I. Policy Objectives Section 18(a)(4) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(a)(4), (Section 18(a)(4)) prohibits any person from misusing the name or logo of the Federal Deposit Insurance Corporation (FDIC) or from engaging in false advertising or making knowing misrepresentations about deposit insurance. The FDIC has observed an increasing number of instances where financial services providers or other entities or individuals have misused the FDIC’s name or logo or have made false or misleading representations that would suggest to the public that these providers’ products are FDIC-insured. To provide transparency into how the PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 FDIC will address these and similar concerns, the FDIC is proposing to adopt regulations to further clarify its procedures for identifying, investigating, and where necessary taking formal and informal action to address potential violations of Section 18(a)(4). The regulations would also establish a point-of-contact for receiving complaints about potentially false or misleading representations regarding deposit insurance and would direct depositors and prospective depositors to where they could obtain information or verification about deposit insurance claims. Although the FDIC is not required to promulgate regulations to implement section 18(a)(4), the FDIC nonetheless believes that the proposed rule, if adopted, would establish a more transparent process that will benefit all parties and would promote stability and confidence in FDIC deposit insurance and the nation’s financial system. II. Background The FDIC has steadfastly and proactively sought to protect depositors and prospective depositors by limiting use of the FDIC’s name, seal, and logo to insured depository institutions (IDIs) and preventing false and misleading representations about the manner and extent of FDIC deposit insurance (deposit insurance). Under Federal law, it is a criminal offense to misuse the FDIC name or make false representations regarding deposit insurance.1 Moreover, the FDIC has 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: (1) Falsely represents or implies that any deposit liability, obligation, certificate, or share is insured by the FDIC; or (2) otherwise knowingly misrepresents: (a) That any deposit liability, obligation, certificate, or share is insured, or (b) the extent or manner 1 See 18 U.S.C. 709 (‘‘Whoever, except as expressly authorized by Federal law, uses the words ‘Federal Deposit’, Federal Deposit Insurance’, or ‘Federal Deposit Insurance Corporation’ or a combination of any three of these words, as the name or a part thereof under which he or it does business, or advertises or otherwise represents falsely by any device whatsoever that his or its deposit liabilities, obligations, certificates, or shares are insured or guaranteed by the Federal Deposit Insurance Corporation, or by the United States or by any instrumentality thereof, or whoever advertises that his or its deposits, shares, or accounts are federally insured, or falsely advertises or otherwise represents by any device whatsoever the extent to which or the manner in which the deposit liabilities of an insured bank or banks are insured by the Federal Deposit Insurance Corporation . . . Shall be punished . . . by a fine under this title or imprisonment for not more than one year . . .’’). E:\FR\FM\10MYP1.SGM 10MYP1 Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS in which any deposit liability, obligation, certificate, or share is insured.2 Although the FDIC has broad statutory authority in this area, the FDIC has never issued specific regulations regarding false representations related to FDIC insurance or the misuse of the FDIC’s name or logo. On February 26, 2020, the FDIC published in the Federal Register a Request for Information (RFI) related to potential modernization of its signage and advertising rules set out in part 328 of the FDIC regulations.3 This RFI included the questions tied to the deposit insurance misrepresentation issues discussed in this Notice of Proposed Rulemaking.4 On March 13, 2020, the FDIC published an extension of the comment period in the Federal Register.5 However, on April 16, 2020, in light of COVID–19, the FDIC announced that it was temporarily postponing its efforts to modify the rules under part 328 of the FDIC regulations. In light of the increasing number of instances where financial services providers or other entities or individuals have misused the FDIC’s name or logo, the FDIC has elected to address false or misleading representation and misuse issues through this Notice of Proposed Rulemaking. Because the FDIC is committed to obtaining input on these issues from the industry and the public, we have included relevant questions in this document. Separately, on April 9, 2021, the FDIC re-issued its RFI regarding the FDIC Sign and Official Advertising Requirements.6 The 2021 RFI focuses on soliciting information on the modernization of the FDIC’s advertising requirements applicable to IDIs, and related topics. While questions related to misrepresentation and misuse have been removed from that document, there remains a degree of overlap between the RFI and the proposed rule and responses to the RFI may provide information that is relevant to consideration of the proposed rule. For example, the RFI asks about how to deal with parties that may be fraudulently 2 See 12 U.S.C. 1828(a)(4)(C)–(D). With regard to an insured depository institution under the supervision of another Federal banking agency, the FDIC shall first write to that agency to take enforcement action under section 18(a)(4) against any entity for which the agency is the appropriate Federal banking agency or any institution-affiliated party of such entity; if that agency takes no action within 30 days, the FDIC may take action. 3 85 FR 10997 (Feb. 26, 2020). 4 Id, at 10999–11000. 5 85 FR 14678 (Mar. 13, 2020). 6 86 FR 18528 (Apr. 9, 2021). VerDate Sep<11>2014 16:59 May 07, 2021 Jkt 253001 impersonating insured depository institutions, which necessarily overlaps with the proposed rule. Therefore, the FDIC will consider relevant comments submitted in response to the RFI, together with comments submitted in response to the proposed rule, in adopting the final rule. III. Summary of Proposed Regulation The proposed regulation establishes a new subpart B to part 328, entitled ‘‘False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo.’’ The proposed subpart sets forth 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). Section 328.100—Scope Section 328.100 notes that, unlike many FDIC regulations, which are binding upon IDIs and institutionaffiliated parties (IAPs), this regulation, consistent with the authority set forth in Section 18(a)(4), will apply to any person who violates Section 18(a)(4) or who aids another in such a violation. Section 328.101—Definitions Section 328.101 sets forth certain definitions that will be used throughout the subpart. Such definitions include, but are not limited to the terms or phrases ‘‘non-deposit product,’’ ‘‘uninsured financial product,’’ ‘‘FDICassociated images,’’ and ‘‘FDICassociated terms.’’ Section 328.102—Prohibition Section 328.102 sets forth the conduct that is prohibited by Section 18(a)(4). It further provides transparency by setting forth the FDIC’s interpretation of the scope of prohibited conduct, including specific examples of conduct that the FDIC deems to violate Section 18(a)(4). The identified practices include instances where false statements are made regarding the existence or extent of deposit insurance associated with a product, as well as instances where material information is omitted from a representation (e.g., where a non-bank third party represents that its products are FDIC-insured without identifying the name or the names of the IDIs where customer deposits will be placed and through whom such insurance is derived.) These examples are not meant to be an exhaustive list, but rather specific examples of the type of conduct that the FDIC has observed that violate the prohibitions in Section 18(a)(4). PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 24771 This list is not intended to be an exhaustive list, and the FDIC may modify the list based on responses to this notice or the RFI. The section further sets forth certain standards that the FDIC will use to determine if a statement violates Section 18(a)(4). The standards laid out in § 328.102 are adapted from the standards that Federal Trade Commission developed decades ago to determine if acts or practices are deceptive in violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. 45 (Section 5).7 While Section 18(a)(4) is separate from Section 5, it prohibits similar conduct—deception in connection with commerce. The standards governing deception under Section 5 have been consistently accepted by courts,8 and used by the FTC and other agencies, including the FDIC, which enforces prohibitions of Section 5 against the institutions it supervises and IAPs of those institutions.9 In light of the long-term use and acceptance of these standards, the FDIC believes it is appropriate to use similar standards to determine if a representation about deposit insurance violates Section 18(a)(4). Section 328.102 also sets forth a bright-line rule for when the FDIC will presume a misrepresentation to have been knowingly made (i.e., when a respondent continues to make representations about deposit insurance after having been advised by a governmental or regulatory authority that such representations are false or misleading). This bright-line rule is not, however, intended to be the exclusive manner in which the FDIC can establish that any misrepresentation was knowingly made, and the agency reserves the right to establish this statutory element by introducing other evidence. Section 328.103—Inquiries and Complaints Section 328.103 provides a process by which members of the public may submit complaints to the FDIC regarding suspected false or misleading representations about deposit insurance. It also directs members of the public to the agency’s existing resources to submit inquiries about representations 7 See generally, FTC Policy Statement on Deception, October 14, 1983. 8 See,e.g., FTC v. Stefanchik, 559 F.3d 924 (9th Cir. 2009). 9 See, FIL–57–2002 Unfair or Deceptive Acts— Applicability of the Federal Trade Commission Act (May 30, 2002) and FIL–26–2004, Unfair or Deceptive Acts or Practices under Section 5 of the Federal Trade Commission Act (March 11, 2004). E:\FR\FM\10MYP1.SGM 10MYP1 24772 Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Proposed Rules regarding deposit insurance to the FDIC’s Information and Support Center. The FDIC believes that having a specified point-of-contact for depositors and prospective depositors who may have questions about deposit insurance coverage will be of particular value to the public given the increasing volume of communication and advertising relating to financial products that members of the public receive over various media, including social media and electronic communication. This process represents a continuation of the Information and Support Center’s role of aiding the FDIC’s mission of ensuring and promoting the stability and confidence of the banking system by responding to inquiries from the public. khammond on DSKJM1Z7X2PROD with PROPOSALS Section 328.104—Investigation Section 328.104 sets forth procedures for formal investigations into potential violations of Section 18(a)(4). Among other things, the section delegates authority to the FDIC’s General Counsel to investigate potential violations and provides that such investigations will be conducted in accordance with section 10(c) of the Federal Deposit Insurance Act 10 and the FDIC’s rules governing investigations, which are found in subpart K of the FDIC’s Rules of Practice and Procedure.11 Section 328.104 further provides that, notwithstanding the longstanding confidentiality provisions found in 12 CFR 308.147, in those limited circumstances where there is risk of imminent harm to consumers or depositors, the FDIC may disclose the existence of an investigation under this part that does not involve a bank or a known IAP of a bank. This disclosure authorization, which is a departure from the general practice of maintaining the confidentiality of investigations, is intended to further the FDIC’s mission of promoting confidence and stability in the banking system by allowing it to disclose investigations into potentially false or misleading representations about deposit insurance where there is a risk of imminent harm to consumers or depositors. Section 328.105—Referral to Appropriate Authority Section 328.105 sets forth circumstances under which the FDIC may notify other authorities of potential violations of law that it becomes aware of in connection with a complaint, inquiry, investigation or action under this subpart. Section 328.105 provides that the FDIC may recommend that another 10 12 11 12 U.S.C. 1820(c). CFR 308.144–150. VerDate Sep<11>2014 16:59 May 07, 2021 Jkt 253001 appropriate Federal banking agency take action to enforce Section 18(a)(4) against an IDI that is subject to the authority of that appropriate Federal banking agency or an IAP of such an institution. Such recommendations are authorized by Section 18(a)(4), which also provides that if the appropriate Federal banking agency fails to take action within 30 days, the FDIC may take enforcement action. Section 328.105 further provides that, in the event the FDIC becomes aware of conduct that potentially violates laws or regulations within the jurisdiction of another regulatory authority, the FDIC may take steps to notify the appropriate authority. Section 328.105 also provides that, in the event the FDIC becomes aware of conduct that potentially constitutes a criminal violation of 18 U.S.C. 709, the FDIC may, in appropriate circumstances, notify the FDIC Office of the Inspector General or the appropriate criminal law authority. Finally, § 328.105 contains provisions governing the provision of any records to other regulatory or criminal authorities in connection with notice under the section. Section 328.106—Informal Resolution Historically, the FDIC has generally resolved apparent violations of Section 18(a)(4) informally by notifying the party responsible and requesting that the apparent false or misleading representation be withdrawn and corrected. Section 328.106 sets forth the process the FDIC will follow when pursuing an informal resolution. Under this process, the FDIC will generally send any person that appears to be making a false or misleading representation, or any person aiding or abetting such a representation, an advisory letter notifying the person of the basis for the FDIC’s concerns and requesting corrective action. Such letters will also provide the recipient the opportunity to provide the FDIC with supplemental information if the recipient contends that the representations made are true and not misleading and/or that any use of the FDIC’s name or logo is authorized. Examples of the general form such advisory letters may take may be found on the FDIC’s public website at https:// www.fdic.gov/regulations/laws/federal/ 2021/template-advisory-letters.pdf. Form A–1 provides a template advisory letter for communicating directly with a person that is believed to be misusing the FDIC’s name or logo or making false or misleading representations about deposit insurance. Form A–2 provides a template advisory letter for PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 communications directed to a thirdparty publisher that may be disseminating potentially false or misleading representations regarding deposit insurance. Form A–3 provides a template for communications with internet service providers (ISPs), alerting them that a website hosted by the ISP may be making false representations in violation of Section 18(a)(4). Generally, the FDIC will only send such advisory letters to an ISP if the website in question contains one or more indicia of fraud. Such indicia would include, among other things, evidence that: (1) The website purports to belong to or be associated with an IDI when the IDI disclaims any ownership or association with the website; (2) the website appears to mirror or look like a valid website maintained by an IDI by spoofing or copying photos or pages from the IDI’s website in an attempt to deceive depositors into believing that the website belongs to or is associated with the IDI; (3) the website purports to belong to an IDI, when no such IDI exists; or (4) there are geographic or other inconsistencies on the site (e.g., the website is hosted abroad or the contact information reflected on the site does not match those on file with the FDIC). Section 328.106 further provides that if the recipient of such a letter takes the requested corrective action within the time requested, the FDIC will generally take no further action. However, if the recipient fails to timely take corrective action, the FDIC may pursue all remedies available to it. Additionally, pursuant to § 328.106, the FDIC may commence formal enforcement action at any time if the FDIC has reason to believe that depositors or IDIs may suffer harm as a result of continued conduct or if the person making the false or misleading representation has been previously advised of the agency’s concerns. Section 328.107—Formal Enforcement Action Section 328.107 sets forth the procedures that will govern any formal enforcement action brought by the FDIC to enforce the provisions of Section 18(a)(4). Under § 328.107, and as authorized by Section 18(a)(4), the FDIC may bring formal actions to enforce Section 18(a)(4) under section 8 of the Federal Deposit Insurance Act (Section 8) 12 against any person in the same 12 12 U.S.C. 1818. Specifically, the FDIC is authorized to pursue actions under Section 8(b), (c), (d), or (i) to enforce the provisions of Section 18(a)(4). E:\FR\FM\10MYP1.SGM 10MYP1 Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS manner and to the same extent that it can bring such actions against insured state nonmember banks and their IAPs. Section 328.107 authorizes the FDIC General Counsel to bring an action against any person to enforce the provisions of Section 18(a)(4); however, it provides that in the case of an IDI for which another Federal banking agency is the appropriate Federal banking agency, the General Counsel can only commence an action if the appropriate Federal banking agency fails to take action after receiving a recommendation pursuant to § 328.105. It further provides that administrative proceedings brought to enforce Section 18(a)(4) will be governed by the FDIC’s Rules of Practice and Procedure set forth in Part 308 of the FDIC’s Regulations. Section 328.107 also sets forth the venue for formal enforcement actions. In the case of actions against IDIs or IAPs, venue will be in the federal judicial district where the home office of the IDI is located. This is consistent with the venue provisions of Section 8. In actions that do not involve IDIs or IAPs, venue will be based on the residence of the respondent, similar to the manner in which venue is determined for general civil actions under 29 U.S.C 1391. The FDIC believes these venue provisions are consistent with existing law and due process. Section 328.108—Appeals Process Section 328.108 clarifies that any order issued after hearings conducted pursuant to this subpart is subject to judicial review to the same extent as any other order issued under Section 8. While Section 18(a)(4) does not expressly provide for judicial review, it does authorize enforcement actions under Section 8, which provides for such review. The FDIC believes that this grant of authority includes the right to seek judicial review and further believes such right is necessary and appropriate. Section 328.108 also provides that any petitions for judicial review may be filed in the court of appeals for the federal circuit where the hearing was held or the United States Court of Appeals for the District of Columbia Circuit. This venue provision is consistent with the venue provisions of Section 8 and provides respondents with the same choice of venue provided after any other FDIC enforcement hearing. IV. Expected Effects The proposed rule, if adopted, would primarily affect non-bank entities and individuals who are potentially misusing the FDIC’s name or logo or are making false or misleading VerDate Sep<11>2014 16:59 May 07, 2021 Jkt 253001 representations about deposit insurance. The FDIC currently insures 5,042 depository institutions 13 that could also be affected; however in practice, the proposed rule would primarily affect non-bank entities and private individuals. Since the adoption of Section 18(a)(4) in 2008, the FDIC has issued only one formal enforcement order against a non-bank entity for misuse of the FDIC’s name or logo or for misrepresentations or false advertising in relation to deposit insurance. However, as previously noted the FDIC has observed a recent 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 that would falsely suggest to the public that these providers’ products are FDIC-insured and been subject to an informal resolution. Between January 1, 2019, and December 31, 2020, the FDIC has worked with non-bank entities to reach informal resolutions regarding the potential misuse of the FDIC’s name or logo and/or misrepresentations relation to deposit insurance in at least 165 instances.14 Based on this experience, the FDIC estimates that the proposed rule, if adopted, would apply to relatively few formal enforcement actions and conservatively estimates that it would affect fewer than 165 informal resolutions with non-bank entities and individuals each year. As discussed previously, the proposed rule, if adopted, would 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. Further 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 the proposed rule, if adopted, would be unlikely to have any significant effect on formal and informal enforcement of the Section 18(a)(4) prohibitions. The FDIC believes that the proposed rule, if adopted, would benefit FDICinsured institutions and members of the public by further clarifying what constitutes a violation of Section 18(a)(4), by creating a process by which institutions and members of the public can report suspected instances of false advertising, misuse, or misrepresentation regarding deposit insurance, and by establishing clear 13 FDIC Call Report data, September 30, 2020. FDIC 2019 Annual Report, p. 38; FDIC 2020 Annual Report, p. 47. 14 See PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 24773 procedures by which the FDIC will investigate and, where necessary, formally and informally resolve potential violations of Section 18(a)(4). Specifically, the added transparency on the FDIC’s processes for investigating potential instances of misuse or misrepresentation and, if needed, resolution are expected to benefit the parties involved by establishing a common understanding of those processes. V. Alternatives The FDIC has considered alternatives to the rule but believes that adopting subpart B to part 328 represents the most appropriate option. As discussed previously, Section 18(a)(4) establishes prohibitions against the misuse of the FDIC’s name or logo and prohibits misrepresentations and false advertising in relation to deposit insurance. The FDIC considered the status quo alternative of not adopting a regulation that further clarifies what constitutes misuse of FDIC name or logo or false or misleading representation with respect to FDIC insurance, how the FDIC will identify and investigate suspected instances of misuse or misrepresentation, and the process by which the FDIC will pursue formal or informal resolution of instances of misuse or misrepresentation. However, based on the FDIC’s recent experience addressing instances of potential and actual misuse, misrepresentation, and false advertising in relation to the FDIC name and logo, the FDIC believes that the proposed rule is the most appropriate action. VI. Request for Comments The FDIC invites comments on all aspects of this proposed rulemaking. In particular, the FDIC seeks feedback on the scope of the proposed rule and the procedures described therein, including the following specific questions: False Advertising, Misuse of Logo, and Misrepresentations 1. Please describe the extent to which the proposed rule sufficiently identifies situations that present potential risks related to false or misleading representations regarding deposit insurance coverage and the misuse of the FDIC’s name or logo, including those related to specific products and advertising channels. If there are additional types of false or misleading representations about deposit insurance coverage that may not be effectively captured by the rule, please describe them. 2. Please describe the extent to which the proposed rule sufficiently addresses E:\FR\FM\10MYP1.SGM 10MYP1 24774 Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS false or misleading representations regarding deposit insurance and the misuse of the FDIC’s name and logo. If there are additional or alternative ways to more effectively or efficiently address such misrepresentations and/or misuse, please describe them. 3. Please describe any suggested additions to the proposed rule for preventing and addressing the risks of false or misleading representations regarding deposit insurance and/or the misuse of the FDIC’s name and logo. Procedures for Investigations, Informal Resolution, and Formal Enforcement Actions 4. Are the proposed complaint and inquiry procedures sufficiently clear about how business entities and members of the public may contact the FDIC if they have questions or concerns relating to potentially false or misleading representations regarding deposit insurance or misuse of the FDIC’s name and logo? Are there other types of procedures the FDIC should consider? If so, please describe them. 5. Are there other alternative, effective, and efficient methods by which a customer can ensure that a third-party’s representations regarding deposit insurance are true and accurate? If so, please describe them. 6. Is the proposed informal resolution process an adequate means of addressing, in the first instance in most circumstances, potentially false or misleading representations regarding deposit insurance or misuse of the FDIC’s name and logo? Should the FDIC consider other or additional procedures? If so, please describe them. 7. The proposed rule contains a provision that would permit the FDIC, in those limited circumstances where there is risk of imminent harm to consumers or depositors, to confirm the existence of a formal investigation, so long as the target of the investigation was not an IDI or a known IAP thereof. This provision would be an exception to the longstanding confidentiality provisions found in 12 CFR 308.147. Is such an exception appropriate? Does the proposed rule strike an appropriate balance between the need to maintain the confidentiality of investigations involving IDIs and known IAPs, versus the potential value in identifying the existence of investigations into nonbank persons and entities whose conduct may result in risk of imminent harm to consumers and depositors? Are there alternatives the FDIC should consider? If so, please describe them. 8. Is the formal enforcement action process sufficiently clear, given that Section 18(a)(4) expressly references the VerDate Sep<11>2014 16:59 May 07, 2021 Jkt 253001 use of established enforcement mechanisms set forth in Section 8 of the FDI Act? Should other provisions be added? If so, please describe them. 9. Do the investigation, informal resolution, and formal enforcement action processes described in the proposed rule strike the appropriate balance between addressing in a timely manner potentially false or misleading representations regarding deposit insurance and allowing the parties identified as potentially participating in the false or misleading representations an opportunity to present additional facts or provide a legal defense? Other Areas of Concern 10. Upon entering into a relationship or arrangement with a third-party nonbank entity, as part of FDIC-insured institutions’ due diligence, do such institutions currently take steps to ensure: (a) That the non-bank is aware of existing laws and regulations related to the use of the FDIC’s name and logo, and (b) that representations made by the non-bank regarding the insured status of bank products are accurate and comply with existing laws and regulations? If not, are there practices that FDICinsured institutions could adopt to spread awareness of and compliance with these laws and regulations by nonbanks? 11. Are there other topics or issues relating to false or misleading representations regarding deposit insurance or the misuse of the FDIC’s name and logo that the FDIC should consider? If so, please describe them and how you think the FDIC should address those topics and issues. Written comments must be received by the FDIC no later than July 9, 2021. VII. Administrative Law Matters A. The Regulatory Flexibility Act The Regulatory Flexibility Act (RFA), requires that, in connection with a notice of proposed rulemaking, an agency prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of the proposed rule on small entities.15 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, and publishes its certification and a short explanatory statement in the Federal Register together with the rule. The Small Business Administration (SBA) has defined ‘‘small entities’’ to include banking organizations with total 15 5 PO 00000 U.S.C. 601, et seq. Frm 00025 Fmt 4702 Sfmt 4702 assets of less than or equal to $600 million.16 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 provided below, the FDIC certifies that the proposed rule, if adopted in final form, would not have a significant economic impact on a substantial number of small banking organizations. Accordingly, a regulatory flexibility analysis is not required. As of September 30, 2020, the FDIC insured 5,042 depository institutions, of which 3,585 are considered small banking organizations for the purposes of RFA.17 Potential instances of misuse or misrepresentation of the FDIC name or logo by IDIs are usually addressed under the normal supervisory authority of the appropriate federal financial regulator, therefore although the proposed rule could affect IDIs, in practice the proposed rule would primarily affect non-bank entities and private individuals. Private individuals are not considered ‘‘small entities’’ by the terms of the RFA.18 Based on the information above, 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 rule have any significant effects on small entities that the FDIC has not identified? B. Plain Language Section 722 of the Gramm-LeachBliley Act 19 requires the federal banking agencies to use plain language in all proposed and final rules 16 The SBA defines a small banking organization as having $600 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 84 FR 34261, effective August 19, 2019). ‘‘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. 17 FDIC Call Report data, September 30, 2020. 18 How to Comply with the Regulatory Flexibility Act, August 2017, The U.S. Small Business Administration, Office of Advocacy, https:// cdn.advocacy.sba.gov/wp-content/uploads/2019/ 06/21110349/How-to-Comply-with-the-RFA.pdf. 19 Public Law 106–102, section 722, 113 Stat. 1338, 1471 (1999). E:\FR\FM\10MYP1.SGM 10MYP1 Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Proposed Rules published after January 1, 2000. The FDIC has sought to present the proposed rule in a simple and straightforward manner. The FDIC invites comments on whether the proposal is clearly stated and effectively organized, and how the FDIC might make the proposal easier to understand. D. Riegle Community Development and Regulatory Improvement Act of 1994 Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),21 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on IDIs, each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that the regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of the regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.22 The FDIC invites comments that further will inform its consideration of RCDRIA. List of Subjects in 12 CFR Part 328 Advertising, Bank deposit insurance, Savings associations, Signs and symbols. khammond on DSKJM1Z7X2PROD with PROPOSALS Authority and Issuance For the reasons stated in the preamble, the Federal Deposit Insurance Corporation proposes to amend 12 CFR part 328 as follows: 20 Public 21 12 Law 104–208, 110 Stat. 3009 (1996). U.S.C. 4802(a). 22 Id. VerDate Sep<11>2014 16:59 May 07, 2021 Jkt 253001 3. Add new subpart A of part 328 entitled ‘‘Subpart A—Advertisement of Membership.’’ ■ 4. Redesignate §§ 328.0 through 328.4 as subpart A of part 328. ■ 5. Reserve §§ 328.5 through 328.99. ■ 6. Add a new part 328, subpart B to read as follows: ■ Under section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), the FDIC is required to review all of its regulations, at least once every 10 years, in order to identify any outdated or otherwise unnecessary regulations imposed on insured institutions.20 1. Revise the heading for part 328 to read as follows: 2. Revise the authority citation for part 328 to read as follows: ■ Authority: 12 U.S.C. 1818, 1819 (Tenth), 1820(c), 1828(a). C. The Economic Growth and Regulatory Paperwork Reduction Act ■ PART 328—ADVERTISEMENT OF MEMBERSHIP, FALSE ADVERTISING, MISREPRESENTATION OF INSURED STATUS, AND MISUSE OF THE FDIC’S NAME OR LOGO Subpart B—False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo. Sec. 328.100 Scope 328.101 Definitions 328.102 Prohibition 328.103 Inquiries and Complaints 328.104 Investigations of Potential Violations 328.105 Referral to Appropriate Authority 328.106 Informal Resolution 328.107 Formal Enforcement Actions 328.108 Appeals Process Subpart B—False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo § 328.100 Scope. This Subpart applies to any person who: (1) Falsely represents, expressly or by implication, that any deposit liability, obligation, certificate, or share is FDIC-insured by using the FDIC’s name or logo; (2) knowingly misrepresents, expressly or by implication, that any deposit liability, obligation, certificate, or share is insured by the FDIC if such an item is not so insured; (3) knowingly misrepresents, expressly or by implication, the extent to which or the manner in which any deposit liability, obligation, certificate, or share is insured by the FDIC, if such an item is not insured to the extent or manner represented; or (4) aid or abets another in any of the foregoing. § 328.101 Definitions. For purposes of this subpart: (a) Advertisement means a commercial message, in any medium, that is designed to attract public attention or patronage to a product, business, or service. (b) Appropriate Federal Banking Agency has the meaning set forth in PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 24775 section 3(q) of the FDIC (12 U.S.C. 1813(q)). (c) FDIA means the Federal Deposit Insurance Act, 12 U.S.C. 1811 et seq. (d) FDIC means the Federal Deposit Insurance Corporation. (e) 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 12 CFR 328.1; the Official Advertising Statement, as set forth in 12 CFR 328.3(b); 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 by the FDIC. (f) FDIC-Associated Terms means the abbreviation, ‘‘FDIC,’’ and the following words or phrases: ‘‘Federal Deposit Insurance Corporation,’’ ‘‘Federal Deposit,’’ ‘‘Federal Deposit Insurance,’’ ‘‘FDIC-insured,’’ ‘‘FDIC insurance,’’ ‘‘insured by FDIC,’’ ‘‘member FDIC;’’ any similar words or phrases; or any other terms that may represent or imply that any deposit, liability, obligation certificate, or share is insured or guaranteed by the FDIC. (g) Federal Banking Agency has the meaning set forth in section 3(z) of the FDIC (12 U.S.C. 1813(z)). (h) General Counsel means the General Counsel of the FDIC or his or her designee. (i) Hybrid Product has the same meaning as set forth under 12 CFR 328.3(e)(1)(ii). (j) Institution-Affiliated Party (IAP) has the same meaning as set forth under section 3(u) of the FDIA, 12 U.S.C. 1813(u). (k) Insured Deposit has the same meaning as set forth under section 3(m) of the FDIA, 12 U.S.C. 1813(m). (l) Insured Depository Institution has the same meaning as set forth under section 3(c)(2) of the FDIA, 12 U.S.C. 1813(c)(2). (m) Non-Deposit Product has the same meaning as set forth under 12 CFR 328.3(e)(1)(i). (n) Person means a natural person, sole proprietor, partnership, corporation, unincorporated association, trust, joint venture, pool, syndicate, agency or other entity, association, or organization, including a Regulated Institution as defined in paragraph (o) of this section. (o) Regulated Institution means any institution for which the FDIC, the Office of the Comptroller of the Currency, or the Board of Governors of the Federal Reserve System is the ‘‘appropriate Federal banking agency’’ under section 3(q) of the FDIA, 12 U.S.C. 1813(q). E:\FR\FM\10MYP1.SGM 10MYP1 24776 Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Proposed Rules (p) Third-Party Publisher means any party that publishes, places, distributes, or circulates advertising or marketing materials, regardless of the platform or media used for distribution, containing FDIC-Associated Images, FDICAssociated Terms, or other claims regarding FDIC insurance or guarantees. Third-Party Publishers shall include, but not be limited to: Publishers and distributors of written, visual, or print advertising; broadcasters of video or audio advertisements; telemarketers; internet or web-based distributors, including internet service providers, and email marketers; and direct mail marketers and distributors. (q) Uninsured Financial Product means any Non-Deposit Product, Hybrid-Product, investment, security, obligation, certificate, share, or financial product other than an ‘‘Insured Deposit’’ as defined in paragraph (k) of this section. khammond on DSKJM1Z7X2PROD with PROPOSALS § 328.102 Prohibition. (a) Use of the FDIC Name or Logo. (1) No person may represent or imply that any Uninsured Financial Product is insured or guaranteed by the FDIC by using FDIC-Associated Terms as part of any business name or firm name of any person; (2) No person may represent or imply that any Uninsured Financial Product is insured or guaranteed by the FDIC by using FDIC-Associated Terms or by using FDIC-Associated Images as part of an Advertisement, solicitation, or other publication or dissemination. (3) This subsection applies, but is not limited, to: (i) An Advertisement for any Uninsured Financial Product which feature or include one or more FDICAssociated Terms or FDIC-Associated Images, without a clear, conspicuous, and prominent disclaimer that the products being offered are not FDIC insured or guaranteed; (ii) An Advertisement for any Uninsured Financial Product which may be backed or guaranteed by an entity other that the FDIC, but which feature or include one or more FDICAssociated Terms or FDIC-Associated Images, without a clear, conspicuous, prominent, and accurate explanation as to the actual nature and source of the guarantee; (iii) An Advertisement for any NonDeposit Product or Hybrid Product by a Regulated Institution which include any statement or symbol which implies or suggests the existence of Federal deposit insurance relating to the Non-Deposit product or Hybrid Product; (iv) Publication or dissemination of information, regardless of the media or VerDate Sep<11>2014 16:59 May 07, 2021 Jkt 253001 platform, that suggests or implies that the party making the representation is an FDIC-insured institution if this is not in fact true. (v) Publication or dissemination of information, regardless of the media or platform, that suggests or implies that the party making the representation is associated with an FDIC-insured institution if the nature of the association is not clearly, conspicuously, prominently, and accurately described. (vi) Publication or dissemination of information, regardless of the media or platform, that suggests or implies that the party making the representation is the FDIC or any office, division, or subdivision thereof, if this is not in fact true. (vii) Publication or dissemination of information, regardless of the media or platform, that suggests or implies that the party making the representation is associated with the FDIC or any office, division, or subdivision thereof, if the nature of the association is not clearly, conspicuously, prominently, and accurately described. (b) False or Misleading Representations regarding FDIC Insurance. (1) No person may knowingly make false or misleading representations about deposit insurance, including: (i) That any deposit liability, obligation, certificate, or share is insured, under this subpart, if such a deposit is not so insured; (ii) the extent to which any deposit liability, obligation, certificate, or share is insured under this subpart, if such item is not insured to the extent represented; or (iii) the manner in which any deposit liability, obligation, certificate, or share is insured under this subpart, if such item is not insured in the manner represented. (2) For the purposes of this subsection, a statement is deemed to be a statement regarding deposit insurance, if it: (i) Includes any FDIC-Associated Images or FDIC-Associated Terms; (ii) makes any representation, suggestion, or implication about the existence of FDIC insurance or the extent or manner of coverage; or (iii) makes any representation, suggestion, or implication about the existence, extent, or effectiveness of any guarantee by FDIC in the event of financial distress by Insured Depository Institutions, whether a specific Insured Depository Institution or Insured Depository Institutions generally, including but not limited to bank PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 failure, insolvency, or receivership of such institutions. (3) For the purposes of this subsection, a statement regarding deposit insurance violates this section, if: (i) The statement contains any material representations which would have the tendency or capacity to mislead a reasonable consumer, regardless of whether any such consumer was actually misled; or (ii) the statement omits material information which would be necessary to prevent a reasonable consumer from being misled, regardless of whether any such consumer was actually misled. Where such a statement is made by a person other than an Insured Depository Institution, failure to identify the name(s) of the Insured Depository Institution(s) that will be receiving the deposits is deemed a material omission. (4) Without limitation, a false or misleading representation is deemed to be material if it states, suggests or implies that: (i) Uninsured Financial Products are insured or guaranteed by the FDIC; (ii) Insured Deposits (whether generally or at a particular Regulated Institution) are not insured or guaranteed by the FDIC; (iii) the amount of deposit insurance coverage is different (whether greater or less) than actually provided under the FDIA; (iv) the circumstances under which deposit insurance may be paid are different than actually provided under the FDIA; (v) the requirements to qualify for deposit insurance, or the process by which deposit insurance would be paid, are different from what is provided under the FDIA and its implementing regulations, including false or misleading claims related to actions required of depositors to qualify for or obtain such insurance; or (vi) Regulated Institutions may convert Insured Deposits into another form of liability that is not insured, such as unsecured debt or equity. (5) Without limitation, a representation is deemed to have been knowingly made if the person making the representation: (i) Has made false or misleading representations regarding deposit insurance; (ii) has been advised by the FDIC in an advisory letter, as provided in § 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 U.S. Department of Justice, or a state bank E:\FR\FM\10MYP1.SGM 10MYP1 Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Proposed Rules supervisor, that such representations are false or misleading; and (iii) thereafter, continues to make these, or substantially-similar, representations. § 328.103 Inquiries and Complaints. Should any person have reason to believe that anyone is or may be acting in violation of section 18(a) of the FDIA (12 U.S.C. 1828(a)) or this subpart, or have questions regarding the accuracy of deposit-related representations, such individuals may contact the FDIC at the FDIC Information and Support Center, https://ask.fdic.gov/fdicinformation andsupportcenter/s/, or by telephone at: 1–877–275–3342 (1–877–ASK–FDIC). § 328.104 Investigations of Potential Violations. (a) The General Counsel shall have delegated authority to investigate potential violations of section 18(a) of the FDIA (12 U.S.C. 1828(a)) and this subpart. (b) Such investigations will be conducted as prescribed under section 10(c) of the FDIA (12 U.S.C. 1820(c)) and subpart K of part 308 of the FDIC’s Rules of Practice and Procedure (12 CFR 308.144–150). Notwithstanding the general confidentiality provisions of 12 CFR 308.147, in cases which may pose a risk of imminent harm to consumers or depositors, the FDIC may disclose or confirm the existence of an investigation that does not involve an Insured Depository Institution or a known IAP thereof. Such disclosure shall not disclose any information obtained or uncovered during the course of the investigation. khammond on DSKJM1Z7X2PROD with PROPOSALS § 328.105 Referral to Appropriate Authority. (a) If, in connection with the receipt of an inquiry or complaint, or during the course of an investigation, informal resolution, or formal enforcement under this subpart: (1) The FDIC becomes aware of conduct by a Regulated Institution for which another Federal banking agency is the appropriate Federal banking agency or an Institution-Affiliated Party of such an institution, that appears to violate section 18(a) of the FDIA (12 U.S.C. 1828(a)), the FDIC may recommend that the appropriate Federal banking agency take appropriate enforcement action. If the appropriate Federal banking agency does not take the recommended action within 30 days, the FDIC may pursue any and all remedies available under section 18(a) or the FDIA (12 U.S.C. 1828(a)) and this subpart; (2) the FDIC becomes aware of conduct that the FDIC has reason to VerDate Sep<11>2014 16:59 May 07, 2021 Jkt 253001 believe violates a civil law or regulations within the jurisdiction of another regulatory authority, the FDIC may take steps to notify the appropriate authority; and (3) the FDIC becomes aware of conduct that the FDIC has reason to believe violates 18 U.S.C. 709, the FDIC may notify FDIC’s Office of Inspector General for referral to the appropriate criminal law enforcement authority. (b) To the extent that any records are provided to a regulatory or criminal law enforcement authority, as set forth in paragraph (a), of this section, the provision of such records will be made in accordance with the requirements of part 309. Where such records were obtained during the course of an investigation, informal resolution, or formal enforcement action, the General Counsel shall be considered the Director of the Corporation’s Division having primary authority over records so obtained. § 328.106 Informal Resolution. (a) If the FDIC has reason to believe that any person may be misusing an FDIC-associated image or FDICassociated term or otherwise violating § 328.102(a), or may be making false or misleading representations regarding deposit insurance in violation of § 328.102(b), the FDIC may issue an advisory letter to such a person and/or any person who aids or abets another in such conduct, including any ThirdParty Publisher. Generally, such an advisory letter will: (1) Alert the recipient of advisory letter of the basis for the FDIC’s concerns; (2) Request that the person and/or Third-Party Publisher: (i) Take reasonable steps to prevent any violations of section 18(a) of the FDIA (12 U.S.C. 1828(a)) and this subpart; (ii) commit in writing to refrain from such violations in the future; and (iii) notify the FDIC in writing that the identified concerns have been fully addressed and remediated; and (3) Offer the person or Third-Party Publisher the opportunity to provide additional information, documentation, or justifications to substantiate the representations made or otherwise refute the FDIC’s expressed concerns. (b) Except in cases where the FDIC has reason to believe that consumers or Insured Depository Institutions may suffer harm arising from continued violations, recipients of advisory letters described in paragraph (a) of this section, shall be provided not less than fifteen (15) days to provide the PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 24777 requested commitment, explanation, or justification. (c) Where a recipient of an advisory letter described in paragraph (a) of this section, provides the FDIC with the requested written commitments within the timeframe specified in the letter, and where any required remediation has been verified by FDIC staff, the FDIC will generally take no further administrative enforcement against such a party under § 328.107. (d) Where a recipient of an advisory letter described in paragraph (a) of this section, fails to respond to the letter; fails to make the requested commitments; or fails to provide additional information, documentation, or justifications that the FDIC, in its discretion, finds adequate to substantiate the representations made or otherwise refute the concerns set forth in the advisory letter, the FDIC may pursue all remedies set forth in this subpart. (e) Nothing in this section shall prevent the FDIC from commencing a formal enforcement action under § 328.107 at any time before or after the issuance of an advisory letter under this section if: (1) The FDIC has reason to believe that consumers or Insured Depository Institutions may suffer harm arising from continued violations; or (2) the person to whom such an advisory letter would be sent has previously received a similar advisory letter from the FDIC under § 328.106(a). § 328.107 Formal Enforcement Actions. (a) Enforcement Authority—For the purpose of enforcing the requirements of Section 18(a)(4) of the FDIA (12 U.S.C. 1818(a)(4)), the General Counsel is authorized to bring administrative enforcement actions against any person under sections 8(b), (c), (d), and (i) of the FDIA (12 U.S.C. 1818(b), 1818(c), 1818(d), and 1818(i)), in the same manner and to the same extent as with respect to a state nonmember insured bank. In the case of conduct by a Regulated Institution for which another Federal banking agency is the appropriate Federal banking agency or an institution-affiliated party of such an institution, the General Counsel may not bring an enforcement action under this subpart unless the FDIC has provided the appropriate Federal banking agency with notice as set forth in section 105(a)(1) of this subpart and the appropriate Federal banking agency failed to take the recommended action. (b) Venue—Unless the person who is the subject of the enforcement action consents to a different location, the venue for an administrative action E:\FR\FM\10MYP1.SGM 10MYP1 24778 Federal Register / Vol. 86, No. 88 / Monday, May 10, 2021 / Proposed Rules commenced under Section 18(a)(4) of the FDIA (12 U.S.C. 1818(a)(4)), shall be as follows: (1) In a case where the person who is the subject of the action is an Insured Depository Institution or an IAP of an Insured Depository Institution, in the federal judicial district or territory in which the home office of the Insured Depository Institution is located; (2) In a case where the person who is the subject of the action is not an Insured Depository Institution or an IAP of an Insured Depository Institution, the federal judicial district or territory where the person who is the subject of the action resides, if the subject resides in the United States. If the subject of the action does not reside in the United States, the venue shall be where the subject of the action conducts business or the federal judicial district for the District of Columbia. (3) For the purposes of paragraph (1) of this section, a natural person is deemed to reside in the federal judicial district where the natural person is domiciled. A person other than a natural person is deemed to reside in the federal judicial district where it is headquartered or has its principal place of business. (c) Rules of Practice and Procedure. All actions brought and maintained under this section will be subject to the FDIC’s Rules of Practice and Procedure, Subparts A–C of Part 308 (12 CFR 308.1–308.109). § 328.108 Appeals Process. khammond on DSKJM1Z7X2PROD with PROPOSALS (a) A person who is the subject of a final order issued after an administrative action commenced pursuant to this subpart may obtain judicial review of such order in accordance with the procedures set forth in section 8(h)(2) of the FDIA (12 U.S.C. 1818(h)(2)). (b) Petitions for review under this section may be filed in the court of appeals for the circuit where the hearing was held or the United States Court of Appeals for the District of Columbia Circuit. Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on April 21, 2021. James P. Sheesley, Assistant Executive Secretary. [FR Doc. 2021–08690 Filed 5–7–21; 8:45 am] BILLING CODE 6714–01–P VerDate Sep<11>2014 16:59 May 07, 2021 Jkt 253001 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2021–0338; Project Identifier AD–2020–01423–T] RIN 2120–AA64 Airworthiness Directives; The Boeing Company Airplanes Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking (NPRM). AGENCY: The FAA proposes to adopt a new airworthiness directive (AD) for certain The Boeing Company Model 787–8 and 787–9 airplanes. This proposed AD was prompted by reports that shimming requirements were not met during the assembly of certain structural joints, which can result in reduced fatigue thresholds and cracking of the affected structural joints. This proposed AD would require repetitive inspections for cracking of certain areas of the aft wheel well bulkhead (AWWB) body chord and AWWB side fitting and failsafe straps, and repair of any cracking found. The FAA is proposing this AD to address the unsafe condition on these products. DATES: The FAA must receive comments on this proposed AD by June 24, 2021. ADDRESSES: You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods: • Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments. • Fax: 202–493–2251. • Mail: U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. • Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. For service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110–SK57, Seal Beach, CA 90740–5600; telephone 562–797–1717; internet https:// www.myboeingfleet.com. You may view this referenced service information at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206–231– SUMMARY: PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 3195. It is also available on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA–2021–0338. Examining the AD Docket You may examine the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2021– 0338; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this NPRM, any comments received, and other information. The street address for Docket Operations is listed above. FOR FURTHER INFORMATION CONTACT: Greg Rutar, Aerospace Engineer, Airframe Section, FAA, Seattle ACO Branch, 2200 South 216th St., Des Moines, WA 98198; phone and fax: 206–231–3529; email: Greg.Rutar@faa.gov. SUPPLEMENTARY INFORMATION: Comments Invited The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under ADDRESSES. Include ‘‘Docket No. FAA–2021–0338; Project Identifier AD– 2020–01423–T’’ at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend the proposal because of those comments. Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments we receive, without change, to https:// www.regulations.gov, including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact we receive about this proposed AD. Confidential Business Information CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each E:\FR\FM\10MYP1.SGM 10MYP1

Agencies

[Federal Register Volume 86, Number 88 (Monday, May 10, 2021)]
[Proposed Rules]
[Pages 24770-24778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08690]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 328

RIN 3064-AF71


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 information.

-----------------------------------------------------------------------

SUMMARY: The Federal Deposit Insurance Corporation is seeking comment 
on a proposed rule to implement section 18(a)(4) of the Federal Deposit 
Insurance Act. Section 18(a)(4) of the Federal Deposit Insurance Act 
prohibits any person from making false or misleading representations 
about deposit insurance or from using the Federal Deposit Insurance 
Corporation's name or logo in a manner that would imply that an 
uninsured financial product is insured or guaranteed by the Federal 
Deposit Insurance Corporation. The proposed rule would describe: The 
process by which the Federal Deposit Insurance Corporation will 
identify and investigate conduct that may violate section 18(a)(4) of 
the Federal Deposit Insurance Act; the standards under which such 
conduct will be evaluated; and the procedures which the Federal Deposit 
Insurance Corporation will follow when formally and informally 
enforcing the provisions of section 18(a)(4) of the Federal Deposit 
Insurance Corporation Act.

DATES: Comments are due on or before July 9, 2021. Comments on the 
Paperwork Reduction Act burden estimates are due on or before July 9, 
2021.

ADDRESSES: You may submit comments, identified by RIN 3064-AF71, by any 
of the following methods:
     FDIC website: https://www.fdic.gov/regulations/laws/federal/. Follow instructions for submitting comments on the agency 
website.
     FDIC Email: [email protected]. Include RIN 3064-AF71 on 
the subject line of the message.
     Mail: James P. Sheesley, Assistant Executive Secretary, 
Legal-ESS, Attention: Comments--RIN 3064-AF71, Federal Deposit 
Insurance Corporation, 550 17th Street NW, Washington, DC 20429.
     Hand Delivery/Courier: Comments may be hand-delivered to 
the guard station at the rear of the 550 17th Street NW building 
(located on F Street) on business days between 7 a.m. and 5 p.m.
    Please include your name, affiliation, address, email address, and 
telephone number(s) in your comment. All statements received, including 
attachments and other supporting materials, are part of the public 
record and are subject to public disclosure. You should submit only 
information that you wish to make publicly available.

    Please note: All comments received will be posted generally 
without change to https://www.fdic.gov/regulations/laws/federal/, 
including any personal information provided.


FOR FURTHER INFORMATION CONTACT: Richard M. Schwartz, Counsel, Legal 
Division, (202) 898-7424; Michael P. Farrell, Counsel, Legal Division, 
(202) 898-3853, Federal Deposit Insurance Corporation, 550 17th Street 
NW, Washington, DC 20429.

SUPPLEMENTARY INFORMATION: 

I. Policy Objectives

    Section 18(a)(4) of the Federal Deposit Insurance Act, 12 U.S.C. 
1828(a)(4), (Section 18(a)(4)) prohibits any person from misusing the 
name or logo of the Federal Deposit Insurance Corporation (FDIC) or 
from engaging in false advertising or making knowing misrepresentations 
about deposit insurance. The FDIC has observed an increasing number of 
instances where financial services providers or other entities or 
individuals have misused the FDIC's name or logo or have made false or 
misleading representations that would suggest to the public that these 
providers' products are FDIC-insured. To provide transparency into how 
the FDIC will address these and similar concerns, the FDIC is proposing 
to adopt regulations to further clarify its procedures for identifying, 
investigating, and where necessary taking formal and informal action to 
address potential violations of Section 18(a)(4). The regulations would 
also establish a point-of-contact for receiving complaints about 
potentially false or misleading representations regarding deposit 
insurance and would direct depositors and prospective depositors to 
where they could obtain information or verification about deposit 
insurance claims. Although the FDIC is not required to promulgate 
regulations to implement section 18(a)(4), the FDIC nonetheless 
believes that the proposed rule, if adopted, would establish a more 
transparent process that will benefit all parties and would promote 
stability and confidence in FDIC deposit insurance and the nation's 
financial system.

II. Background

    The FDIC has steadfastly and proactively sought to protect 
depositors and prospective depositors by limiting use of the FDIC's 
name, seal, and logo to insured depository institutions (IDIs) and 
preventing false and misleading representations about the manner and 
extent of FDIC deposit insurance (deposit insurance). Under Federal 
law, it is a criminal offense to misuse the FDIC name or make false 
representations regarding deposit insurance.\1\ Moreover, the FDIC has 
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: (1) 
Falsely represents or implies that any deposit liability, obligation, 
certificate, or share is insured by the FDIC; or (2) otherwise 
knowingly misrepresents: (a) That any deposit liability, obligation, 
certificate, or share is insured, or (b) the extent or manner

[[Page 24771]]

in which any deposit liability, obligation, certificate, or share is 
insured.\2\
---------------------------------------------------------------------------

    \1\ See 18 U.S.C. 709 (``Whoever, except as expressly authorized 
by Federal law, uses the words `Federal Deposit', Federal Deposit 
Insurance', or `Federal Deposit Insurance Corporation' or a 
combination of any three of these words, as the name or a part 
thereof under which he or it does business, or advertises or 
otherwise represents falsely by any device whatsoever that his or 
its deposit liabilities, obligations, certificates, or shares are 
insured or guaranteed by the Federal Deposit Insurance Corporation, 
or by the United States or by any instrumentality thereof, or 
whoever advertises that his or its deposits, shares, or accounts are 
federally insured, or falsely advertises or otherwise represents by 
any device whatsoever the extent to which or the manner in which the 
deposit liabilities of an insured bank or banks are insured by the 
Federal Deposit Insurance Corporation . . . Shall be punished . . . 
by a fine under this title or imprisonment for not more than one 
year . . .'').
    \2\ See 12 U.S.C. 1828(a)(4)(C)-(D). With regard to an insured 
depository institution under the supervision of another Federal 
banking agency, the FDIC shall first write to that agency to take 
enforcement action under section 18(a)(4) against any entity for 
which the agency is the appropriate Federal banking agency or any 
institution-affiliated party of such entity; if that agency takes no 
action within 30 days, the FDIC may take action.
---------------------------------------------------------------------------

    Although the FDIC has broad statutory authority in this area, the 
FDIC has never issued specific regulations regarding false 
representations related to FDIC insurance or the misuse of the FDIC's 
name or logo.
    On February 26, 2020, the FDIC published in the Federal Register a 
Request for Information (RFI) related to potential modernization of its 
signage and advertising rules set out in part 328 of the FDIC 
regulations.\3\ This RFI included the questions tied to the deposit 
insurance misrepresentation issues discussed in this Notice of Proposed 
Rulemaking.\4\ On March 13, 2020, the FDIC published an extension of 
the comment period in the Federal Register.\5\ However, on April 16, 
2020, in light of COVID-19, the FDIC announced that it was temporarily 
postponing its efforts to modify the rules under part 328 of the FDIC 
regulations.
---------------------------------------------------------------------------

    \3\ 85 FR 10997 (Feb. 26, 2020).
    \4\ Id, at 10999-11000.
    \5\ 85 FR 14678 (Mar. 13, 2020).
---------------------------------------------------------------------------

    In light of the increasing number of instances where financial 
services providers or other entities or individuals have misused the 
FDIC's name or logo, the FDIC has elected to address false or 
misleading representation and misuse issues through this Notice of 
Proposed Rulemaking. Because the FDIC is committed to obtaining input 
on these issues from the industry and the public, we have included 
relevant questions in this document.
    Separately, on April 9, 2021, the FDIC re-issued its RFI regarding 
the FDIC Sign and Official Advertising Requirements.\6\ The 2021 RFI 
focuses on soliciting information on the modernization of the FDIC's 
advertising requirements applicable to IDIs, and related topics. While 
questions related to misrepresentation and misuse have been removed 
from that document, there remains a degree of overlap between the RFI 
and the proposed rule and responses to the RFI may provide information 
that is relevant to consideration of the proposed rule. For example, 
the RFI asks about how to deal with parties that may be fraudulently 
impersonating insured depository institutions, which necessarily 
overlaps with the proposed rule. Therefore, the FDIC will consider 
relevant comments submitted in response to the RFI, together with 
comments submitted in response to the proposed rule, in adopting the 
final rule.
---------------------------------------------------------------------------

    \6\ 86 FR 18528 (Apr. 9, 2021).
---------------------------------------------------------------------------

III. Summary of Proposed Regulation

    The proposed regulation establishes a new subpart B to part 328, 
entitled ``False Advertising, Misrepresentation of Insured Status, and 
Misuse of the FDIC's Name or Logo.'' The proposed subpart sets forth 
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).

Section 328.100--Scope

    Section 328.100 notes that, unlike many FDIC regulations, which are 
binding upon IDIs and institution-affiliated parties (IAPs), this 
regulation, consistent with the authority set forth in Section 
18(a)(4), will apply to any person who violates Section 18(a)(4) or who 
aids another in such a violation.

Section 328.101--Definitions

    Section 328.101 sets forth certain definitions that will be used 
throughout the subpart. Such definitions include, but are not limited 
to the terms or phrases ``non-deposit product,'' ``uninsured financial 
product,'' ``FDIC-associated images,'' and ``FDIC-associated terms.''

Section 328.102--Prohibition

    Section 328.102 sets forth the conduct that is prohibited by 
Section 18(a)(4). It further provides transparency by setting forth the 
FDIC's interpretation of the scope of prohibited conduct, including 
specific examples of conduct that the FDIC deems to violate Section 
18(a)(4). The identified practices include instances where false 
statements are made regarding the existence or extent of deposit 
insurance associated with a product, as well as instances where 
material information is omitted from a representation (e.g., where a 
non-bank third party represents that its products are FDIC-insured 
without identifying the name or the names of the IDIs where customer 
deposits will be placed and through whom such insurance is derived.) 
These examples are not meant to be an exhaustive list, but rather 
specific examples of the type of conduct that the FDIC has observed 
that violate the prohibitions in Section 18(a)(4). This list is not 
intended to be an exhaustive list, and the FDIC may modify the list 
based on responses to this notice or the RFI.
    The section further sets forth certain standards that the FDIC will 
use to determine if a statement violates Section 18(a)(4). The 
standards laid out in Sec.  328.102 are adapted from the standards that 
Federal Trade Commission developed decades ago to determine if acts or 
practices are deceptive in violation of Section 5 of the Federal Trade 
Commission Act, 15 U.S.C. 45 (Section 5).\7\ While Section 18(a)(4) is 
separate from Section 5, it prohibits similar conduct--deception in 
connection with commerce. The standards governing deception under 
Section 5 have been consistently accepted by courts,\8\ and used by the 
FTC and other agencies, including the FDIC, which enforces prohibitions 
of Section 5 against the institutions it supervises and IAPs of those 
institutions.\9\ In light of the long-term use and acceptance of these 
standards, the FDIC believes it is appropriate to use similar standards 
to determine if a representation about deposit insurance violates 
Section 18(a)(4).
---------------------------------------------------------------------------

    \7\ See generally, FTC Policy Statement on Deception, October 
14, 1983.
    \8\ See,e.g., FTC v. Stefanchik, 559 F.3d 924 (9th Cir. 2009).
    \9\ See, FIL-57-2002 Unfair or Deceptive Acts--Applicability of 
the Federal Trade Commission Act (May 30, 2002) and FIL-26-2004, 
Unfair or Deceptive Acts or Practices under Section 5 of the Federal 
Trade Commission Act (March 11, 2004).
---------------------------------------------------------------------------

    Section 328.102 also sets forth a bright-line rule for when the 
FDIC will presume a misrepresentation to have been knowingly made 
(i.e., when a respondent continues to make representations about 
deposit insurance after having been advised by a governmental or 
regulatory authority that such representations are false or 
misleading). This bright-line rule is not, however, intended to be the 
exclusive manner in which the FDIC can establish that any 
misrepresentation was knowingly made, and the agency reserves the right 
to establish this statutory element by introducing other evidence.

Section 328.103--Inquiries and Complaints

    Section 328.103 provides a process by which members of the public 
may submit complaints to the FDIC regarding suspected false or 
misleading representations about deposit insurance. It also directs 
members of the public to the agency's existing resources to submit 
inquiries about representations

[[Page 24772]]

regarding deposit insurance to the FDIC's Information and Support 
Center.
    The FDIC believes that having a specified point-of-contact for 
depositors and prospective depositors who may have questions about 
deposit insurance coverage will be of particular value to the public 
given the increasing volume of communication and advertising relating 
to financial products that members of the public receive over various 
media, including social media and electronic communication. This 
process represents a continuation of the Information and Support 
Center's role of aiding the FDIC's mission of ensuring and promoting 
the stability and confidence of the banking system by responding to 
inquiries from the public.

Section 328.104--Investigation

    Section 328.104 sets forth procedures for formal investigations 
into potential violations of Section 18(a)(4). Among other things, the 
section delegates authority to the FDIC's General Counsel to 
investigate potential violations and provides that such investigations 
will be conducted in accordance with section 10(c) of the Federal 
Deposit Insurance Act \10\ and the FDIC's rules governing 
investigations, which are found in subpart K of the FDIC's Rules of 
Practice and Procedure.\11\ Section 328.104 further provides that, 
notwithstanding the longstanding confidentiality provisions found in 12 
CFR 308.147, in those limited circumstances where there is risk of 
imminent harm to consumers or depositors, the FDIC may disclose the 
existence of an investigation under this part that does not involve a 
bank or a known IAP of a bank. This disclosure authorization, which is 
a departure from the general practice of maintaining the 
confidentiality of investigations, is intended to further the FDIC's 
mission of promoting confidence and stability in the banking system by 
allowing it to disclose investigations into potentially false or 
misleading representations about deposit insurance where there is a 
risk of imminent harm to consumers or depositors.
---------------------------------------------------------------------------

    \10\ 12 U.S.C. 1820(c).
    \11\ 12 CFR 308.144-150.
---------------------------------------------------------------------------

Section 328.105--Referral to Appropriate Authority

    Section 328.105 sets forth circumstances under which the FDIC may 
notify other authorities of potential violations of law that it becomes 
aware of in connection with a complaint, inquiry, investigation or 
action under this subpart.
    Section 328.105 provides that the FDIC may recommend that another 
appropriate Federal banking agency take action to enforce Section 
18(a)(4) against an IDI that is subject to the authority of that 
appropriate Federal banking agency or an IAP of such an institution. 
Such recommendations are authorized by Section 18(a)(4), which also 
provides that if the appropriate Federal banking agency fails to take 
action within 30 days, the FDIC may take enforcement action.
    Section 328.105 further provides that, in the event the FDIC 
becomes aware of conduct that potentially violates laws or regulations 
within the jurisdiction of another regulatory authority, the FDIC may 
take steps to notify the appropriate authority.
    Section 328.105 also provides that, in the event the FDIC becomes 
aware of conduct that potentially constitutes a criminal violation of 
18 U.S.C. 709, the FDIC may, in appropriate circumstances, notify the 
FDIC Office of the Inspector General or the appropriate criminal law 
authority.
    Finally, Sec.  328.105 contains provisions governing the provision 
of any records to other regulatory or criminal authorities in 
connection with notice under the section.

Section 328.106--Informal Resolution

    Historically, the FDIC has generally resolved apparent violations 
of Section 18(a)(4) informally by notifying the party responsible and 
requesting that the apparent false or misleading representation be 
withdrawn and corrected. Section 328.106 sets forth the process the 
FDIC will follow when pursuing an informal resolution. Under this 
process, the FDIC will generally send any person that appears to be 
making a false or misleading representation, or any person aiding or 
abetting such a representation, an advisory letter notifying the person 
of the basis for the FDIC's concerns and requesting corrective action. 
Such letters will also provide the recipient the opportunity to provide 
the FDIC with supplemental information if the recipient contends that 
the representations made are true and not misleading and/or that any 
use of the FDIC's name or logo is authorized.
    Examples of the general form such advisory letters may take may be 
found on the FDIC's public website at https://www.fdic.gov/regulations/laws/federal/2021/template-advisory-letters.pdf. Form A-1 provides a 
template advisory letter for communicating directly with a person that 
is believed to be misusing the FDIC's name or logo or making false or 
misleading representations about deposit insurance. Form A-2 provides a 
template advisory letter for communications directed to a third-party 
publisher that may be disseminating potentially false or misleading 
representations regarding deposit insurance. Form A-3 provides a 
template for communications with internet service providers (ISPs), 
alerting them that a website hosted by the ISP may be making false 
representations in violation of Section 18(a)(4).
    Generally, the FDIC will only send such advisory letters to an ISP 
if the website in question contains one or more indicia of fraud. Such 
indicia would include, among other things, evidence that: (1) The 
website purports to belong to or be associated with an IDI when the IDI 
disclaims any ownership or association with the website; (2) the 
website appears to mirror or look like a valid website maintained by an 
IDI by spoofing or copying photos or pages from the IDI's website in an 
attempt to deceive depositors into believing that the website belongs 
to or is associated with the IDI; (3) the website purports to belong to 
an IDI, when no such IDI exists; or (4) there are geographic or other 
inconsistencies on the site (e.g., the website is hosted abroad or the 
contact information reflected on the site does not match those on file 
with the FDIC).
    Section 328.106 further provides that if the recipient of such a 
letter takes the requested corrective action within the time requested, 
the FDIC will generally take no further action. However, if the 
recipient fails to timely take corrective action, the FDIC may pursue 
all remedies available to it. Additionally, pursuant to Sec.  328.106, 
the FDIC may commence formal enforcement action at any time if the FDIC 
has reason to believe that depositors or IDIs may suffer harm as a 
result of continued conduct or if the person making the false or 
misleading representation has been previously advised of the agency's 
concerns.

Section 328.107--Formal Enforcement Action

    Section 328.107 sets forth the procedures that will govern any 
formal enforcement action brought by the FDIC to enforce the provisions 
of Section 18(a)(4). Under Sec.  328.107, and as authorized by Section 
18(a)(4), the FDIC may bring formal actions to enforce Section 18(a)(4) 
under section 8 of the Federal Deposit Insurance Act (Section 8) \12\ 
against any person in the same

[[Page 24773]]

manner and to the same extent that it can bring such actions against 
insured state nonmember banks and their IAPs.
---------------------------------------------------------------------------

    \12\ 12 U.S.C. 1818. Specifically, the FDIC is authorized to 
pursue actions under Section 8(b), (c), (d), or (i) to enforce the 
provisions of Section 18(a)(4).
---------------------------------------------------------------------------

    Section 328.107 authorizes the FDIC General Counsel to bring an 
action against any person to enforce the provisions of Section 
18(a)(4); however, it provides that in the case of an IDI for which 
another Federal banking agency is the appropriate Federal banking 
agency, the General Counsel can only commence an action if the 
appropriate Federal banking agency fails to take action after receiving 
a recommendation pursuant to Sec.  328.105. It further provides that 
administrative proceedings brought to enforce Section 18(a)(4) will be 
governed by the FDIC's Rules of Practice and Procedure set forth in 
Part 308 of the FDIC's Regulations.
    Section 328.107 also sets forth the venue for formal enforcement 
actions. In the case of actions against IDIs or IAPs, venue will be in 
the federal judicial district where the home office of the IDI is 
located. This is consistent with the venue provisions of Section 8. In 
actions that do not involve IDIs or IAPs, venue will be based on the 
residence of the respondent, similar to the manner in which venue is 
determined for general civil actions under 29 U.S.C 1391. The FDIC 
believes these venue provisions are consistent with existing law and 
due process.

Section 328.108--Appeals Process

    Section 328.108 clarifies that any order issued after hearings 
conducted pursuant to this subpart is subject to judicial review to the 
same extent as any other order issued under Section 8. While Section 
18(a)(4) does not expressly provide for judicial review, it does 
authorize enforcement actions under Section 8, which provides for such 
review. The FDIC believes that this grant of authority includes the 
right to seek judicial review and further believes such right is 
necessary and appropriate. Section 328.108 also provides that any 
petitions for judicial review may be filed in the court of appeals for 
the federal circuit where the hearing was held or the United States 
Court of Appeals for the District of Columbia Circuit. This venue 
provision is consistent with the venue provisions of Section 8 and 
provides respondents with the same choice of venue provided after any 
other FDIC enforcement hearing.

IV. Expected Effects

    The proposed rule, if adopted, would primarily affect non-bank 
entities and individuals who are potentially misusing the FDIC's name 
or logo or are making false or misleading representations about deposit 
insurance. The FDIC currently insures 5,042 depository institutions 
\13\ that could also be affected; however in practice, the proposed 
rule would primarily affect non-bank entities and private individuals. 
Since the adoption of Section 18(a)(4) in 2008, the FDIC has issued 
only one formal enforcement order against a non-bank entity for misuse 
of the FDIC's name or logo or for misrepresentations or false 
advertising in relation to deposit insurance. However, as previously 
noted the FDIC has observed a recent 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 that would falsely suggest to the public that these 
providers' products are FDIC-insured and been subject to an informal 
resolution. Between January 1, 2019, and December 31, 2020, the FDIC 
has worked with non-bank entities to reach informal resolutions 
regarding the potential misuse of the FDIC's name or logo and/or 
misrepresentations relation to deposit insurance in at least 165 
instances.\14\ Based on this experience, the FDIC estimates that the 
proposed rule, if adopted, would apply to relatively few formal 
enforcement actions and conservatively estimates that it would affect 
fewer than 165 informal resolutions with non-bank entities and 
individuals each year.
---------------------------------------------------------------------------

    \13\ FDIC Call Report data, September 30, 2020.
    \14\ See FDIC 2019 Annual Report, p. 38; FDIC 2020 Annual 
Report, p. 47.
---------------------------------------------------------------------------

    As discussed previously, the proposed rule, if adopted, would 
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. 
Further 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 the proposed rule, if adopted, would be unlikely to 
have any significant effect on formal and informal enforcement of the 
Section 18(a)(4) prohibitions.
    The FDIC believes that the proposed rule, if adopted, would benefit 
FDIC-insured institutions and members of the public by further 
clarifying what constitutes a violation of Section 18(a)(4), by 
creating a process by which institutions and members of the public can 
report suspected instances of false advertising, misuse, or 
misrepresentation regarding deposit insurance, and by establishing 
clear procedures by which the FDIC will investigate and, where 
necessary, formally and informally resolve potential violations of 
Section 18(a)(4). Specifically, the added transparency on the FDIC's 
processes for investigating potential instances of misuse or 
misrepresentation and, if needed, resolution are expected to benefit 
the parties involved by establishing a common understanding of those 
processes.

V. Alternatives

    The FDIC has considered alternatives to the rule but believes that 
adopting subpart B to part 328 represents the most appropriate option. 
As discussed previously, Section 18(a)(4) establishes prohibitions 
against the misuse of the FDIC's name or logo and prohibits 
misrepresentations and false advertising in relation to deposit 
insurance. The FDIC considered the status quo alternative of not 
adopting a regulation that further clarifies what constitutes misuse of 
FDIC name or logo or false or misleading representation with respect to 
FDIC insurance, how the FDIC will identify and investigate suspected 
instances of misuse or misrepresentation, and the process by which the 
FDIC will pursue formal or informal resolution of instances of misuse 
or misrepresentation. However, based on the FDIC's recent experience 
addressing instances of potential and actual misuse, misrepresentation, 
and false advertising in relation to the FDIC name and logo, the FDIC 
believes that the proposed rule is the most appropriate action.

VI. Request for Comments

    The FDIC invites comments on all aspects of this proposed 
rulemaking. In particular, the FDIC seeks feedback on the scope of the 
proposed rule and the procedures described therein, including the 
following specific questions:

False Advertising, Misuse of Logo, and Misrepresentations

    1. Please describe the extent to which the proposed rule 
sufficiently identifies situations that present potential risks related 
to false or misleading representations regarding deposit insurance 
coverage and the misuse of the FDIC's name or logo, including those 
related to specific products and advertising channels. If there are 
additional types of false or misleading representations about deposit 
insurance coverage that may not be effectively captured by the rule, 
please describe them.
    2. Please describe the extent to which the proposed rule 
sufficiently addresses

[[Page 24774]]

false or misleading representations regarding deposit insurance and the 
misuse of the FDIC's name and logo. If there are additional or 
alternative ways to more effectively or efficiently address such 
misrepresentations and/or misuse, please describe them.
    3. Please describe any suggested additions to the proposed rule for 
preventing and addressing the risks of false or misleading 
representations regarding deposit insurance and/or the misuse of the 
FDIC's name and logo.

Procedures for Investigations, Informal Resolution, and Formal 
Enforcement Actions

    4. Are the proposed complaint and inquiry procedures sufficiently 
clear about how business entities and members of the public may contact 
the FDIC if they have questions or concerns relating to potentially 
false or misleading representations regarding deposit insurance or 
misuse of the FDIC's name and logo? Are there other types of procedures 
the FDIC should consider? If so, please describe them.
    5. Are there other alternative, effective, and efficient methods by 
which a customer can ensure that a third-party's representations 
regarding deposit insurance are true and accurate? If so, please 
describe them.
    6. Is the proposed informal resolution process an adequate means of 
addressing, in the first instance in most circumstances, potentially 
false or misleading representations regarding deposit insurance or 
misuse of the FDIC's name and logo? Should the FDIC consider other or 
additional procedures? If so, please describe them.
    7. The proposed rule contains a provision that would permit the 
FDIC, in those limited circumstances where there is risk of imminent 
harm to consumers or depositors, to confirm the existence of a formal 
investigation, so long as the target of the investigation was not an 
IDI or a known IAP thereof. This provision would be an exception to the 
longstanding confidentiality provisions found in 12 CFR 308.147. Is 
such an exception appropriate? Does the proposed rule strike an 
appropriate balance between the need to maintain the confidentiality of 
investigations involving IDIs and known IAPs, versus the potential 
value in identifying the existence of investigations into non-bank 
persons and entities whose conduct may result in risk of imminent harm 
to consumers and depositors? Are there alternatives the FDIC should 
consider? If so, please describe them.
    8. Is the formal enforcement action process sufficiently clear, 
given that Section 18(a)(4) expressly references the use of established 
enforcement mechanisms set forth in Section 8 of the FDI Act? Should 
other provisions be added? If so, please describe them.
    9. Do the investigation, informal resolution, and formal 
enforcement action processes described in the proposed rule strike the 
appropriate balance between addressing in a timely manner potentially 
false or misleading representations regarding deposit insurance and 
allowing the parties identified as potentially participating in the 
false or misleading representations an opportunity to present 
additional facts or provide a legal defense?

Other Areas of Concern

    10. Upon entering into a relationship or arrangement with a third-
party non-bank entity, as part of FDIC-insured institutions' due 
diligence, do such institutions currently take steps to ensure: (a) 
That the non-bank is aware of existing laws and regulations related to 
the use of the FDIC's name and logo, and (b) that representations made 
by the non-bank regarding the insured status of bank products are 
accurate and comply with existing laws and regulations? If not, are 
there practices that FDIC-insured institutions could adopt to spread 
awareness of and compliance with these laws and regulations by non-
banks?
    11. Are there other topics or issues relating to false or 
misleading representations regarding deposit insurance or the misuse of 
the FDIC's name and logo that the FDIC should consider? If so, please 
describe them and how you think the FDIC should address those topics 
and issues.
    Written comments must be received by the FDIC no later than July 9, 
2021.

VII. Administrative Law Matters

A. The Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), requires that, in connection 
with a notice of proposed rulemaking, an agency prepare and make 
available for public comment an initial regulatory flexibility analysis 
that describes the impact of the proposed rule on small entities.\15\ 
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, and publishes its 
certification and a short explanatory statement in the Federal Register 
together with the rule. The Small Business Administration (SBA) has 
defined ``small entities'' to include banking organizations with total 
assets of less than or equal to $600 million.\16\ 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 provided below, the 
FDIC certifies that the proposed rule, if adopted in final form, would 
not have a significant economic impact on a substantial number of small 
banking organizations. Accordingly, a regulatory flexibility analysis 
is not required.
---------------------------------------------------------------------------

    \15\ 5 U.S.C. 601, et seq.
    \16\ The SBA defines a small banking organization as having $600 
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 84 FR 34261, effective August 19, 2019). ``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 of September 30, 2020, the FDIC insured 5,042 depository 
institutions, of which 3,585 are considered small banking organizations 
for the purposes of RFA.\17\ Potential instances of misuse or 
misrepresentation of the FDIC name or logo by IDIs are usually 
addressed under the normal supervisory authority of the appropriate 
federal financial regulator, therefore although the proposed rule could 
affect IDIs, in practice the proposed rule would primarily affect non-
bank entities and private individuals. Private individuals are not 
considered ``small entities'' by the terms of the RFA.\18\
---------------------------------------------------------------------------

    \17\ FDIC Call Report data, September 30, 2020.
    \18\ How to Comply with the Regulatory Flexibility Act, August 
2017, The U.S. Small Business Administration, Office of Advocacy, 
https://cdn.advocacy.sba.gov/wp-content/uploads/2019/06/21110349/How-to-Comply-with-the-RFA.pdf.
---------------------------------------------------------------------------

    Based on the information above, 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 
rule have any significant effects on small entities that the FDIC has 
not identified?

B. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \19\ requires the federal 
banking agencies to use plain language in all proposed and final rules

[[Page 24775]]

published after January 1, 2000. The FDIC has sought to present the 
proposed rule in a simple and straightforward manner. The FDIC invites 
comments on whether the proposal is clearly stated and effectively 
organized, and how the FDIC might make the proposal easier to 
understand.
---------------------------------------------------------------------------

    \19\ Public Law 106-102, section 722, 113 Stat. 1338, 1471 
(1999).
---------------------------------------------------------------------------

C. The Economic Growth and Regulatory Paperwork Reduction Act

    Under section 2222 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (EGRPRA), the FDIC is required to review all of 
its regulations, at least once every 10 years, in order to identify any 
outdated or otherwise unnecessary regulations imposed on insured 
institutions.\20\
---------------------------------------------------------------------------

    \20\ Public Law 104-208, 110 Stat. 3009 (1996).
---------------------------------------------------------------------------

D. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (RCDRIA),\21\ in determining the effective 
date and administrative compliance requirements for new regulations 
that impose additional reporting, disclosure, or other requirements on 
IDIs, each Federal banking agency must consider, consistent with 
principles of safety and soundness and the public interest, any 
administrative burdens that the regulations would place on depository 
institutions, including small depository institutions, and customers of 
depository institutions, as well as the benefits of the regulations. In 
addition, section 302(b) of RCDRIA requires new regulations and 
amendments to regulations that impose additional reporting, 
disclosures, or other new requirements on IDIs generally to take effect 
on the first day of a calendar quarter that begins on or after the date 
on which the regulations are published in final form.\22\ The FDIC 
invites comments that further will inform its consideration of RCDRIA.
---------------------------------------------------------------------------

    \21\ 12 U.S.C. 4802(a).
    \22\ Id.
---------------------------------------------------------------------------

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:

0
1. Revise the heading for part 328 to read as follows:

PART 328--ADVERTISEMENT OF MEMBERSHIP, FALSE ADVERTISING, 
MISREPRESENTATION OF INSURED STATUS, AND MISUSE OF THE FDIC'S NAME 
OR LOGO

0
2. Revise the authority citation for part 328 to read as follows:

    Authority: 12 U.S.C. 1818, 1819 (Tenth), 1820(c), 1828(a).

0
3. Add new subpart A of part 328 entitled ``Subpart A--Advertisement of 
Membership.''
0
4. Redesignate Sec. Sec.  328.0 through 328.4 as subpart A of part 328.
0
5. Reserve Sec. Sec.  328.5 through 328.99.
0
6. Add a new part 328, subpart B to read as follows:

Subpart B--False Advertising, Misrepresentation of Insured Status, 
and Misuse of the FDIC's Name or Logo.

Sec.
328.100 Scope
328.101 Definitions
328.102 Prohibition
328.103 Inquiries and Complaints
328.104 Investigations of Potential Violations
328.105 Referral to Appropriate Authority
328.106 Informal Resolution
328.107 Formal Enforcement Actions
328.108 Appeals Process

Subpart B--False Advertising, Misrepresentation of Insured Status, 
and Misuse of the FDIC's Name or Logo


Sec.  328.100  Scope.

    This Subpart applies to any person who: (1) Falsely represents, 
expressly or by implication, that any deposit liability, obligation, 
certificate, or share is FDIC-insured by using the FDIC's name or logo; 
(2) knowingly misrepresents, expressly or by implication, that any 
deposit liability, obligation, certificate, or share is insured by the 
FDIC if such an item is not so insured; (3) knowingly misrepresents, 
expressly or by implication, the extent to which or the manner in which 
any deposit liability, obligation, certificate, or share is insured by 
the FDIC, if such an item is not insured to the extent or manner 
represented; or (4) aid or abets another in any of the foregoing.


Sec.  328.101  Definitions.

    For purposes of this subpart:
    (a) Advertisement means a commercial message, in any medium, that 
is designed to attract public attention or patronage to a product, 
business, or service.
    (b) Appropriate Federal Banking Agency has the meaning set forth in 
section 3(q) of the FDIC (12 U.S.C. 1813(q)).
    (c) FDIA means the Federal Deposit Insurance Act, 12 U.S.C. 1811 et 
seq.
    (d) FDIC means the Federal Deposit Insurance Corporation.
    (e) 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 12 CFR 328.1; the Official Advertising 
Statement, as set forth in 12 CFR 328.3(b); 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 by 
the FDIC.
    (f) FDIC-Associated Terms means the abbreviation, ``FDIC,'' and the 
following words or phrases: ``Federal Deposit Insurance Corporation,'' 
``Federal Deposit,'' ``Federal Deposit Insurance,'' ``FDIC-insured,'' 
``FDIC insurance,'' ``insured by FDIC,'' ``member FDIC;'' any similar 
words or phrases; or any other terms that may represent or imply that 
any deposit, liability, obligation certificate, or share is insured or 
guaranteed by the FDIC.
    (g) Federal Banking Agency has the meaning set forth in section 
3(z) of the FDIC (12 U.S.C. 1813(z)).
    (h) General Counsel means the General Counsel of the FDIC or his or 
her designee.
    (i) Hybrid Product has the same meaning as set forth under 12 CFR 
328.3(e)(1)(ii).
    (j) Institution-Affiliated Party (IAP) has the same meaning as set 
forth under section 3(u) of the FDIA, 12 U.S.C. 1813(u).
    (k) Insured Deposit has the same meaning as set forth under section 
3(m) of the FDIA, 12 U.S.C. 1813(m).
    (l) Insured Depository Institution has the same meaning as set 
forth under section 3(c)(2) of the FDIA, 12 U.S.C. 1813(c)(2).
    (m) Non-Deposit Product has the same meaning as set forth under 12 
CFR 328.3(e)(1)(i).
    (n) Person means a natural person, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, agency or other entity, association, or organization, 
including a Regulated Institution as defined in paragraph (o) of this 
section.
    (o) Regulated Institution means any institution for which the FDIC, 
the Office of the Comptroller of the Currency, or the Board of 
Governors of the Federal Reserve System is the ``appropriate Federal 
banking agency'' under section 3(q) of the FDIA, 12 U.S.C. 1813(q).

[[Page 24776]]

    (p) Third-Party Publisher means any party that publishes, places, 
distributes, or circulates advertising or marketing materials, 
regardless of the platform or media used for distribution, containing 
FDIC-Associated Images, FDIC-Associated Terms, or other claims 
regarding FDIC insurance or guarantees. Third-Party Publishers shall 
include, but not be limited to: Publishers and distributors of written, 
visual, or print advertising; broadcasters of video or audio 
advertisements; telemarketers; internet or web-based distributors, 
including internet service providers, and email marketers; and direct 
mail marketers and distributors.
    (q) Uninsured Financial Product means any Non-Deposit Product, 
Hybrid-Product, investment, security, obligation, certificate, share, 
or financial product other than an ``Insured Deposit'' as defined in 
paragraph (k) of this section.


Sec.  328.102  Prohibition.

    (a) Use of the FDIC Name or Logo.
    (1) No person may represent or imply that any Uninsured Financial 
Product is insured or guaranteed by the FDIC by using FDIC-Associated 
Terms as part of any business name or firm name of any person;
    (2) No person may represent or imply that any Uninsured Financial 
Product is insured or guaranteed by the FDIC by using FDIC-Associated 
Terms or by using FDIC-Associated Images as part of an Advertisement, 
solicitation, or other publication or dissemination.
    (3) This subsection applies, but is not limited, to:
    (i) An Advertisement for any Uninsured Financial Product which 
feature or include one or more FDIC-Associated Terms or FDIC-Associated 
Images, without a clear, conspicuous, and prominent disclaimer that the 
products being offered are not FDIC insured or guaranteed;
    (ii) An Advertisement for any Uninsured Financial Product which may 
be backed or guaranteed by an entity other that the FDIC, but which 
feature or include one or more FDIC-Associated Terms or FDIC-Associated 
Images, without a clear, conspicuous, prominent, and accurate 
explanation as to the actual nature and source of the guarantee;
    (iii) An Advertisement for any Non-Deposit Product or Hybrid 
Product by a Regulated Institution which include any statement or 
symbol which implies or suggests the existence of Federal deposit 
insurance relating to the Non-Deposit product or Hybrid Product;
    (iv) Publication or dissemination of information, regardless of the 
media or platform, that suggests or implies that the party making the 
representation is an FDIC-insured institution if this is not in fact 
true.
    (v) Publication or dissemination of information, regardless of the 
media or platform, that suggests or implies that the party making the 
representation is associated with an FDIC-insured institution if the 
nature of the association is not clearly, conspicuously, prominently, 
and accurately described.
    (vi) Publication or dissemination of information, regardless of the 
media or platform, that suggests or implies that the party making the 
representation is the FDIC or any office, division, or subdivision 
thereof, if this is not in fact true.
    (vii) Publication or dissemination of information, regardless of 
the media or platform, that suggests or implies that the party making 
the representation is associated with the FDIC or any office, division, 
or subdivision thereof, if the nature of the association is not 
clearly, conspicuously, prominently, and accurately described.
    (b) False or Misleading Representations regarding FDIC Insurance.
    (1) No person may knowingly make false or misleading 
representations about deposit insurance, including:
    (i) That any deposit liability, obligation, certificate, or share 
is insured, under this subpart, if such a deposit is not so insured;
    (ii) the extent to which any deposit liability, obligation, 
certificate, or share is insured under this subpart, if such item is 
not insured to the extent represented; or
    (iii) the manner in which any deposit liability, obligation, 
certificate, or share is insured under this subpart, if such item is 
not insured in the manner represented.
    (2) For the purposes of this subsection, a statement is deemed to 
be a statement regarding deposit insurance, if it:
    (i) Includes any FDIC-Associated Images or FDIC-Associated Terms;
    (ii) makes any representation, suggestion, or implication about the 
existence of FDIC insurance or the extent or manner of coverage; or
    (iii) makes any representation, suggestion, or implication about 
the existence, extent, or effectiveness of any guarantee by FDIC in the 
event of financial distress by Insured Depository Institutions, whether 
a specific Insured Depository Institution or Insured Depository 
Institutions generally, including but not limited to bank failure, 
insolvency, or receivership of such institutions.
    (3) For the purposes of this subsection, a statement regarding 
deposit insurance violates this section, if:
    (i) The statement contains any material representations which would 
have the tendency or capacity to mislead a reasonable consumer, 
regardless of whether any such consumer was actually misled; or
    (ii) the statement omits material information which would be 
necessary to prevent a reasonable consumer from being misled, 
regardless of whether any such consumer was actually misled. Where such 
a statement is made by a person other than an Insured Depository 
Institution, failure to identify the name(s) of the Insured Depository 
Institution(s) that will be receiving the deposits is deemed a material 
omission.
    (4) Without limitation, a false or misleading representation is 
deemed to be material if it states, suggests or implies that:
    (i) Uninsured Financial Products are insured or guaranteed by the 
FDIC;
    (ii) Insured Deposits (whether generally or at a particular 
Regulated Institution) are not insured or guaranteed by the FDIC;
    (iii) the amount of deposit insurance coverage is different 
(whether greater or less) than actually provided under the FDIA;
    (iv) the circumstances under which deposit insurance may be paid 
are different than actually provided under the FDIA;
    (v) the requirements to qualify for deposit insurance, or the 
process by which deposit insurance would be paid, are different from 
what is provided under the FDIA and its implementing regulations, 
including false or misleading claims related to actions required of 
depositors to qualify for or obtain such insurance; or
    (vi) Regulated Institutions may convert Insured Deposits into 
another form of liability that is not insured, such as unsecured debt 
or equity.
    (5) Without limitation, a representation is deemed to have been 
knowingly made if the person making the representation:
    (i) Has made false or misleading representations regarding deposit 
insurance;
    (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 U.S. 
Department of Justice, or a state bank

[[Page 24777]]

supervisor, that such representations are false or misleading; and
    (iii) thereafter, continues to make these, or substantially-
similar, representations.


Sec.  328.103  Inquiries and Complaints.

    Should any person have reason to believe that anyone is or may be 
acting in violation of section 18(a) of the FDIA (12 U.S.C. 1828(a)) or 
this subpart, or have questions regarding the accuracy of deposit-
related representations, such individuals may contact the FDIC at the 
FDIC Information and Support Center, https://ask.fdic.gov/fdicinformationandsupportcenter/s/, or by telephone at: 1-877-275-3342 
(1-877-ASK-FDIC).


Sec.  328.104  Investigations of Potential Violations.

    (a) The General Counsel shall have delegated authority to 
investigate potential violations of section 18(a) of the FDIA (12 
U.S.C. 1828(a)) and this subpart.
    (b) Such investigations will be conducted as prescribed under 
section 10(c) of the FDIA (12 U.S.C. 1820(c)) and subpart K of part 308 
of the FDIC's Rules of Practice and Procedure (12 CFR 308.144-150). 
Notwithstanding the general confidentiality provisions of 12 CFR 
308.147, in cases which may pose a risk of imminent harm to consumers 
or depositors, the FDIC may disclose or confirm the existence of an 
investigation that does not involve an Insured Depository Institution 
or a known IAP thereof. Such disclosure shall not disclose any 
information obtained or uncovered during the course of the 
investigation.


Sec.  328.105  Referral to Appropriate Authority.

    (a) If, in connection with the receipt of an inquiry or complaint, 
or during the course of an investigation, informal resolution, or 
formal enforcement under this subpart:
    (1) The FDIC becomes aware of conduct by a Regulated Institution 
for which another Federal banking agency is the appropriate Federal 
banking agency or an Institution-Affiliated Party of such an 
institution, that appears to violate section 18(a) of the FDIA (12 
U.S.C. 1828(a)), the FDIC may recommend that the appropriate Federal 
banking agency take appropriate enforcement action. If the appropriate 
Federal banking agency does not take the recommended action within 30 
days, the FDIC may pursue any and all remedies available under section 
18(a) or the FDIA (12 U.S.C. 1828(a)) and this subpart;
    (2) the FDIC becomes aware of conduct that the FDIC has reason to 
believe violates a civil law or regulations within the jurisdiction of 
another regulatory authority, the FDIC may take steps to notify the 
appropriate authority; and
    (3) the FDIC becomes aware of conduct that the FDIC has reason to 
believe violates 18 U.S.C. 709, the FDIC may notify FDIC's Office of 
Inspector General for referral to the appropriate criminal law 
enforcement authority.
    (b) To the extent that any records are provided to a regulatory or 
criminal law enforcement authority, as set forth in paragraph (a), of 
this section, the provision of such records will be made in accordance 
with the requirements of part 309. Where such records were obtained 
during the course of an investigation, informal resolution, or formal 
enforcement action, the General Counsel shall be considered the 
Director of the Corporation's Division having primary authority over 
records so obtained.


Sec.  328.106  Informal Resolution.

    (a) If the FDIC has reason to believe that any person may be 
misusing an FDIC-associated image or FDIC-associated term or otherwise 
violating Sec.  328.102(a), or may be making false or misleading 
representations regarding deposit insurance in violation of Sec.  
328.102(b), the FDIC may issue an advisory letter to such a person and/
or any person who aids or abets another in such conduct, including any 
Third-Party Publisher. Generally, such an advisory letter will:
    (1) Alert the recipient of advisory letter of the basis for the 
FDIC's concerns;
    (2) Request that the person and/or Third-Party Publisher:
    (i) Take reasonable steps to prevent any violations of section 
18(a) of the FDIA (12 U.S.C. 1828(a)) and this subpart;
    (ii) commit in writing to refrain from such violations in the 
future; and
    (iii) notify the FDIC in writing that the identified concerns have 
been fully addressed and remediated; and
    (3) Offer the person or Third-Party Publisher the opportunity to 
provide additional information, documentation, or justifications to 
substantiate the representations made or otherwise refute the FDIC's 
expressed concerns.
    (b) Except in cases where the FDIC has reason to believe that 
consumers or Insured Depository Institutions may suffer harm arising 
from continued violations, recipients of advisory letters described in 
paragraph (a) of this section, shall be provided not less than fifteen 
(15) days to provide the requested commitment, explanation, or 
justification.
    (c) Where a recipient of an advisory letter described in paragraph 
(a) of this section, provides the FDIC with the requested written 
commitments within the timeframe specified in the letter, and where any 
required remediation has been verified by FDIC staff, the FDIC will 
generally take no further administrative enforcement against such a 
party under Sec.  328.107.
    (d) Where a recipient of an advisory letter described in paragraph 
(a) of this section, fails to respond to the letter; fails to make the 
requested commitments; or fails to provide additional information, 
documentation, or justifications that the FDIC, in its discretion, 
finds adequate to substantiate the representations made or otherwise 
refute the concerns set forth in the advisory letter, the FDIC may 
pursue all remedies set forth in this subpart.
    (e) Nothing in this section shall prevent the FDIC from commencing 
a formal enforcement action under Sec.  328.107 at any time before or 
after the issuance of an advisory letter under this section if:
    (1) The FDIC has reason to believe that consumers or Insured 
Depository Institutions may suffer harm arising from continued 
violations; or
    (2) the person to whom such an advisory letter would be sent has 
previously received a similar advisory letter from the FDIC under Sec.  
328.106(a).


Sec.  328.107  Formal Enforcement Actions.

    (a) Enforcement Authority--For the purpose of enforcing the 
requirements of Section 18(a)(4) of the FDIA (12 U.S.C. 1818(a)(4)), 
the General Counsel is authorized to bring administrative enforcement 
actions against any person under sections 8(b), (c), (d), and (i) of 
the FDIA (12 U.S.C. 1818(b), 1818(c), 1818(d), and 1818(i)), in the 
same manner and to the same extent as with respect to a state nonmember 
insured bank. In the case of conduct by a Regulated Institution for 
which another Federal banking agency is the appropriate Federal banking 
agency or an institution-affiliated party of such an institution, the 
General Counsel may not bring an enforcement action under this subpart 
unless the FDIC has provided the appropriate Federal banking agency 
with notice as set forth in section 105(a)(1) of this subpart and the 
appropriate Federal banking agency failed to take the recommended 
action.
    (b) Venue--Unless the person who is the subject of the enforcement 
action consents to a different location, the venue for an 
administrative action

[[Page 24778]]

commenced under Section 18(a)(4) of the FDIA (12 U.S.C. 1818(a)(4)), 
shall be as follows:
    (1) In a case where the person who is the subject of the action is 
an Insured Depository Institution or an IAP of an Insured Depository 
Institution, in the federal judicial district or territory in which the 
home office of the Insured Depository Institution is located;
    (2) In a case where the person who is the subject of the action is 
not an Insured Depository Institution or an IAP of an Insured 
Depository Institution, the federal judicial district or territory 
where the person who is the subject of the action resides, if the 
subject resides in the United States. If the subject of the action does 
not reside in the United States, the venue shall be where the subject 
of the action conducts business or the federal judicial district for 
the District of Columbia.
    (3) For the purposes of paragraph (1) of this section, a natural 
person is deemed to reside in the federal judicial district where the 
natural person is domiciled. A person other than a natural person is 
deemed to reside in the federal judicial district where it is 
headquartered or has its principal place of business.
    (c) Rules of Practice and Procedure. All actions brought and 
maintained under this section will be subject to the FDIC's Rules of 
Practice and Procedure, Subparts A-C of Part 308 (12 CFR 308.1-
308.109).


Sec.  328.108  Appeals Process.

    (a) A person who is the subject of a final order issued after an 
administrative action commenced pursuant to this subpart may obtain 
judicial review of such order in accordance with the procedures set 
forth in section 8(h)(2) of the FDIA (12 U.S.C. 1818(h)(2)).
    (b) Petitions for review under this section may be filed in the 
court of appeals for the circuit where the hearing was held or the 
United States Court of Appeals for the District of Columbia Circuit.

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on April 21, 2021.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2021-08690 Filed 5-7-21; 8:45 am]
BILLING CODE 6714-01-P