FDIC Official Signs and Advertising Requirements, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC's Name or Logo, 3504-3532 [2023-28629]

Download as PDF 3504 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 328 RIN 3064–AF26 FDIC Official Signs and Advertising Requirements, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo Federal Deposit Insurance Corporation. ACTION: Final rule. AGENCY: The Federal Deposit Insurance Corporation (FDIC) is amending its regulations governing use of the official FDIC sign and insured depository institutions’ (IDIs) advertising statements to reflect how depositors conduct business with IDIs today, including through digital and mobile channels. The final rule also clarifies the FDIC’s regulations regarding misrepresentations of deposit insurance coverage by addressing specific scenarios where consumers may be misled as to whether they are conducting business with an IDI and whether their funds are protected by federal deposit insurance. The final rule is intended to enable consumers to better understand when they are conducting business with an IDI and when their funds are protected by the FDIC’s deposit insurance coverage. DATES: The amendments made in this rule are effective April 1, 2024. Compliance is required by January 1, 2025. SUMMARY: khammond on DSKJM1Z7X2PROD with RULES2 FOR FURTHER INFORMATION CONTACT: Division of Depositor and Consumer Protection: Luke H. Brown, Associate Director, 202–898–3842, LuBrown@ FDIC.gov; Meron Wondwosen, Chief, Supervisory Policy, 202–898–7211, MeWondwosen@FDIC.gov; Edward J. Hof, Senior Policy Analyst, 202–898– 7213, EdwHof@FDIC.gov. Legal Division: Vivek Khare, Counsel, 202– 898–6847, VKhare@fdic.gov; James Watts, Counsel, 202–898–6678, JWatts@ FDIC.gov; Chantal Hernandez, Senior Attorney, 202–898–7388, ChHernandez@fdic.gov. SUPPLEMENTARY INFORMATION: The FDIC is amending part 328 of its regulations, which includes requirements for use of the official FDIC sign and IDIs’ advertising statements, as well as misrepresentations of insured status and misuse of the FDIC’s name or logo. The final rule generally: (1) modernizes and amends the rules governing the display of the official sign in branches to also, for example, apply the rules to IDIs’ VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 physical premises with different layouts and designs where consumers have access to or transact with deposits; (2) establishes and requires the display of the FDIC official digital sign on bank websites, mobile applications, and certain IDI automated teller machines (ATMs) and other like devices; (3) requires the use of disclosures differentiating deposits and non-deposit products across all banking channels, including digital channels; (4) clarifies the FDIC’s rules regarding misrepresentations of deposit insurance coverage by addressing specific scenarios where information provided to consumers may be misleading; (5) amends the definition of ‘‘non-deposit product’’ to include crypto-assets and specifically address safe deposit box services; and (6) requires IDIs to establish and maintain written policies and procedures addressing compliance with part 328. As explained below, the final rule is intended to enable consumers to better understand when they are conducting business with an IDI and when their funds are protected by the FDIC’s deposit insurance coverage. A. Policy Objectives The banking landscape has significantly changed since 2006, when the FDIC last updated its regulation on the official sign and advertising statement. For example, consumers are increasingly relying on internet and mobile banking channels to access IDI banking services, bank branches are continually evolving to serve depositors, and financial technology (fintech) companies are offering consumers new options and alternatives for accessing banking products and services. While these developments are beneficial, they may make it more difficult for depositors and consumers to understand when they are conducting business with an IDI and when their funds are protected by FDIC deposit insurance. In addition, the FDIC has observed an increase in misleading representations about deposit insurance on the internet, which can result in consumer confusion and harm. These types of misleading statements create uncertainty and could dilute and undermine the confidence that underpins banks and our nation’s broader financial system. To address ongoing market and technological developments, the amendments to part 328 are intended to achieve several policy goals. Specifically, the FDIC intends to bring the certainty and confidence historically provided by the FDIC official sign found at banks’ teller windows to IDI digital channels through which depositors are PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 increasingly handling their banking needs today. These channels serve as the digital teller windows of the modern banking landscape, and it is critical that these channels provide clear, consistent, and accurate information about deposit insurance upon which consumers, businesses, and other entities may base their financial decisions. The final rule establishes sign requirements across all banking channels, including evolving digital channels, to better align with how depositors conduct business with IDIs today. The sign requirements are also intended to more clearly distinguish insured deposits from non-deposit products (which are not insured) and to help consumers distinguish IDIs from non-banks in the digital age. The final rule allows consumers, businesses, and other entities to better understand when their funds are protected by FDICs deposit insurance, and when they may not be insured. At the same time, the sign requirements are intended to permit flexibility for IDIs and other firms in the marketing of their products and services. The amendments to the FDIC’s rules regarding misrepresentations of deposit insurance coverage are intended to address specific scenarios where information provided to consumers may be misleading with respect to deposit insurance coverage. In particular, the FDIC is concerned that certain business relationships between IDIs and nonbanks may be confusing to many consumers. Consequently, the final rule requires clear disclosures that will better inform consumers as to when their funds are protected by FDIC deposit insurance. Further clarity in this area will be beneficial for both consumers and the industry. B. Background The FDIC is an independent federal agency and its mission is to maintain stability and public confidence in the nation’s financial system by, among other things, insuring deposits at all IDIs. Today, there are about 4,654 IDIs in the United States.1 Since 1933, the FDIC has taken action in accordance with its mission to restore public confidence in the banking system in times of financial turmoil, including the severe financial crisis of 2008 to 2013, during the financial stress associated with the coronavirus disease 2019 (COVID–19) pandemic, and, most recently, when large regional banks failed in the first half of 2023. The FDIC has proactively sought to protect 1 Call E:\FR\FM\18JAR2.SGM Reports as of June 30, 2023. 18JAR2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations depositors and consumers,2 promote public confidence in insured deposits, and prevent false and misleading representations about the manner and extent of FDIC deposit insurance. khammond on DSKJM1Z7X2PROD with RULES2 Statutory Authority and Regulations Sign and advertising statement requirements for IDIs date back to the Banking Act of 1935 and are now set forth in section 18(a) of the Federal Deposit Insurance Act (FDI Act).3 Section 18(a) grants the FDIC authority to prescribe regulations with respect to these requirements, which are currently contained in subpart A to 12 CFR part 328.4 The FDIC’s official sign and advertising statement regulations require IDIs to continuously display the FDIC official sign where insured deposits are usually and normally received in the bank’s principal place of business and at all of its branches and to use an official advertising statement, such as ‘‘Member FDIC,’’ when advertising deposit products and services, with few exceptions.5 The FDIC last made major amendments to these regulations in 2006.6 The 2006 amendments refer to an IDI’s physical premises and ‘‘Remote Service Facilities’’ but do not specify other banking channels that have since evolved, such as digital banking channels.7 Section 18(a)(4) of the FDI Act prohibits any person from misusing the name or logo of the FDIC or from engaging in false advertising or making knowing misrepresentations about deposit insurance.8 The FDIC has broad 2 As used in this document, the term ‘‘consumer’’ means any current or potential depositor, including natural persons, organizations, corporate entities, and governmental bodies. See 12 CFR 328.101. 3 12 U.S.C. 1828(a)(1). Section 9 of the FDI Act provides the FDIC with the authority to prescribe rules and regulations as it may deem necessary to carry out the provisions of this Act or of any other law which it has the responsibility of administering or enforcing. 12 U.S.C. 1819(a) Tenth. 4 See subpart A to 12 CFR part 328 (§§ 328.0 through 328.5–328.99). 5 See generally, 12 CFR part 328. 6 71 FR 66098 (Nov. 13, 2006). 7 See 12 CFR 328.2. ‘‘Remote Service Facility’’ includes any automated teller machine, cash dispensing machine, point-of-sale terminal, or other remote electronic facility where deposits are received. 12 CFR 328.2(a)(1)(ii). 8 12 U.S.C. 1828(a)(4). Section 18(a)(4) also provides the FDIC independent authority to investigate and take administrative enforcement actions, including the power to issue cease and desist orders and impose civil money penalties, against any person who misuses the FDIC name or logo or makes misrepresentations about deposit insurance. 12 U.S.C. 1828(a)(4)(C)–(D). Furthermore, under Federal law, it is a criminal offense to misuse the FDIC name or make false representations regarding deposit insurance. See 18 U.S.C. 709. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 statutory authority in this area and, in May 2022, issued specific regulations in subpart B to 12 CFR part 328 regarding false representations related to FDIC insurance and the misuse of the FDIC name and logo.9 Developments in Consumer Access to Banking and Financial Services In recent years, there have been significant changes in the provision of banking products and services, including the widespread use of digital banking channels as a critical and fundamental mechanism to access banking and financial services, the evolution of bank branches’ role in serving consumers, and an increasingly broad array of financial products offered through banking channels, including access to non-deposit products. The following overview of these trends is intended to provide context for the final rule, which seeks to enable consumers to better understand when they are conducting business with an IDI and when their funds are protected by the FDIC’s deposit insurance coverage. Many bank branches retain a traditional physical branch footprint, serving depositors primarily at teller windows or stations. According to the FDIC’s 2021 National Survey of Unbanked and Underbanked Households (Household Survey), roughly 63.4 percent of all banked households used a bank teller to access their accounts at least once in the last 12 months, including 57.8 percent of the youngest banked households between the ages of 15 to 24, and 72.2 percent of the oldest banked households aged 65 or older.10 However, IDIs have increasingly begun operating physical premises with different layouts and designs. These locations may include electronically-staffed kiosks, interactive ATMs that provide remote assistance with a teller, and teller-less cafe´s with internet access where deposits can be accepted on tablets or through ATMs. The FDIC’s long-standing sign rules, focused on display of the official sign at teller windows or stations, need to be updated to reflect these market changes 9 87 FR 33415 (June 2, 2022); Subpart B to 12 CFR part 328 (§§ 328.100 through 328.109). Subpart B establishes the process by which the FDIC identifies and investigates conduct that may violate section 18(a)(4), the standards under which such conduct is evaluated, and the procedures the FDIC follows when formally and informally enforcing the provisions of section 18(a)(4). 10 Federal Deposit Insurance Corporation (FDIC), 2021 National Survey of Unbanked and Underbanked Households (October 2022), https:// www.fdic.gov/analysis/household-survey/ 2021report.pdf. PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 3505 and the way banks and consumers conduct business. The FDIC’s long-standing sign rules also do not reflect the digital banking services now offered, such as online banking and mobile banking. For example, digital banking channels enable banks to receive customer deposits through remote deposit capture. For consumers that use these channels to make deposits, an IDI’s ATM, website, or mobile application effectively serves as a digital teller window. The results of the Household Survey show that the proportion of banked households that used mobile banking as their primary method of bank account access increased from 34.0 percent in 2019 to 43.5 percent in 2021.11 The proportion of banked households that used online banking as their primary method of bank account access was similar in 2019 (22.8 percent) and 2021 (22.0 percent).12 Combined, 65.4 percent of banked households in 2021 used mobile or online banking as their primary method of bank account access, up from 56.8 percent in 2019.13 Given that nearly two-thirds of banked households primarily access banking products through phones, computers, and other devices, the FDIC believes it is critical to update its rules and provide consistent sign requirements for digital channels. Banking customers are also offered an increasingly wide array of financial products and services, regardless of whether they are in a branch, using an ATM, or connecting with an IDI through digital channels. In many instances, IDIs offer both deposits and non-deposit products to consumers. For example, IDIs might allow depositors in their branches to consult with an investment adviser and purchase securities or mutual funds. Options to purchase nondeposit products are continuing to evolve, with some IDIs offering ATM or digital banking customers the ability to purchase crypto-assets with their funds. In some cases, an IDI may provide its customers who initially access the IDI’s website, ATM, or banking application the ability to purchase non-deposit products from a third party. Absent adequate signs or disclosures, simultaneous offering of both insured deposits and non-deposit products may lead bank customers (who are aware that the IDI is insured by the FDIC) to mistakenly conclude that all of the financial products being offered through 11 Id. at 25. 12 Id. 13 Id. E:\FR\FM\18JAR2.SGM 18JAR2 3506 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations their bank’s website or application are FDIC-insured. Growth in the number of fintech companies has also blurred the distinction between IDIs and non-banks in the eyes of many consumers, increasing the potential for confusion regarding deposit insurance coverage. Business arrangements between IDIs and non-banks, including fintech companies, can take many forms and continue to evolve at a rapid pace. In some cases, such business arrangements can present the risk of consumer confusion. For example, an IDI and a fintech company might enter into an arrangement where the fintech company offers the IDI’s deposit products and services to the fintech company’s customers. In other instances, fintech companies might deposit their customers’ funds at an IDI. In such cases, the fintech company might represent to its customers that the customers’ funds are FDIC-insured, or that they are insured by the FDIC on a ‘‘pass-through’’ basis, without noting that it is subject to certain conditions. The substantial increase in the number and types of arrangements and the various representations that companies are making regarding deposit insurance coverage may confuse many consumers. For example, inadequate disclosures may result in consumers not understanding whether they are dealing with an IDI, and whether their funds are insured by the FDIC. khammond on DSKJM1Z7X2PROD with RULES2 Industry Outreach—Request for Information In February 2020 and April 2021, the FDIC published Requests for Information (collectively, the RFIs) in the Federal Register to seek public input regarding potential modernization of the official sign and advertising rules to reflect changes in deposit-taking via physical branch, digital, and mobile banking channels.14 In response to the RFIs, the FDIC received 20 comments from trade associations, IDIs, and others.15 In addition, FDIC staff met with representatives from IDIs, a technology service provider, and consumer groups. Commenters generally recognized the importance and value of displaying FDIC signs and the advertising statement, and some commenters stressed that depositors 14 85 FR 18528 (Feb. 26, 2020); 86 FR 18528 (Apr. 9, 2021). 15 Comments to the RFIs can be found on the FDIC’s website, available at: https://www.fdic.gov/ resources/regulations/federal-register-publications/ 2020/2020-rfi-fdic-sign-and-advertisingrequirements-3064-za14.html and https:// www.fdic.gov/resources/regulations/federalregister-publications/2021/2021-rfi-fdic-officialsign-and-advertising-requirements-3064-za14.html. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 place significant trust in FDIC signs. A summary of these comments was provided in the December 2022 Notice of Proposed Rulemaking (NPR or proposal) and the comments were considered as part of this rulemaking process.16 Previous Rulemaking On May 17, 2022, the FDIC issued a final rule adding a new subpart B to 12 CFR part 328.17 The final rule describes: (1) the process by which the FDIC will identify and investigate conduct that may violate the prohibitions against misuse and misrepresentation; (2) the standards under which such conduct will be evaluated; and (3) the procedures that the FDIC will follow when formally and informally enforcing these prohibitions. While this rulemaking was an important step, the FDIC has observed an increase in the number of instances where financial services providers or other entities or individuals have misused the FDIC’s name or logo or have made misrepresentations about FDIC insurance. Although the FDIC demanded that these non-banks cease and desist from making false and misleading statements, such actions by non-banks caused continuing challenges for consumers in determining whether they are conducting business with an IDI and whether their funds are protected by the FDIC’s deposit insurance coverage.18 This final rule will provide further clarification of subpart B to address these challenges, particularly to address specific situations where consumers may be misled as to whether an entity is insured by the FDIC or as to the nature and extent of deposit insurance coverage. December 2022 Proposal and Comments On December 13, 2022, the FDIC Board approved an NPR on the FDIC’s sign and advertising requirements, rules on misrepresentation of insured status, and misuse of the FDIC’s name or logo. The FDIC sought to obtain input from the public for these proposed regulations in light of significant changes to bank branches and their role in serving consumers, the proliferation of digital channels as a critical and fundamental mechanism to access banking and financial services, and an increasingly broad array of financial 16 87 FR 78017, 78020 (Dec. 21, 2022). 17 87 FR 33415 (June 2, 2022). 18 A public list of FDIC cease and desist letters related to violations of section 18(a)(4) of the FDI Act can be found on the FDIC’s website, available at: https://www.fdic.gov/resources/regulations/ laws/section-18a4-of-fdi-act/. PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 products offered through banking channels, including access to nondeposit products. Specifically, the FDIC’s proposal aimed to modernize its sign and advertising requirements to reflect current banking practices, like deposittaking via physical branches and similar locations, digital banking channels, and ATMs. The proposal included three distinct signs relating to deposit insurance. The first pertained to the official sign displayed at IDIs’ principal places of business. The NPR proposed to modernize the requirements relating to display of the official sign to reflect developments in the marketplace. The second was for a new digital official sign that IDIs would be required to display on their digital deposit-taking channels, such as online banking websites, mobile applications, and ATMs. Third, the FDIC proposed requiring IDIs to display a non-deposit products sign indicating that such products: are not insured by the FDIC; are not deposits; and may lose value (where the IDI offers both insured and uninsured, non-deposit products through the same channel) in order to address potential customer confusion regarding a product’s insured status. The FDIC also proposed limited amendments to its official advertising statement requirements to provide IDIs with an additional option for a shortened official advertising statement. Finally, the proposal included clarifications for the application of the misrepresentation statute in specific situations where consumers may misunderstand or be misled as to whether an entity is insured by the FDIC or the nature and extent of deposit insurance coverage. The NPR solicited comments on all aspects of the proposed rule. The comment period ended on April 7, 2023. The FDIC received 17 substantive comments from financial institutions, industry groups, consumer organizations, investor advocacy groups, crypto-asset/blockchain groups, deposit networks, and third-party vendors.19 A number of comments were supportive of the proposal. More specifically, several comments supported the FDIC’s efforts to modernize its rules in light of changes and innovation in the marketplace and to provide further clarity through 19 Comments can be accessed at: https:// www.fdic.gov/resources/regulations/federalregister-publications/2022/2022-fdic-official-signadvertising-requirements-3064-af26.html. In response to a comment letter, the FDIC extended the comment period by 45 days to provide additional opportunity for the public to prepare comments to address the matters raised by the NPR. E:\FR\FM\18JAR2.SGM 18JAR2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 deposit insurance signage and advertisement requirements. Several comments also supported the FDIC’s efforts to ensure consumers fully understand the insured status of products offered by financial institutions. One commenter provided that the confusion over new and complex financial products could undermine public confidence in the safety and reliability of the mainstream banking system. A number of commenters expressed a desire for more flexibility regarding the proposed signage and disclosure requirements. Some commenters advocated for increased flexibility in the placement of both physical and digital signage, noting the costs entailed to comply with the proposed rule’s requirements. Several financial institutions provided that the proposed rule focused on community banks instead of nonbanks that falsify their insured status, and noted that banks already take affirmative steps to inform their customers about deposit insurance coverage. However, other commenters commended the FDIC’s effort to improve clarity for customers regarding deposit insurance coverage and reduce customer confusion, given the rise of various banking services offered by the third parties. Some comments advocated for stronger measures to address deposit insurance misrepresentations. Specifically, a commenter suggested that FDIC should expressly prohibit comparing an uninsured financial product to an insured product without clearly and conspicuously noting the difference between insured and uninsured status. Commenters also expressed views on an appropriate effective date for the rule. One commenter recommended a minimum 18-month implementation period before the final rule becomes effective. Another commenter requested that the requirements related to the digital sign be made effective after the industry has at least one year to comply. C. Final Rule and Discussion of Comments The FDIC has reviewed and carefully considered public comments received and is generally finalizing the rule as proposed, with some changes and clarifications, as described below. The amendments made by this final rule will take effect on April 1, 2024. However, full compliance with the amendments made by this final rule is extended to January 1, 2025. The extended compliance date is intended to provide sufficient time for financial institutions VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 to put in place processes, systems and technological updates to implement the new regulatory requirements described below. 1. FDIC Official Sign The FDIC did not receive comments on its official sign and will continue to use the existing design of the official sign, which, in addition to prominently bearing the name of the FDIC, includes statements indicating that each depositor is insured up to at least $250,000 and that the FDIC’s deposit insurance is backed by the full faith and credit of the United States government. In the proposed rule, the FDIC moved the reference to the display of the official sign to proposed § 328.3, including the language that the official sign must be in a size of 7″ by 3″ or larger with black lettering on a gold background. After further consideration, the FDIC is including the official sign size and color requirements as part of the official sign description under § 328.2 for ease of reference under the final rule. The FDIC also continues to reference this language in the requirements for display of the official sign in § 328.3 under the final rule. 2. Sign Requirements on IDIs’ Physical Premises Official Sign In an IDI’s Physical Premises Proposed Rule Section 18(a) of the FDI Act requires all IDIs to display at each place of business a sign or signs relating to the insurance of the deposits of the institution. The FDIC proposed updated signage requirements in § 328.3 to govern signage within an IDI’s premises. The proposed rule would have continued to require all IDIs to continuously, clearly, and conspicuously display the official sign in their principal place of business and all their U.S. branches.20 To accommodate evolving styles and footprints of branches, the proposed rule also would have required IDIs to display the FDIC official sign in any physical location where IDIs receive deposits other than teller windows or stations (referred to as ‘‘non-traditional branches’’ in the preamble to the proposed rule). Discussion of Comments One commenter suggested that the FDIC eliminate references to ‘‘nontraditional branches’’ and stated that non-branch locations should not be 20 As stated in the NPR, the term ‘‘branch’’ would be defined by reference to the FDI Act’s definition of ‘‘domestic branch,’’ 12 U.S.C. 1813(o). PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 3507 subject to the proposed rule’s sign requirement. The commenter further stated that the proposed rule’s requirements for physical premises would apply only to banks’ principal place of business and branches. The commenter expressed concerns that the term ‘‘non-traditional branch’’ could be over-inclusive and include non-branch locations, like deposit production offices. Final Rule The FDIC is revising § 328.3(b) to now require that: Each insured depository institution must continuously, clearly, and conspicuously display the official sign at each place of business where consumers have access to or transact with deposits, including all of its branches (except branches excluded from the scope of this subpart under § 328.0) and other premises in which customers have access to or transact with deposits, in the manner described in this paragraph (b).21 This requirement is consistent with section 18(a) of the FDI Act, which provides the FDIC authority to prescribe regulations for IDIs to display at each place of business a sign or signs relating to the insurance of deposits of the institution.22 With respect to the comment that requested the FDIC not use the term ‘‘non-traditional branches,’’ the FDIC did not intend to affect how the term ‘‘branch’’ is defined or interpreted in other regulations. In the preamble to the proposal, the FDIC used the term ‘‘nontraditional branches’’ to help distinguish such places of business from what are commonly viewed as the ‘‘traditional branches’’ where deposits are usually and normally received at only teller windows. The FDIC intended for the term to describe the new layouts and designs that some IDIs are using where deposits are usually and normally received in areas other than teller windows or stations.23 However, to prevent potential confusion related to the term ‘‘branch’’ and its applications in other regulations, the preamble to the final rule will not refer to the term ‘‘non-traditional branches.’’ Rather, under the final rule, the signage requirements apply to an IDI’s places of business where consumers have access to, or transact with, deposits, including branches and other physical premises (e.g., cafe´-style locations). As a result, the types of bank premises that were intended to be covered under the proposal are covered by the final rule. For example, under a 21 Final 12 CFR 328.3(b) (emphasis added). 12 U.S.C. 1828(a)(1)(A), 1828(a)(2). 23 See final 12 CFR 328.3(b)(2). 22 See E:\FR\FM\18JAR2.SGM 18JAR2 3508 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations station in a size of 7″ by 3″ or larger, with black lettering on a gold background, if insured deposits are usually and normally received at teller windows or stations. As provided under the proposal, the FDIC believes that it is appropriate to allow additional flexibility with respect to display of the official sign in instances when the IDI usually and Display of Official Sign When Deposits normally receives deposits at teller Received at Teller Windows or Stations windows and stations and only offers Proposed Rule insured deposit products on the premises. In such cases, the requirement Under the proposed rule, if IDIs usually and normally receive deposits at to display the official sign at each teller window or station may be satisfied by teller windows or stations, IDIs would have been required to display the displaying the official sign in one or official sign at each teller window or more locations visible from the teller station in a size of 7″ by 3″ or larger with windows or stations, in a size large black lettering on a gold background. enough to be legible from anywhere in The proposed rule would also have that area. This flexible option would allowed flexibility with respect to apply to branches that do not offer nondisplay of the official sign where the IDI deposit products on the premises even usually and normally receives deposits if the IDI’s other locations offer nonat teller windows or stations and only deposit products.24 offers insured deposit products on the Under the final rule, whether the premises. In such instances, an IDI display of the official sign is ‘‘large would have the option to display the enough to be legible from anywhere in official sign at one or more locations that area’’ means that the average visible from the teller windows or customer can easily see and read the stations in a manner that ensures a copy sign from a reasonable distance from of the official sign is large enough so as that area. This would depend on factors to be legible from anywhere in that area. specific to the layout of the bank’s physical premises or places of business Discussion of Comments and the sign used, such as the size and One commenter suggested that the shape of the physical location, the area FDIC provide IDIs with flexibility to where deposits are usually and display clear and conspicuous signage normally accepted, a sign’s placement, a and disclosures best suited for a sign’s size, and its font and colors. For particular branch facility. The example, if a bank’s place of business commenter further stated that branch has two teller windows right next to managers and other employees are each other and it posts one official sign readily available onsite to answer between the teller windows that is large customer questions and address any enough to be legible to depositors at confusion to the extent a customer may both teller windows, that approach have questions, even with the presence would meet the standard. Banks’ places of clear, conspicuous disclosures. of business vary significantly in size and With respect to IDIs that only offer layout, and the final rule is intended to insured deposit products on the provide banks the flexibility to account premises, one commenter requested clarification as to whether the proposed for these physical variations. flexible option would apply if the IDI’s Display of Official Sign When Deposits larger locations offer non-deposit Received in Areas Other Than Teller products. The same commenter also Windows or Stations commended the FDIC for providing Proposed Rule flexibility in signage placement but sought an example of what the FDIC Under the proposal, if an IDI usually would consider a sign ‘‘large enough to and normally receives deposits in areas be legible from anywhere in that area’’ of the premises other than teller to satisfy this flexible option. windows or stations, IDIs would have been required to display the official sign Final Rule in one or more locations in a manner The FDIC is finalizing the proposed that ensures the official sign is large requirements with respect to the display enough so as to be legible from of the official sign when IDIs usually anywhere in those areas. and normally receive deposits at teller windows or stations. The final rule will 24 See infra Non-Deposits Sign on IDI’s Premises continue to require that IDIs display the Section for discussion on the offering of nondeposit products. official sign at each teller window or khammond on DSKJM1Z7X2PROD with RULES2 scenario where an IDI usually and normally receives insured deposits at a teller window or station and other areas within the same premise, then pursuant to the final rule, the IDI is required to display the official sign in accordance with the applicable signage requirements for each area as provided in § 328.3(b). VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 Discussion of Comments As discussed above, a commenter suggested that non-branch locations should not be subject to the proposed rule’s sign requirements. Final Rule Consistent with the proposal, the final rule provides that if insured deposits are usually and normally received in areas of the premises other than teller windows or stations (e.g., cafe´-style locations), the IDI is required to display the official sign in one or more locations in a size large enough to be legible anywhere in those deposit-taking areas.25 The FDIC believes that such a requirement will help ensure that IDI customers are aware that their deposits are protected by deposit insurance. As discussed above, an IDI’s premises, including non-branch locations that receive deposits in areas other than teller windows or stations, are subject to the final rule’s requirements. For example, an IDI’s cafe´-style location that does not receive deposits at a teller window or station, but where customers engage with bankers in an open area and customers have access to or transact with deposits, is subject to the sign requirements under the final rule. Non-Deposit Signage on an IDIs’ Physical Premises Proposed Rule When both insured deposits and nondeposit products are offered within the IDI’s premises (regardless of whether deposits are received at teller windows or stations or deposits are received in areas other than teller windows or stations), the proposed rule would have required IDIs to display a non-deposit sign within a segregated area and not in close proximity to the official sign. The proposed rule would have required that IDIs continuously, clearly, and conspicuously display signage indicating that the non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. Under the proposed rule, the definition of ‘‘non-deposit product’’ read as, ‘‘Any product that is not a ‘deposit’, including, but not limited to: stocks, bonds, government and municipal securities, mutual funds, annuities (fixed and variable), life 25 As discussed, whether the display of the official sign is ‘‘large enough to be legible from anywhere in that area’’ means that the average customer can easily see and read the sign from a reasonable distance from that area depending on factors specific to the layout of the bank’s physical branch and the sign used, such as the size and shape of the physical location, the area where deposits are usually and normally accepted, a sign’s placement, a sign‘s size, and its font and colors. E:\FR\FM\18JAR2.SGM 18JAR2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 insurance policies (whole and variable), savings bonds, and crypto-assets. For purposes of this definition, a credit product is not a non-deposit product.’’ 26 Discussion of Comments Non-deposit product definition. One commenter requested clarification on what products constitute a non-deposit product under the proposed rule, such that they would require the display of the non-deposit sign. Specifically, the commenter noted the proposal only included life insurance policies that are whole or variable and requested clarification as to whether other types of insurance offerings are also included in the definition. Moreover, the commenter requested clarification on whether safe deposit box services would be considered a non-deposit product requiring the display of the non-deposit sign. Non-deposit sign design. With respect to the design of the non-deposit sign, one commenter stated that it would not be necessary for the FDIC to fully standardize the design, but recommended the FDIC set minimum standards for the sign such as a minimum font size. Another commenter supported standardization of the nondeposit sign and suggested a standardized icon, such as the red circle-backslash symbol overlaid on the word ‘‘FDIC’’ or ‘‘FDIC-insured’’ with the phrase ‘‘NOT FDIC-insured’’ underneath the symbol. Display of non-deposit sign. Some commenters requested that the FDIC take a less prescriptive approach with respect to the non-deposit sign requirements and adopt a more flexible approach that can change with evolving technology and business practices. Two commenters suggested that the FDIC adopt a single, centralized disclosure approach to address deposit and nondeposit products rather than separate signage requirements. Another commenter raised concerns that the costs of segregating physical signage across multiple branch locations would be challenging in smaller branch locations and requested further clarification when separation would be required for institutions with various service offerings. One commenter requested the FDIC define the term ‘‘offers’’ in relation to the offering of non-deposit products on the IDI’s physical premises that would require the display of the non-deposit sign. The commenter stated that they understood ‘‘offers’’ to mean that the bank has personnel on the premises 26 87 FR 78017, 78033, 78036 (Dec. 21, 2022). VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 who are licensed to sell non-deposit products but would exclude locations without onsite staff licensed to sell nondeposit products. Final Rule The FDIC is finalizing the proposed requirement to display non-deposit signs when both insured deposits and non-deposit products are offered within the IDI’s premises. The final rule’s nondeposit sign requirement applies to both an IDI’s places of business where deposits are received at teller windows or stations and an IDI’s places of business where deposits are received in areas other than teller windows or stations (e.g., cafe´-style locations). Under the final rule an IDI generally must physically segregate the areas where non-deposit products are offered from areas where insured deposits are usually and normally accepted, and display a sign in the non-deposit areas indicating that non-deposit products: are not insured by the FDIC; are not deposits; and may lose value.27 An IDI is required to continuously, clearly, and conspicuously display this non-deposit sign; however, the final rule does not include specific design or size requirements. To minimize the potential for consumer confusion, the final rule prohibits display of non-deposit signs in close proximity to the official FDIC sign. Non-Deposit Product Definition Through the proposed rule, the FDIC intended to provide further clarity on the types of products that would constitute non-deposit products. In response to comments related to the non-deposit definition, the FDIC acknowledges that the proposed definition, as written, could be read as excluding products that would otherwise constitute a non-deposit product. Accordingly, the final rule generally retains the current nondeposit definition with minor changes, discussed in further detail below. The final rule defines a non-deposit product as: ‘‘[A]ny product that is not a ‘deposit’, including, but not limited to: insurance products, annuities, mutual funds, securities, and crypto-assets. For purposes of this definition, credit products and safe deposit box services are not non-deposit products.’’ 28 The definition under the final rule provides a non-exclusive list of general examples of the types of products that 27 As noted above, this requirement is intended to be generally consistent with longstanding interagency guidance on the retail sale of nondeposit investment products that many institutions already follow and thus should be familiar to many consumers. 28 Final §§ 328.1, 328.101. PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 3509 constitute non-deposit products that is consistent with the long-standing definition, updated to include ‘‘cryptoassets.’’ 29 However, the FDIC agrees with a commenter that safe deposit boxes should not be included in the definition for purposes of requiring display of the non-deposit sign under part 328, Subpart A, and has revised the definition under the final rule to clarify the treatment of safe deposit boxes.30 Banks have a longstanding history of providing safe deposit box services to consumers to store valuables in a private, secure section of the bank. Accordingly, IDIs are not required to display the non-deposit sign in areas where IDIs provide safe deposit boxes and offer no other non-deposit products. Design of Non-Deposit Sign Consistent with the proposal, the final rule requires IDIs that offer both deposit and non-deposit products at their physical premises to display a nondeposit sign in a continuous, clear, and conspicuous manner with information indicating that non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. The FDIC is not standardizing the design of the non-deposit sign as the FDIC believes the rule strikes a proper balance in providing IDIs flexibility, but also helps prevent consumer confusion by requiring signs informing consumers of the risks associated with non-deposit products. With respect to the comment to use red circle-backslash over ‘‘FDIC’’ or ‘‘FDIC-insured,’’ the FDIC views the suggestion as potentially confusing to consumers. With respect to the recommendation that the FDIC set minimum standards for the sign such as a minimum font size, the final rule, as proposed, requires that the sign be displayed in a continuous, clear, and conspicuous manner. As such, the FDIC believes this standard will help mitigate potential concerns regarding minimum font sizes and standards to ensure that consumers are able to view clearly the non-deposit sign. Accordingly, the FDIC is not adopting this recommendation and is not standardizing the design of the non-deposit sign. Display of the Non-Deposit Sign Under the final rule, the FDIC requires IDIs that offer both insured deposits and non-deposit products to clearly delineate and distinguish areas where activities related to the sale of non-deposit products occur from the 29 See infra Crypto-Assets Section for further discussion. 30 For purposes of part 328, subpart B, the ‘‘nondeposit definition’’ includes safe deposit boxes. E:\FR\FM\18JAR2.SGM 18JAR2 khammond on DSKJM1Z7X2PROD with RULES2 3510 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations areas where insured deposit-taking activities occur. The FDIC believes requiring display of the non-deposit sign in a physically segregated area would more effectively mitigate the potential for consumer confusion than a centralized disclosure as recommended by some commenters, as it would better alert consumers when products are not insured. Further, given that the final rule does not require standardization of the non-deposit sign and provides IDIs flexibility regarding the design of the non-deposit sign, the FDIC believes that the approach taken in the final rule is responsive to commenter concerns on flexibility. With respect to comments noting concerns on the costs of segregating physical signage across multiple locations and requesting further clarification on when separation would be required, the non-deposit sign requirement is intended to be generally consistent with practices described in the longstanding interagency guidance on the retail sale of non-deposit investment products.31 As a result, the FDIC has added a provision to the final rule, generally consistent with longstanding guidance, noting that in limited situations in which physical considerations present challenges to offering non-deposit products in a distinct area, institutions must take prudent and reasonable steps to minimize customer confusion. This guidance has informed many institutions’ current approaches, and thus should be familiar to many IDIs and consumers. Consistent with the interagency guidance, the FDIC expects IDIs to minimize the possibility of consumer confusion when delineating the areas where non-deposit activities take place from areas where insured deposit-taking activities occur. The FDIC intends for the delineation requirement to include some flexibility, depending on the circumstances. For example, IDIs could conduct non-deposit related activity in separate areas or in areas that are not in close proximity to where deposits are taken by using a desk, cubicle, partitions, railings, planters, a separate room, or other indicator that the area is distinct and separate from the deposittaking area. In the limited situations where IDIs experience challenges in physically segregating products, IDIs must take prudent and reasonable steps to minimize consumer confusion, 31 See Interagency Statement on Retail Sales of Non-deposit Investment Products, FIL–9–94 (Feb. 17, 1994), available at: https://www.fdic.gov/news/ financial-institution-letters/1994/fil9409.html. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 consistent with the regulation’s requirements. In response to the commenter requesting clarification on the term ‘‘offers’’ for purposes of displaying the non-deposit sign under part 328, the FDIC interprets ‘‘offers’’ to capture situations where customers are presented with or sold non-deposit products within an IDI’s physical premises. This could include situations where personnel are not physically present on the bank premises, but the IDI presents or sells non-deposit products to consumers within the bank’s premises. As an example, nondeposit signs are required in areas where the consumer is offered nondeposit products within an IDI’s physical premises by personnel through an electronic communication device (e.g., an interactive kiosk or tablet). Relevance of Non-Deposit Sign Requirements to Interagency Statement of Policy The federal banking agencies have previously issued guidance to IDIs they supervise relating to the retail sale of non-deposit investment products.32 The FDIC’s proposed rule stated that its nondeposit sign requirement was intended to be consistent with the practices described in this longstanding interagency guidance. Specifically, the proposed rule’s non-deposit sign requirements were similar to disclosures related to sales of non-deposit products described in the interagency guidance. Use of Electronic Media or Varied Signs To Satisfy Official Sign and NonDeposit Sign Requirements on IDIs’ Premises Proposed Rule Under the proposed rule, IDIs would have had the option to display the official sign and non-deposit sign through the use of electronic media. The proposed rule also would retain certain provisions of existing regulations that provide IDIs with flexibility in displaying the official sign. Under the proposal, IDIs would have the option to display the official sign in locations on the premises other than those required under the rule, except for in areas where non-deposit products are offered. For locations where display of the official sign is required, IDIs could choose to display signs that vary from the official sign in size, color, or material, provided that the sign is no smaller than the official sign, has the same color for the text and graphics, and includes the same content. 32 Id. PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 Discussion of Comments Commenters supported the proposed option to use electronic media to display the official sign and non-deposit sign. One commenter recommended that the FDIC produce educational, captioned consumer videos to be displayed on digital signage within an IDI’s lobby. Final Rule The final rule adopts the proposal to provide IDIs the flexibility to utilize electronic media to satisfy sign requirements on an IDI’s premises. This provision allowing IDIs to use electronic signs applies to both display of the official sign and non-deposit signage, where required, and would similarly be subject to the continuous, clear, and conspicuous display standard. Accordingly, a rotating display will not satisfy the ‘‘continuous’’ requirement applicable to the display of official sign and non-deposit sign. The final rule also retains certain provisions of current regulations that provide IDIs with flexibility in displaying the official sign. IDIs have the option to display the official sign in locations on the premises other than those required under the rule, except for in areas where non-deposit products are offered. For locations where display of the official sign is required, IDIs may choose to display signs that vary from the official sign in size, color, or material, provided that the sign is no smaller than the official sign, has the same color for the text and graphics, and includes the same content. Under the final rule, the FDIC will not require IDIs to display FDIC-produced videos within their physical premises. The FDIC is, however, undertaking several efforts to educate consumers regarding deposit insurance and the role of the FDIC, including a public awareness campaign on deposit insurance launched in October 2023.33 3. Sign Requirements for Digital Deposit-Taking Channels The final rule will facilitate banks providing consumers with clear, consistent, and accurate digital disclosures to promote consumers’ understanding of when they are interacting with an IDI and when their funds are protected by the FDIC’s deposit insurance coverage. At the same time, the FDIC intends to permit some flexibility for IDIs with respect to digital sign requirements. As such, the FDIC is 33 FDIC’s national consumer campaign (‘‘Know Your Risk. Protect Your Money’’), available at: https://www.fdic.gov/news/campaigns/know-yourrisk/. E:\FR\FM\18JAR2.SGM 18JAR2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations finalizing sign requirements related to IDI digital channels, with some changes and clarifications, as described below. a. FDIC Official Digital Sign Proposed Rule Under the proposal, an IDI would have been required to clearly, continuously, and conspicuously display a newly established digital sign on the IDI’s homepage, landing and login pages or screens, and transactional pages or screens involving deposits, to the extent applicable. The proposal further provided that a digital sign displayed in a continuous manner, near the top of the relevant page or screen in close proximity to the IDI’s name, would be considered ‘‘clear and conspicuous.’’ The proposed digital sign was intended to visually communicate to consumers that they are conducting business with an IDI rather than a nonbank. The proposal provided that the FDIC expected the digital sign to be an abbreviated version of the official sign and that it would prominently bear the name of the FDIC and the statement that insured deposits are backed by the full faith and credit of the U.S. Government. Discussion of Comments Some commenters raised concerns that the proposed changes in digital signage design and placement were overly prescriptive and may be difficult to implement due to technological and budgetary limits. However, other commenters supported the proposed Final Rule After carefully considering the comments received, the FDIC is adopting this part of the proposed rule as final and will require IDIs to display the FDIC official digital sign ‘‘clearly and conspicuously’’ in a continuous manner, near the top of the relevant page or screen, and in close proximity to the IDI’s name. The FDIC is finalizing a design for the FDIC official digital sign that consists of ‘‘FDIC’’ along with the following text: ‘‘FDIC-Insured- Backed by the full faith and credit of the U.S. Government.’’ Below is the design for the FDIC official digital sign under § 328.5: FDIC-Insured - Backed by the full faith and credit of the U.S. Government The final rule establishes a clear standard to promote consistency in the use and application of the FDIC official digital sign by IDIs. The rule specifies the color, size, and font to establish an easily recognizable, consistent digital sign to convey the certainty and confidence historically provided by the FDIC official sign at banks’ teller windows. Recognizing the variability in the design and color of IDI websites, the final rule also provides an alternative color if the specified colors, navy blue and black, would not be legible against the background design colors of the IDI’s web page or mobile banking application. The final rule requires ‘‘FDIC’’ in the FDIC official digital sign to be displayed with a wordmark size of 37.36 x 15.74px in navy blue (hexadecimal color code #003256), with ‘‘FDIC-Insured—Backed by the full faith and credit of the U.S. Government’’ in Source Sans Pro Web VerDate Sep<11>2014 flexibility in implementation and compliance, a commenter suggested that the FDIC add a ‘‘reasonable person test’’ when assessing the digital signage requirements in order to allow banks to continue to innovate. Another commenter provided that there would be no significant difference for a consumer in placing the FDIC official digital sign at the top of the page in close proximity to the bank name, other than increased costs for the IDIs. Other commenters supported the proposal to place the sign at the top of the screen to comply with the clear and conspicuous requirement. The FDIC notes that a specific question was asked as part of the NPR about the design of the digital sign but no comments were received in response to this question. 17:39 Jan 17, 2024 Jkt 262001 font (regular 400 italic), 12.8px, displayed in black (hexadecimal color code #000000) lettering. If the official FDIC digital sign in these colors would be illegible due to the color of the background, the final rule requires the ‘‘FDIC’’ and the one line of smaller type to the right of ‘‘FDIC’’ to both be displayed in white (hexadecimal color code #FFFFFF). The FDIC official digital sign aligns with the statutory provisions in section 18 of the FDI Act on the display of signage at each IDI’s principal place of business relating to the insurability of deposits and, consistent with section 18 of the FDI Act, the FDIC official digital sign includes a statement that insured deposits are backed by the full faith and credit of the U.S. Government. The FDIC appreciates the issues raised by commenters with respect to the FDIC official digital sign, including supporting flexibility and ensuring the PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 new FDIC official digital sign does not cause depositor confusion. Given the discussion above regarding the increased use of mobile banking, as well as the FDIC’s interest in protecting consumers, the FDIC believes the requirement to display the FDIC official digital sign will promote consumer confidence in the Nation’s banking system and benefit IDIs by assisting consumers in more easily identifying IDI websites. The FDIC believes that the use of the FDIC official digital sign by IDIs will assist consumers in better understanding when they are conducting business with an IDI and when they are interacting with a nonbank entity. Seeing the FDIC official digital sign on all IDI websites and mobile applications will promote awareness that consumers are doing business with FDIC-insured institutions. Display of the FDIC official digital sign E:\FR\FM\18JAR2.SGM 18JAR2 ER18JA24.000</GPH> khammond on DSKJM1Z7X2PROD with RULES2 FDIC requirement, noting the importance of ensuring that bank customers are made fully aware of situations where deposit insurance is present and is separate and distinct from product offerings that do not include deposit insurance. With respect to the placement of the proposed digital sign on the IDI’s homepage, landing and login pages or screens, one commenter offered that home pages and landing pages are not the primary point of interaction between banks and customers, noting that home pages are generally used for marketing, not customer transactions. As such, the commenter believed only pages with transactional capacity should be subject to the proposed signage requirement. Some commenters questioned the necessity of displaying the same digital signage on each subsequent screen after a customer has logged in, and thought that the rules were unclear regarding internal transfer screens between FDICinsured products after log-in. One comment noted that having the digital sign on login and other pages could imply to customers that deposit insurance applies to all products on the website. Several commenters recommended that the FDIC adopt a more flexible approach where banks could place the digital sign on the bank’s web page. One commenter noted that many websites use a basic template that carries through each successive web page and that template could contain the required statement. To allow for further 3511 3512 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations by any non-bank third party would improperly imply that the non-bank is FDIC-insured and would constitute a misrepresentation under part 328 subpart B. The FDIC official digital sign must be displayed on the (1) initial or homepage of the website or application, (2) landing or login pages, and (3) pages where the customer may transact with deposits. For example, the FDIC official digital sign should be displayed where an IDI’s mobile application allows customers to deposit checks remotely, because this electronic space is in effect a digital teller window. In response to comments related to technical issues and potential costs, the FDIC recognizes the commenters’ concerns. But several comments also highlighted the importance and value of clear and conspicuous signage to prevent consumer confusion. The FDIC believes that the benefits of the FDIC official digital sign outweigh the concerns about costs. To alleviate those concerns the FDIC is reviewing options to provide IDIs with technical assistance or guidance to assist in implementing the FDIC official digital sign requirements. The FDIC will also review options to provide an image of the FDIC official digital sign to IDIs upon request at no charge, similar to the process by which the FDIC provides banks with physical official signs. b. Digital Display of Non-Deposit Signage khammond on DSKJM1Z7X2PROD with RULES2 Proposed Rule Under the proposed rule, if a digital deposit-taking channel offers access to deposits, as well as non-deposit products, IDIs would have been required to clearly, continuously and conspicuously display a non-deposit sign indicating that the non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. To satisfy this proposed requirement, the proposed rule would have required the continuous display of the nondeposit sign (referred to as the ‘‘static’’ non-deposit sign) on each IDI page relating to non-deposit products and prohibit displaying the non-deposit sign in close proximity to the FDIC official digital sign. The FDIC would expect the non-deposit signage to be in a prominent place, in an appropriate size, and displayed in a continuous manner for any consumer accessing the page to notice. The proposal provided, however, that institutions would have flexibility in the way they market non-deposit products and did not specify design or size requirements for this non-deposit sign. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 In addition, under the proposed rule, IDIs would have been required to display this non-deposit sign via a ‘‘onetime’’ notification when consumers initially access a page related to nondeposit products (referred to as the onetime notification). The notification would have provided an initial, prominent display of the non-deposit information to alert consumers that they are dealing with non-deposit products that are not covered by FDIC insurance. Moreover, consumers would need to take action to dismiss the notification before accessing the relevant page or screen. Discussion of Comments Commenters generally recommended that the FDIC consider the costs related to implementing the digital signage requirements for IDIs and to ensure that the requirements are not overly burdensome for consumers and the industry. More specifically, several commenters raised concerns that the increased digital signage requirements would increase costs for banks without countervailing benefits for consumers. While agreeing with the sentiment behind the proposed pop-up requirement, two commenters noted that creating pop-ups can be operationally complex and may be burdensome for smaller institutions to implement. Similarly, another commenter raised technical concerns and suggested a reduction of the repetitive disclosures. One commenter recommended that the FDIC only finalize a requirement for non-deposit disclosures to be included statically on the applicable pages, and not require affirmative consumer action regarding such disclosures. Some commenters also stated that the proposed digital signage requirements could lead to customer confusion and create a suboptimal customer experience. Relatedly, another commenter stated that the proposed digital pop-up message could degrade the customer experience and may cause difficulties for screen readers used by disabled customers. One commenter expressed appreciation about the ability of ‘‘popups’’, ‘‘speedbumps’’, or ‘‘overlays’’ to notify consumers of non-deposit products and ensure that they remain properly informed. However, the commenter also asserted that to reflect the various business models, products, and services, as well as adequately respect the importance of a consumer’s experience in the increasingly competitive online financial services market, the FDIC should allow banks to PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 work with their non-bank partners to ensure proper disclosure and ensure that these disclosures are properly applied to the various online platforms and consumer experiences. Several commenters supported the proposed requirements, noting that it would be beneficial for customers to know a given entity’s or product’s insured status. One commenter advocated for the FDIC to require IDIs to explicitly mark every financial product as either insured or non-insured and advocated for a more comprehensive disclosure statement. Non-Deposit Digital Signage in Final Rule: Requirements When Non-Deposit Products and Deposit Products Are Offered Through Same Digital DepositTaking Channel After consideration of the comments responding to the proposed non-deposit digital signage requirements, the FDIC is finalizing certain aspects of the proposal and modifying other aspects as described below. The FDIC is finalizing the requirement for IDIs to clearly and conspicuously display the ‘‘static’’ nondeposit signage on its digital deposittaking channels. More specifically, if an IDI’s digital deposit-taking channel offers access to both deposits at the IDI and non-deposit products, the IDI must clearly and conspicuously display 34 signage indicating that the non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. This signage must be displayed on each IDI page relating to non-deposit products and may not be displayed in close proximity to the FDIC digital sign. The static non-deposit language described above will provide an important disclosure aimed at addressing potential customer confusion regarding the insured status of particular products offered by IDIs. Separately, the FDIC acknowledges the commenters that discussed the onetime non-deposit notification requirement increasing costs, being operationally complex, and creating a suboptimal customer experience. The FDIC has concluded that having two separate disclosures relating to nondeposit products on an IDI’s digital channel—the ‘‘static’’ signage and the one-time notification—are unnecessary. 34 Some IDIs currently display non-deposit disclosures in small font near the bottom of web pages and application screens. Consumers are unlikely to notice such disclosures and may mistakenly believe that non-deposits products are covered by FDIC insurance. Such display of nondeposit disclosures would not satisfy the clear, continuous, and conspicuous display requirement of the proposed rule. E:\FR\FM\18JAR2.SGM 18JAR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations One such disclosure will sufficiently inform consumers and mitigate risks. As such, and in response to commenter concerns, the FDIC is only retaining a part of the proposed one-time notification requirement and is narrowing the scope for when the onetime notification is provided. Under the final rule, IDIs will only be required to display a one-time notification when a bank customer accesses non-deposit products from a non-bank third party via an IDI’s digital deposit-taking channel such as through a hyperlink (or similar weblinking feature). For example, if an IDI’s digital channel offers a third party’s securities product that requires the bank customer to leave the IDI’s website and access the securities product on the third party’s website, then the IDI will be required to provide the bank customer with a ‘‘one time’’ notification before the customer leaves the IDI’s digital channel. Moreover, under the final rule, the ‘‘one time’’ notification requirement will not apply broadly to all consumers accessing the IDI’s website; instead, it will only apply to bank customers that have logged into their respective account at a particular IDI website. The ‘‘one time’’ notification will be required per web session, which is the period of interaction between a bank customer and the IDI’s digital channel, starting when the customer logs in and ending when the customer logs off. Consistent with the proposal, the ‘‘one time’’ notification must be clearly and conspicuously displayed and indicate that the non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. The onetime notification could include, for example, an IDI using a ‘‘pop-up’’, ‘‘speedbump’’, or ‘‘overlay’’ that displays a notification to the customer that the customer must dismiss before accessing the content related to nondeposit products on the third party’s website. Bank customers, who log in to their bank’s website and can access nondeposit products through their IDI’s deposit-taking digital channel, may click on a hyperlink that takes them to an IDI’s non-deposit page or click on a hyperlink that, unbeknownst to the customer, causes them to leave the bank’s website to access non-deposit products offered or presented by a third party. From the FDIC’s perspective, this raises two areas of elevated risk regarding customer confusion and potential harm because a bank customer is moving: (a) from an IDI to a non-bank; and (b) from an FDIC-insured deposit area to a non-deposit area. Further, bank customers that are accessing the third VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 party’s website will not have the same benefit of the ‘‘static’’ non-deposit signage that will be available on IDI digital channels. As described above, one commenter recommended that the FDIC allow banks to work with their non-bank partners to ensure proper disclosure and ensure that these disclosures are properly applied to the various online platforms and consumer experiences. Given that certain non-bank third parties may offer both deposit products through a bank partner and non-deposit products on its website, IDIs will have discretion to provide customers with additional disclosure information as part of its one-time notification related to products offered by the non-bank third party, which may further minimize customer confusion. The final rule’s narrower, less burdensome, one-time non-deposit notification responds to several commenters’ concerns, while still mitigating the broader consumer protection risks by enabling bank customers to better understand when they are doing business with an IDI and when their funds are protected by the FDIC’s deposit insurance coverage. Regarding the comment about digital pop-up disclosures causing issues for disabled customers that use screen readers, the FDIC encourages IDIs to ensure that their pop-up notifications can be as accessible to screen reader users as any other web content. 4. Automated Teller Machines and Similar Devices Proposed Rule The FDIC proposed amendments to update § 328.4 signage requirements for IDIs’ ATMs and other remote electronic facilities that receive deposits. The FDIC sought to ensure that depositors receive necessary disclosures regarding deposit insurance as banks continue to devise new ways to provide services to their customers. The proposed rule intended to capture banking kiosks and other devices currently defined as ‘‘Remote Service Facilities’’ 35 that receive deposits. This section of the proposed rule was not intended to address online and mobile banking channels, which are considered ‘‘digital deposit-taking channels.’’ The proposed rule would have required electronic display of the FDIC official digital sign on IDIs’ ATM and like devices. The proposed rule 35 ‘‘Remote Service Facility’’ includes any automated teller machine, cash dispensing machine, point-of-sale terminal, or other remote electronic facility where deposits are received. 12 CFR 328.2(a)(1)(ii). PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 3513 provided that the official FDIC sign must be electronically displayed clearly and conspicuously. ATMs and like devices would be required, at a minimum, to display the FDIC official digital sign on the home page or screen and each transaction page or screen relating to deposits. The proposed rule would have further required electronic non-deposit signs where an IDI’s ATM or like device both receives deposits for an IDI and offers access to non-deposit products.36 In this instance, the ATM or like device would be required to clearly, continuously, and conspicuously display electronic disclosures indicating that non-deposit products are not insured by the FDIC, are not deposits, and may lose value. The proposed rule would have required the display of these disclosures on each transaction page or screen relating to non-deposit products. Discussion of Comments Generally, commenters expressed concern over the difficulty or cost in implementing the proposed signage requirements for ATMs. Some commenters noted that costs will disproportionately affect community banks who rely on third-party vendors that provide ATM operating software; one commenter noted that software changes take time, and these vendors would be expected to prioritize large banks. Another commenter noted that a handful of third-party vendors are utilized by many banks, and the proposed changes would create supply bottlenecks as digital platforms are individualized for each bank. Three commenters specifically requested additional time—ranging from at least one year to up to 18 months—in order to comply with any new requirements imposed for physical or software signs on ATMs or similar devices. Relatedly, another commenter urged the FDIC to consider allowing banks to use a physical sign at their ATMs instead of an electronic one. A few comments sought clarity or expressed concern on the scope of the proposed ATM signage requirements. One commenter requested that the FDIC clarify whether the proposed ATM provision would only apply to ATMs and similar devices that receive deposits, excluding facilities that only provide balance, transfer, or withdrawal capabilities. Another commenter requested that the FDIC exclude Interactive Teller Machines (ITMs) from the ATM and like devices requirements as the commenter believed that ITMs do 36 The FDIC would not view postage stamps sold at ATMs to require these disclosures. E:\FR\FM\18JAR2.SGM 18JAR2 3514 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations not have any transaction screens visible and do not perform bank branch functions. One commenter requested that the FDIC clarify whether nondeposit signage requirements apply to the owner of the ATM and not the depository bank, if they are not the same. Commenters representing consumer groups were supportive of the proposed rule changes relating to ATMs and similar devices. One commenter believed the proposed rules were beneficial because consumers do not have the opportunity to seek clarification from bank employees at an ATM, like they would at a bank or bank branch. One commenter advocated for more stringent signage requirements for ATMs, recommending that the FDIC require IDIs to display disclosures on each screen that references a deposit or non-deposit product. khammond on DSKJM1Z7X2PROD with RULES2 Final Rule The FDIC has carefully considered these comments and is adopting certain parts of the proposed ATM signage requirements, with changes discussed below. The FDIC appreciates the comments and concerns provided regarding the costs of the proposed requirements and a need for additional time and the impact of potential changes on community banks who often rely on third parties to support operating and maintaining ATMs. The FDIC believes that the benefits of the new ATM signage requirements outweigh the potential costs; however, additional flexibility is warranted in certain situations. The new ATM requirements under the final rule will provide clear information to consumers as to when they are engaging with insured deposit products and when they are engaging with non-deposit products. For an IDI’s ATM or like device that receives deposits but does not offer access to non-deposit products, the final rule provides flexibility to meet the signage requirement by either (1) displaying the FDIC official digital sign as described in § 328.5 on ATM screens, or (2) displaying the physical official sign as described in § 328.2 by attaching or posting it to the ATM. However, IDIs’ ATMs or like devices that accept deposits and are put into service after January 1, 2025, must display the official digital sign (with no option to satisfy the requirement through display of the physical official sign). This approach provides IDIs with flexibility, consistent with some comments the FDIC received, and provides additional time to make related system and process revisions and updates. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 For an IDI’s ATM or like device that both receives deposits and offers access to non-deposit products, the final rule requires that such ATMs must: (a) display the official digital sign clearly, continuously, and conspicuously on the home page or screen and on each transaction page or screen relating to deposits; and (b) clearly, continuously, and conspicuously indicate that nondeposit products are not insured by the FDIC, are not deposits, and may lose value on each transaction page or screen relating to non-deposit products by January 1, 2025. The FDIC believes that clear signs differentiating the insured and uninsured products is important in this setting because customers often interact with ATMs alone, including when bank branches are closed or in areas that are isolated or where there are no bank branches. In such situations bank customers would not have an opportunity to ask clarifying questions of a bank representative or for bank staff to ensure that customers fully understand whether a product is covered by FDIC deposit insurance. The final rule also provides that degraded or defaced physical official signs would not meet the ‘‘clearly, continuously, and conspicuously’’ standard. For example, an official sign defaced such that portions are illegible would not ‘‘clearly’’ signal or notify consumers that they are dealing with an FDIC-insured depository institution’s ATM. However, if an ATM’s physical digital sign is, for example, slightly diminished, minimally blemished, or superficially damaged, these circumstances would be considered de minimis for the purposes of determining whether a physical official sign meets the ‘‘clearly, continuously, and conspicuous’’ standard for the purposes of compliance with the final rule. In addition, the final rule includes specific design features of the digital official sign, including specifics about colors, size, and font which should assist in implementation. In response to the comments on the scope of the rule, the final rule’s ATM provisions apply to an IDI’s automated teller machines or other remote electronic facilities that receive deposits. If an IDI’s remote electronic facility receives deposits and is labeled an ITM (instead of an ATM), the official sign requirements in part 328 apply; however, if an ITM does not receive deposits, it is not subject to the rule. In some cases, where there is a deposit-taking ATM or like device, the owner of the ATM and the IDI may not be the same. As noted above, § 328.4 applies to ‘‘IDIs’ automated teller machines or like devices.’’ In PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 determining whether an ATM or like device is an IDI’s, the FDIC will consider circumstances such as the ATM or like device’s location, branding, whether it is operated by the IDI, and other factors that reasonably indicate it is an IDI’s ATM. Under the final rule, for such in-scope ATMs and like devices, the official digital sign and non-deposit signage requirements under § 328.4 apply. In response to the comment on recommending more stringent requirements, the FDIC does not consider more stringent signage requirements as necessary to achieve its policy goals. For certain in-scope ATMs, the signage requirements under the final rule apply to each transaction page or screen for deposits and, if applicable, non-deposit products. 5. Official Advertising Statement for IDIs Proposed Rule The FDIC proposed limited amendments to the advertisement statement requirements applicable to IDIs. Specifically, the FDIC proposed to expand IDIs’ options for use of a short advertising statement to include the term ‘‘FDIC-insured.’’ Currently, IDIs must include the official advertising statement in all advertisements that promote deposit products.37 The term advertisement means a commercial message in any medium that is designed to attract public attention or patronage to a product or business.38 The FDIC views this definition to include advertising published through social media channels. The current regulation allows IDIs to use the short title ‘‘Member of FDIC’’, ‘‘Member FDIC’’, or a reproduction of the symbol of the corporation (defined in § 328.2(b)). In addition to these options, to provide additional flexibility, the proposed rule would allow the use of ‘‘FDIC-insured’’. The FDIC also proposed to make a technical correction to the reference to the deposit insurance limit found in paragraph (d)(10) of the current regulation, which states that ‘‘deposits or depositors are insured by the Federal Deposit Insurance Corporation to at least $100,000 for each depositor.’’ 39 As a technical correction, the proposed rule would instead reference the standard maximum deposit insurance amount (currently $250,000), as established by Congress. 37 12 CFR 328.3(c). CFR 328.3(a). 39 12 CFR 328.3(d)(10). 38 12 E:\FR\FM\18JAR2.SGM 18JAR2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations Discussion of Comments A comment letter submitted by several non-profit organizations opposed the addition of the term ‘‘FDICinsured’’ for use as a shortened form of the official advertising statement and suggested that IDIs continue to use the shortened forms of the advertising statement found in the existing regulation (‘‘Member of FDIC’’ or ‘‘Member FDIC’’). The commenters stated that when IDIs offer products that are not FDIC-insured, their use of the term ‘‘FDIC-insured’’ could be misleading and poses risk of consumer confusion. The commenters asserted that the purported benefit to IDIs of increased flexibility is not worth this risk of increased consumer confusion. khammond on DSKJM1Z7X2PROD with RULES2 Final Rule The FDIC appreciates the concern about risk of consumer confusion stemming from use of the term ‘‘FDICInsured.’’ However, the FDIC believes that restrictions on usage of the advertising statement (including a shortened form) in connection with non-deposit products sufficiently mitigate any risk of consumer confusion. Specifically, IDIs are prohibited from using the official advertising statement in any advertisement relating solely to non-deposit products. IDIs are also prohibited from using the official advertising statement in any advertisement relating solely to hybrid products, which are products that have both deposit product features and nondeposit product features. IDIs may use the official advertising statement in advertisements containing information about both insured deposit products and non-deposit or hybrid products, but are required to clearly segregate the official advertising statement from any portion of the advertisement that relates to the non-deposit products. These restrictions are part of the existing regulation and were included in the proposed rule. The FDIC is including these same restrictions in the final rule, meaning that consumers should not, for example, see statements indicating that a particular IDI is ‘‘FDIC-Insured’’ made in connection with advertisements related solely to non-deposit products. The FDIC is finalizing the advertising statement provisions of the final rule as proposed. Under the final rule, IDIs will have the option to use ‘‘FDIC-Insured’’ as a short form of the official advertising statement to satisfy advertising statement requirements. Subject to limited exceptions, IDIs are required to include the official advertising statement in all advertisements that VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 promote either deposit products and services or non-specific banking products and services offered by the institution. The advertising statement must be in a size and print to be clearly legible. In addition, as noted in the proposed rule, the FDIC does not intend for the digital sign requirement to overlap with the general advertising statement requirements that apply to IDIs. For example, the advertising statement would not be required on web pages where an IDI displays the digital official sign, such as a homepage. In these situations, under § 328.6(d)(10), the advertising statement is unnecessary because the inclusion of the digital official sign makes it clear that the IDI is insured by the FDIC. However, IDIs remain responsible for complying with the official advertising statement requirements for other qualifying advertisements, including those contained on other web pages. As under existing regulations, the final rule provides that a non-English equivalent of the official advertising statement may be used in any advertisement, provided that the translation has the prior written approval of the FDIC. The FDIC is also considering making available to the public approved translations of the official advertising statement in several common languages on its website or through other means in the future to support IDIs’ efforts to communicate with their non-English-speaking customers. 6. Misrepresentations and Material Omissions by Any Person Proposed Rule Section 18(a)(4) of the FDI Act,40 and its implementing regulations in subpart B to part 328,41 prohibit any person from misusing the name or logo of the FDIC, engaging in false advertising, and making knowing misrepresentations about deposit insurance. In the NPR, the FDIC stated that it may be beneficial to provide further clarity on the application of the statutory prohibition on misrepresentations in specific situations where consumers may be misled as to whether an entity is insured by the FDIC and the nature and extent of deposit insurance coverage. The FDIC proposed to amend subpart B to expressly address these situations, making clear when specific statements or omissions constitute a misrepresentation under section 18(a)(4). 40 See 41 See PO 00000 12 U.S.C. 1828(a)(4). §§ 328.100 through 328.109. Frm 00013 Fmt 4701 Sfmt 4700 3515 Use of the Official Advertising Statement or FDIC-Associated Terms or Images Consumers have historically identified the use of the official advertising statement (such as ‘‘Member FDIC’’), FDIC-Associated Terms, or FDIC-Associated Images to signify that they are dealing with an IDI and will receive the protection of FDIC deposit insurance. The official advertising statement, FDIC-Associated Terms, and FDIC-Associated Images have increasingly been used by non-banks that purport to deposit their customers’ funds at IDIs. As discussed in the NPR, the FDIC believes that use of the official advertisement, FDIC-Associated Terms, or FDIC-Associated Images in such instances presents a high risk of confusing consumers as to whether they are dealing with an IDI and whether deposit insurance applies to their funds. To address this risk, the proposed rule would have amended § 328.102(a) and § 328.102(b) to clarify specific circumstances under which use of the official advertising statement, FDICAssociated Terms, or FDIC-Associated Images by a non-bank would constitute a misrepresentation of insured status as it would inaccurately imply that the non-bank is FDIC-insured. For example, under the proposed rule, a non-bank’s use of the ‘‘Member FDIC’’ logo on its website or in its marketing materials would have been a misrepresentation unless that logo is next to the name of one or more IDIs. The NPR also stated that a non-bank’s use of either the FDIC official sign or the FDIC official digital sign would be a misrepresentation if it inaccurately implies that the non-bank is insured by the FDIC and backed by the full faith and credit of the U.S. Government. Similarly, the NPR stated that a non-bank’s use of FDICAssociated Terms in statements suggesting that the non-bank is insured by the FDIC would constitute a misrepresentation.42 Failure To Disclose That a Person Is a Non-Bank Is a Material Omission When a Statement Is Made Regarding Deposit Insurance Non-banks that purport to deposit their customers’ funds at IDIs sometimes make statements regarding deposit insurance coverage for those funds. Absent additional context, to the extent such statements suggest that FDIC 42 These examples are intended to be illustrative, rather than an exhaustive list of ways in which a non-bank might misrepresent its insured status. Any use of the official advertising statement, FDICAssociated Terms, or FDIC-Associated Images that inaccurately states or implies that the non-bank is insured by the FDIC will violate the final rule. E:\FR\FM\18JAR2.SGM 18JAR2 3516 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 deposit insurance will protect consumers in the event of the nonbank’s insolvency, they likely misrepresent the insured status of the non-bank. To minimize the risk of consumer confusion, the proposed rule provided that if a non-bank makes statements regarding deposit insurance for its customers, it is a material omission for the non-bank to fail to clearly and conspicuously disclose that it is not itself an FDIC-insured institution and that the FDIC’s deposit insurance coverage only protects against the failure of an FDIC-insured depository institution. In the NPR, the FDIC stated that this additional disclosure is necessary to prevent consumers from misinterpreting a nonbank’s assertions regarding deposit insurance coverage. The FDIC noted that some non-banks already include such language on their websites, often identifying the partner IDI through which banking services are provided.43 The proposed rule did not prescribe specific disclosure language; however, it explained that a statement that a person is not an FDIC-insured bank and deposit insurance covers the failure of an insured bank would be considered a clear statement for purposes of this provision. The proposed rule aimed to give non-banks that wish to make statements regarding deposit insurance coverage some flexibility in how they communicate the required information. Failure To State That Non-Deposit Products Are Not Insured by the FDIC Is a Material Omission When a Statement Is Made Regarding Deposit Insurance The FDIC’s experience suggests that deposits and non-deposit products are increasingly being offered to consumers in ways that fail to distinguish which products are insured by the FDIC. For instance, marketing materials might emphasize the deposit insurance protection that applies to some products while failing to make clear that not all of the products offered are FDICinsured. In other instances, firms have represented to their customers that nondeposit products are eligible for deposit insurance coverage, which has led consumers to believe, mistakenly, that their money or investments are protected by deposit insurance. In the NPR, the FDIC stated it believes that where banks or non-banks make statements regarding deposit insurance in a context where deposits and nondeposit products are involved, 43 For example, ‘‘ABC Co. is not an FDIC-insured depository institution; banking services provided by XYZ Bank, Member FDIC.’’ VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 additional information is necessary to ensure that consumers understand which products are subject to deposit insurance. To prevent consumer confusion, the proposed rule provided that if a person makes statements regarding deposit insurance in a context that involves both deposits and nondeposit products, it is a material omission to fail to disclose that nondeposit products are not insured by the FDIC, are not deposits, and may lose value. For example, under the proposed rule, if a non-bank’s website offered customers the option to have their funds deposited at an IDI and protected by deposit insurance or invested in nondeposit products, it would be a material omission if the non-bank’s website failed to state that the non-deposit products are not insured by the FDIC, are not deposits, and may lose value. Failure To State That Requirements Apply to Pass-Through Deposit Insurance The FDIC has a long history of providing ‘‘pass-through’’ deposit insurance coverage, meaning that deposits placed at an IDI by a third party on behalf of one or more owners are insured as if deposited directly at the IDI by the owner(s). Pass-through insurance allows each owner of the funds in such an arrangement to be separately insured up to the statutory deposit insurance limit, currently $250,000, even if the total deposits of all owners (in the aggregate) exceeds the $250,000 limit. Pass-through insurance only applies, however, if certain regulatory requirements are satisfied.44 Arrangements that rely on passthrough insurance have become increasingly common, with non-banks often claiming to provide the protection of pass-through deposit insurance for consumers’ funds. Such representations, however, may be inaccurate, mislead consumers, and fail to apprise them of the risk they face in the event that the pass-through deposit insurance requirements have not been satisfied. If the pass-through requirements are not met, consumers’ funds may not be fully 44 See §§ 330.5, 330.7. For pass-through deposit insurance to apply, a consumer’s funds must first be on deposit at an IDI. In addition: (1) the deposit account records of the IDI must disclose a basis for pass-through coverage, such as a custodial or agency relationship; (2) the identities and interests of the actual owners of the funds must be ascertainable either from the records of the IDI or records maintained in good faith and in the regular course of business by another party; and (3) the relationship that provides the basis for pass-through deposit insurance coverage must be genuine, with the deposited funds actually owned by the named owners. Additional requirements apply to arrangements involving multiple levels of relationships. PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 insured in the event the IDI where their funds have been deposited were to fail. In the NPR, the FDIC would have required that parties that make statements regarding the application of pass-through deposit insurance make additional disclosure to promote awareness of this risk. The proposed rule provided that if a person makes statements regarding passthrough deposit insurance for its customers’ funds, it is a material omission to fail to clearly and conspicuously disclose that certain conditions must be satisfied for passthrough deposit insurance coverage to apply. The proposed rule would not require a person making a statement regarding pass-through deposit insurance to list the specific conditions that must be satisfied; simply referencing that conditions must be satisfied would be sufficient under the proposed rule. The proposed rule also did not prescribe specific disclosure language, providing flexibility in how parties may wish to express the required information. For example, under the proposed rule, if a website for a financial product were to state that consumers’ funds are eligible for passthrough deposit insurance, it would be a material omission to fail to clearly and conspicuously state that certain conditions must be satisfied in order for pass-through insurance to apply. Discussion of Comments Some commenters recommended that the rule require entities to disclose certain information that they believed was necessary to avoid material omissions when making statements about deposit insurance. For example, one commenter suggested that the FDIC impose several specific requirements, presumptions, and enforcement practices on any advertising relating to digital assets. Another commenter suggested that the FDIC prohibit nonbanks from using the words ‘‘banking’’ and ‘‘bank account’’ to describe their products or services offered, and that a non-bank’s failure to comply should constitute a material omission. With respect to statements referencing deposit and non-deposit products, one commenter suggested that the FDIC should make clear that comparing an uninsured financial product to an insured one without clearly and conspicuously noting the difference in insurance status is a misrepresentation. Another commenter similarly suggested that it would be a material omission for a non-bank to fail to disclose that its non-deposit products are not FDICinsured. E:\FR\FM\18JAR2.SGM 18JAR2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations In connection with the proposed passthrough provision, one commenter suggested that it should be a material omission for entities that are not FDICinsured to advertise pass-through deposit insurance without setting forth all the conditions necessary to receive such coverage. Another commenter suggested that requiring a clear and conspicuous disclosure that certain conditions must be satisfied for passthrough insurance, without more, could lead a depositor to wonder what those conditions might be and question whether pass-through claims will be honored. One commenter requested confirmation as to whether hyperlinking would be permissible for the required disclosures. Specifically, the commenter requested confirmation that a non-bank entity placing deposits through a deposit network would still be permitted to hyperlink to the list of network banks to satisfy this provision under the new rule, as previously stated in the preamble to the 2022 final rule.45 The same commenter also requested confirmation that a non-bank would be permitted to hyperlink to required disclosures that a non-bank is not a bank and that pass-through insurance coverage is subject to conditions. khammond on DSKJM1Z7X2PROD with RULES2 Final Rule As generally provided in the proposal, with specific changes noted below, the FDIC is amending subpart B to expressly address additional examples that violate part 328, making clear when specific statements or omissions constitute a misrepresentation under section 18(a)(4). Moreover, the FDIC reiterates that the specific examples set forth in the final rule are part of a nonexhaustive list of conduct that violates part 328. The FDIC has the authority to take action against conduct that constitutes a prohibited misrepresentation about deposit insurance, regardless of whether it is among the non-exhaustive list of examples included in the final rule. The FDIC has been, and will continue to be, consistently proactive in enforcing its requirements and taking appropriate action whenever it becomes aware of prohibited conduct. Use of the Official Advertising Statement or FDIC-Associated Terms or Images The final rule adopts the proposed amendments to § 328.102 to clarify specific circumstances under which use of the official advertising statement, FDIC-Associated Terms, or FDIC45 See 87 FR 33415, 33418 (June 2, 2022). VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 Associated Images by a non-bank would constitute a misrepresentation of insured status. In a technical change from the proposal, the final rule corrects an amendment to § 328.102. Proposed § 328.102(b)(4)(i) stated, without limitation, a false or misleading representation is deemed to be material if it states, suggests, or implies that, ‘‘A person or Uninsured Financial Products are insured or guaranteed by the FDIC’’. The final rule corrects the reference to ‘‘A person’’ to ‘‘A person other than Insured Depository Institution’’ and moves this amendment to new § 328.102(b)(1)(iv).46 Failure To Disclose That a Person Is a Non-Bank Is a Material Omission When a Statement Is Made Regarding Deposit Insurance The FDIC is adopting the proposal that if a non-bank makes statements regarding deposit insurance for its customers, it is a material omission for the non-bank to fail to clearly and conspicuously disclose that it is not itself an FDIC-insured institution and that the FDIC’s deposit insurance coverage only protects against the failure of an FDIC-insured depository institution. With respect to the comment on prohibiting non-banks from using the words ‘‘banking’’ and ‘‘bank account,’’ the final rule’s amendments to subpart B are limited to addressing misrepresentations concerning deposit insurance, which is the focus of section 18(a)(4) of the FDI Act. A non-bank’s use of the terms ‘‘bank’’ or ‘‘banking account’’ does not itself misrepresent deposit insurance status. However, such usage may violate other laws, including state banking laws or laws that address deceptive practices. As stated above, the final rule makes clear that it is a misrepresentation for an entity that is not insured by the FDIC to state, suggest, or imply that it is FDICinsured. Further, the final rule specifically notes that the FDIC considers it to be a material omission for an entity that is not an IDI to make statements about deposit insurance without clearly and conspicuously disclosing that it is not an IDI and that FDIC insurance only covers the failure of IDIs. The FDIC concludes that these provisions adequately address commenters’ concerns regarding situations where an entity that is not FDIC-insured suggests that it is. 46 See PO 00000 final 12 CFR 328.102(b)(4)(iv). Frm 00015 Fmt 4701 Sfmt 4700 3517 Failure To State That Non-Deposit Products Are Not Insured by the FDIC Is a Material Omission When a Statement Is Made Regarding Deposit Insurance The final rule adopts the proposal that, if a person makes statements regarding deposit insurance in a context that involves both deposits and nondeposit products, it is a material omission to fail to disclose that nondeposit products are not insured by the FDIC, are not deposits, and may lose value, subject to the clarifications below. The FDIC believes that the final rule addresses commenters’ concerns regarding misrepresentations about uninsured financial products and nondeposit products as the rule helps mitigate potential consumer confusion when deposit insurance statements are made in the context of deposit and nondeposit products. Under the final rule, if a non-bank’s website offered customers the option to have their funds deposited at an IDI and protected by deposit insurance or invested in nondeposit products in close proximity, it is a material omission if the non-bank’s website failed to state that the nondeposit products are not insured by the FDIC, are not deposits, and may lose value. Non-bank digital wallets. The FDIC recognizes that certain non-banks offer payment products that are not FDICinsured that allow consumers to store, send, or receive fiat money, for example U.S. dollars, electronically. While these products are not insured by the FDIC and therefore are vulnerable to the risks related to the non-bank’s insolvency, they do not otherwise fluctuate in value. Accordingly, the FDIC believes that requiring non-banks to disclose to consumers that such products ‘‘may lose value’’ may not be beneficial. As such, if a non-bank offers customers access to deposit products and a digital wallet where funds placed in a digital wallet are not covered by FDIC deposit insurance, it will not be a material omission for the non-bank entity to not include ‘‘may lose value’’ with respect to such digital wallet products. It will be a material omission for the non-bank to fail to disclose that any such uninsured products are: ‘‘not insured by the FDIC and are not deposits’’. The FDIC believes that a disclosure that the product is not a deposit and not FDICinsured strikes a reasonable balance by providing consumers with sufficient information if they utilize these digital wallet products from non-bank entities that also offer deposit products. The FDIC also notes that if the non-bank offers other non-deposit products as E:\FR\FM\18JAR2.SGM 18JAR2 3518 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 defined by part 328, including nondeposit products as part of its digital wallet on its website, it must disclose that the non-deposit product ‘‘may lose value’’ in addition to disclosing that the products are ‘‘not a deposit, not FDIC insured’’. Proximity. It has been the FDIC’s experience that it is more likely that a consumer will be confused about the application of deposit insurance to nondeposit products, when the deposit product is being offered in close proximity to the non-deposit product by the non-bank. For example, the FDIC has seen that some non-banks provide ‘‘mixed advertisements’’ where deposit products and non-deposit products are offered on the same web page or as part of a single social media post. As such, the FDIC believes that such offerings, in close proximity, represent clear scenarios where it would be a material omission for the entity to fail to disclose that the non-deposit product is not insured by the FDIC, is not a deposit, and may lose value. Non-deposit products unrelated to financial or investment products. The intent of this particular clarification in the final rule is to ensure that consumers understand when deposit insurance applies, particularly when a non-bank is offering both deposits and non-deposit products. From the FDIC’s experience, consumers are more likely to be confused about the application of deposit insurance when a non-bank offers deposit products and non-deposit products that are financial products subject to investment risks. Services or products offered by a non-bank that are unrelated to financial or investment products and physical goods are generally not the type of non-deposit product that would confuse consumers about deposit insurance. While the FDIC generally would not expect non-banks offering these types of non-deposit products to provide disclosures that the non-deposit product is not insured by the FDIC, is not a deposit, and may lose value, the non-bank is nevertheless prohibited from representing or implying that the non-deposit products are insured or guaranteed by the FDIC.47 Failure To State That Requirements Apply to Pass-Through Deposit Insurance The FDIC is finalizing the proposal that if a person makes statements regarding pass-through deposit insurance for its customers’ funds, it is a material omission to fail to clearly and conspicuously disclose that certain conditions must be satisfied for pass47 12 CFR 328.102(a). VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 through deposit insurance coverage to apply. Under the final rule, a person making a statement regarding passthrough deposit insurance is not required to list the specific conditions that must be satisfied; simply referencing that conditions must be satisfied is sufficient. The final rule also does not prescribe specific disclosure language, providing flexibility as to how parties may express the required information. With respect to the comments recommending that entities list all the conditions necessary to receive passthrough coverage, the FDIC believes that the final rule strikes an appropriate balance with making consumers aware of the risks they face without inundating them with a technical recitation of the pass-through conditions. Further, such technical information may be impracticable for some types of advertisements due to the amount of text required to adequately disclose the requirements. The FDIC believes that the final rule’s approach reflects a better balance, as it puts consumers on notice that pass-through insurance is not automatic or guaranteed and empowers them to raise questions or concerns. The FDIC remains concerned, however, that even with this notice, it is challenging to consumers to assess the risks related to the likelihood of receiving pass-through insurance given its technical legal requirements. In addition, consumers would not have access to banks’ or non-banks’ records to directly confirm that applicable conditions have been met. Given these circumstances, the FDIC is considering options for conducting qualitative consumer testing of deposit insurance disclosure language, including regarding pass-through coverage, to assess consumers’ understanding and whether there are other disclosure language options that are more effective and beneficial for consumers. In the event the FDIC identifies disclosure language through consumer testing that would improve consumer understanding of the risks related to pass-through coverage, the FDIC could consider options to promote use of the disclosure. The FDIC is also considering whether additional public education efforts would be valuable to help consumers understand the differences in deposit insurance coverage when working with IDIs directly as compared to non-bank entities. Earlier this year, the FDIC launched its ‘‘Know your Risk. Protect your Money.’’ national public awareness campaign to help consumers better understand deposit insurance and how it protects their money. This campaign complements the final rule’s intended PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 purposes, including helping consumers understand when they are interacting with an IDI and when their funds are protected by the FDIC’s deposit insurance coverage. Hyperlinking to Material Information In the NPR, the FDIC proposed to maintain the existing provision that it is a material omission for a non-insured entity that advertises deposit insurance to fail to identify the IDIs with which the representing party has a direct or indirect business relationship for the placement of deposits and into which the consumers’ deposits may be placed.48 As explained in the proposal, the FDIC is concerned that certain business relationships between IDIs and nonbanks may be confusing to consumers and proposed to require clear disclosures that would better inform consumers as to when their funds are protected by FDIC deposit insurance. The proposed rule made clear that it is a prohibited misrepresentation to fail to clearly and conspicuously disclose material information necessary to avoid a false statement, suggestion, or implication about deposit insurance. After considering the comment received on hyperlinking to the list of network banks, the FDIC is amending 12 CFR 328.102(b)(5)(i) in the final rule to expressly state that it is a material omission for a non-insured entity that advertises deposit insurance to fail to clearly and conspicuously identify the IDIs with which the representing party has a direct or indirect business relationship for the placement of deposits and into which the consumers’ deposits may be placed.49 The addition of this language harmonizes this provision with the other specific examples in the final rule and makes clear that information about where funds may be placed must be clear and conspicuous. To the extent that a nonbank entity places deposits through a deposit network, it may satisfy this requirement by clearly and conspicuously identifying the deposit network and each IDI in the deposit network or by providing a clear and conspicuous hyperlink to a current list of all the IDIs that are part of such a network. Further, the FDIC will evaluate the clear and conspicuous requirement in the context of the statement the information is material to, including the information’s proximity, placement, and prominence in relation to the statement. 48 See 49 See proposed 12 CFR 328.102(b)(5)(i). final 12 CFR 328.102(b)(5)(i) (emphasis added). E:\FR\FM\18JAR2.SGM 18JAR2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations In particular, the FDIC believes that Federal Trade Commission guidance provides helpful principles for determining whether hyperlinks to the list of deposit network IDIs are sufficiently clear and conspicuous.50 In response to the comment on hyperlinking to other disclosures, the FDIC generally believes that hyperlinking to the required disclosures—that a non-bank is not an FDIC-insured depository institution, the FDIC’s deposit insurance coverage only protects against the failure of an FDICinsured depository institution, and passthrough insurance coverage is subject to conditions—would not satisfy the ‘‘clear and conspicuous’’ standard in § 328.102(b)(5) under the final rule. Failure to include these disclosures with statements regarding deposit insurance could result in consumer confusion as to whether an entity is FDIC-insured and the extent of deposit insurance coverage. 7. Policies and Procedures for IDIs Proposed Rule The FDIC proposed requirements for IDIs to establish written policies and procedures to comply with part 328 that are commensurate with the nature, size, complexity, scope, and potential risk of the deposit-taking activities of the institution. As part of these policies and procedures, IDIs would also need to include, as appropriate, provisions related to monitoring and evaluating activities of persons that provide deposit-related services to the IDI or offer the IDI’s deposit-related products or services to other parties. khammond on DSKJM1Z7X2PROD with RULES2 a. Signs and Advertising Statement The proposal provided that such policies and procedures could include, for example, measures that an IDI would take to ensure compliance with the proposed sign and advertising requirements when the IDI changes its advertising strategy or engages with, or expands into, new physical or digital deposit-taking channels. For example, this could include, if applicable, establishing procedures to ensure that the IDI’s technology (e.g., websites and mobile applications) is capable of implementing the proposed signs and advertisement statement requirements across all digital deposit-taking channels. 50 See Federal Trade Commission, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, available at: https:// www.ftc.gov/system/files/documents/plainlanguage/bus41-dot-com-disclosures-informationabout-online-advertising.pdf. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 b. Certain Third-Party Relationships and Misrepresentations The proposal also provided that to the extent a third party has a business relationship with, and is serving as a deposit-taking channel for, an IDI, sound risk management would compel the IDI to be aware of the activities of the third party to ensure that the availability of deposit insurance is not being misrepresented. As such, the proposal would have required IDIs, as appropriate, to establish policies and procedures that include provisions related to the deposit-related services that a third party provides to the IDI or deposit-related products or services offered by the third party to other parties. These policies and procedures would include, as appropriate, provisions related to monitoring and evaluating whether such third parties are in compliance with subpart B. c. Reservation of Authority The proposal reserved the FDIC’s authority to take appropriate actions, including supervisory or enforcement actions, against any person that violates part 328. The existence of adequate policies and procedures would not preclude the FDIC from taking actions against IDIs or third parties to address violations. Comments Some commenters expressed concerns that the proposed policies and procedures requirement was not aligned with existing interagency third-party risk management guidance. In addition, commenters recommended excluding non-contractual relationships from the scope of the rule and clarifying that the involvement of non-marketing related deposit services does not automatically implicate the proposed rule. Other commenters requested the FDIC cover only third parties with a contractual relationship with the IDI addressing the offering or sales of the IDI’s insured deposits, and only relationships involving marketing and public dissemination of information on FDIC deposit insurance. Another commenter requested that the FDIC exclude deposit products traded in secondary markets, such as certificates of deposit, because IDIs have no control over representations made to secondary market purchasers. Final Rule Under 12 CFR 328.8, the FDIC is finalizing the policies and procedures requirement for IDIs as proposed. As part of the final rule, IDIs must establish and maintain written policies and procedures to achieve compliance with PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 3519 part 328. Such policies and procedures must be commensurate with the nature, size, complexity, scope, and potential risk of the deposit-taking activities of the IDI and must include, as appropriate, provisions related to monitoring and evaluating activities of persons that provide deposit-related services to the IDI or offer the IDI’s deposit-related products or services to other parties. This new requirement is consistent with the Interagency Guidance on Third-Party Relationships: Risk Management that was issued earlier this year.51 The interagency guidance underscores that a banking organization’s use of third parties can increase its risk, and that the use of third parties does not diminish or remove a banking organization’s responsibility to perform all activities in a safe and sound manner and in compliance with applicable laws and regulations, including those related to consumer protection. Here, the policies and procedures established and maintained by IDIs will facilitate compliance with part 328, including by ensuring that appropriate monitoring is conducted and evaluations are performed regarding activities of certain persons that provide deposit-related services to IDIs or offer an IDI’s deposit products or services to other parties. The policies and procedures will help ensure activities are conducted in compliance with applicable laws and that IDIs are aware of whether certain third parties are in violation of subpart B of part 328. Having these policies and procedures in place will help mitigate the risks of consumer harm and confusion, consistent with the statutory purpose underlying section 18(a) of the FDI Act and the FDIC’s mission to maintain and promote public confidence in the banking system. IDIs should include reasonable provisions regarding compliance with part 328 in their policies and procedures, including addressing for example: the use of FDIC-Associated Terms or FDIC-Associated Images by third parties in a manner that inaccurately states or implies that a person other than an IDI is insured by FDIC; statements made that represent or imply that an advertised product is insured by the FDIC but fail to identify the IDI; and ensuring the marketing and advertising information or materials presented or made available to prospective depositors by third parties do not misrepresent the insurability of the IDI’s financial products. The FDIC 51 See E:\FR\FM\18JAR2.SGM 88 FR 37920 (June 9, 2023). 18JAR2 khammond on DSKJM1Z7X2PROD with RULES2 3520 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations expects that IDIs, as appropriate, will implement, or enhance, current policies and procedures related to training staff to review any marketing and advertising materials about the IDI’s deposit products and services and to monitor and evaluate compliance with part 328. With respect to the comments related to the scope of the third parties’ activities, IDIs should establish and maintain policies and procedures to evaluate and monitor, as appropriate, any deposit insurance-related representations made by third parties that provide deposit-related services to the IDI or offer the IDI’s deposit-related products or services to other parties. More specifically, IDIs should consider the extent to which their third-party relationships involve representations or statements subject to part 328, and the role third parties have in crafting or presenting such representations or statements for prospective depositors. For example, a third-party relationship for web hosting services may not warrant policies or procedures for compliance with part 328 to the extent the third party simply publishes and hosts content developed and directed by the IDI. However, if the IDI offers a deposit account through or by a nonbank third party on a consumer-facing website with the branding and marketing of a non-bank third party, that third party may be making representations to consumers to describe the product’s characteristics in a manner that is covered by part 328 subpart B. This would warrant that the IDI include provisions in its policies and procedures to monitor and evaluate compliance with part 328 by the third party. The IDI should also consider steps that it would take to mitigate any misrepresentations related to deposit insurance that could cause potential consumer confusion and harm regarding a product provided by the IDI. Commenters also suggested that the policies and procedures requirement should exclude non-contractual relationships. While the FDIC understands that IDIs often have provisions in their contracts with third parties to review certain marketing materials, the FDIC believes that limiting the scope of this requirement to only situations where IDIs have contractual relationships with third parties would not capture IDI relationships with certain third parties that the rule is intended to capture. In response to commenter concerns about the scope of this requirement, the FDIC notes that the policies and procedures related to certain third parties are required to be commensurate with the nature, size, complexity, scope, VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 and potential risk of the deposit-taking activities. With regard to third-party relationships, IDIs will be expected to utilize a risk-based approach in determining the nature and extent of the policies and procedures that are needed to monitor and evaluate certain third parties’ compliance with part 328 subpart B. For example, there may be third parties that have long-standing, well-established relationships with the IDI such that the third party has been offering products and services on the IDI’s behalf for many years and appropriately representing deposit insurance. In such instances, the IDI might deem the relationship to be one that warrants less extensive monitoring and evaluation, depending on the relationship and potential risk. The FDIC notes, however, that such relationships could experience significant changes, including in personnel, risk management philosophy, or new types of products offered, that may warrant more extensive policies and procedures. Likewise, the IDI may be involved in nascent relationships with novel arrangements and products that present a greater risk of consumer confusion and warrant more extensive monitoring and evaluation. As such, IDIs should ensure that the nature and scope of the policies and procedures under the final rule are tailored to the risks identified. The policies and procedures should effectively identify, address, and mitigate potential deposit insurance misrepresentations identified by the IDI. It is also prudent for policies and procedures to include provisions ensuring that third parties that provide marketing or joint marketing services, web and other electronic channel design, or similar services, are aware of the IDI’s compliance responsibilities under part 328. Finally, the FDIC notes that if a nonbank misrepresents deposit insurance, the FDIC would still expect to devote attention to taking action against the non-bank, formally or informally, under part 328 subpart B, regardless of the presence of a bank partner. 8. Crypto-Assets Proposed Rule Among other things, part 328 prohibits any person from representing or implying that any uninsured financial product is insured or guaranteed by the FDIC.52 This 52 ‘‘Uninsured Financial Product’’ is currently defined to include non-deposit products, hybrid products, investments, securities, obligations, certificates, shares, or financial products other than insured deposits. PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 prohibition applies to advertisements, publications, and other disseminations of information. The FDIC has noted a number of misrepresentations of deposit insurance coverage for crypto-assets,53 and proposed to amend part 328 to reinforce that representations regarding deposit insurance in the crypto-asset marketplace fall within its scope. Specifically, the FDIC proposed to amend the definitions of ‘‘Non-Deposit Product’’ and ‘‘Uninsured Financial Product’’ in subpart B to include cryptoassets and define crypto-asset as ‘‘any digital asset implemented using cryptographic techniques.’’ The proposed rule also included crypto-assets in subpart A’s definition of ‘‘non-deposit product’’ using the definition of ‘‘crypto-asset’’ described above. Accordingly, the non-deposit sign requirements proposed in subpart A would apply to crypto-assets. For example, if an IDI’s ATM offered customers the ability to purchase crypto-assets, the ATM would be required to clearly, continuously, and conspicuously display disclosures indicating that the crypto-assets are not insured by the FDIC, are not deposits, and may lose value. Discussion of Comments Commenters generally supported the FDIC’s efforts to address deposit insurance misrepresentations involving crypto-assets. Commenters also supported including crypto-assets in the definition of ‘‘uninsured financial product’’ and applying disclosure requirements for non-deposit products to crypto-assets. One commenter noted that misrepresentations made by prominent crypto-related entities demonstrate the necessity of the FDIC’s proposed rules. Commenters also raised concerns with the proposed definition of ‘‘cryptoasset.’’ A venture capital firm commented that the proposed definition of ‘‘crypto-asset’’ was over inclusive and vague. Specifically, the commenter explained that ‘‘cryptographic techniques’’ could refer to a variety of technologies not associated with the crypto-asset ecosystem, such as the endto-end encryption technology that secures common communications applications. The commenter stated that the broader context of the FDIC’s proposal did not indicate an intent to 53 See FDIC Press Release PR–60–2022, FDIC Issues Cease and Desist Letters to Five Companies for Making Crypto Related False or Misleading Representations About Deposit Insurance (Aug. 19, 2022); FDIC Press Release PR–9–2023, FDIC Demands Four Entities Cease Making False or Misleading Representations About Deposit Insurance (Feb. 15, 2023). E:\FR\FM\18JAR2.SGM 18JAR2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 capture such usage. The commenter recommended an alternative definition and suggested that it did not present the same ambiguities as the proposal, making the amendment to part 328 more practicable. A trade association and a consortium composed of banks and technology firms each raised the concern that the proposed definition of ‘‘crypto-asset’’ could be problematic for banks that seek to employ blockchain technology in offering their deposit products. These commenters suggested that the proposed rule’s broad definition of ‘‘crypto-asset’’ might be read to include a traditional deposit product if the bank offering it were to employ blockchain technology. The consortium stated that equating a traditional deposit product to the crypto-asset products offered by nonbanks would disadvantage regulated financial institutions and deter banks from leveraging blockchain technology to improve their products. Another trade association stated that regulators will need to pay close attention to the rapidly expanding landscape of bank products, particularly offerings involving cryptocurrencies and tokenized assets that reside on blockchains. The commenter further stated that as tokenization increases in popularity, the risk of a traded asset being confused with a bank deposit will increase as customers navigate complex product offerings that blur the lines between bank deposits and non-deposit products. Final Rule The FDIC recognizes that the proposed definition of ‘‘crypto-asset’’ may have been over inclusive for the purposes of this regulation. This definition was not intended to capture, for example, the use of encrypted communications technology by firms developing or offering financial products. As pointed out by commenters, however, the proposed definition of ‘‘crypto-asset’’ included language (‘‘any digital asset implemented using cryptographic techniques’’) susceptible to a broad interpretation. The FDIC notes that the proposed definition of ‘‘crypto-asset’’ was limited to ‘‘digital asset[s]’’ that are implemented using cryptographic techniques, and it is not clear that traditional deposit products could be considered ‘‘digital assets.’’ Nevertheless, the FDIC agrees that the proposed definition was somewhat ambiguous in this respect. While one commenter recommended an alternative definition for the term ‘‘crypto-asset,’’ the FDIC is concerned that the commenter’s proposed two-part VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 test—(1) that the asset confers economic, proprietary, or access rights or powers, and (2) is recorded using a cryptographically secured distributed ledger or similar technology—could be too narrow to capture some digital assets that are broadly recognized as crypto-assets by market participants today. This could be interpreted to exempt digital assets lacking certain specific characteristics from the regulations regarding misrepresentation of deposit insurance, which would be inconsistent with the FDIC’s policy goals. The FDIC is also mindful that, as noted by a commenter, the landscape of these products continues to evolve rapidly. The FDIC further notes that the proposed definition of ‘‘uninsured financial product’’ included any financial product that is not a deposit. The definition’s enumerated list of uninsured products serve as examples, rather than an exhaustive list, of the products that are not insured by the FDIC. In determining whether a particular product is an ‘‘uninsured financial product’’ for purposes of part 328, the test is whether that product falls within the statutory definition of ‘‘deposit.’’ 54 The FDIC also notes that, of the products listed in the proposed definition of ‘‘uninsured financial product,’’ only ‘‘crypto-asset’’ was specifically defined in the proposal. In light of this, the final rule adopts a more flexible approach better suited to an evolving landscape. While ‘‘cryptoasset’’ is included in the products listed in the definition of ‘‘uninsured financial product,’’ the FDIC is not including a specific definition of ‘‘crypto-asset’’ in part 328. The FDIC believes this approach will signal that representations regarding deposit insurance in the crypto-asset marketplace are subject to the prohibitions of section 18(a) and part 328, like other financial products, without relying on a specific regulatory definition of ‘‘crypto-asset’’ that could quickly become obsolete. The FDIC has publicly stated that crypto-assets are not insured by the FDIC.55 As noted above, the test of whether a particular financial product is an ‘‘uninsured financial product’’ will continue to be based upon application of the statutory definition of 54 See 12 U.S.C. 1813(l). Fact Sheet, What the Public Needs to Know About FDIC Deposit Insurance and Crypto Companies (July 28, 2022), available at: https:// www.fdic.gov/news/fact-sheets/crypto-fact-sheet-728-22.pdf. While blockchain technology may be used for purposes other than the creation of cryptoassets, the FDIC is not expressing a view with respect to whether a product employing such technology could meet the definition of a ’’deposit’’ in this final rule. 55 See PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 3521 ‘‘deposit,’’ and is by its nature fact specific. D. Expected Effects Costs The costs of the final rule will be incurred by IDIs, as well as some nonbanks that may need to update disclosures or marketing materials. This section addresses these two groups separately. Costs to IDIs According to data from recent Reports of Condition and Income (Call Reports), the FDIC insures the deposits of 4,654 IDIs operating approximately 80 thousand branches in the United States.56 These IDIs are currently subject to the existing requirements of part 328, so the costs incurred by these IDIs due to the final rule will be limited to activities to ensure compliance with the new provisions in the final rule and ameliorated by the extent to which IDIs are already complying with the new provisions. These activities include updating the display of FDIC signs in both physical and digital locations where deposits are normally received (including ATMs and websites), creating and maintaining signs for non-deposit products, segregating areas related to the sale of non-deposit products from areas where insured deposits are normally received, and ensuring that FDIC signs are not displayed in close proximity with non-deposit product signs. Data on the costs of updating the displays of signs and segregating physical areas within bank premises are unavailable, but the FDIC expects these costs would depend on the number of branches operated by each IDI as well as the complexities of each IDI’s branches and other premises. The FDIC expects that larger banks are more likely to have branches that are nontraditional, complex, and/or offer both deposit and non-deposit products. For purposes of the final rule, the FDIC estimates that IDIs with less than $10 billion in assets will spend, on average, approximately one hour per year to complete these activities at each branch while IDIs with at least $10 billion in total consolidated assets (assets) will spend, on average, approximately two hours per year per branch, for a total estimated annual burden of approximately 120 thousand hours per year across all IDIs 57 at an 56 Call Reports as of June 30, 2023. to Call Reports as of June 30, 2023, there were 4,496 IDIs with assets less than $10 billion operating 33,479 branches and 158 IDIs with assets at least $10 billion operating 44,133 branches. 57 According E:\FR\FM\18JAR2.SGM 18JAR2 3522 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 estimated annual cost of approximately $10 million.58 The costs of complying with the final rule’s requirements for digital deposittaking channels will also depend on the complexities of each IDI’s digital deposit-taking operations. The FDIC expects that larger banks are more likely to have more complex digital operations or offer both deposit and non-deposit products through their digital deposittaking operations. For purposes of the final rule, the FDIC estimates that, on average, IDIs will incur a one-time burden of sixty hours to update their digital operations to incorporate the requirements in the final rule, at an approximate cost of $23 million for the industry.59 The FDIC also estimates that, in years subsequent to the enactment of the final rule, IDIs with less than $10 billion in assets will spend, on average, approximately ten additional hours per year to comply with the digital deposittaking operation requirements of the final rule, while IDIs with at least $10 billion in assets will spend, on average, approximately twenty additional hours per year, at an estimated annual cost of approximately $4 million for the industry.60 Finally, all IDIs must update their policies and procedures to comply with the final rule. These policies and procedures are required to include, as appropriate, provisions related to monitoring and evaluating whether certain third parties are in compliance with subpart B. The FDIC recognizes that the costs to implement and maintain these policies and procedures will vary across IDIs in ways that depend on the specifics of each IDI’s operations or relationships with certain 58 Dollar costs for this analysis are based on a $82.38 total hourly cost of compensation, a weighted average of the 75th percentile hourly wages reported by the Bureau of Labor Statistics (BLS) National Industry-Specific Occupational Employment and Wage Estimates (OEWS) across five occupational groups in the Depository Credit Intermediation sector, as of May 2022, and adjusted by 1.51 to include non-wage compensation and 1.05 to account for the change in the seasonally adjusted Employment Cost Index for the Credit Intermediation and Related Activities sector (NAICS Code 522) between March 2022 and June 2023. For this analysis, the FDIC uses the following estimated occupational burden weights and occupational hourly labor costs: 14.6 percent for executives and managers at $131.66 per hour, 2.8 percent for lawyers at $169.85 per hour, 35.7 percent for compliance officers at $65.27 per hour, 28.5 percent for IT professionals at $103.74 per hour, and 18.3 percent for clerical workers at $37.09 per hour. 59 According to Call Reports as of June 30, 2023: $23 million = 4,654 IDIs × 60 hours per IDI × $82.38 per hour. 60 According to Call Reports as of June 30, 2023: $4 million = 4,496 IDIs × 10 hours per IDI × $82.38 per hour + 158 IDIs × 20 hours per IDI x $82.38 per hour. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 third parties. For purposes of the final rule, the FDIC estimates that, on average, IDIs will incur a one-time burden of eighty hours to update their policies and procedures to incorporate the requirements in the final rule, at an approximately cost of $31 million for the industry.61 The FDIC also estimates that, in years subsequent to the enactment of the proposed rule, IDIs will spend, on average, approximately seventeen additional hours per year to ensure that their policies and procedures maintain compliance with the final rule,62 at an estimated annual cost of approximately $7 million for the industry.63 Based on the preceding analysis, the FDIC expects that the banking industry will incur approximately $64 million in the first year after adoption and approximately $20 million in each subsequent year to comply with the amendments to part 328. Costs to Non-Banks The FDIC does not have direct data on the number of non-banks that will be affected by the final rule. FDIC staff believe that the non-banks affected by the final rule would generally be classified in the following North American Industry Classification System (NAICS) industries: Miscellaneous Financial Investment Activities (NAICS Code 523999), Financial Transaction Processing, Reserve & Clearinghouse Activities (NAICS Code 522320), Computer System Design and Related Services (NAICS Code 5415), and Investment Advice (NAICS Code 523930). According to recent Census data, there were 148,235 firms in these NAICS industries in 2020, the most recent year for which such data is available.64 However, not all of these firms enter into agreements with IDIs or otherwise engage in operations related to insured deposits; FDIC staff believe that the number of non-banks engaged in such operations is likely considerably less than the number of IDIs. For purposes of the final rule, the FDIC estimates that the number of affected non-banks will 61 According to Call Reports as of June 30, 2023: $31 million = 4,654 IDIs × 80 hours per IDI × $82.38 per hour. 62 The FDIC estimates that twelve of the seventeen hours are recordkeeping costs under the Paperwork Reduction Act. The five remaining hours are regulatory costs of compliance that are not under the Paperwork Reduction Act. 63 According to Call Reports as of June 30, 2023: $7 million = 4,654 IDIs × 17 hours per IDI × $82.38 per hour. 64 See United States Census Bureau, 2020 SUSB Annual Data Tables by Establishment Industry, available at: https://www.census.gov/data/tables/ 2020/econ/susb/2020-susb-annual.html, last retrieved on October 23, 2023. PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 be approximately one percent of firms in the NAICS industries listed above. Therefore, the FDIC estimates that approximately 1,500 non-banks will be affected by the proposed rule. Non-banks have been statutorily prohibited from falsely representing that uninsured financial products are FDICinsured for many years. Thus, the final rule will not create a new prohibition on such misrepresentations, but will clarify the types of communications that can materially misrepresent deposit insurance coverage. The non-banks affected by the final rule may need to update their disclosures and marketing materials to ensure that they neither misuse the FDIC’s official sign or any FDIC-associated terms or images, nor omit or fail to clearly and conspicuously disclose material information that could lead to a reasonable consumer being unable to understand the extent or manner of deposit insurance provided. For purposes of the final rule, the FDIC estimates that, on average, each nonbank will spend an additional 2.5 hours in the first year to implement these changes and one hour per year to maintain compliance with the amendments to subpart B, for a total cost of approximately $300 thousand for the first year and $125 thousand for each subsequent year across all nonbanks affected by the rule.65 E. Benefits Provided that affected entities are not already complying with certain aspects of the final rule, the FDIC expects the final rule to produce benefits for the general public by providing clarity, and requiring affected entities to provide such clarity, to consumers about the extent to which or the manner in which products are insured by the FDIC. This clarity is expected to help consumers to more clearly understand when they are conducting business with IDIs and when their funds are protected by FDIC deposit insurance, thereby helping them avoid incurring financial losses as a result of investing in products they mistakenly thought were FDIC-insured. The final rule will reduce ambiguity about the nature of deposit insurance in situations where non-deposit products are offered by IDIs, where insured deposits are advertised by non-banks, or where both non-deposit products and deposit products are offered at the same location. The final rule will extend these benefits to digital deposit-taking channels where physical segregation is 65 Assuming the same average hourly wage as calculated for IDIs: 1,500 non-banks × 2.5 hours per non-bank × $82.38 per hour = approximately $300 thousand. 1,500 non-banks × 1 hour per non-bank × $82.38 per hour = approximately $125 thousand. E:\FR\FM\18JAR2.SGM 18JAR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations not possible. The final rule will also require the clear, conspicuous, and consistent use of the official FDIC sign and symbol in both physical and digital locations. These requirements are expected to enhance consumers’ recognition of the FDIC’s guarantee and reassure them of the nature of deposit insurance for those products. This effect will reinforce the role of FDIC deposit insurance and may bolster confidence in the U.S. banking sector. As discussed previously, the final rule will further clarify the FDIC’s procedures for evaluating potential violations of section 18(a)(4). The final rule will generally be consistent with existing practices used by the FDIC with respect to these matters. Furthermore, the final rule will not affect the application of related criminal prohibitions under 18 U.S.C. 709. Therefore, the FDIC believes that this aspect of the final rule is unlikely to have any significant effect on formal or informal enforcement of the section 18(a)(4) prohibitions. By providing the clarity described above, the FDIC believes the final rule is likely to curtail instances in which IDIs or non-banks potentially misuse or misrepresent the FDIC’s name or logo.66 Consumers’ uncertainty as to the safety of their funds may weaken the confidence that underpins bank stability and our nation’s broader financial system. The final rule is likely to reduce the frequency of these types of instances going forward. The FDIC does not have the data to quantify the cost savings of this effect but expects that the reduction in such instances would strengthen public confidence in the FDIC deposit insurance and the nation’s banking system. The FDIC invited comment on the expected effects of the proposed rule. Some commenters opined that burden costs borne by smaller banks may be similar to or even higher than those borne by larger banks. Other commenters noted that the increased digital signage requirements, including the pop-up requirements, may require smaller banks to adopt more complex and costly digital platforms. The FDIC recognizes that there will be variation in the costs of compliance across banks and that some small banks may incur higher compliance costs than others. After consideration of the public comments, the final rule has narrowed the one-time notification requirement to reduce the cost and complexity while also achieving the relevant policy goals, 66 There have been at least 165 such instances recently. See FDIC, 2019 Annual Report, at 38 and FDIC, 2020 Annual Report, at 47. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 and maintains the hourly compliance estimates presented in the proposed rule. The cost estimates described in this section reflect the FDIC’s supervisory experience that larger banks have, on average, higher costs for the maintenance of signage at their physical branches and the maintenance of their digital operations. F. Alternatives Considered The FDIC has considered a number of alternatives to the final rule that could meet its objectives in this rulemaking, including proposals suggested by commenters in response to the 2020 and 2021 RFIs and the NPR. Some of these alternatives have been discussed above and additional alternatives are described below. For the reasons described, the FDIC views the final rule as the most appropriate and effective means of achieving its policy objectives with respect to part 328. Alternatives to Digital Official Sign for Digital Deposit-Taking Channels With respect to digital deposit-taking channels, the FDIC considered alternatives to the digital official sign required by the final rule, including plain text signage and disclosure requirements.67 As discussed above, the FDIC official digital sign is intended to quickly and visually convey to consumers that they are dealing directly with an IDI rather than a non-bank entity. This distinction is critical to understanding the risks a consumer faces, and the FDIC believes that it warrants a requirement for consistent visual signage. Plain text signage or disclosures would not achieve this objective as effectively. Official Advertising Statement Requirements—Allow ‘‘One-ClickAway’’ Disclosures Some commenters recommended that the FDIC adopt a ‘‘one click away’’ approach for electronic or digital advertisements (where the advertising statement may not be immediately visible to consumers but could be reached through one mouse click) in order to permit greater flexibility in advertising formats.68 The FDIC believes that the final rule better meets its 67 See e.g., Hancock Whitney Bank Comment Letter to 2021 RFI (May 24, 2021); Kasasa Comment Letter to 2020 RFI (March 24, 2020) (stating that the official sign should not be required on an IDI’s website or mobile applications but suggesting the FDIC require, at minimum, the FDIC advertising statement on certain pages). 68 See Hancock Whitney Bank Comment Letter to 2021 RFI (May 24, 2021); American Bankers Association and Bank Policy Institute joint comment letter to 2021 RFI (May 21, 2021); Kasasa Comment Letter to 2020 RFI (March 24, 2020). PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 3523 objectives, as a ‘‘one click away’’ approach places the burden on consumers to obtain the necessary information and makes it less likely that they will do so. In addition, the advertising statement options available to IDIs under the final rule allow significant flexibility in advertising formats, as IDIs could use short titles including ‘‘Member of FDIC’’, ‘‘Member FDIC’’, or ‘‘FDIC-insured’’. The FDIC believes that these options are sufficient to permit advertising flexibility. Additional Disclosures Requiring a Consumer’s Signature for Non-Deposit Products Offered Within an IDI’s Physical Premises One commenter recommended that the FDIC require written and oral disclosures with respect to the sale or recommendation of any non-deposit product offered within an IDI’s premises and to require a consumer’s signature affirming their understanding. The FDIC believes that such additional requirements would be overly burdensome for IDIs. Accordingly, the final rule will not adopt this recommendation. However, nothing contained in this regulation should be read to limit the authority of any state or Federal agency or individual under any other laws that may require such disclosures. G. Administrative Law Matters Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) generally requires an agency, in connection with a final rule, to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of a proposed rule on small entities.69 However, a final regulatory flexibility analysis is not required if the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities. The Small Business Administration (SBA) has defined ‘‘small entities’’ to include banking organizations with total assets of less than or equal to $850 million.70 69 5 U.S.C. 601 et seq. SBA defines a small banking organization as having $850 million or less in assets, where an organization’s ’’assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year.’’ See 13 CFR 121.201 (as amended by 87 FR 69118, effective December 19, 2022). In its determination, the ’’SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates.’’ See 13 CFR 121.103. Following these regulations, the FDIC uses an insured depository institution’s affiliated and acquired assets, averaged over the preceding four quarters, to determine whether the insured 70 The E:\FR\FM\18JAR2.SGM Continued 18JAR2 khammond on DSKJM1Z7X2PROD with RULES2 3524 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations Generally, the FDIC considers a significant economic impact to be a quantified effect in excess of 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total noninterest expenses. The FDIC believes that effects in excess of these thresholds typically represent significant effects for FDIC-supervised institutions. For the reasons described below, the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small entities. As described in the Expected Effects section, the proposed rule is expected to affect all institutions whose deposits are insured by the FDIC, as well as nonbanks who may potentially use the official FDIC sign, advertising statements, or otherwise make representations that their products are insured or guaranteed by the FDIC. According to recent Call Reports, there are 4,654 IDIs.71 Of these, approximately 3,373 are considered small entities for the purposes of RFA.72 These small IDIs operate approximately 13 thousand deposit-taking offices. The number of deposit-taking offices at each small IDI ranges from 1 to 21. As discussed in the Expected Effects section, the FDIC expects affected IDIs with less than $10 billion in assets, which are likely to have less complex deposit-taking operations and fewer offices than larger IDIs, to spend, on average, 60 hours to update their digital operations, 80 hours to implement policies and procedures, and seven hours to update physical signage at branches in the first year. At average labor costs of $82.38 per hour, the expected first-year costs of complying with the proposed rule would average less than a percent of the small IDIs’ total annual salaries and benefits. These expected first-year costs would exceed five percent of the total annual salaries and benefits for fewer than 20 small IDIs (comprising less than one percent of the total number of affected small IDIs). For subsequent years, the costs of maintaining compliance are even smaller. Thus, the proposed rule would not significantly affect a substantial number of small IDIs. As described in the Expected Effects section, the FDIC estimates that 1,500 non-banks would be affected by the final rule. The FDIC does not have data on the number of non-banks that would be considered small entities for the purposes of RFA. As a conservative estimate, the FDIC assumes all 1,500 depository institution is ’’small’’ for the purposes of RFA. 71 Call Reports as of June 30, 2023. 72 Id. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 affected non-banks are small. As discussed in the Expected Effects section, the FDIC estimates that each non-bank, on average, would incur an additional 2.5 hours in the first year and 1 hour in each subsequent year to comply with the proposed amendments to subpart B. At an estimated compensation rate of $82.38, the expected costs of complying with the proposed rule would be less than $300 per year per non-bank, on average. The final rule may also affect private individuals who may potentially misuse the FDIC name or logo or misrepresent the nature of deposit insurance. Private individuals are not considered ‘‘small entities’’ under the RFA. Given that the expected costs of the proposed rule would be relatively small, the FDIC certifies that the proposed rule would not have a significant economic impact on a substantial number of small entities. Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501–3521), the FDIC may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. Certain provisions of the proposed rule contain ‘‘collection of information’’ requirements within the meaning of the PRA.73 The information collection requirements (IC) contained in this final rule have been submitted to OMB for review and approval by the FDIC under section 3507(d) of the PRA and section 1320.11 of OMB’s implementing regulations (5 CFR part 1320) as a new information collection. Title of Proposed Information Collection: Disclosure, Recordkeeping and Reporting Requirements Related to FDIC’s Official Sign and Advertising Requirements, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo. OMB Control Number: 3064–0219 Affected Public: Businesses or other for-profit. Respondents: Any FDIC-insured depository institution and persons that provide deposit-related services to insured depository institutions or offer insured depository institution’s depositrelated products or services to other parties. Estimated Annual Burden: 73 Information collection is defined under OMB’s regulations at 5 CFR 1320(c). Certain requirements in part 328 for public disclosure of the FDIC name and/or logo are not information collections. See 5 CFR 1320(c)(2). PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 The final rule contains the following ten (10) information collection requirements: 1. Signs within Institution Premises— Banks <$10B, 12 CFR 328.3 (Third-Party Disclosure; Mandatory). Section 328.3 imposes PRA third-party disclosure burden governing signage within the premises of insured depository institutions. This burden is associated with the display of signage for nondeposit products, segregating areas offering non-deposit products, and the use of electronic media. The FDIC believes the hourly burden for these activities differs among respondents. For purposes of PRA, the FDIC would split the burden into two information collection categories: one for banks with less than $10 billion in total consolidated assets (assets) and one for banks with at least $10 billion in assets. This IC captures the burden for the former group. 2. Signs within Institution Premises— Banks >$10B, 12 CFR 328.3 (Third-Party Disclosure; Mandatory). Section 328.3 imposes PRA third-party disclosure burden governing signage within the premises of insured depository institutions. This burden is associated with the display of signage for nondeposit products, segregating areas offering non-deposit products, and the use of electronic media. The FDIC believes the hourly burden for these activities differs among respondents. For purposes of PRA, the FDIC would split the burden into two ICs: one for banks with less than $10 billion in total consolidated assets (assets) and one for banks with at least $10 billion in assets. This IC captures the burden for the latter group. 3. Signage for ATMs and Digital Deposit-taking Channels— Implementation, §§ 328.4 and 328.5 (Third-Party Disclosure; Mandatory). Sections 328.4 and 328.5 impose PRA third-party disclosure burden governing signs for ATMs as well as digital deposit-taking channels. This burden is associated with the display of signage for both deposit and non-deposit products. The FDIC believes banks will incur burdens in the first year to update their digital channels to incorporate the amended requirements in the rule. This IC captures the burden for these implementation activities. 4. Signage for ATMs and Digital Deposit-taking Channels—Banks <$10B—Ongoing, §§ 328.4 and 328.5 (Third-Party Disclosure; Mandatory). Sections 328.4 and 328.5 impose PRA third-party disclosure burden governing signs for ATMs as well as digital deposit-taking channels. This burden is associated with the display of signage E:\FR\FM\18JAR2.SGM 18JAR2 khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations for deposit and non-deposit products. The FDIC believes that, in years subsequent to implementation, banks would incur ongoing burdens to update and maintain their digital channels to ensure continual compliance with the requirements in the rule. For purposes of PRA, the FDIC would split this ongoing burden into two ICs: one for banks with less than $10 billion in total consolidated assets (assets) and one for banks with at least $10 billion in assets. This IC captures the burden for the former group. 5. Signage for ATMs and Digital Deposit-taking Channels—Banks >=$10B—Ongoing, §§ 328.4 and 328.5 (Third-Party Disclosure; Mandatory). Sections 328.4 and 328.5 impose PRA third-party disclosure burden governing signs for ATMs as well as digital deposit-taking channels. This burden is associated with the display of signage for deposit and non-deposit products. The FDIC believes that, in years subsequent to implementation, banks would incur ongoing burdens to update and maintain their digital channels to ensure continual compliance with the requirements in the rule. For purposes of PRA, the FDIC would split the burden into two ICs: one for banks with less than $10 billion in total consolidated assets (assets) and one for banks with at least $10 billion in assets. This IC captures the burden for the latter group. 6. Policies and Procedures— Implementation, 12 CFR 328.8 (Recordkeeping; Mandatory). Section 328.8 requires IDIs to establish and maintain written policies and procedures to achieve compliance with part 328 including provisions related to monitor and evaluate the activities of persons that provide deposit-related services to the IDI or offer the IDI’s deposit-related products or services to other parties. The FDIC believes the hourly burden for these activities can be categorized into two distinct ICs covering: (1) implementation burdens incurred in the first year in which the policies and procedures are implemented; and (2) ongoing burden incurred every subsequent year to maintain compliance. This IC captures the implementation burden. 7. Policies and Procedures—Ongoing, 12 CFR 328.8 (Recordkeeping; Mandatory). Section 328.8 requires IDIs to establish and maintain written policies and procedures to achieve compliance with part 328 including provisions related to monitoring and evaluating the activities of persons that provide deposit-related services to the Insured Depository Institution or offer the Insured Depository Institution’s deposit-related products or services to VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 other parties. The FDIC believes the hourly burden for these activities can be categorized into two distinct ICs covering: (1) implementation burdens incurred in the first year in which the policies and procedures are implemented; and (2) ongoing burden incurred every subsequent year to maintain compliance. This IC captures the ongoing burden. 8. Insured Depository Institution Relationships—Implementation 12 CFR 328.102(b)(5) (Third-Party Disclosure; Mandatory). Section 328.102(b)(5) requires covered non-banks to ensure that their public statements regarding deposit insurance comply with the requirements in part 328. The FDIC believes the hourly burden for these activities can be categorized into two distinct ICs covering: (1) implementation burdens incurred in the first year in which the public statements are amended; and (2) ongoing burden incurred every subsequent year to ensure continual compliance. This IC captures the implementation burden. 9. Insured Depository Institution Relationships—Ongoing 12 CFR 328.102(b)(5) (Third-Party Disclosure; Mandatory). Section 328.102(b)(5) requires covered non-banks to ensure that their public statements regarding deposit insurance comply with the requirements in part 328. The FDIC believes the hourly burden for these activities can be categorized into two distinct ICs covering: (1) implementation burdens incurred in the first year in which the public statements are amended; and (2) ongoing burden incurred every subsequent year to ensure continual compliance. This IC captures the ongoing burden. 10. Request for Consent to Use NonEnglish Language Advertising Statement—12 CFR 328.3(f), proposed 12 CFR 328.6(f) (Reporting; Required to Obtain or Retain a Benefit). Existing § 328.3(f), which the proposed rule moves to § 328.6(f), requires IDIs to obtain prior written approval of the FDIC before using a non-English equivalent of the official FDIC advertising statement in an advertisement. Methodology and Assumptions Estimated Annual Number of Respondents ICs 1–7 and IC 10 capture PRA burdens incurred by IDIs. According to recent Call Reports, the FDIC supervised approximately 4,564 IDIs.74 These include 158 IDIs with assets at least $10 billion and 4,496 IDIs with assets less 74 According PO 00000 Frm 00023 to Call Reports as of June 30, 2023. Fmt 4701 Sfmt 4700 3525 than $10 billion. Of these, 3,373 IDIs are considered small entities for purposes of the Regulatory Flexibility Act. IC 1 captures PRA burdens incurred by all IDIs with less than $10 billion in assets, and IC 2 captures PRA burdens incurred by all IDIs with at least $10 billion in assets. Using the Call Report data summarized above, the FDIC estimates 4,496 annual respondents for IC 1 and 158 annual respondents for IC 2. ICs 3 and 6 capture implementation burdens incurred by all 4,496 IDIs. Implementation burdens are incurred in the first year after the proposed rule would become effective. Given that this information collection request (ICR) covers PRA burdens over three years, the FDIC annualizes the counts of respondents by dividing the total number of respondents by three. Thus, the FDIC estimates 1,551 annual respondents for ICs 3 and 6. ICs 4, 5, and 7 capture the ongoing PRA burdens incurred by the 4,496 IDIs with less than $10 billion in assets, the 158 IDIs with at least $10 billion in assets, and all 4,654 IDIs, respectively. Ongoing burdens are incurred in two of the three years after the rule would become effective. The FDIC annualizes the counts of respondents accordingly. Thus, the FDIC estimates 2,997 annual respondents for IC 4, 105 annual respondents for IC 5 and 3,103 annual respondents for IC 7. ICs 8 and 9 capture PRA requirements incurred by non-banks. The FDIC does not have direct data on the number of non-banks that would be subject to part 328. The FDIC assumes that the affected non-banks would generally be classified in the following North American Industry Classification System (NAICS) industries: Miscellaneous Financial Investment Activities (NAICS Code 523999), Financial Transaction Processing, Reserve & Clearinghouse Activities (NAICS Code 522320), Computer System Design and Related Services (NAICS Code 5415), and Investment Advice (NAICS Code 523930). As discussed in the Expected Effects section, there were 148,235 firms in these NAICS industries in 2020, the most recent year for which such data is available. However, not all of these firms enter into agreements with IDIs or otherwise engage in operations related to insured deposits; the FDIC assumes that the number of non-banks engaged in such operations would be considerably less than the number of IDIs. For purposes of this estimation, the FDIC assumes that the number of covered non-banks would be approximately one percent of firms in the NAICS industries listed above. E:\FR\FM\18JAR2.SGM 18JAR2 3526 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations Therefore, the FDIC estimates that approximately 1,500 non-banks will incur burdens associated with part 328. ICs 8 and 9 are implementation and ongoing burdens, respectively. The FDIC annualizes the count of respondents accordingly. Thus, the FDIC estimates 500 annual respondents for IC 8 and 1,000 annual respondents for IC 9. IC 10 captures PRA requirements incurred by IDIs that submit requests to the FDIC for the use of a non-English equivalent of the official FDIC advertising statement. The FDIC does not have data on the historical annual number of such requests submitted. However, the FDIC has not handled such a request since at least January 1, 2021, and believes it is unlikely that such a request from an IDI would be received within the next three years. As OMB’s system of record for PRA burdens does not allow non-positive respondent counts, the FDIC uses an annual respondent count of one for IC 10 to preserve the estimated burden calculations. khammond on DSKJM1Z7X2PROD with RULES2 Estimated Annual Number of Responses per Respondent ICs 1 and 2 capture the activities that respondents undertake at each of their branches to comply with the PRA requirements in 12 CFR 328.3. For purposes of this ICR, the FDIC designates the activities at a single branch as a single response by the respondent. According to recent Call Reports, IDIs with assets less than $10 billion operate approximately seven branches each, on average, while IDIs with assets of at least $10 billion have approximately 279 branches each, on average.75 Accordingly, the FDIC estimates seven responses per year for IC 1 and 279 responses per year for IC 2. For ICs 3–10, the activities that respondents undergo throughout the year to comply with the PRA requirements in each IC can all be considered part of a single annual response to that IC. Therefore, the FDIC uses one as the number of annual responses per respondent for these ICs. Estimated Burden Hours per Response ICs 1 and 2 capture the third-party disclosure burden of ensuring that signage within the premises of insured depository institutions comply with part 328. Data on this burden is unavailable. The FDIC assumes that larger banks are more likely to have branches that are 75 According to Call Reports as of June 30, 2023, there were 4,496 IDIs with assets less than $10 VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 nontraditional, complex, and/or offer both deposit and non-deposit products. While smaller IDIs are more likely to operate simple branches that offer only deposit products and may not require extensive revisions of signage, those that do may require updates to their designated areas. For purposes of this ICR, the FDIC estimates the burden would be approximately one hour per branch, on average, for institutions with less than $10 billion in assets and approximately two hours per branch, on average, for institutions with at least $10 billion in assets. Accordingly, the FDIC estimates burdens as one hour per response for IC 1 and two hours per response for IC 2. ICs 3, 4, and 5 capture the third-party disclosure burden of ensuring that signs for ATMs and digital deposit-taking channels comply with part 328. Data on this burden is unavailable. The FDIC assumes that larger banks are more likely to have more complex digital operations or offer both deposit and non-deposit products through their digital deposit-taking operations. However, these larger banks may also have permanent IT teams in place that could facilitate and/or reduce the hourly burden of these changes. Conversely, for smaller banks relying on third-party web service providers, many may be seeking compliance through the same channel as others, which could create a backlog of work on the third-party web service providers, making it so other small banks experience a delay in compliance timelines. For purposes of this ICR, FDIC assumes that each IDI will spend 60 hours, on average, in the first year to implement the changes to its ATM and digital deposit-taking channels to comply with part 328. In subsequent years, IDIs with less than $10 billion in assets would spend approximately 10 additional hours per year, on average, to maintain ongoing compliance, while IDIs with at least $10 billion in assets would spend approximately 20 additional hours per year, on average, to maintain ongoing compliance. As such, FDIC estimates burdens as 60 hours per response for IC 3, 10 hours per response for IC 4, and 20 hours per response for IC 5. ICs 6 and 7 capture the recordkeeping burden of ensuring that the IDIs’ policies and procedures comply with part 328. The FDIC assumes the recordkeeping burden imposed relates to documenting the development of policies and procedures by compliance officers and senior management that would be appropriate to the institution’s risk profile. This program would then be reviewed, revised, and then approved by the board of directors or other executives at the institution. In addition, part 328 requires that IDIs monitor and evaluate certain third parties to ensure that these third parties are also in compliance with part 328. Additional recordkeeping burden would be incurred in documenting the results of such monitoring activities. Data on the hourly burden of these activities is unavailable. For purposes of this ICR, the FDIC assumes that each IDI, on average, would spend approximately 80 hours in the first year to establish and/ or implement policies and approximately 12 hours in each subsequent year to revise and update these documents. The FDIC estimates burdens as 80 hours per response for IC 6 and 12 hours per response for IC 7. ICs 8 and 9 capture the burden of ensuring that covered non-banks’ thirdparty disclosures comply with part 328. Data on this burden is unavailable. The FDIC assumes each covered non-bank entity, on average, would spend approximately two and one-half hours in the first year to implement these procedures and approximately one hour in each subsequent year to revise and maintain ongoing compliance. The FDIC estimates burdens as two and one-half hours per response for IC 8 and one hour per response for IC 9. IC 10 captures the reporting burden incurred when an IDI requests approval from the FDIC to use the non-English equivalent of the official advertising statement in any of its advertisements. The FDIC believes that an IDI would spend approximately two hours per year, on average, to prepare and submit such requests. billion operating 33,479 branches and 158 IDIs with assets at least $10 billion operating 44,133 branches. PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 Estimated Annual Burden Summary The estimated PRA burdens for the proposed rule are summarized in the Summary of Estimated Annual Burden table below. For each IC, the burden table lists the estimated annual number of responses per respondent and estimated time per response, as described in the sections above. Note that the counts of annual respondents for ICs 3–9 have been annualized to reflect a three-year PRA cycle in which respondents incur implementation costs in the first year and ongoing costs in the second and third years. E:\FR\FM\18JAR2.SGM 18JAR2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations 3527 SUMMARY OF ESTIMATED ANNUAL PRA BURDEN Information collection (obligation to respond) Type of burden (frequency of response) 1. Signs within Institution Premises—Banks <$10B, 12 CFR 328.3 (Mandatory). 2. Signs within Institution Premises—Banks >=$10B, 12 CFR 328.3 (Mandatory). 3. Signage for ATMs and Digital Deposit-taking Channels—Implementation, 12 CFR 328.4 and .5 (Mandatory). 4. Signage for ATMs and Digital Deposit-taking Channels—Banks <$10B—Ongoing, 12 CFR 328.4 and .5 (Mandatory). 5. Signage for ATMs and Digital Deposit-taking Channels—Banks >=$10B—Ongoing, 12 CFR 328.4 and .5 (Mandatory). 6. Policies and Procedures—Implementation, 12 CFR 328.8 (Mandatory). 7. Policies and Procedures—Ongoing, 12 CFR 328.8 (Mandatory). 8. Insured Depository Institution Relationships— Implementation 12 CFR 328.102(b)(5) (Mandatory). 9. Insured Depository Institution Relationships— Ongoing 12 CFR 328.102(b)(5) (Mandatory). 10. Request for Consent to Use Non-English Language Advertising Statement—12 CFR 328.6(f) (Required to Obtain or Retain a Benefit). Average number of responses per respondent Number of respondents Average time per response (HH:MM) Annual burden (hours) Third-Party Disclosure (Annual). Third-Party Disclosure (Annual). Third-Party Disclosure (Annual). 4,496 7 1:00 31,472 158 279 2:00 88,164 1,551 1 60:00 93,060 Third-Party Disclosure (Annual). 2,997 1 10:00 29,970 Third-Party Disclosure (Annual). 105 1 20:00 2,100 Recordkeeping (Annual) 1,551 1 80:00 124,080 Recordkeeping (Annual) 3,103 1 12:00 37,236 Third-Party Disclosure (Annual). 500 1 2:30 1,250 Third-Party Disclosure (Annual). Reporting (On occasion). 1,000 1 1:00 1,000 1 1 2:00 2 ........................ ........................ ........................ 408,334 Total Annual Burden (Hours) ........................ ....................................... khammond on DSKJM1Z7X2PROD with RULES2 Source: FDIC. Note: The annual burden estimate for a given collection is calculated in two steps. First, the total number of annual responses is calculated as the whole number closest to the product of the annual number of respondents and the annual number of responses per respondent. Then, the total number of annual responses is multiplied by the time per response and rounded to the nearest hour to obtain the estimated annual burden for that collection. This rounding ensures the annual burden hours in the table are consistent with the values recorded in the OMB’s regulatory tracking system. Riegle Community Development and Regulatory Improvement Act on which the regulations are published in final form. Section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA) requires that the Federal banking agencies, including the FDIC, in determining the effective date and administrative compliance requirements of new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations subject to certain exceptions, new regulations and amendments to regulations prescribed by a Federal banking agency which impose additional reporting, disclosures, or other new requirements on insured depository institutions shall take effect on the first day of a calendar quarter which begins on or after the date Congressional Review Act For purposes of the Congressional Review Act (5 U.S.C. 801 et seq.), the OMB makes a determination as to whether a final rule constitutes a ‘‘major rule.’’ If a rule is deemed a ‘‘major rule’’ by the OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication. The Congressional Review Act defines a ‘‘major rule’’ as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in: (1) an annual effect on the economy of $100 million or more; (2) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 export markets.76 The FDIC has submitted the final rule to the OMB for this major rule determination. As required by the Congressional Review Act, the FDIC will also submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review.77 Plain Language Section 722 of the Gramm-LeachBliley Act requires the Federal banking agencies to use plain language in all proposed and final rulemakings published in the Federal Register after January 1, 2000. The FDIC invited comment regarding the use of plain language, but did not receive any comments on this topic. List of Subjects in 12 CFR Part 328 Advertising, Bank deposit insurance, Savings associations, Signs and symbols. 76 See 77 See E:\FR\FM\18JAR2.SGM 5 U.S.C. 804(2). 5 U.S.C. 801(a)(1). 18JAR2 3528 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations Authority and Issuance For the reasons stated in the preamble, the Federal Deposit Insurance Corporation amends part 328 of title 12 of the Code of Federal Regulations as follows: PART 328—FDIC OFFICIAL SIGNS, ADVERTISEMENT OF MEMBERSHIP, FALSE ADVERTISING, MISREPRESENTATION OF INSURED STATUS, AND MISUSE OF THE FDIC’S NAME OR LOGO 1. The authority citation for part 328 continues to read as follows: ■ Authority: 12 U.S.C. 1818, 1819 (Tenth), 1820(c), 1828(a). 2. Revise the part heading to read as set forth above. ■ 3. Revise subpart A to read as follows: ■ Subpart A—FDIC Official Signs and Advertisement of Membership Sec. 328.0 Purpose. 328.1 Definitions. 328.2 Official sign. 328.3 Signs within institution premises and offering of non-deposit products within institution premises. 328.4 Signs for automated teller machines and like devices. 328.5 Signs for digital deposit-taking channels. 328.6 Official advertising statement requirements. 328.7 Prohibition against receiving deposits at same teller station or window as noninsured institution. 328.8 Policies and procedures. § 328.0 Purpose. Subpart A of this part describes the official signs and advertising statement and prescribes their use by insured depository institutions, as well as other signs to prevent customer confusion in the event non-deposit products are offered by an insured depository institution. Subpart A applies to insured depository institutions, including insured branches of foreign banks, but does not apply to non-insured offices or branches of insured depository institutions located in foreign countries. § 328.1 Definitions. Branch has the same meaning as the term ‘‘domestic branch’’ as set forth under section 3(o) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(o). Corporation means the Federal Deposit Insurance Corporation. Deposit has the same meaning as set forth under section 3(l) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(l). Digital deposit-taking channel means websites, banking applications, and any other electronic communications method through which an insured depository institution accepts deposits. Hybrid product means a product or service that has both deposit product features and non-deposit product features. A sweep account is an example of a hybrid product. Insured depository institution has the same meaning as set forth under section 3(c)(2) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(c)(2). Non-deposit product means any product that is not a ‘‘deposit’’, including, but not limited to: insurance products, annuities, mutual funds, securities and crypto-assets. For purposes of this definition, credit products and safe deposit boxes are not non-deposit products. § 328.2 Official sign. (a) Design. Except as otherwise provided in this section, the official sign referred to in this part shall be 7’’ by 3’’ in size, with black lettering and gold background, and has the following design: BMWl,y tl#follfoitl, mulmttlil of• ,,,,,,,.,,,,,. llnillllStt#el (b) Symbol. The ‘‘symbol’’ of the Corporation, as used in this subpart, shall be that portion of the official sign consisting of ‘‘FDIC’’ and the two lines of smaller type above and below ‘‘FDIC.’’ (c) Procuring signage. An insured depository institution may procure the official sign from the Corporation for official use at no charge. Information on obtaining the official sign is posted on the FDIC’s internet website, https:// www.fdic.gov. Alternatively, insured depository institutions may, at their expense, procure from commercial suppliers, signs that vary from the VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 official sign in size, color, or material. Any insured depository institution which has promptly submitted a written request for an official sign to the Corporation shall not be deemed to have violated this subpart by failing to display the official sign, unless the insured depository institution fails to display the official sign after receipt thereof. (d) Required changes in signage. The Corporation may require any insured depository institution, upon at least thirty (30) days’ written notice, to change the wording or color of the official sign in a manner deemed PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 necessary for the protection of depositors or others. § 328.3 Signs within institution premises and offering of non-deposit products within institution premises. (a) Scope. This section governs signage within the premises of insured depository institutions and the offering of non-deposit products within the premises of insured depository institutions. (b) Display of official sign. Each insured depository institution must continuously, clearly, and conspicuously display the official sign at each place of business where E:\FR\FM\18JAR2.SGM 18JAR2 ER18JA24.001</GPH> khammond on DSKJM1Z7X2PROD with RULES2 Federal Deposit lnaurance Corporatlon•www.fdic.gov khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations consumers have access to or transact with deposits, including all of its branches (except branches excluded from the scope of this subpart under § 328.0) and other premises in which customers have access to or transact with deposits, in the manner described in this paragraph (b). (1) Deposits received at teller windows or stations. If insured deposits are usually and normally received at teller windows or stations, the insured depository institution must display the official sign: (i) At each teller window or station where insured deposits are usually and normally received, in a size of 7″ by 3″ or larger with black lettering on a gold background as described in § 328.2(a); or (ii) If the insured depository institution does not offer non-deposit products on the premises, at one or more locations visible from the teller windows or stations in a manner that ensures a copy of the official sign is large enough so as to be legible from anywhere in that area. (2) Deposits received in areas other than teller windows or stations. If insured deposits are usually and normally received in areas of the premises other than teller windows or stations, the insured depository institution must display the official sign in one or more locations in a manner that ensures a copy of the official sign is large enough so as to be legible from anywhere in those areas. (3) Other locations within the premises. An insured depository institution may display the official sign in locations at the institution other than those required by this section, except for areas where non-deposit products are offered. (4) Varied signs. An insured depository institution may display signs that vary from the official sign in size, color, or material at any location where display of the official sign is required or permitted under this paragraph. However, any such varied sign that is displayed in locations where display of the official sign is required must not be smaller in size than the official sign, must have the same color for the text and graphics, and includes the same content. (5) Newly insured institutions. An insured depository institution shall display the official sign as described in this section no later than its twenty-first calendar day of operation as an insured depository institution, unless the institution promptly requested the official sign from the Corporation but did not receive it before that date. VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 (c) Non-deposit products offered on insured depository institution premises— (1) Segregated areas. Except as provided in paragraph (c)(3) of this section, if non-deposit products are offered within the premises, those products must be physically segregated from areas where insured deposits are usually and normally accepted. The institution must identify areas where activities related to the sale of nondeposit products occur and clearly delineate and distinguish those areas from the areas where insured deposittaking activities occur. (2) Non-deposit signage. At each location within the premises where nondeposit products are offered, an insured depository institution must continuously, clearly, and conspicuously display signage indicating that the non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. Such signage may not be displayed in close proximity to the official sign. (3) Physical area limitations. In limited situations where physical considerations present challenges to offering non-deposit products in a distinct area, an institution must take prudent and reasonable steps to minimize customer confusion. (d) Electronic media. Insured depository institutions may use electronic media to display the official sign and non-deposit sign required by this section. § 328.4 Signs for automated teller machines and like devices. (a) Scope. This section governs signage for insured depository institutions’ automated teller machines or other remote electronic facilities that receive deposits. (b) ATMs or like devices that do not offer access to non-deposit products. Except as provided in paragraph (e), an insured depository institution’s automated teller machine or like device that receives deposits for an insured depository institution and does not offer access to non-deposit products may comply with the official sign requirement of this section by either: (1) Displaying the physical official sign as described in § 328.2 on the automated teller machine, subject to paragraph (f); or (2) Displaying the FDIC official digital sign as described in paragraph (c) of this section. (c) Display of FDIC official digital sign. An insured depository institution’s automated teller machine or like device that receives deposits for an insured depository institution and offers access PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 3529 to non-deposit products must clearly, continuously, and conspicuously display the FDIC official digital sign as described in § 328.5 on its home page or screen and on each transaction page or screen relating to deposits. (d) Non-deposit signage. An insured depository institution’s automated teller machine or like device that receives deposits for an insured depository institution and offers access to nondeposit products must clearly, continuously, and conspicuously display electronic disclosures indicating that such non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. These disclosures must be displayed on each transaction page or screen relating to non-deposit products. Such signage may not be displayed in close proximity to the FDIC official digital sign. (e) Automated teller machines and like devices placed into service after January 1, 2025. An insured depository institution’s automated teller machine or like device that receives deposits for an insured depository institution and does not offer access to non-deposit products, that is placed into service after January 1, 2025 must display the official digital sign as described in paragraph (c) of this section. (f) Degraded or defaced physical official signs. A physical official sign that is displayed on an insured depository institution’s automated teller machine or like device under paragraph (b)(1) that is degraded or defaced would not be displayed ‘‘clearly, continuously, and conspicuously’’ for purposes of paragraph (b)(1) of this section. § 328.5 Signs for digital deposit-taking channels. (a) Scope. This section governs signage for digital deposit-taking channels, including insured depository institutions’ websites and web-based or mobile applications that offer the ability to make deposits electronically and provide access to deposits at insured depository institutions. (b) Design. In general, the ‘‘FDIC’’ in the FDIC official digital sign shall be displayed with a wordmark size of 37.36 × 15.74px, in navy blue (hexadecimal color code #003256), and the ‘‘FDICInsured—Backed by the full faith and credit of the U.S. Government’’ shall be displayed in regular 400 italic (12.8px) and with black (hexadecimal color code #000000) lettering. The entire FDIC official digital sign shall be displayed in Source Sans Pro Web. If the FDIC official digital sign in these colors would be illegible in a digital-taking channel, due to the color of the background, the entire FDIC official E:\FR\FM\18JAR2.SGM 18JAR2 3530 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations digital sign shall be displayed in white (hexadecimal color code #FFFFFF). The official digital sign required by the provisions of this section shall have the following design: (c) Digital symbol. The ‘‘digital symbol’’ of the Corporation, as used in this subpart, shall be that portion of the FDIC official digital sign consisting of ‘‘FDIC’’ and the one line of smaller type to the right of ‘‘FDIC’’. (d) Display of FDIC official digital sign. An insured depository institution must clearly, continuously and conspicuously display the FDIC official digital sign specified in paragraph (b) of this section on its digital deposit-taking channels on the following pages or screens: (1) Initial or homepage of the website or application; (2) Landing or login pages; and (3) Pages where the customer may transact with deposits. (e) Legibility. The FDIC official digital sign shall be clearly legible across all insured depository institution deposittaking channels. (f) Clear and conspicuous placement of FDIC official digital sign. An official digital sign continuously displayed near the top of the relevant page or screen and in close proximity to the insured depository institution’s name would be considered clear and conspicuous. (g) Display of non-deposit signage. (1) Continuous Display of Non-deposit signage. If a digital deposit-taking channel offers both access to deposits at an insured depository institution and non-deposit products, the insured depository institution must clearly and conspicuously display signage indicating that the non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. This signage must be displayed continuously on each page relating to non-deposit products. This non-deposit signage may not be displayed in close proximity to the digital sign required by paragraph (d) of this section. (2) One-Time Notification for Bank Customers Related to Third-Party Nondeposit Products. If a digital deposittaking channel offers access to nondeposit products from a non-bank third party’s online platform, and a logged-in bank customer attempts to access such non-deposit products, the insured depository institution must provide a one-time per web session notification on the insured depository institution’s deposit-taking channel before the customer leaves the insured depository VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 institution’s digital deposit-taking channel. The notification must be dismissed by an action of the bank customer before initially accessing the third party’s online platform and it must clearly, conspicuously indicate that the third party’s non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. Nothing in this paragraph shall be read to limit an insured depository institution’s ability to include additional disclosures in the notification that may help prevent consumer confusion, including, for example, that the bank customer is leaving the insured depository institution’s website. (h) Required changes in digital signage. The Corporation may require any insured depository institution, upon at least thirty (30) days’ written notice, to change the wording, color or placement of the FDIC official digital sign and other signs for digital deposittaking channels when it is deemed necessary for the protection of depositors or others or to ensure consistency with this part’s requirement. § 328.6 Official advertising statement requirements. (a) Advertisement defined. The term ‘‘advertisement,’’ as used in this subpart, shall mean a commercial message, in any medium, that is designed to attract public attention or patronage to a product or business. (b) Official advertising statement. The official advertising statement shall be in substance as follows: ‘‘Member of the Federal Deposit Insurance Corporation.’’ (1) Optional short title and symbol. The short title ‘‘Member of FDIC’’, ‘‘Member FDIC’’, ‘‘FDIC-Insured’’, or a reproduction of the symbol of the Corporation (as described in § 328.2(b)), may be used by insured depository institutions at their option as the official advertising statement. (2) Size and print. The official advertising statement shall be of such size and print to be clearly legible. If the symbol of the Corporation is used as the official advertising statement, and the symbol must be reduced to such proportions that the two lines of smaller type above and below ‘‘FDIC’’ are indistinct and illegible, those lines of PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 smaller type may be blocked out or dropped. (c) Use of official advertising statement in advertisements—(1) General requirement. Except as provided in paragraph (d) of this section, each insured depository institution shall include the official advertising statement prescribed in paragraph (b) of this section in all advertisements that either promote deposit products and services or promote non-specific banking products and services offered by the institution. For purposes of this section, an advertisement promotes non-specific banking products and services if it includes the name of the insured depository institution but does not list or describe particular products or services offered by the institution. An example of such an advertisement would be, ‘‘Anytown Bank, offering a full range of banking services.’’ (2) Foreign depository institutions. When a foreign depository institution has both insured and noninsured U.S. branches, the depository institution must also identify which branches are insured and which branches are not insured in all of its advertisements requiring use of the official advertising statement. (3) Newly insured institutions. A depository institution shall include the official advertising statement in its advertisements no later than its twentyfirst day of operation as an insured depository institution. (d) Types of advertisements which do not require the official advertising statement. The following types of advertisements do not require use of the official advertising statement: (1) Statements of condition and reports of condition of an insured depository institution which are required to be published by State or Federal law; (2) Insured depository institution supplies such as stationery (except when used for circular letters), envelopes, deposit slips, checks, drafts, signature cards, deposit passbooks, certificates of deposit, etc.; (3) Signs or plates in the insured depository institution offices or attached to the building or buildings in which such offices are located; (4) Listings in directories; E:\FR\FM\18JAR2.SGM 18JAR2 ER18JA24.002</GPH> khammond on DSKJM1Z7X2PROD with RULES2 fNr FDIC-Insured - Backed by the full faith and credit of the U.S. Government ~,~K~"'~~h~¥48:~¼W'~"◊','lr~w~~~=t!iY-%01W'#)R?~'\\_WKst;!ft.h~§f:Jk.W!."4:1~~w:~imfi"L?s1:'1'€!1~'!41fil4.m..ufill~~~½~~~oo~@mf~T~~q~~?~To~¥A~~w~~~~~%lli~&~~~~n1~~~x~;Jr~~,, khammond on DSKJM1Z7X2PROD with RULES2 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations (5) Advertisements not setting forth the name of the insured depository institution; (6) Entries in a depository institution directory, provided the name of the insured depository institution is listed on any page in the directory with a symbol or other descriptive matter indicating it is a member of the Federal Deposit Insurance Corporation; (7) Joint or group advertisements of depository institution services where the names of insured depository institutions and noninsured institutions are listed and form a part of such advertisements; (8) Advertisements by radio or television, other than display advertisements, which do not exceed thirty (30) seconds in time; (9) Advertisements which are of the type or character that make it impractical to include the official advertising statement, including, but not limited to, promotional items such as calendars, matchbooks, pens, pencils, and key chains; and (10) Advertisements which contain a statement to the effect that the depository institution is a member of the Federal Deposit Insurance Corporation, or that the depository institution is insured by the Federal Deposit Insurance Corporation, or that its deposits or depositors are insured by the Federal Deposit Insurance Corporation to at least the standard maximum deposit insurance amount (as defined in § 330.1(o)) for each depositor. (e) Restrictions on using the official advertising statement when advertising non-deposit products—(1) Non-deposit product advertisements. Except as provided in paragraph (e)(3) of this section, an insured depository institution shall not include the official advertising statement, or any other statement or symbol which implies or suggests the existence of Federal deposit insurance, in any advertisement relating solely to non-deposit products. (2) Hybrid product advertisements. Except as provided in paragraph (e)(3) of this section, an insured depository institution shall not include the official advertising statement, or any other statement or symbol which implies or suggests the existence of Federal deposit insurance, in any advertisement relating solely to hybrid products. (3) Mixed advertisements. In advertisements containing information about both insured deposit products and non-deposit products or hybrid products, an insured depository institution shall clearly segregate the official advertising statement or any similar statement from that portion of VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 the advertisement that relates to the non-deposit products. (f) Official advertising statement in non-English language. The non-English equivalent of the official advertising statement may be used in any advertisement, provided that the translation has had the prior written approval of the Corporation. § 328.7 Prohibition against receiving deposits at same teller station or window as noninsured institution. (a) Prohibition. An insured depository institution may not receive deposits at any teller station or window where any noninsured institution receives deposits or similar liabilities. (b) Exception. This section does not apply to deposits received at an automated teller machine or other remote electronic facility that receives deposits for an insured depository institution, or to deposits facilitated through a digital deposit-taking channel. § 328.8 Policies and procedures. (a) Policies and Procedures. An insured depository institution must establish and maintain written policies and procedures to achieve compliance with this part. Such policies and procedures must be commensurate with the nature, size, complexity, scope, and potential risk of the deposit-taking activities of the insured depository institution and must include, as appropriate, provisions related to monitoring and evaluating activities of persons that provide deposit-related services to the insured depository institution or offer the insured depository institution’s deposit-related products or services to other parties. (b) Reservation of authority. Nothing in this section shall be construed to limit the FDIC’s authority to address violations of this part, the FDIC’s authority to interpret the rules in this part, or any other authority the FDIC has pursuant to any other laws or regulations. ■ 3. Amend § 328.101 by adding the definition for ‘‘Deposit’’ in alphabetical order, and revising the definitions for ‘‘FDIC-Associated Images’’, ‘‘Hybrid Product’’, ‘‘Non-Deposit Product’’, and ‘‘Uninsured Financial Product’’ to read as follows: § 328.101 Definitions. * * * * * Deposit has the same meaning as set forth under section 3(l) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(l). * * * * * FDIC-Associated Images means the Seal of the FDIC, alone or within the PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 3531 letter C of the term FDIC; the Official Sign and Symbol of the FDIC, as set forth in § 328.2; the FDIC Official Digital Sign and Digital Symbol set forth in § 328.5; the Official Advertising Statement, as set forth in § 328.6; any similar images; and any other signs and symbols that may represent or imply that any deposit, liability, obligation certificate, or share is insured or guaranteed in whole or in part by the FDIC. * * * * * Hybrid Product has the same meaning as set forth under § 328.1. * * * * * Non-Deposit Product means any product that is not a ‘‘deposit’’, including, but not limited to: insurance products, annuities, mutual funds, securities, and crypto-assets. For purposes of this definition, credit products and safe deposit box services are not Non-Deposit Products. * * * * * Uninsured Financial Product means any Non-Deposit Product, HybridProduct, investment, security, obligation, certificate, share, cryptoasset or financial product other than an ‘‘Insured Deposit’’ as defined in this section. ■ 4. Amend § 328.102 by adding paragraph (a)(3)(viii) and (b)(1)(iv) and revising paragraphs (b)(3)(ii), (b)(5), and (b)(6)(ii) to read as follows: § 328.102 Prohibition. (a) * * * (3) * * * (viii) Use of FDIC-Associated Terms or FDIC-Associated Images, in a manner that inaccurately states or implies that a person other than an insured depository institution is insured by the FDIC. (b) * * * (1) * * * (iv) A person other than an insured depository institution is an FDICinsured depository institution. This includes use of FDIC-Associated Terms or FDIC-Associated Images, in a manner that inaccurately states or implies that a person other than an insured depository institution is insured by the FDIC. (3) * * * (ii) The statement omits or fails to clearly and conspicuously disclose material information that would be necessary to prevent a reasonable consumer from being misled, regardless of whether any such consumer was actually misled. (5) Without limitation, a statement regarding deposit insurance will be deemed to omit or fail to clearly and conspicuously disclose material information if the absence of such E:\FR\FM\18JAR2.SGM 18JAR2 3532 Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES2 information could lead a reasonable consumer to believe any of the material misrepresentations set forth in paragraph (b)(4) of this section or could otherwise result in a reasonable consumer being unable to understand the extent or manner of deposit insurance provided. Examples of such material information include, but are not limited to, the following: (i) A statement made by a person other than an insured depository institution that represents or implies that an advertised product is insured by the FDIC that fails to clearly and conspicuously identify the insured depository institution(s) with which the representing party has a direct or indirect business relationship for the placement of deposits and into which the consumer’s deposits may be placed; (ii) A statement made by a person that is not an insured depository institution regarding deposit insurance that fails to clearly and conspicuously disclose that the person is not an FDIC-insured depository institution and that FDIC insurance only covers the failure of the FDIC-insured depository institution. A statement that a person is not an FDIC- VerDate Sep<11>2014 17:39 Jan 17, 2024 Jkt 262001 insured bank and deposit insurance covers the failure of an insured bank would be considered a clear statement for purposes of this provision. (iii) A statement made by a person regarding deposit insurance in a context where deposits and Non-Deposit products are both offered on a website in close proximity, that fails to clearly and conspicuously differentiate between insured deposits and Non-Deposit Products by disclosing that Non-Deposit Products: are not insured by the FDIC; are not deposits; and may lose value, except that: (A) Services unrelated to financial products or investments and physical goods shall not be considered NonDeposit Products for purposes of clause (b)(5)(iii) of this section; and (B) In the case of a Non-Deposit Product that is a product that allows consumers to store, send, or receive fiat money and does not fluctuate in value, failure to disclose that the Non-Deposit Product may lose value will not be a material omission for purposes of clause (b)(5)(iii) of this section. (iv) A statement made by a person regarding pass-through deposit PO 00000 Frm 00030 Fmt 4701 Sfmt 9990 insurance coverage that fails to clearly and conspicuously disclose that certain conditions must be satisfied for passthrough deposit insurance coverage to apply. (6) * * * (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 Bureau of Consumer Financial Protection, the U.S. Department of Justice, or a state bank supervisor, that such representations are false or misleading; and * * * * * Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on December 20, 2023. James P. Sheesley, Assistant Executive Secretary. [FR Doc. 2023–28629 Filed 1–17–24; 8:45 am] BILLING CODE 6714–01–P E:\FR\FM\18JAR2.SGM 18JAR2

Agencies

FEDERAL DEPOSIT INSURANCE CORPORATION

[Federal Register Volume 89, Number 12 (Thursday, January 18, 2024)]
[Rules and Regulations]
[Pages 3504-3532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28629]



[[Page 3503]]

Vol. 89

Thursday,

No. 12

January 18, 2024

Part II





Federal Deposit Insurance Corporation





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12 CFR Part 328





FDIC Official Signs and Advertising Requirements, False Advertising, 
Misrepresentation of Insured Status, and Misuse of the FDIC's Name or 
Logo; Final Rule

Federal Register / Vol. 89 , No. 12 / Thursday, January 18, 2024 / 
Rules and Regulations

[[Page 3504]]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 328

RIN 3064-AF26


FDIC Official Signs and Advertising Requirements, False 
Advertising, Misrepresentation of Insured Status, and Misuse of the 
FDIC's Name or Logo

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending 
its regulations governing use of the official FDIC sign and insured 
depository institutions' (IDIs) advertising statements to reflect how 
depositors conduct business with IDIs today, including through digital 
and mobile channels. The final rule also clarifies the FDIC's 
regulations regarding misrepresentations of deposit insurance coverage 
by addressing specific scenarios where consumers may be misled as to 
whether they are conducting business with an IDI and whether their 
funds are protected by federal deposit insurance. The final rule is 
intended to enable consumers to better understand when they are 
conducting business with an IDI and when their funds are protected by 
the FDIC's deposit insurance coverage.

DATES: The amendments made in this rule are effective April 1, 2024. 
Compliance is required by January 1, 2025.

FOR FURTHER INFORMATION CONTACT: Division of Depositor and Consumer 
Protection: Luke H. Brown, Associate Director, 202-898-3842, 
[email protected]; Meron Wondwosen, Chief, Supervisory Policy, 202-898-
7211, [email protected]; Edward J. Hof, Senior Policy Analyst, 202-
898-7213, [email protected]. Legal Division: Vivek Khare, Counsel, 202-
898-6847, [email protected]; James Watts, Counsel, 202-898-6678, 
[email protected]; Chantal Hernandez, Senior Attorney, 202-898-7388, 
[email protected].

SUPPLEMENTARY INFORMATION: The FDIC is amending part 328 of its 
regulations, which includes requirements for use of the official FDIC 
sign and IDIs' advertising statements, as well as misrepresentations of 
insured status and misuse of the FDIC's name or logo. The final rule 
generally: (1) modernizes and amends the rules governing the display of 
the official sign in branches to also, for example, apply the rules to 
IDIs' physical premises with different layouts and designs where 
consumers have access to or transact with deposits; (2) establishes and 
requires the display of the FDIC official digital sign on bank 
websites, mobile applications, and certain IDI automated teller 
machines (ATMs) and other like devices; (3) requires the use of 
disclosures differentiating deposits and non-deposit products across 
all banking channels, including digital channels; (4) clarifies the 
FDIC's rules regarding misrepresentations of deposit insurance coverage 
by addressing specific scenarios where information provided to 
consumers may be misleading; (5) amends the definition of ``non-deposit 
product'' to include crypto-assets and specifically address safe 
deposit box services; and (6) requires IDIs to establish and maintain 
written policies and procedures addressing compliance with part 328. As 
explained below, the final rule is intended to enable consumers to 
better understand when they are conducting business with an IDI and 
when their funds are protected by the FDIC's deposit insurance 
coverage.

A. Policy Objectives

    The banking landscape has significantly changed since 2006, when 
the FDIC last updated its regulation on the official sign and 
advertising statement. For example, consumers are increasingly relying 
on internet and mobile banking channels to access IDI banking services, 
bank branches are continually evolving to serve depositors, and 
financial technology (fintech) companies are offering consumers new 
options and alternatives for accessing banking products and services. 
While these developments are beneficial, they may make it more 
difficult for depositors and consumers to understand when they are 
conducting business with an IDI and when their funds are protected by 
FDIC deposit insurance. In addition, the FDIC has observed an increase 
in misleading representations about deposit insurance on the internet, 
which can result in consumer confusion and harm. These types of 
misleading statements create uncertainty and could dilute and undermine 
the confidence that underpins banks and our nation's broader financial 
system.
    To address ongoing market and technological developments, the 
amendments to part 328 are intended to achieve several policy goals. 
Specifically, the FDIC intends to bring the certainty and confidence 
historically provided by the FDIC official sign found at banks' teller 
windows to IDI digital channels through which depositors are 
increasingly handling their banking needs today. These channels serve 
as the digital teller windows of the modern banking landscape, and it 
is critical that these channels provide clear, consistent, and accurate 
information about deposit insurance upon which consumers, businesses, 
and other entities may base their financial decisions.
    The final rule establishes sign requirements across all banking 
channels, including evolving digital channels, to better align with how 
depositors conduct business with IDIs today. The sign requirements are 
also intended to more clearly distinguish insured deposits from non-
deposit products (which are not insured) and to help consumers 
distinguish IDIs from non-banks in the digital age. The final rule 
allows consumers, businesses, and other entities to better understand 
when their funds are protected by FDICs deposit insurance, and when 
they may not be insured. At the same time, the sign requirements are 
intended to permit flexibility for IDIs and other firms in the 
marketing of their products and services.
    The amendments to the FDIC's rules regarding misrepresentations of 
deposit insurance coverage are intended to address specific scenarios 
where information provided to consumers may be misleading with respect 
to deposit insurance coverage. In particular, the FDIC is concerned 
that certain business relationships between IDIs and non-banks may be 
confusing to many consumers. Consequently, the final rule requires 
clear disclosures that will better inform consumers as to when their 
funds are protected by FDIC deposit insurance. Further clarity in this 
area will be beneficial for both consumers and the industry.

B. Background

    The FDIC is an independent federal agency and its mission is to 
maintain stability and public confidence in the nation's financial 
system by, among other things, insuring deposits at all IDIs. Today, 
there are about 4,654 IDIs in the United States.\1\ Since 1933, the 
FDIC has taken action in accordance with its mission to restore public 
confidence in the banking system in times of financial turmoil, 
including the severe financial crisis of 2008 to 2013, during the 
financial stress associated with the coronavirus disease 2019 (COVID-
19) pandemic, and, most recently, when large regional banks failed in 
the first half of 2023. The FDIC has proactively sought to protect

[[Page 3505]]

depositors and consumers,\2\ promote public confidence in insured 
deposits, and prevent false and misleading representations about the 
manner and extent of FDIC deposit insurance.
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    \1\ Call Reports as of June 30, 2023.
    \2\ As used in this document, the term ``consumer'' means any 
current or potential depositor, including natural persons, 
organizations, corporate entities, and governmental bodies. See 12 
CFR 328.101.
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Statutory Authority and Regulations

    Sign and advertising statement requirements for IDIs date back to 
the Banking Act of 1935 and are now set forth in section 18(a) of the 
Federal Deposit Insurance Act (FDI Act).\3\ Section 18(a) grants the 
FDIC authority to prescribe regulations with respect to these 
requirements, which are currently contained in subpart A to 12 CFR part 
328.\4\
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    \3\ 12 U.S.C. 1828(a)(1). Section 9 of the FDI Act provides the 
FDIC with the authority to prescribe rules and regulations as it may 
deem necessary to carry out the provisions of this Act or of any 
other law which it has the responsibility of administering or 
enforcing. 12 U.S.C. 1819(a) Tenth.
    \4\ See subpart A to 12 CFR part 328 (Sec. Sec.  328.0 through 
328.5-328.99).
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    The FDIC's official sign and advertising statement regulations 
require IDIs to continuously display the FDIC official sign where 
insured deposits are usually and normally received in the bank's 
principal place of business and at all of its branches and to use an 
official advertising statement, such as ``Member FDIC,'' when 
advertising deposit products and services, with few exceptions.\5\ The 
FDIC last made major amendments to these regulations in 2006.\6\ The 
2006 amendments refer to an IDI's physical premises and ``Remote 
Service Facilities'' but do not specify other banking channels that 
have since evolved, such as digital banking channels.\7\
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    \5\ See generally, 12 CFR part 328.
    \6\ 71 FR 66098 (Nov. 13, 2006).
    \7\ See 12 CFR 328.2. ``Remote Service Facility'' includes any 
automated teller machine, cash dispensing machine, point-of-sale 
terminal, or other remote electronic facility where deposits are 
received. 12 CFR 328.2(a)(1)(ii).
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    Section 18(a)(4) of the FDI Act prohibits any person from misusing 
the name or logo of the FDIC or from engaging in false advertising or 
making knowing misrepresentations about deposit insurance.\8\ The FDIC 
has broad statutory authority in this area and, in May 2022, issued 
specific regulations in subpart B to 12 CFR part 328 regarding false 
representations related to FDIC insurance and the misuse of the FDIC 
name and logo.\9\
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    \8\ 12 U.S.C. 1828(a)(4). Section 18(a)(4) also provides the 
FDIC independent authority to investigate and take administrative 
enforcement actions, including the power to issue cease and desist 
orders and impose civil money penalties, against any person who 
misuses the FDIC name or logo or makes misrepresentations about 
deposit insurance. 12 U.S.C. 1828(a)(4)(C)-(D). Furthermore, under 
Federal law, it is a criminal offense to misuse the FDIC name or 
make false representations regarding deposit insurance. See 18 
U.S.C. 709.
    \9\ 87 FR 33415 (June 2, 2022); Subpart B to 12 CFR part 328 
(Sec. Sec.  328.100 through 328.109). Subpart B establishes the 
process by which the FDIC identifies and investigates conduct that 
may violate section 18(a)(4), the standards under which such conduct 
is evaluated, and the procedures the FDIC follows when formally and 
informally enforcing the provisions of section 18(a)(4).
---------------------------------------------------------------------------

Developments in Consumer Access to Banking and Financial Services

    In recent years, there have been significant changes in the 
provision of banking products and services, including the widespread 
use of digital banking channels as a critical and fundamental mechanism 
to access banking and financial services, the evolution of bank 
branches' role in serving consumers, and an increasingly broad array of 
financial products offered through banking channels, including access 
to non-deposit products. The following overview of these trends is 
intended to provide context for the final rule, which seeks to enable 
consumers to better understand when they are conducting business with 
an IDI and when their funds are protected by the FDIC's deposit 
insurance coverage.
    Many bank branches retain a traditional physical branch footprint, 
serving depositors primarily at teller windows or stations. According 
to the FDIC's 2021 National Survey of Unbanked and Underbanked 
Households (Household Survey), roughly 63.4 percent of all banked 
households used a bank teller to access their accounts at least once in 
the last 12 months, including 57.8 percent of the youngest banked 
households between the ages of 15 to 24, and 72.2 percent of the oldest 
banked households aged 65 or older.\10\ However, IDIs have increasingly 
begun operating physical premises with different layouts and designs. 
These locations may include electronically-staffed kiosks, interactive 
ATMs that provide remote assistance with a teller, and teller-less 
caf[eacute]s with internet access where deposits can be accepted on 
tablets or through ATMs. The FDIC's long-standing sign rules, focused 
on display of the official sign at teller windows or stations, need to 
be updated to reflect these market changes and the way banks and 
consumers conduct business.
---------------------------------------------------------------------------

    \10\ Federal Deposit Insurance Corporation (FDIC), 2021 National 
Survey of Unbanked and Underbanked Households (October 2022), 
https://www.fdic.gov/analysis/household-survey/2021report.pdf.
---------------------------------------------------------------------------

    The FDIC's long-standing sign rules also do not reflect the digital 
banking services now offered, such as online banking and mobile 
banking. For example, digital banking channels enable banks to receive 
customer deposits through remote deposit capture. For consumers that 
use these channels to make deposits, an IDI's ATM, website, or mobile 
application effectively serves as a digital teller window. The results 
of the Household Survey show that the proportion of banked households 
that used mobile banking as their primary method of bank account access 
increased from 34.0 percent in 2019 to 43.5 percent in 2021.\11\ The 
proportion of banked households that used online banking as their 
primary method of bank account access was similar in 2019 (22.8 
percent) and 2021 (22.0 percent).\12\ Combined, 65.4 percent of banked 
households in 2021 used mobile or online banking as their primary 
method of bank account access, up from 56.8 percent in 2019.\13\ Given 
that nearly two-thirds of banked households primarily access banking 
products through phones, computers, and other devices, the FDIC 
believes it is critical to update its rules and provide consistent sign 
requirements for digital channels.
---------------------------------------------------------------------------

    \11\ Id. at 25.
    \12\ Id.
    \13\ Id.
---------------------------------------------------------------------------

    Banking customers are also offered an increasingly wide array of 
financial products and services, regardless of whether they are in a 
branch, using an ATM, or connecting with an IDI through digital 
channels. In many instances, IDIs offer both deposits and non-deposit 
products to consumers. For example, IDIs might allow depositors in 
their branches to consult with an investment adviser and purchase 
securities or mutual funds. Options to purchase non-deposit products 
are continuing to evolve, with some IDIs offering ATM or digital 
banking customers the ability to purchase crypto-assets with their 
funds. In some cases, an IDI may provide its customers who initially 
access the IDI's website, ATM, or banking application the ability to 
purchase non-deposit products from a third party. Absent adequate signs 
or disclosures, simultaneous offering of both insured deposits and non-
deposit products may lead bank customers (who are aware that the IDI is 
insured by the FDIC) to mistakenly conclude that all of the financial 
products being offered through

[[Page 3506]]

their bank's website or application are FDIC-insured.
    Growth in the number of fintech companies has also blurred the 
distinction between IDIs and non-banks in the eyes of many consumers, 
increasing the potential for confusion regarding deposit insurance 
coverage. Business arrangements between IDIs and non-banks, including 
fintech companies, can take many forms and continue to evolve at a 
rapid pace. In some cases, such business arrangements can present the 
risk of consumer confusion. For example, an IDI and a fintech company 
might enter into an arrangement where the fintech company offers the 
IDI's deposit products and services to the fintech company's customers. 
In other instances, fintech companies might deposit their customers' 
funds at an IDI. In such cases, the fintech company might represent to 
its customers that the customers' funds are FDIC-insured, or that they 
are insured by the FDIC on a ``pass-through'' basis, without noting 
that it is subject to certain conditions. The substantial increase in 
the number and types of arrangements and the various representations 
that companies are making regarding deposit insurance coverage may 
confuse many consumers. For example, inadequate disclosures may result 
in consumers not understanding whether they are dealing with an IDI, 
and whether their funds are insured by the FDIC.

Industry Outreach--Request for Information

    In February 2020 and April 2021, the FDIC published Requests for 
Information (collectively, the RFIs) in the Federal Register to seek 
public input regarding potential modernization of the official sign and 
advertising rules to reflect changes in deposit-taking via physical 
branch, digital, and mobile banking channels.\14\ In response to the 
RFIs, the FDIC received 20 comments from trade associations, IDIs, and 
others.\15\ In addition, FDIC staff met with representatives from IDIs, 
a technology service provider, and consumer groups. Commenters 
generally recognized the importance and value of displaying FDIC signs 
and the advertising statement, and some commenters stressed that 
depositors place significant trust in FDIC signs. A summary of these 
comments was provided in the December 2022 Notice of Proposed 
Rulemaking (NPR or proposal) and the comments were considered as part 
of this rulemaking process.\16\
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    \14\ 85 FR 18528 (Feb. 26, 2020); 86 FR 18528 (Apr. 9, 2021).
    \15\ Comments to the RFIs can be found on the FDIC's website, 
available at: https://www.fdic.gov/resources/regulations/federal-register-publications/2020/2020-rfi-fdic-sign-and-advertising-requirements-3064-za14.html and https://www.fdic.gov/resources/regulations/federal-register-publications/2021/2021-rfi-fdic-official-sign-and-advertising-requirements-3064-za14.html.
    \16\ 87 FR 78017, 78020 (Dec. 21, 2022).
---------------------------------------------------------------------------

Previous Rulemaking

    On May 17, 2022, the FDIC issued a final rule adding a new subpart 
B to 12 CFR part 328.\17\ The final rule describes: (1) the process by 
which the FDIC will identify and investigate conduct that may violate 
the prohibitions against misuse and misrepresentation; (2) the 
standards under which such conduct will be evaluated; and (3) the 
procedures that the FDIC will follow when formally and informally 
enforcing these prohibitions. While this rulemaking was an important 
step, the FDIC has observed an increase in the number of instances 
where financial services providers or other entities or individuals 
have misused the FDIC's name or logo or have made misrepresentations 
about FDIC insurance. Although the FDIC demanded that these non-banks 
cease and desist from making false and misleading statements, such 
actions by non-banks caused continuing challenges for consumers in 
determining whether they are conducting business with an IDI and 
whether their funds are protected by the FDIC's deposit insurance 
coverage.\18\ This final rule will provide further clarification of 
subpart B to address these challenges, particularly to address specific 
situations where consumers may be misled as to whether an entity is 
insured by the FDIC or as to the nature and extent of deposit insurance 
coverage.
---------------------------------------------------------------------------

    \17\ 87 FR 33415 (June 2, 2022).
    \18\ A public list of FDIC cease and desist letters related to 
violations of section 18(a)(4) of the FDI Act can be found on the 
FDIC's website, available at: https://www.fdic.gov/resources/regulations/laws/section-18a4-of-fdi-act/.
---------------------------------------------------------------------------

December 2022 Proposal and Comments

    On December 13, 2022, the FDIC Board approved an NPR on the FDIC's 
sign and advertising requirements, rules on misrepresentation of 
insured status, and misuse of the FDIC's name or logo. The FDIC sought 
to obtain input from the public for these proposed regulations in light 
of significant changes to bank branches and their role in serving 
consumers, the proliferation of digital channels as a critical and 
fundamental mechanism to access banking and financial services, and an 
increasingly broad array of financial products offered through banking 
channels, including access to non-deposit products.
    Specifically, the FDIC's proposal aimed to modernize its sign and 
advertising requirements to reflect current banking practices, like 
deposit-taking via physical branches and similar locations, digital 
banking channels, and ATMs. The proposal included three distinct signs 
relating to deposit insurance. The first pertained to the official sign 
displayed at IDIs' principal places of business. The NPR proposed to 
modernize the requirements relating to display of the official sign to 
reflect developments in the marketplace. The second was for a new 
digital official sign that IDIs would be required to display on their 
digital deposit-taking channels, such as online banking websites, 
mobile applications, and ATMs. Third, the FDIC proposed requiring IDIs 
to display a non-deposit products sign indicating that such products: 
are not insured by the FDIC; are not deposits; and may lose value 
(where the IDI offers both insured and uninsured, non-deposit products 
through the same channel) in order to address potential customer 
confusion regarding a product's insured status. The FDIC also proposed 
limited amendments to its official advertising statement requirements 
to provide IDIs with an additional option for a shortened official 
advertising statement. Finally, the proposal included clarifications 
for the application of the misrepresentation statute in specific 
situations where consumers may misunderstand or be misled as to whether 
an entity is insured by the FDIC or the nature and extent of deposit 
insurance coverage.
    The NPR solicited comments on all aspects of the proposed rule. The 
comment period ended on April 7, 2023. The FDIC received 17 substantive 
comments from financial institutions, industry groups, consumer 
organizations, investor advocacy groups, crypto-asset/blockchain 
groups, deposit networks, and third-party vendors.\19\
---------------------------------------------------------------------------

    \19\ Comments can be accessed at: https://www.fdic.gov/resources/regulations/federal-register-publications/2022/2022-fdic-official-sign-advertising-requirements-3064-af26.html. In response 
to a comment letter, the FDIC extended the comment period by 45 days 
to provide additional opportunity for the public to prepare comments 
to address the matters raised by the NPR.
---------------------------------------------------------------------------

    A number of comments were supportive of the proposal. More 
specifically, several comments supported the FDIC's efforts to 
modernize its rules in light of changes and innovation in the 
marketplace and to provide further clarity through

[[Page 3507]]

deposit insurance signage and advertisement requirements. Several 
comments also supported the FDIC's efforts to ensure consumers fully 
understand the insured status of products offered by financial 
institutions. One commenter provided that the confusion over new and 
complex financial products could undermine public confidence in the 
safety and reliability of the mainstream banking system.
    A number of commenters expressed a desire for more flexibility 
regarding the proposed signage and disclosure requirements. Some 
commenters advocated for increased flexibility in the placement of both 
physical and digital signage, noting the costs entailed to comply with 
the proposed rule's requirements.
    Several financial institutions provided that the proposed rule 
focused on community banks instead of non-banks that falsify their 
insured status, and noted that banks already take affirmative steps to 
inform their customers about deposit insurance coverage. However, other 
commenters commended the FDIC's effort to improve clarity for customers 
regarding deposit insurance coverage and reduce customer confusion, 
given the rise of various banking services offered by the third 
parties.
    Some comments advocated for stronger measures to address deposit 
insurance misrepresentations. Specifically, a commenter suggested that 
FDIC should expressly prohibit comparing an uninsured financial product 
to an insured product without clearly and conspicuously noting the 
difference between insured and uninsured status.
    Commenters also expressed views on an appropriate effective date 
for the rule. One commenter recommended a minimum 18-month 
implementation period before the final rule becomes effective. Another 
commenter requested that the requirements related to the digital sign 
be made effective after the industry has at least one year to comply.

C. Final Rule and Discussion of Comments

    The FDIC has reviewed and carefully considered public comments 
received and is generally finalizing the rule as proposed, with some 
changes and clarifications, as described below. The amendments made by 
this final rule will take effect on April 1, 2024. However, full 
compliance with the amendments made by this final rule is extended to 
January 1, 2025. The extended compliance date is intended to provide 
sufficient time for financial institutions to put in place processes, 
systems and technological updates to implement the new regulatory 
requirements described below.

1. FDIC Official Sign

    The FDIC did not receive comments on its official sign and will 
continue to use the existing design of the official sign, which, in 
addition to prominently bearing the name of the FDIC, includes 
statements indicating that each depositor is insured up to at least 
$250,000 and that the FDIC's deposit insurance is backed by the full 
faith and credit of the United States government. In the proposed rule, 
the FDIC moved the reference to the display of the official sign to 
proposed Sec.  328.3, including the language that the official sign 
must be in a size of 7'' by 3'' or larger with black lettering on a 
gold background. After further consideration, the FDIC is including the 
official sign size and color requirements as part of the official sign 
description under Sec.  328.2 for ease of reference under the final 
rule. The FDIC also continues to reference this language in the 
requirements for display of the official sign in Sec.  328.3 under the 
final rule.

2. Sign Requirements on IDIs' Physical Premises

Official Sign In an IDI's Physical Premises
Proposed Rule
    Section 18(a) of the FDI Act requires all IDIs to display at each 
place of business a sign or signs relating to the insurance of the 
deposits of the institution. The FDIC proposed updated signage 
requirements in Sec.  328.3 to govern signage within an IDI's premises. 
The proposed rule would have continued to require all IDIs to 
continuously, clearly, and conspicuously display the official sign in 
their principal place of business and all their U.S. branches.\20\ To 
accommodate evolving styles and footprints of branches, the proposed 
rule also would have required IDIs to display the FDIC official sign in 
any physical location where IDIs receive deposits other than teller 
windows or stations (referred to as ``non-traditional branches'' in the 
preamble to the proposed rule).
---------------------------------------------------------------------------

    \20\ As stated in the NPR, the term ``branch'' would be defined 
by reference to the FDI Act's definition of ``domestic branch,'' 12 
U.S.C. 1813(o).
---------------------------------------------------------------------------

Discussion of Comments
    One commenter suggested that the FDIC eliminate references to 
``non-traditional branches'' and stated that non-branch locations 
should not be subject to the proposed rule's sign requirement. The 
commenter further stated that the proposed rule's requirements for 
physical premises would apply only to banks' principal place of 
business and branches. The commenter expressed concerns that the term 
``non-traditional branch'' could be over-inclusive and include non-
branch locations, like deposit production offices.
Final Rule
    The FDIC is revising Sec.  328.3(b) to now require that:

    Each insured depository institution must continuously, clearly, 
and conspicuously display the official sign at each place of 
business where consumers have access to or transact with deposits, 
including all of its branches (except branches excluded from the 
scope of this subpart under Sec.  328.0) and other premises in which 
customers have access to or transact with deposits, in the manner 
described in this paragraph (b).\21\
---------------------------------------------------------------------------

    \21\ Final 12 CFR 328.3(b) (emphasis added).

    This requirement is consistent with section 18(a) of the FDI Act, 
which provides the FDIC authority to prescribe regulations for IDIs to 
display at each place of business a sign or signs relating to the 
insurance of deposits of the institution.\22\
---------------------------------------------------------------------------

    \22\ See 12 U.S.C. 1828(a)(1)(A), 1828(a)(2).
---------------------------------------------------------------------------

    With respect to the comment that requested the FDIC not use the 
term ``non-traditional branches,'' the FDIC did not intend to affect 
how the term ``branch'' is defined or interpreted in other regulations. 
In the preamble to the proposal, the FDIC used the term ``non-
traditional branches'' to help distinguish such places of business from 
what are commonly viewed as the ``traditional branches'' where deposits 
are usually and normally received at only teller windows. The FDIC 
intended for the term to describe the new layouts and designs that some 
IDIs are using where deposits are usually and normally received in 
areas other than teller windows or stations.\23\
---------------------------------------------------------------------------

    \23\ See final 12 CFR 328.3(b)(2).
---------------------------------------------------------------------------

    However, to prevent potential confusion related to the term 
``branch'' and its applications in other regulations, the preamble to 
the final rule will not refer to the term ``non-traditional branches.'' 
Rather, under the final rule, the signage requirements apply to an 
IDI's places of business where consumers have access to, or transact 
with, deposits, including branches and other physical premises (e.g., 
caf[eacute]-style locations). As a result, the types of bank premises 
that were intended to be covered under the proposal are covered by the 
final rule. For example, under a

[[Page 3508]]

scenario where an IDI usually and normally receives insured deposits at 
a teller window or station and other areas within the same premise, 
then pursuant to the final rule, the IDI is required to display the 
official sign in accordance with the applicable signage requirements 
for each area as provided in Sec.  328.3(b).
Display of Official Sign When Deposits Received at Teller Windows or 
Stations
Proposed Rule
    Under the proposed rule, if IDIs usually and normally receive 
deposits at teller windows or stations, IDIs would have been required 
to display the official sign at each teller window or station in a size 
of 7'' by 3'' or larger with black lettering on a gold background. The 
proposed rule would also have allowed flexibility with respect to 
display of the official sign where the IDI usually and normally 
receives deposits at teller windows or stations and only offers insured 
deposit products on the premises. In such instances, an IDI would have 
the option to display the official sign at one or more locations 
visible from the teller windows or stations in a manner that ensures a 
copy of the official sign is large enough so as to be legible from 
anywhere in that area.
Discussion of Comments
    One commenter suggested that the FDIC provide IDIs with flexibility 
to display clear and conspicuous signage and disclosures best suited 
for a particular branch facility. The commenter further stated that 
branch managers and other employees are readily available onsite to 
answer customer questions and address any confusion to the extent a 
customer may have questions, even with the presence of clear, 
conspicuous disclosures.
    With respect to IDIs that only offer insured deposit products on 
the premises, one commenter requested clarification as to whether the 
proposed flexible option would apply if the IDI's larger locations 
offer non-deposit products. The same commenter also commended the FDIC 
for providing flexibility in signage placement but sought an example of 
what the FDIC would consider a sign ``large enough to be legible from 
anywhere in that area'' to satisfy this flexible option.
Final Rule
    The FDIC is finalizing the proposed requirements with respect to 
the display of the official sign when IDIs usually and normally receive 
deposits at teller windows or stations. The final rule will continue to 
require that IDIs display the official sign at each teller window or 
station in a size of 7'' by 3'' or larger, with black lettering on a 
gold background, if insured deposits are usually and normally received 
at teller windows or stations.
    As provided under the proposal, the FDIC believes that it is 
appropriate to allow additional flexibility with respect to display of 
the official sign in instances when the IDI usually and normally 
receives deposits at teller windows and stations and only offers 
insured deposit products on the premises. In such cases, the 
requirement to display the official sign at each teller window or 
station may be satisfied by displaying the official sign in one or more 
locations visible from the teller windows or stations, in a size large 
enough to be legible from anywhere in that area. This flexible option 
would apply to branches that do not offer non-deposit products on the 
premises even if the IDI's other locations offer non-deposit 
products.\24\
---------------------------------------------------------------------------

    \24\ See infra Non-Deposits Sign on IDI's Premises Section for 
discussion on the offering of non-deposit products.
---------------------------------------------------------------------------

    Under the final rule, whether the display of the official sign is 
``large enough to be legible from anywhere in that area'' means that 
the average customer can easily see and read the sign from a reasonable 
distance from that area. This would depend on factors specific to the 
layout of the bank's physical premises or places of business and the 
sign used, such as the size and shape of the physical location, the 
area where deposits are usually and normally accepted, a sign's 
placement, a sign's size, and its font and colors. For example, if a 
bank's place of business has two teller windows right next to each 
other and it posts one official sign between the teller windows that is 
large enough to be legible to depositors at both teller windows, that 
approach would meet the standard. Banks' places of business vary 
significantly in size and layout, and the final rule is intended to 
provide banks the flexibility to account for these physical variations.
Display of Official Sign When Deposits Received in Areas Other Than 
Teller Windows or Stations
Proposed Rule
    Under the proposal, if an IDI usually and normally receives 
deposits in areas of the premises other than teller windows or 
stations, IDIs would have been required to display the official sign in 
one or more locations in a manner that ensures the official sign is 
large enough so as to be legible from anywhere in those areas.
Discussion of Comments
    As discussed above, a commenter suggested that non-branch locations 
should not be subject to the proposed rule's sign requirements.
Final Rule
    Consistent with the proposal, the final rule provides that if 
insured deposits are usually and normally received in areas of the 
premises other than teller windows or stations (e.g., caf[eacute]-style 
locations), the IDI is required to display the official sign in one or 
more locations in a size large enough to be legible anywhere in those 
deposit-taking areas.\25\ The FDIC believes that such a requirement 
will help ensure that IDI customers are aware that their deposits are 
protected by deposit insurance.
---------------------------------------------------------------------------

    \25\ As discussed, whether the display of the official sign is 
``large enough to be legible from anywhere in that area'' means that 
the average customer can easily see and read the sign from a 
reasonable distance from that area depending on factors specific to 
the layout of the bank's physical branch and the sign used, such as 
the size and shape of the physical location, the area where deposits 
are usually and normally accepted, a sign's placement, a sign`s 
size, and its font and colors.
---------------------------------------------------------------------------

    As discussed above, an IDI's premises, including non-branch 
locations that receive deposits in areas other than teller windows or 
stations, are subject to the final rule's requirements. For example, an 
IDI's caf[eacute]-style location that does not receive deposits at a 
teller window or station, but where customers engage with bankers in an 
open area and customers have access to or transact with deposits, is 
subject to the sign requirements under the final rule.
Non-Deposit Signage on an IDIs' Physical Premises
Proposed Rule
    When both insured deposits and non-deposit products are offered 
within the IDI's premises (regardless of whether deposits are received 
at teller windows or stations or deposits are received in areas other 
than teller windows or stations), the proposed rule would have required 
IDIs to display a non-deposit sign within a segregated area and not in 
close proximity to the official sign. The proposed rule would have 
required that IDIs continuously, clearly, and conspicuously display 
signage indicating that the non-deposit products: are not insured by 
the FDIC; are not deposits; and may lose value.
    Under the proposed rule, the definition of ``non-deposit product'' 
read as, ``Any product that is not a `deposit', including, but not 
limited to: stocks, bonds, government and municipal securities, mutual 
funds, annuities (fixed and variable), life

[[Page 3509]]

insurance policies (whole and variable), savings bonds, and crypto-
assets. For purposes of this definition, a credit product is not a non-
deposit product.'' \26\
---------------------------------------------------------------------------

    \26\ 87 FR 78017, 78033, 78036 (Dec. 21, 2022).
---------------------------------------------------------------------------

Discussion of Comments
    Non-deposit product definition. One commenter requested 
clarification on what products constitute a non-deposit product under 
the proposed rule, such that they would require the display of the non-
deposit sign. Specifically, the commenter noted the proposal only 
included life insurance policies that are whole or variable and 
requested clarification as to whether other types of insurance 
offerings are also included in the definition. Moreover, the commenter 
requested clarification on whether safe deposit box services would be 
considered a non-deposit product requiring the display of the non-
deposit sign.
    Non-deposit sign design. With respect to the design of the non-
deposit sign, one commenter stated that it would not be necessary for 
the FDIC to fully standardize the design, but recommended the FDIC set 
minimum standards for the sign such as a minimum font size. Another 
commenter supported standardization of the non-deposit sign and 
suggested a standardized icon, such as the red circle-backslash symbol 
overlaid on the word ``FDIC'' or ``FDIC-insured'' with the phrase ``NOT 
FDIC-insured'' underneath the symbol.
    Display of non-deposit sign. Some commenters requested that the 
FDIC take a less prescriptive approach with respect to the non-deposit 
sign requirements and adopt a more flexible approach that can change 
with evolving technology and business practices. Two commenters 
suggested that the FDIC adopt a single, centralized disclosure approach 
to address deposit and non-deposit products rather than separate 
signage requirements. Another commenter raised concerns that the costs 
of segregating physical signage across multiple branch locations would 
be challenging in smaller branch locations and requested further 
clarification when separation would be required for institutions with 
various service offerings.
    One commenter requested the FDIC define the term ``offers'' in 
relation to the offering of non-deposit products on the IDI's physical 
premises that would require the display of the non-deposit sign. The 
commenter stated that they understood ``offers'' to mean that the bank 
has personnel on the premises who are licensed to sell non-deposit 
products but would exclude locations without onsite staff licensed to 
sell non-deposit products.
Final Rule
    The FDIC is finalizing the proposed requirement to display non-
deposit signs when both insured deposits and non-deposit products are 
offered within the IDI's premises. The final rule's non-deposit sign 
requirement applies to both an IDI's places of business where deposits 
are received at teller windows or stations and an IDI's places of 
business where deposits are received in areas other than teller windows 
or stations (e.g., caf[eacute]-style locations). Under the final rule 
an IDI generally must physically segregate the areas where non-deposit 
products are offered from areas where insured deposits are usually and 
normally accepted, and display a sign in the non-deposit areas 
indicating that non-deposit products: are not insured by the FDIC; are 
not deposits; and may lose value.\27\ An IDI is required to 
continuously, clearly, and conspicuously display this non-deposit sign; 
however, the final rule does not include specific design or size 
requirements. To minimize the potential for consumer confusion, the 
final rule prohibits display of non-deposit signs in close proximity to 
the official FDIC sign.
---------------------------------------------------------------------------

    \27\ As noted above, this requirement is intended to be 
generally consistent with longstanding interagency guidance on the 
retail sale of non-deposit investment products that many 
institutions already follow and thus should be familiar to many 
consumers.
---------------------------------------------------------------------------

Non-Deposit Product Definition
    Through the proposed rule, the FDIC intended to provide further 
clarity on the types of products that would constitute non-deposit 
products. In response to comments related to the non-deposit 
definition, the FDIC acknowledges that the proposed definition, as 
written, could be read as excluding products that would otherwise 
constitute a non-deposit product. Accordingly, the final rule generally 
retains the current non-deposit definition with minor changes, 
discussed in further detail below.
    The final rule defines a non-deposit product as: ``[A]ny product 
that is not a `deposit', including, but not limited to: insurance 
products, annuities, mutual funds, securities, and crypto-assets. For 
purposes of this definition, credit products and safe deposit box 
services are not non-deposit products.'' \28\
---------------------------------------------------------------------------

    \28\ Final Sec. Sec.  328.1, 328.101.
---------------------------------------------------------------------------

    The definition under the final rule provides a non-exclusive list 
of general examples of the types of products that constitute non-
deposit products that is consistent with the long-standing definition, 
updated to include ``crypto-assets.'' \29\ However, the FDIC agrees 
with a commenter that safe deposit boxes should not be included in the 
definition for purposes of requiring display of the non-deposit sign 
under part 328, Subpart A, and has revised the definition under the 
final rule to clarify the treatment of safe deposit boxes.\30\ Banks 
have a longstanding history of providing safe deposit box services to 
consumers to store valuables in a private, secure section of the bank. 
Accordingly, IDIs are not required to display the non-deposit sign in 
areas where IDIs provide safe deposit boxes and offer no other non-
deposit products.
---------------------------------------------------------------------------

    \29\ See infra Crypto-Assets Section for further discussion.
    \30\ For purposes of part 328, subpart B, the ``non-deposit 
definition'' includes safe deposit boxes.
---------------------------------------------------------------------------

Design of Non-Deposit Sign
    Consistent with the proposal, the final rule requires IDIs that 
offer both deposit and non-deposit products at their physical premises 
to display a non-deposit sign in a continuous, clear, and conspicuous 
manner with information indicating that non-deposit products: are not 
insured by the FDIC; are not deposits; and may lose value. The FDIC is 
not standardizing the design of the non-deposit sign as the FDIC 
believes the rule strikes a proper balance in providing IDIs 
flexibility, but also helps prevent consumer confusion by requiring 
signs informing consumers of the risks associated with non-deposit 
products. With respect to the comment to use red circle-backslash over 
``FDIC'' or ``FDIC-insured,'' the FDIC views the suggestion as 
potentially confusing to consumers. With respect to the recommendation 
that the FDIC set minimum standards for the sign such as a minimum font 
size, the final rule, as proposed, requires that the sign be displayed 
in a continuous, clear, and conspicuous manner. As such, the FDIC 
believes this standard will help mitigate potential concerns regarding 
minimum font sizes and standards to ensure that consumers are able to 
view clearly the non-deposit sign. Accordingly, the FDIC is not 
adopting this recommendation and is not standardizing the design of the 
non-deposit sign.
Display of the Non-Deposit Sign
    Under the final rule, the FDIC requires IDIs that offer both 
insured deposits and non-deposit products to clearly delineate and 
distinguish areas where activities related to the sale of non-deposit 
products occur from the

[[Page 3510]]

areas where insured deposit-taking activities occur. The FDIC believes 
requiring display of the non-deposit sign in a physically segregated 
area would more effectively mitigate the potential for consumer 
confusion than a centralized disclosure as recommended by some 
commenters, as it would better alert consumers when products are not 
insured. Further, given that the final rule does not require 
standardization of the non-deposit sign and provides IDIs flexibility 
regarding the design of the non-deposit sign, the FDIC believes that 
the approach taken in the final rule is responsive to commenter 
concerns on flexibility.
    With respect to comments noting concerns on the costs of 
segregating physical signage across multiple locations and requesting 
further clarification on when separation would be required, the non-
deposit sign requirement is intended to be generally consistent with 
practices described in the longstanding interagency guidance on the 
retail sale of non-deposit investment products.\31\ As a result, the 
FDIC has added a provision to the final rule, generally consistent with 
longstanding guidance, noting that in limited situations in which 
physical considerations present challenges to offering non-deposit 
products in a distinct area, institutions must take prudent and 
reasonable steps to minimize customer confusion. This guidance has 
informed many institutions' current approaches, and thus should be 
familiar to many IDIs and consumers.
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    \31\ See Interagency Statement on Retail Sales of Non-deposit 
Investment Products, FIL-9-94 (Feb. 17, 1994), available at: https://www.fdic.gov/news/financial-institution-letters/1994/fil9409.html.
---------------------------------------------------------------------------

    Consistent with the interagency guidance, the FDIC expects IDIs to 
minimize the possibility of consumer confusion when delineating the 
areas where non-deposit activities take place from areas where insured 
deposit-taking activities occur. The FDIC intends for the delineation 
requirement to include some flexibility, depending on the 
circumstances. For example, IDIs could conduct non-deposit related 
activity in separate areas or in areas that are not in close proximity 
to where deposits are taken by using a desk, cubicle, partitions, 
railings, planters, a separate room, or other indicator that the area 
is distinct and separate from the deposit-taking area. In the limited 
situations where IDIs experience challenges in physically segregating 
products, IDIs must take prudent and reasonable steps to minimize 
consumer confusion, consistent with the regulation's requirements.
    In response to the commenter requesting clarification on the term 
``offers'' for purposes of displaying the non-deposit sign under part 
328, the FDIC interprets ``offers'' to capture situations where 
customers are presented with or sold non-deposit products within an 
IDI's physical premises. This could include situations where personnel 
are not physically present on the bank premises, but the IDI presents 
or sells non-deposit products to consumers within the bank's premises. 
As an example, non-deposit signs are required in areas where the 
consumer is offered non-deposit products within an IDI's physical 
premises by personnel through an electronic communication device (e.g., 
an interactive kiosk or tablet).
Relevance of Non-Deposit Sign Requirements to Interagency Statement of 
Policy
    The federal banking agencies have previously issued guidance to 
IDIs they supervise relating to the retail sale of non-deposit 
investment products.\32\ The FDIC's proposed rule stated that its non-
deposit sign requirement was intended to be consistent with the 
practices described in this longstanding interagency guidance. 
Specifically, the proposed rule's non-deposit sign requirements were 
similar to disclosures related to sales of non-deposit products 
described in the interagency guidance.
---------------------------------------------------------------------------

    \32\ Id.
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Use of Electronic Media or Varied Signs To Satisfy Official Sign and 
Non-Deposit Sign Requirements on IDIs' Premises
Proposed Rule
    Under the proposed rule, IDIs would have had the option to display 
the official sign and non-deposit sign through the use of electronic 
media. The proposed rule also would retain certain provisions of 
existing regulations that provide IDIs with flexibility in displaying 
the official sign. Under the proposal, IDIs would have the option to 
display the official sign in locations on the premises other than those 
required under the rule, except for in areas where non-deposit products 
are offered. For locations where display of the official sign is 
required, IDIs could choose to display signs that vary from the 
official sign in size, color, or material, provided that the sign is no 
smaller than the official sign, has the same color for the text and 
graphics, and includes the same content.
Discussion of Comments
    Commenters supported the proposed option to use electronic media to 
display the official sign and non-deposit sign. One commenter 
recommended that the FDIC produce educational, captioned consumer 
videos to be displayed on digital signage within an IDI's lobby.
Final Rule
    The final rule adopts the proposal to provide IDIs the flexibility 
to utilize electronic media to satisfy sign requirements on an IDI's 
premises. This provision allowing IDIs to use electronic signs applies 
to both display of the official sign and non-deposit signage, where 
required, and would similarly be subject to the continuous, clear, and 
conspicuous display standard. Accordingly, a rotating display will not 
satisfy the ``continuous'' requirement applicable to the display of 
official sign and non-deposit sign.
    The final rule also retains certain provisions of current 
regulations that provide IDIs with flexibility in displaying the 
official sign. IDIs have the option to display the official sign in 
locations on the premises other than those required under the rule, 
except for in areas where non-deposit products are offered. For 
locations where display of the official sign is required, IDIs may 
choose to display signs that vary from the official sign in size, 
color, or material, provided that the sign is no smaller than the 
official sign, has the same color for the text and graphics, and 
includes the same content.
    Under the final rule, the FDIC will not require IDIs to display 
FDIC-produced videos within their physical premises. The FDIC is, 
however, undertaking several efforts to educate consumers regarding 
deposit insurance and the role of the FDIC, including a public 
awareness campaign on deposit insurance launched in October 2023.\33\
---------------------------------------------------------------------------

    \33\ FDIC's national consumer campaign (``Know Your Risk. 
Protect Your Money''), available at: https://www.fdic.gov/news/campaigns/know-your-risk/.
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3. Sign Requirements for Digital Deposit-Taking Channels

    The final rule will facilitate banks providing consumers with 
clear, consistent, and accurate digital disclosures to promote 
consumers' understanding of when they are interacting with an IDI and 
when their funds are protected by the FDIC's deposit insurance 
coverage. At the same time, the FDIC intends to permit some flexibility 
for IDIs with respect to digital sign requirements. As such, the FDIC 
is

[[Page 3511]]

finalizing sign requirements related to IDI digital channels, with some 
changes and clarifications, as described below.
a. FDIC Official Digital Sign
Proposed Rule
    Under the proposal, an IDI would have been required to clearly, 
continuously, and conspicuously display a newly established digital 
sign on the IDI's homepage, landing and login pages or screens, and 
transactional pages or screens involving deposits, to the extent 
applicable. The proposal further provided that a digital sign displayed 
in a continuous manner, near the top of the relevant page or screen in 
close proximity to the IDI's name, would be considered ``clear and 
conspicuous.'' The proposed digital sign was intended to visually 
communicate to consumers that they are conducting business with an IDI 
rather than a non-bank. The proposal provided that the FDIC expected 
the digital sign to be an abbreviated version of the official sign and 
that it would prominently bear the name of the FDIC and the statement 
that insured deposits are backed by the full faith and credit of the 
U.S. Government.
Discussion of Comments
    Some commenters raised concerns that the proposed changes in 
digital signage design and placement were overly prescriptive and may 
be difficult to implement due to technological and budgetary limits. 
However, other commenters supported the proposed requirement, noting 
the importance of ensuring that bank customers are made fully aware of 
situations where deposit insurance is present and is separate and 
distinct from product offerings that do not include deposit insurance.
    With respect to the placement of the proposed digital sign on the 
IDI's homepage, landing and login pages or screens, one commenter 
offered that home pages and landing pages are not the primary point of 
interaction between banks and customers, noting that home pages are 
generally used for marketing, not customer transactions. As such, the 
commenter believed only pages with transactional capacity should be 
subject to the proposed signage requirement. Some commenters questioned 
the necessity of displaying the same digital signage on each subsequent 
screen after a customer has logged in, and thought that the rules were 
unclear regarding internal transfer screens between FDIC-insured 
products after log-in. One comment noted that having the digital sign 
on login and other pages could imply to customers that deposit 
insurance applies to all products on the website.
    Several commenters recommended that the FDIC adopt a more flexible 
approach where banks could place the digital sign on the bank's web 
page. One commenter noted that many websites use a basic template that 
carries through each successive web page and that template could 
contain the required statement. To allow for further flexibility in 
implementation and compliance, a commenter suggested that the FDIC add 
a ``reasonable person test'' when assessing the digital signage 
requirements in order to allow banks to continue to innovate. Another 
commenter provided that there would be no significant difference for a 
consumer in placing the FDIC official digital sign at the top of the 
page in close proximity to the bank name, other than increased costs 
for the IDIs. Other commenters supported the proposal to place the sign 
at the top of the screen to comply with the clear and conspicuous 
requirement.
    The FDIC notes that a specific question was asked as part of the 
NPR about the design of the digital sign but no comments were received 
in response to this question.
Final Rule
    After carefully considering the comments received, the FDIC is 
adopting this part of the proposed rule as final and will require IDIs 
to display the FDIC official digital sign ``clearly and conspicuously'' 
in a continuous manner, near the top of the relevant page or screen, 
and in close proximity to the IDI's name. The FDIC is finalizing a 
design for the FDIC official digital sign that consists of ``FDIC'' 
along with the following text: ``FDIC-Insured- Backed by the full faith 
and credit of the U.S. Government.'' Below is the design for the FDIC 
official digital sign under Sec.  328.5:
[GRAPHIC] [TIFF OMITTED] TR18JA24.000

    The final rule establishes a clear standard to promote consistency 
in the use and application of the FDIC official digital sign by IDIs. 
The rule specifies the color, size, and font to establish an easily 
recognizable, consistent digital sign to convey the certainty and 
confidence historically provided by the FDIC official sign at banks' 
teller windows. Recognizing the variability in the design and color of 
IDI websites, the final rule also provides an alternative color if the 
specified colors, navy blue and black, would not be legible against the 
background design colors of the IDI's web page or mobile banking 
application.
    The final rule requires ``FDIC'' in the FDIC official digital sign 
to be displayed with a wordmark size of 37.36 x 15.74px in navy blue 
(hexadecimal color code #003256), with ``FDIC-Insured--Backed by the 
full faith and credit of the U.S. Government'' in Source Sans Pro Web 
font (regular 400 italic), 12.8px, displayed in black (hexadecimal 
color code #000000) lettering. If the official FDIC digital sign in 
these colors would be illegible due to the color of the background, the 
final rule requires the ``FDIC'' and the one line of smaller type to 
the right of ``FDIC'' to both be displayed in white (hexadecimal color 
code #FFFFFF).
    The FDIC official digital sign aligns with the statutory provisions 
in section 18 of the FDI Act on the display of signage at each IDI's 
principal place of business relating to the insurability of deposits 
and, consistent with section 18 of the FDI Act, the FDIC official 
digital sign includes a statement that insured deposits are backed by 
the full faith and credit of the U.S. Government. The FDIC appreciates 
the issues raised by commenters with respect to the FDIC official 
digital sign, including supporting flexibility and ensuring the new 
FDIC official digital sign does not cause depositor confusion. Given 
the discussion above regarding the increased use of mobile banking, as 
well as the FDIC's interest in protecting consumers, the FDIC believes 
the requirement to display the FDIC official digital sign will promote 
consumer confidence in the Nation's banking system and benefit IDIs by 
assisting consumers in more easily identifying IDI websites.
    The FDIC believes that the use of the FDIC official digital sign by 
IDIs will assist consumers in better understanding when they are 
conducting business with an IDI and when they are interacting with a 
non-bank entity. Seeing the FDIC official digital sign on all IDI 
websites and mobile applications will promote awareness that consumers 
are doing business with FDIC-insured institutions. Display of the FDIC 
official digital sign

[[Page 3512]]

by any non-bank third party would improperly imply that the non-bank is 
FDIC-insured and would constitute a misrepresentation under part 328 
subpart B.
    The FDIC official digital sign must be displayed on the (1) initial 
or homepage of the website or application, (2) landing or login pages, 
and (3) pages where the customer may transact with deposits. For 
example, the FDIC official digital sign should be displayed where an 
IDI's mobile application allows customers to deposit checks remotely, 
because this electronic space is in effect a digital teller window.
    In response to comments related to technical issues and potential 
costs, the FDIC recognizes the commenters' concerns. But several 
comments also highlighted the importance and value of clear and 
conspicuous signage to prevent consumer confusion. The FDIC believes 
that the benefits of the FDIC official digital sign outweigh the 
concerns about costs. To alleviate those concerns the FDIC is reviewing 
options to provide IDIs with technical assistance or guidance to assist 
in implementing the FDIC official digital sign requirements. The FDIC 
will also review options to provide an image of the FDIC official 
digital sign to IDIs upon request at no charge, similar to the process 
by which the FDIC provides banks with physical official signs.
b. Digital Display of Non-Deposit Signage
Proposed Rule
    Under the proposed rule, if a digital deposit-taking channel offers 
access to deposits, as well as non-deposit products, IDIs would have 
been required to clearly, continuously and conspicuously display a non-
deposit sign indicating that the non-deposit products: are not insured 
by the FDIC; are not deposits; and may lose value.
    To satisfy this proposed requirement, the proposed rule would have 
required the continuous display of the non-deposit sign (referred to as 
the ``static'' non-deposit sign) on each IDI page relating to non-
deposit products and prohibit displaying the non-deposit sign in close 
proximity to the FDIC official digital sign. The FDIC would expect the 
non-deposit signage to be in a prominent place, in an appropriate size, 
and displayed in a continuous manner for any consumer accessing the 
page to notice. The proposal provided, however, that institutions would 
have flexibility in the way they market non-deposit products and did 
not specify design or size requirements for this non-deposit sign.
    In addition, under the proposed rule, IDIs would have been required 
to display this non-deposit sign via a ``one-time'' notification when 
consumers initially access a page related to non-deposit products 
(referred to as the one-time notification). The notification would have 
provided an initial, prominent display of the non-deposit information 
to alert consumers that they are dealing with non-deposit products that 
are not covered by FDIC insurance. Moreover, consumers would need to 
take action to dismiss the notification before accessing the relevant 
page or screen.
Discussion of Comments
    Commenters generally recommended that the FDIC consider the costs 
related to implementing the digital signage requirements for IDIs and 
to ensure that the requirements are not overly burdensome for consumers 
and the industry.
    More specifically, several commenters raised concerns that the 
increased digital signage requirements would increase costs for banks 
without countervailing benefits for consumers. While agreeing with the 
sentiment behind the proposed pop-up requirement, two commenters noted 
that creating pop-ups can be operationally complex and may be 
burdensome for smaller institutions to implement. Similarly, another 
commenter raised technical concerns and suggested a reduction of the 
repetitive disclosures.
    One commenter recommended that the FDIC only finalize a requirement 
for non-deposit disclosures to be included statically on the applicable 
pages, and not require affirmative consumer action regarding such 
disclosures.
    Some commenters also stated that the proposed digital signage 
requirements could lead to customer confusion and create a suboptimal 
customer experience. Relatedly, another commenter stated that the 
proposed digital pop-up message could degrade the customer experience 
and may cause difficulties for screen readers used by disabled 
customers.
    One commenter expressed appreciation about the ability of ``pop-
ups'', ``speedbumps'', or ``overlays'' to notify consumers of non-
deposit products and ensure that they remain properly informed. 
However, the commenter also asserted that to reflect the various 
business models, products, and services, as well as adequately respect 
the importance of a consumer's experience in the increasingly 
competitive online financial services market, the FDIC should allow 
banks to work with their non-bank partners to ensure proper disclosure 
and ensure that these disclosures are properly applied to the various 
online platforms and consumer experiences.
    Several commenters supported the proposed requirements, noting that 
it would be beneficial for customers to know a given entity's or 
product's insured status. One commenter advocated for the FDIC to 
require IDIs to explicitly mark every financial product as either 
insured or non-insured and advocated for a more comprehensive 
disclosure statement.
Non-Deposit Digital Signage in Final Rule: Requirements When Non-
Deposit Products and Deposit Products Are Offered Through Same Digital 
Deposit-Taking Channel
    After consideration of the comments responding to the proposed non-
deposit digital signage requirements, the FDIC is finalizing certain 
aspects of the proposal and modifying other aspects as described below.
    The FDIC is finalizing the requirement for IDIs to clearly and 
conspicuously display the ``static'' non-deposit signage on its digital 
deposit-taking channels. More specifically, if an IDI's digital 
deposit-taking channel offers access to both deposits at the IDI and 
non-deposit products, the IDI must clearly and conspicuously display 
\34\ signage indicating that the non-deposit products: are not insured 
by the FDIC; are not deposits; and may lose value. This signage must be 
displayed on each IDI page relating to non-deposit products and may not 
be displayed in close proximity to the FDIC digital sign. The static 
non-deposit language described above will provide an important 
disclosure aimed at addressing potential customer confusion regarding 
the insured status of particular products offered by IDIs.
---------------------------------------------------------------------------

    \34\ Some IDIs currently display non-deposit disclosures in 
small font near the bottom of web pages and application screens. 
Consumers are unlikely to notice such disclosures and may mistakenly 
believe that non-deposits products are covered by FDIC insurance. 
Such display of non-deposit disclosures would not satisfy the clear, 
continuous, and conspicuous display requirement of the proposed 
rule.
---------------------------------------------------------------------------

    Separately, the FDIC acknowledges the commenters that discussed the 
one-time non-deposit notification requirement increasing costs, being 
operationally complex, and creating a suboptimal customer experience. 
The FDIC has concluded that having two separate disclosures relating to 
non-deposit products on an IDI's digital channel--the ``static'' 
signage and the one-time notification--are unnecessary.

[[Page 3513]]

One such disclosure will sufficiently inform consumers and mitigate 
risks. As such, and in response to commenter concerns, the FDIC is only 
retaining a part of the proposed one-time notification requirement and 
is narrowing the scope for when the one-time notification is provided.
    Under the final rule, IDIs will only be required to display a one-
time notification when a bank customer accesses non-deposit products 
from a non-bank third party via an IDI's digital deposit-taking channel 
such as through a hyperlink (or similar weblinking feature). For 
example, if an IDI's digital channel offers a third party's securities 
product that requires the bank customer to leave the IDI's website and 
access the securities product on the third party's website, then the 
IDI will be required to provide the bank customer with a ``one time'' 
notification before the customer leaves the IDI's digital channel.
    Moreover, under the final rule, the ``one time'' notification 
requirement will not apply broadly to all consumers accessing the IDI's 
website; instead, it will only apply to bank customers that have logged 
into their respective account at a particular IDI website. The ``one 
time'' notification will be required per web session, which is the 
period of interaction between a bank customer and the IDI's digital 
channel, starting when the customer logs in and ending when the 
customer logs off.
    Consistent with the proposal, the ``one time'' notification must be 
clearly and conspicuously displayed and indicate that the non-deposit 
products: are not insured by the FDIC; are not deposits; and may lose 
value. The one-time notification could include, for example, an IDI 
using a ``pop-up'', ``speedbump'', or ``overlay'' that displays a 
notification to the customer that the customer must dismiss before 
accessing the content related to non-deposit products on the third 
party's website.
    Bank customers, who log in to their bank's website and can access 
non-deposit products through their IDI's deposit-taking digital 
channel, may click on a hyperlink that takes them to an IDI's non-
deposit page or click on a hyperlink that, unbeknownst to the customer, 
causes them to leave the bank's website to access non-deposit products 
offered or presented by a third party. From the FDIC's perspective, 
this raises two areas of elevated risk regarding customer confusion and 
potential harm because a bank customer is moving: (a) from an IDI to a 
non-bank; and (b) from an FDIC-insured deposit area to a non-deposit 
area. Further, bank customers that are accessing the third party's 
website will not have the same benefit of the ``static'' non-deposit 
signage that will be available on IDI digital channels.
    As described above, one commenter recommended that the FDIC allow 
banks to work with their non-bank partners to ensure proper disclosure 
and ensure that these disclosures are properly applied to the various 
online platforms and consumer experiences. Given that certain non-bank 
third parties may offer both deposit products through a bank partner 
and non-deposit products on its website, IDIs will have discretion to 
provide customers with additional disclosure information as part of its 
one-time notification related to products offered by the non-bank third 
party, which may further minimize customer confusion.
    The final rule's narrower, less burdensome, one-time non-deposit 
notification responds to several commenters' concerns, while still 
mitigating the broader consumer protection risks by enabling bank 
customers to better understand when they are doing business with an IDI 
and when their funds are protected by the FDIC's deposit insurance 
coverage.
    Regarding the comment about digital pop-up disclosures causing 
issues for disabled customers that use screen readers, the FDIC 
encourages IDIs to ensure that their pop-up notifications can be as 
accessible to screen reader users as any other web content.

4. Automated Teller Machines and Similar Devices

Proposed Rule
    The FDIC proposed amendments to update Sec.  328.4 signage 
requirements for IDIs' ATMs and other remote electronic facilities that 
receive deposits. The FDIC sought to ensure that depositors receive 
necessary disclosures regarding deposit insurance as banks continue to 
devise new ways to provide services to their customers. The proposed 
rule intended to capture banking kiosks and other devices currently 
defined as ``Remote Service Facilities'' \35\ that receive deposits. 
This section of the proposed rule was not intended to address online 
and mobile banking channels, which are considered ``digital deposit-
taking channels.''
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    \35\ ``Remote Service Facility'' includes any automated teller 
machine, cash dispensing machine, point-of-sale terminal, or other 
remote electronic facility where deposits are received. 12 CFR 
328.2(a)(1)(ii).
---------------------------------------------------------------------------

    The proposed rule would have required electronic display of the 
FDIC official digital sign on IDIs' ATM and like devices. The proposed 
rule provided that the official FDIC sign must be electronically 
displayed clearly and conspicuously. ATMs and like devices would be 
required, at a minimum, to display the FDIC official digital sign on 
the home page or screen and each transaction page or screen relating to 
deposits.
    The proposed rule would have further required electronic non-
deposit signs where an IDI's ATM or like device both receives deposits 
for an IDI and offers access to non-deposit products.\36\ In this 
instance, the ATM or like device would be required to clearly, 
continuously, and conspicuously display electronic disclosures 
indicating that non-deposit products are not insured by the FDIC, are 
not deposits, and may lose value. The proposed rule would have required 
the display of these disclosures on each transaction page or screen 
relating to non-deposit products.
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    \36\ The FDIC would not view postage stamps sold at ATMs to 
require these disclosures.
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Discussion of Comments
    Generally, commenters expressed concern over the difficulty or cost 
in implementing the proposed signage requirements for ATMs. Some 
commenters noted that costs will disproportionately affect community 
banks who rely on third-party vendors that provide ATM operating 
software; one commenter noted that software changes take time, and 
these vendors would be expected to prioritize large banks. Another 
commenter noted that a handful of third-party vendors are utilized by 
many banks, and the proposed changes would create supply bottlenecks as 
digital platforms are individualized for each bank. Three commenters 
specifically requested additional time--ranging from at least one year 
to up to 18 months--in order to comply with any new requirements 
imposed for physical or software signs on ATMs or similar devices. 
Relatedly, another commenter urged the FDIC to consider allowing banks 
to use a physical sign at their ATMs instead of an electronic one.
    A few comments sought clarity or expressed concern on the scope of 
the proposed ATM signage requirements. One commenter requested that the 
FDIC clarify whether the proposed ATM provision would only apply to 
ATMs and similar devices that receive deposits, excluding facilities 
that only provide balance, transfer, or withdrawal capabilities. 
Another commenter requested that the FDIC exclude Interactive Teller 
Machines (ITMs) from the ATM and like devices requirements as the 
commenter believed that ITMs do

[[Page 3514]]

not have any transaction screens visible and do not perform bank branch 
functions. One commenter requested that the FDIC clarify whether non-
deposit signage requirements apply to the owner of the ATM and not the 
depository bank, if they are not the same.
    Commenters representing consumer groups were supportive of the 
proposed rule changes relating to ATMs and similar devices. One 
commenter believed the proposed rules were beneficial because consumers 
do not have the opportunity to seek clarification from bank employees 
at an ATM, like they would at a bank or bank branch. One commenter 
advocated for more stringent signage requirements for ATMs, 
recommending that the FDIC require IDIs to display disclosures on each 
screen that references a deposit or non-deposit product.
Final Rule
    The FDIC has carefully considered these comments and is adopting 
certain parts of the proposed ATM signage requirements, with changes 
discussed below. The FDIC appreciates the comments and concerns 
provided regarding the costs of the proposed requirements and a need 
for additional time and the impact of potential changes on community 
banks who often rely on third parties to support operating and 
maintaining ATMs. The FDIC believes that the benefits of the new ATM 
signage requirements outweigh the potential costs; however, additional 
flexibility is warranted in certain situations. The new ATM 
requirements under the final rule will provide clear information to 
consumers as to when they are engaging with insured deposit products 
and when they are engaging with non-deposit products.
    For an IDI's ATM or like device that receives deposits but does not 
offer access to non-deposit products, the final rule provides 
flexibility to meet the signage requirement by either (1) displaying 
the FDIC official digital sign as described in Sec.  328.5 on ATM 
screens, or (2) displaying the physical official sign as described in 
Sec.  328.2 by attaching or posting it to the ATM. However, IDIs' ATMs 
or like devices that accept deposits and are put into service after 
January 1, 2025, must display the official digital sign (with no option 
to satisfy the requirement through display of the physical official 
sign). This approach provides IDIs with flexibility, consistent with 
some comments the FDIC received, and provides additional time to make 
related system and process revisions and updates.
    For an IDI's ATM or like device that both receives deposits and 
offers access to non-deposit products, the final rule requires that 
such ATMs must: (a) display the official digital sign clearly, 
continuously, and conspicuously on the home page or screen and on each 
transaction page or screen relating to deposits; and (b) clearly, 
continuously, and conspicuously indicate that non-deposit products are 
not insured by the FDIC, are not deposits, and may lose value on each 
transaction page or screen relating to non-deposit products by January 
1, 2025. The FDIC believes that clear signs differentiating the insured 
and uninsured products is important in this setting because customers 
often interact with ATMs alone, including when bank branches are closed 
or in areas that are isolated or where there are no bank branches. In 
such situations bank customers would not have an opportunity to ask 
clarifying questions of a bank representative or for bank staff to 
ensure that customers fully understand whether a product is covered by 
FDIC deposit insurance.
    The final rule also provides that degraded or defaced physical 
official signs would not meet the ``clearly, continuously, and 
conspicuously'' standard. For example, an official sign defaced such 
that portions are illegible would not ``clearly'' signal or notify 
consumers that they are dealing with an FDIC-insured depository 
institution's ATM. However, if an ATM's physical digital sign is, for 
example, slightly diminished, minimally blemished, or superficially 
damaged, these circumstances would be considered de minimis for the 
purposes of determining whether a physical official sign meets the 
``clearly, continuously, and conspicuous'' standard for the purposes of 
compliance with the final rule.
    In addition, the final rule includes specific design features of 
the digital official sign, including specifics about colors, size, and 
font which should assist in implementation. In response to the comments 
on the scope of the rule, the final rule's ATM provisions apply to an 
IDI's automated teller machines or other remote electronic facilities 
that receive deposits. If an IDI's remote electronic facility receives 
deposits and is labeled an ITM (instead of an ATM), the official sign 
requirements in part 328 apply; however, if an ITM does not receive 
deposits, it is not subject to the rule.
    In some cases, where there is a deposit-taking ATM or like device, 
the owner of the ATM and the IDI may not be the same. As noted above, 
Sec.  328.4 applies to ``IDIs' automated teller machines or like 
devices.'' In determining whether an ATM or like device is an IDI's, 
the FDIC will consider circumstances such as the ATM or like device's 
location, branding, whether it is operated by the IDI, and other 
factors that reasonably indicate it is an IDI's ATM. Under the final 
rule, for such in-scope ATMs and like devices, the official digital 
sign and non-deposit signage requirements under Sec.  328.4 apply.
    In response to the comment on recommending more stringent 
requirements, the FDIC does not consider more stringent signage 
requirements as necessary to achieve its policy goals. For certain in-
scope ATMs, the signage requirements under the final rule apply to each 
transaction page or screen for deposits and, if applicable, non-deposit 
products.

5. Official Advertising Statement for IDIs

Proposed Rule
    The FDIC proposed limited amendments to the advertisement statement 
requirements applicable to IDIs. Specifically, the FDIC proposed to 
expand IDIs' options for use of a short advertising statement to 
include the term ``FDIC-insured.''
    Currently, IDIs must include the official advertising statement in 
all advertisements that promote deposit products.\37\ The term 
advertisement means a commercial message in any medium that is designed 
to attract public attention or patronage to a product or business.\38\ 
The FDIC views this definition to include advertising published through 
social media channels.
---------------------------------------------------------------------------

    \37\ 12 CFR 328.3(c).
    \38\ 12 CFR 328.3(a).
---------------------------------------------------------------------------

    The current regulation allows IDIs to use the short title ``Member 
of FDIC'', ``Member FDIC'', or a reproduction of the symbol of the 
corporation (defined in Sec.  328.2(b)). In addition to these options, 
to provide additional flexibility, the proposed rule would allow the 
use of ``FDIC-insured''.
    The FDIC also proposed to make a technical correction to the 
reference to the deposit insurance limit found in paragraph (d)(10) of 
the current regulation, which states that ``deposits or depositors are 
insured by the Federal Deposit Insurance Corporation to at least 
$100,000 for each depositor.'' \39\ As a technical correction, the 
proposed rule would instead reference the standard maximum deposit 
insurance amount (currently $250,000), as established by Congress.
---------------------------------------------------------------------------

    \39\ 12 CFR 328.3(d)(10).

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[[Page 3515]]

Discussion of Comments
    A comment letter submitted by several non-profit organizations 
opposed the addition of the term ``FDIC-insured'' for use as a 
shortened form of the official advertising statement and suggested that 
IDIs continue to use the shortened forms of the advertising statement 
found in the existing regulation (``Member of FDIC'' or ``Member 
FDIC''). The commenters stated that when IDIs offer products that are 
not FDIC-insured, their use of the term ``FDIC-insured'' could be 
misleading and poses risk of consumer confusion. The commenters 
asserted that the purported benefit to IDIs of increased flexibility is 
not worth this risk of increased consumer confusion.
Final Rule
    The FDIC appreciates the concern about risk of consumer confusion 
stemming from use of the term ``FDIC-Insured.'' However, the FDIC 
believes that restrictions on usage of the advertising statement 
(including a shortened form) in connection with non-deposit products 
sufficiently mitigate any risk of consumer confusion.
    Specifically, IDIs are prohibited from using the official 
advertising statement in any advertisement relating solely to non-
deposit products. IDIs are also prohibited from using the official 
advertising statement in any advertisement relating solely to hybrid 
products, which are products that have both deposit product features 
and non-deposit product features. IDIs may use the official advertising 
statement in advertisements containing information about both insured 
deposit products and non-deposit or hybrid products, but are required 
to clearly segregate the official advertising statement from any 
portion of the advertisement that relates to the non-deposit products. 
These restrictions are part of the existing regulation and were 
included in the proposed rule. The FDIC is including these same 
restrictions in the final rule, meaning that consumers should not, for 
example, see statements indicating that a particular IDI is ``FDIC-
Insured'' made in connection with advertisements related solely to non-
deposit products.
    The FDIC is finalizing the advertising statement provisions of the 
final rule as proposed. Under the final rule, IDIs will have the option 
to use ``FDIC-Insured'' as a short form of the official advertising 
statement to satisfy advertising statement requirements. Subject to 
limited exceptions, IDIs are required to include the official 
advertising statement in all advertisements that promote either deposit 
products and services or non-specific banking products and services 
offered by the institution. The advertising statement must be in a size 
and print to be clearly legible.
    In addition, as noted in the proposed rule, the FDIC does not 
intend for the digital sign requirement to overlap with the general 
advertising statement requirements that apply to IDIs. For example, the 
advertising statement would not be required on web pages where an IDI 
displays the digital official sign, such as a homepage. In these 
situations, under Sec.  328.6(d)(10), the advertising statement is 
unnecessary because the inclusion of the digital official sign makes it 
clear that the IDI is insured by the FDIC. However, IDIs remain 
responsible for complying with the official advertising statement 
requirements for other qualifying advertisements, including those 
contained on other web pages.
    As under existing regulations, the final rule provides that a non-
English equivalent of the official advertising statement may be used in 
any advertisement, provided that the translation has the prior written 
approval of the FDIC. The FDIC is also considering making available to 
the public approved translations of the official advertising statement 
in several common languages on its website or through other means in 
the future to support IDIs' efforts to communicate with their non-
English-speaking customers.

6. Misrepresentations and Material Omissions by Any Person

Proposed Rule
    Section 18(a)(4) of the FDI Act,\40\ and its implementing 
regulations in subpart B to part 328,\41\ prohibit any person from 
misusing the name or logo of the FDIC, engaging in false advertising, 
and making knowing misrepresentations about deposit insurance. In the 
NPR, the FDIC stated that it may be beneficial to provide further 
clarity on the application of the statutory prohibition on 
misrepresentations in specific situations where consumers may be misled 
as to whether an entity is insured by the FDIC and the nature and 
extent of deposit insurance coverage. The FDIC proposed to amend 
subpart B to expressly address these situations, making clear when 
specific statements or omissions constitute a misrepresentation under 
section 18(a)(4).
---------------------------------------------------------------------------

    \40\ See 12 U.S.C. 1828(a)(4).
    \41\ See Sec. Sec.  328.100 through 328.109.
---------------------------------------------------------------------------

Use of the Official Advertising Statement or FDIC-Associated Terms or 
Images
    Consumers have historically identified the use of the official 
advertising statement (such as ``Member FDIC''), FDIC-Associated Terms, 
or FDIC-Associated Images to signify that they are dealing with an IDI 
and will receive the protection of FDIC deposit insurance. The official 
advertising statement, FDIC-Associated Terms, and FDIC-Associated 
Images have increasingly been used by non-banks that purport to deposit 
their customers' funds at IDIs. As discussed in the NPR, the FDIC 
believes that use of the official advertisement, FDIC-Associated Terms, 
or FDIC-Associated Images in such instances presents a high risk of 
confusing consumers as to whether they are dealing with an IDI and 
whether deposit insurance applies to their funds.
    To address this risk, the proposed rule would have amended Sec.  
328.102(a) and Sec.  328.102(b) to clarify specific circumstances under 
which use of the official advertising statement, FDIC-Associated Terms, 
or FDIC-Associated Images by a non-bank would constitute a 
misrepresentation of insured status as it would inaccurately imply that 
the non-bank is FDIC-insured. For example, under the proposed rule, a 
non-bank's use of the ``Member FDIC'' logo on its website or in its 
marketing materials would have been a misrepresentation unless that 
logo is next to the name of one or more IDIs. The NPR also stated that 
a non-bank's use of either the FDIC official sign or the FDIC official 
digital sign would be a misrepresentation if it inaccurately implies 
that the non-bank is insured by the FDIC and backed by the full faith 
and credit of the U.S. Government. Similarly, the NPR stated that a 
non-bank's use of FDIC-Associated Terms in statements suggesting that 
the non-bank is insured by the FDIC would constitute a 
misrepresentation.\42\
---------------------------------------------------------------------------

    \42\ These examples are intended to be illustrative, rather than 
an exhaustive list of ways in which a non-bank might misrepresent 
its insured status. Any use of the official advertising statement, 
FDIC-Associated Terms, or FDIC-Associated Images that inaccurately 
states or implies that the non-bank is insured by the FDIC will 
violate the final rule.
---------------------------------------------------------------------------

Failure To Disclose That a Person Is a Non-Bank Is a Material Omission 
When a Statement Is Made Regarding Deposit Insurance
    Non-banks that purport to deposit their customers' funds at IDIs 
sometimes make statements regarding deposit insurance coverage for 
those funds. Absent additional context, to the extent such statements 
suggest that FDIC

[[Page 3516]]

deposit insurance will protect consumers in the event of the non-bank's 
insolvency, they likely misrepresent the insured status of the non-
bank. To minimize the risk of consumer confusion, the proposed rule 
provided that if a non-bank makes statements regarding deposit 
insurance for its customers, it is a material omission for the non-bank 
to fail to clearly and conspicuously disclose that it is not itself an 
FDIC-insured institution and that the FDIC's deposit insurance coverage 
only protects against the failure of an FDIC-insured depository 
institution. In the NPR, the FDIC stated that this additional 
disclosure is necessary to prevent consumers from misinterpreting a 
non-bank's assertions regarding deposit insurance coverage. The FDIC 
noted that some non-banks already include such language on their 
websites, often identifying the partner IDI through which banking 
services are provided.\43\ The proposed rule did not prescribe specific 
disclosure language; however, it explained that a statement that a 
person is not an FDIC-insured bank and deposit insurance covers the 
failure of an insured bank would be considered a clear statement for 
purposes of this provision. The proposed rule aimed to give non-banks 
that wish to make statements regarding deposit insurance coverage some 
flexibility in how they communicate the required information.
---------------------------------------------------------------------------

    \43\ For example, ``ABC Co. is not an FDIC-insured depository 
institution; banking services provided by XYZ Bank, Member FDIC.''
---------------------------------------------------------------------------

Failure To State That Non-Deposit Products Are Not Insured by the FDIC 
Is a Material Omission When a Statement Is Made Regarding Deposit 
Insurance
    The FDIC's experience suggests that deposits and non-deposit 
products are increasingly being offered to consumers in ways that fail 
to distinguish which products are insured by the FDIC. For instance, 
marketing materials might emphasize the deposit insurance protection 
that applies to some products while failing to make clear that not all 
of the products offered are FDIC-insured. In other instances, firms 
have represented to their customers that non-deposit products are 
eligible for deposit insurance coverage, which has led consumers to 
believe, mistakenly, that their money or investments are protected by 
deposit insurance. In the NPR, the FDIC stated it believes that where 
banks or non-banks make statements regarding deposit insurance in a 
context where deposits and non-deposit products are involved, 
additional information is necessary to ensure that consumers understand 
which products are subject to deposit insurance. To prevent consumer 
confusion, the proposed rule provided that if a person makes statements 
regarding deposit insurance in a context that involves both deposits 
and non-deposit products, it is a material omission to fail to disclose 
that non-deposit products are not insured by the FDIC, are not 
deposits, and may lose value. For example, under the proposed rule, if 
a non-bank's website offered customers the option to have their funds 
deposited at an IDI and protected by deposit insurance or invested in 
non-deposit products, it would be a material omission if the non-bank's 
website failed to state that the non-deposit products are not insured 
by the FDIC, are not deposits, and may lose value.
Failure To State That Requirements Apply to Pass-Through Deposit 
Insurance
    The FDIC has a long history of providing ``pass-through'' deposit 
insurance coverage, meaning that deposits placed at an IDI by a third 
party on behalf of one or more owners are insured as if deposited 
directly at the IDI by the owner(s). Pass-through insurance allows each 
owner of the funds in such an arrangement to be separately insured up 
to the statutory deposit insurance limit, currently $250,000, even if 
the total deposits of all owners (in the aggregate) exceeds the 
$250,000 limit. Pass-through insurance only applies, however, if 
certain regulatory requirements are satisfied.\44\
---------------------------------------------------------------------------

    \44\ See Sec. Sec.  330.5, 330.7. For pass-through deposit 
insurance to apply, a consumer's funds must first be on deposit at 
an IDI. In addition: (1) the deposit account records of the IDI must 
disclose a basis for pass-through coverage, such as a custodial or 
agency relationship; (2) the identities and interests of the actual 
owners of the funds must be ascertainable either from the records of 
the IDI or records maintained in good faith and in the regular 
course of business by another party; and (3) the relationship that 
provides the basis for pass-through deposit insurance coverage must 
be genuine, with the deposited funds actually owned by the named 
owners. Additional requirements apply to arrangements involving 
multiple levels of relationships.
---------------------------------------------------------------------------

    Arrangements that rely on pass-through insurance have become 
increasingly common, with non-banks often claiming to provide the 
protection of pass-through deposit insurance for consumers' funds. Such 
representations, however, may be inaccurate, mislead consumers, and 
fail to apprise them of the risk they face in the event that the pass-
through deposit insurance requirements have not been satisfied. If the 
pass-through requirements are not met, consumers' funds may not be 
fully insured in the event the IDI where their funds have been 
deposited were to fail. In the NPR, the FDIC would have required that 
parties that make statements regarding the application of pass-through 
deposit insurance make additional disclosure to promote awareness of 
this risk.
    The proposed rule provided that if a person makes statements 
regarding pass-through deposit insurance for its customers' funds, it 
is a material omission to fail to clearly and conspicuously disclose 
that certain conditions must be satisfied for pass-through deposit 
insurance coverage to apply. The proposed rule would not require a 
person making a statement regarding pass-through deposit insurance to 
list the specific conditions that must be satisfied; simply referencing 
that conditions must be satisfied would be sufficient under the 
proposed rule. The proposed rule also did not prescribe specific 
disclosure language, providing flexibility in how parties may wish to 
express the required information. For example, under the proposed rule, 
if a website for a financial product were to state that consumers' 
funds are eligible for pass-through deposit insurance, it would be a 
material omission to fail to clearly and conspicuously state that 
certain conditions must be satisfied in order for pass-through 
insurance to apply.
Discussion of Comments
    Some commenters recommended that the rule require entities to 
disclose certain information that they believed was necessary to avoid 
material omissions when making statements about deposit insurance. For 
example, one commenter suggested that the FDIC impose several specific 
requirements, presumptions, and enforcement practices on any 
advertising relating to digital assets. Another commenter suggested 
that the FDIC prohibit non-banks from using the words ``banking'' and 
``bank account'' to describe their products or services offered, and 
that a non-bank's failure to comply should constitute a material 
omission.
    With respect to statements referencing deposit and non-deposit 
products, one commenter suggested that the FDIC should make clear that 
comparing an uninsured financial product to an insured one without 
clearly and conspicuously noting the difference in insurance status is 
a misrepresentation. Another commenter similarly suggested that it 
would be a material omission for a non-bank to fail to disclose that 
its non-deposit products are not FDIC-insured.

[[Page 3517]]

    In connection with the proposed pass-through provision, one 
commenter suggested that it should be a material omission for entities 
that are not FDIC-insured to advertise pass-through deposit insurance 
without setting forth all the conditions necessary to receive such 
coverage. Another commenter suggested that requiring a clear and 
conspicuous disclosure that certain conditions must be satisfied for 
pass-through insurance, without more, could lead a depositor to wonder 
what those conditions might be and question whether pass-through claims 
will be honored.
    One commenter requested confirmation as to whether hyperlinking 
would be permissible for the required disclosures. Specifically, the 
commenter requested confirmation that a non-bank entity placing 
deposits through a deposit network would still be permitted to 
hyperlink to the list of network banks to satisfy this provision under 
the new rule, as previously stated in the preamble to the 2022 final 
rule.\45\ The same commenter also requested confirmation that a non-
bank would be permitted to hyperlink to required disclosures that a 
non-bank is not a bank and that pass-through insurance coverage is 
subject to conditions.
---------------------------------------------------------------------------

    \45\ See 87 FR 33415, 33418 (June 2, 2022).
---------------------------------------------------------------------------

Final Rule
    As generally provided in the proposal, with specific changes noted 
below, the FDIC is amending subpart B to expressly address additional 
examples that violate part 328, making clear when specific statements 
or omissions constitute a misrepresentation under section 18(a)(4). 
Moreover, the FDIC reiterates that the specific examples set forth in 
the final rule are part of a non-exhaustive list of conduct that 
violates part 328. The FDIC has the authority to take action against 
conduct that constitutes a prohibited misrepresentation about deposit 
insurance, regardless of whether it is among the non-exhaustive list of 
examples included in the final rule.
    The FDIC has been, and will continue to be, consistently proactive 
in enforcing its requirements and taking appropriate action whenever it 
becomes aware of prohibited conduct.
Use of the Official Advertising Statement or FDIC-Associated Terms or 
Images
    The final rule adopts the proposed amendments to Sec.  328.102 to 
clarify specific circumstances under which use of the official 
advertising statement, FDIC-Associated Terms, or FDIC-Associated Images 
by a non-bank would constitute a misrepresentation of insured status. 
In a technical change from the proposal, the final rule corrects an 
amendment to Sec.  328.102. Proposed Sec.  328.102(b)(4)(i) stated, 
without limitation, a false or misleading representation is deemed to 
be material if it states, suggests, or implies that, ``A person or 
Uninsured Financial Products are insured or guaranteed by the FDIC''. 
The final rule corrects the reference to ``A person'' to ``A person 
other than Insured Depository Institution'' and moves this amendment to 
new Sec.  328.102(b)(1)(iv).\46\
---------------------------------------------------------------------------

    \46\ See final 12 CFR 328.102(b)(4)(iv).
---------------------------------------------------------------------------

Failure To Disclose That a Person Is a Non-Bank Is a Material Omission 
When a Statement Is Made Regarding Deposit Insurance
    The FDIC is adopting the proposal that if a non-bank makes 
statements regarding deposit insurance for its customers, it is a 
material omission for the non-bank to fail to clearly and conspicuously 
disclose that it is not itself an FDIC-insured institution and that the 
FDIC's deposit insurance coverage only protects against the failure of 
an FDIC-insured depository institution. With respect to the comment on 
prohibiting non-banks from using the words ``banking'' and ``bank 
account,'' the final rule's amendments to subpart B are limited to 
addressing misrepresentations concerning deposit insurance, which is 
the focus of section 18(a)(4) of the FDI Act. A non-bank's use of the 
terms ``bank'' or ``banking account'' does not itself misrepresent 
deposit insurance status. However, such usage may violate other laws, 
including state banking laws or laws that address deceptive practices.
    As stated above, the final rule makes clear that it is a 
misrepresentation for an entity that is not insured by the FDIC to 
state, suggest, or imply that it is FDIC-insured. Further, the final 
rule specifically notes that the FDIC considers it to be a material 
omission for an entity that is not an IDI to make statements about 
deposit insurance without clearly and conspicuously disclosing that it 
is not an IDI and that FDIC insurance only covers the failure of IDIs. 
The FDIC concludes that these provisions adequately address commenters' 
concerns regarding situations where an entity that is not FDIC-insured 
suggests that it is.
Failure To State That Non-Deposit Products Are Not Insured by the FDIC 
Is a Material Omission When a Statement Is Made Regarding Deposit 
Insurance
    The final rule adopts the proposal that, if a person makes 
statements regarding deposit insurance in a context that involves both 
deposits and non-deposit products, it is a material omission to fail to 
disclose that non-deposit products are not insured by the FDIC, are not 
deposits, and may lose value, subject to the clarifications below. The 
FDIC believes that the final rule addresses commenters' concerns 
regarding misrepresentations about uninsured financial products and 
non-deposit products as the rule helps mitigate potential consumer 
confusion when deposit insurance statements are made in the context of 
deposit and non-deposit products. Under the final rule, if a non-bank's 
website offered customers the option to have their funds deposited at 
an IDI and protected by deposit insurance or invested in non-deposit 
products in close proximity, it is a material omission if the non-
bank's website failed to state that the non-deposit products are not 
insured by the FDIC, are not deposits, and may lose value.
    Non-bank digital wallets. The FDIC recognizes that certain non-
banks offer payment products that are not FDIC-insured that allow 
consumers to store, send, or receive fiat money, for example U.S. 
dollars, electronically. While these products are not insured by the 
FDIC and therefore are vulnerable to the risks related to the non-
bank's insolvency, they do not otherwise fluctuate in value. 
Accordingly, the FDIC believes that requiring non-banks to disclose to 
consumers that such products ``may lose value'' may not be beneficial. 
As such, if a non-bank offers customers access to deposit products and 
a digital wallet where funds placed in a digital wallet are not covered 
by FDIC deposit insurance, it will not be a material omission for the 
non-bank entity to not include ``may lose value'' with respect to such 
digital wallet products. It will be a material omission for the non-
bank to fail to disclose that any such uninsured products are: ``not 
insured by the FDIC and are not deposits''. The FDIC believes that a 
disclosure that the product is not a deposit and not FDIC-insured 
strikes a reasonable balance by providing consumers with sufficient 
information if they utilize these digital wallet products from non-bank 
entities that also offer deposit products. The FDIC also notes that if 
the non-bank offers other non-deposit products as

[[Page 3518]]

defined by part 328, including non-deposit products as part of its 
digital wallet on its website, it must disclose that the non-deposit 
product ``may lose value'' in addition to disclosing that the products 
are ``not a deposit, not FDIC insured''.
    Proximity. It has been the FDIC's experience that it is more likely 
that a consumer will be confused about the application of deposit 
insurance to non-deposit products, when the deposit product is being 
offered in close proximity to the non-deposit product by the non-bank. 
For example, the FDIC has seen that some non-banks provide ``mixed 
advertisements'' where deposit products and non-deposit products are 
offered on the same web page or as part of a single social media post. 
As such, the FDIC believes that such offerings, in close proximity, 
represent clear scenarios where it would be a material omission for the 
entity to fail to disclose that the non-deposit product is not insured 
by the FDIC, is not a deposit, and may lose value.
    Non-deposit products unrelated to financial or investment products. 
The intent of this particular clarification in the final rule is to 
ensure that consumers understand when deposit insurance applies, 
particularly when a non-bank is offering both deposits and non-deposit 
products. From the FDIC's experience, consumers are more likely to be 
confused about the application of deposit insurance when a non-bank 
offers deposit products and non-deposit products that are financial 
products subject to investment risks. Services or products offered by a 
non-bank that are unrelated to financial or investment products and 
physical goods are generally not the type of non-deposit product that 
would confuse consumers about deposit insurance. While the FDIC 
generally would not expect non-banks offering these types of non-
deposit products to provide disclosures that the non-deposit product is 
not insured by the FDIC, is not a deposit, and may lose value, the non-
bank is nevertheless prohibited from representing or implying that the 
non-deposit products are insured or guaranteed by the FDIC.\47\
---------------------------------------------------------------------------

    \47\ 12 CFR 328.102(a).
---------------------------------------------------------------------------

Failure To State That Requirements Apply to Pass-Through Deposit 
Insurance
    The FDIC is finalizing the proposal that if a person makes 
statements regarding pass-through deposit insurance for its customers' 
funds, it is a material omission to fail to clearly and conspicuously 
disclose that certain conditions must be satisfied for pass-through 
deposit insurance coverage to apply. Under the final rule, a person 
making a statement regarding pass-through deposit insurance is not 
required to list the specific conditions that must be satisfied; simply 
referencing that conditions must be satisfied is sufficient. The final 
rule also does not prescribe specific disclosure language, providing 
flexibility as to how parties may express the required information.
    With respect to the comments recommending that entities list all 
the conditions necessary to receive pass-through coverage, the FDIC 
believes that the final rule strikes an appropriate balance with making 
consumers aware of the risks they face without inundating them with a 
technical recitation of the pass-through conditions. Further, such 
technical information may be impracticable for some types of 
advertisements due to the amount of text required to adequately 
disclose the requirements. The FDIC believes that the final rule's 
approach reflects a better balance, as it puts consumers on notice that 
pass-through insurance is not automatic or guaranteed and empowers them 
to raise questions or concerns.
    The FDIC remains concerned, however, that even with this notice, it 
is challenging to consumers to assess the risks related to the 
likelihood of receiving pass-through insurance given its technical 
legal requirements. In addition, consumers would not have access to 
banks' or non-banks' records to directly confirm that applicable 
conditions have been met. Given these circumstances, the FDIC is 
considering options for conducting qualitative consumer testing of 
deposit insurance disclosure language, including regarding pass-through 
coverage, to assess consumers' understanding and whether there are 
other disclosure language options that are more effective and 
beneficial for consumers. In the event the FDIC identifies disclosure 
language through consumer testing that would improve consumer 
understanding of the risks related to pass-through coverage, the FDIC 
could consider options to promote use of the disclosure.
    The FDIC is also considering whether additional public education 
efforts would be valuable to help consumers understand the differences 
in deposit insurance coverage when working with IDIs directly as 
compared to non-bank entities. Earlier this year, the FDIC launched its 
``Know your Risk. Protect your Money.'' national public awareness 
campaign to help consumers better understand deposit insurance and how 
it protects their money. This campaign complements the final rule's 
intended purposes, including helping consumers understand when they are 
interacting with an IDI and when their funds are protected by the 
FDIC's deposit insurance coverage.
Hyperlinking to Material Information
    In the NPR, the FDIC proposed to maintain the existing provision 
that it is a material omission for a non-insured entity that advertises 
deposit insurance to fail to identify the IDIs with which the 
representing party has a direct or indirect business relationship for 
the placement of deposits and into which the consumers' deposits may be 
placed.\48\
---------------------------------------------------------------------------

    \48\ See proposed 12 CFR 328.102(b)(5)(i).
---------------------------------------------------------------------------

    As explained in the proposal, the FDIC is concerned that certain 
business relationships between IDIs and non-banks may be confusing to 
consumers and proposed to require clear disclosures that would better 
inform consumers as to when their funds are protected by FDIC deposit 
insurance. The proposed rule made clear that it is a prohibited 
misrepresentation to fail to clearly and conspicuously disclose 
material information necessary to avoid a false statement, suggestion, 
or implication about deposit insurance. After considering the comment 
received on hyperlinking to the list of network banks, the FDIC is 
amending 12 CFR 328.102(b)(5)(i) in the final rule to expressly state 
that it is a material omission for a non-insured entity that advertises 
deposit insurance to fail to clearly and conspicuously identify the 
IDIs with which the representing party has a direct or indirect 
business relationship for the placement of deposits and into which the 
consumers' deposits may be placed.\49\ The addition of this language 
harmonizes this provision with the other specific examples in the final 
rule and makes clear that information about where funds may be placed 
must be clear and conspicuous. To the extent that a non-bank entity 
places deposits through a deposit network, it may satisfy this 
requirement by clearly and conspicuously identifying the deposit 
network and each IDI in the deposit network or by providing a clear and 
conspicuous hyperlink to a current list of all the IDIs that are part 
of such a network.
---------------------------------------------------------------------------

    \49\ See final 12 CFR 328.102(b)(5)(i) (emphasis added).
---------------------------------------------------------------------------

    Further, the FDIC will evaluate the clear and conspicuous 
requirement in the context of the statement the information is material 
to, including the information's proximity, placement, and prominence in 
relation to the statement.

[[Page 3519]]

In particular, the FDIC believes that Federal Trade Commission guidance 
provides helpful principles for determining whether hyperlinks to the 
list of deposit network IDIs are sufficiently clear and 
conspicuous.\50\
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    \50\ See Federal Trade Commission, .com Disclosures: How to Make 
Effective Disclosures in Digital Advertising, available at: https://www.ftc.gov/system/files/documents/plain-language/bus41-dot-com-disclosures-information-about-online-advertising.pdf.
---------------------------------------------------------------------------

    In response to the comment on hyperlinking to other disclosures, 
the FDIC generally believes that hyperlinking to the required 
disclosures--that a non-bank is not an FDIC-insured depository 
institution, the FDIC's deposit insurance coverage only protects 
against the failure of an FDIC-insured depository institution, and 
pass-through insurance coverage is subject to conditions--would not 
satisfy the ``clear and conspicuous'' standard in Sec.  328.102(b)(5) 
under the final rule. Failure to include these disclosures with 
statements regarding deposit insurance could result in consumer 
confusion as to whether an entity is FDIC-insured and the extent of 
deposit insurance coverage.

7. Policies and Procedures for IDIs

Proposed Rule
    The FDIC proposed requirements for IDIs to establish written 
policies and procedures to comply with part 328 that are commensurate 
with the nature, size, complexity, scope, and potential risk of the 
deposit-taking activities of the institution. As part of these policies 
and procedures, IDIs would also need to include, as appropriate, 
provisions related to monitoring and evaluating activities of persons 
that provide deposit-related services to the IDI or offer the IDI's 
deposit-related products or services to other parties.
a. Signs and Advertising Statement
    The proposal provided that such policies and procedures could 
include, for example, measures that an IDI would take to ensure 
compliance with the proposed sign and advertising requirements when the 
IDI changes its advertising strategy or engages with, or expands into, 
new physical or digital deposit-taking channels. For example, this 
could include, if applicable, establishing procedures to ensure that 
the IDI's technology (e.g., websites and mobile applications) is 
capable of implementing the proposed signs and advertisement statement 
requirements across all digital deposit-taking channels.
b. Certain Third-Party Relationships and Misrepresentations
    The proposal also provided that to the extent a third party has a 
business relationship with, and is serving as a deposit-taking channel 
for, an IDI, sound risk management would compel the IDI to be aware of 
the activities of the third party to ensure that the availability of 
deposit insurance is not being misrepresented. As such, the proposal 
would have required IDIs, as appropriate, to establish policies and 
procedures that include provisions related to the deposit-related 
services that a third party provides to the IDI or deposit-related 
products or services offered by the third party to other parties. These 
policies and procedures would include, as appropriate, provisions 
related to monitoring and evaluating whether such third parties are in 
compliance with subpart B.
c. Reservation of Authority
    The proposal reserved the FDIC's authority to take appropriate 
actions, including supervisory or enforcement actions, against any 
person that violates part 328. The existence of adequate policies and 
procedures would not preclude the FDIC from taking actions against IDIs 
or third parties to address violations.
Comments
    Some commenters expressed concerns that the proposed policies and 
procedures requirement was not aligned with existing interagency third-
party risk management guidance. In addition, commenters recommended 
excluding non-contractual relationships from the scope of the rule and 
clarifying that the involvement of non-marketing related deposit 
services does not automatically implicate the proposed rule. Other 
commenters requested the FDIC cover only third parties with a 
contractual relationship with the IDI addressing the offering or sales 
of the IDI's insured deposits, and only relationships involving 
marketing and public dissemination of information on FDIC deposit 
insurance. Another commenter requested that the FDIC exclude deposit 
products traded in secondary markets, such as certificates of deposit, 
because IDIs have no control over representations made to secondary 
market purchasers.
Final Rule
    Under 12 CFR 328.8, the FDIC is finalizing the policies and 
procedures requirement for IDIs as proposed. As part of the final rule, 
IDIs must establish and maintain written policies and procedures to 
achieve compliance with part 328. Such policies and procedures must be 
commensurate with the nature, size, complexity, scope, and potential 
risk of the deposit-taking activities of the IDI and must include, as 
appropriate, provisions related to monitoring and evaluating activities 
of persons that provide deposit-related services to the IDI or offer 
the IDI's deposit-related products or services to other parties.
    This new requirement is consistent with the Interagency Guidance on 
Third-Party Relationships: Risk Management that was issued earlier this 
year.\51\ The interagency guidance underscores that a banking 
organization's use of third parties can increase its risk, and that the 
use of third parties does not diminish or remove a banking 
organization's responsibility to perform all activities in a safe and 
sound manner and in compliance with applicable laws and regulations, 
including those related to consumer protection.
---------------------------------------------------------------------------

    \51\ See 88 FR 37920 (June 9, 2023).
---------------------------------------------------------------------------

    Here, the policies and procedures established and maintained by 
IDIs will facilitate compliance with part 328, including by ensuring 
that appropriate monitoring is conducted and evaluations are performed 
regarding activities of certain persons that provide deposit-related 
services to IDIs or offer an IDI's deposit products or services to 
other parties. The policies and procedures will help ensure activities 
are conducted in compliance with applicable laws and that IDIs are 
aware of whether certain third parties are in violation of subpart B of 
part 328. Having these policies and procedures in place will help 
mitigate the risks of consumer harm and confusion, consistent with the 
statutory purpose underlying section 18(a) of the FDI Act and the 
FDIC's mission to maintain and promote public confidence in the banking 
system.
    IDIs should include reasonable provisions regarding compliance with 
part 328 in their policies and procedures, including addressing for 
example: the use of FDIC-Associated Terms or FDIC-Associated Images by 
third parties in a manner that inaccurately states or implies that a 
person other than an IDI is insured by FDIC; statements made that 
represent or imply that an advertised product is insured by the FDIC 
but fail to identify the IDI; and ensuring the marketing and 
advertising information or materials presented or made available to 
prospective depositors by third parties do not misrepresent the 
insurability of the IDI's financial products. The FDIC

[[Page 3520]]

expects that IDIs, as appropriate, will implement, or enhance, current 
policies and procedures related to training staff to review any 
marketing and advertising materials about the IDI's deposit products 
and services and to monitor and evaluate compliance with part 328.
    With respect to the comments related to the scope of the third 
parties' activities, IDIs should establish and maintain policies and 
procedures to evaluate and monitor, as appropriate, any deposit 
insurance-related representations made by third parties that provide 
deposit-related services to the IDI or offer the IDI's deposit-related 
products or services to other parties. More specifically, IDIs should 
consider the extent to which their third-party relationships involve 
representations or statements subject to part 328, and the role third 
parties have in crafting or presenting such representations or 
statements for prospective depositors. For example, a third-party 
relationship for web hosting services may not warrant policies or 
procedures for compliance with part 328 to the extent the third party 
simply publishes and hosts content developed and directed by the IDI. 
However, if the IDI offers a deposit account through or by a non-bank 
third party on a consumer-facing website with the branding and 
marketing of a non-bank third party, that third party may be making 
representations to consumers to describe the product's characteristics 
in a manner that is covered by part 328 subpart B. This would warrant 
that the IDI include provisions in its policies and procedures to 
monitor and evaluate compliance with part 328 by the third party. The 
IDI should also consider steps that it would take to mitigate any 
misrepresentations related to deposit insurance that could cause 
potential consumer confusion and harm regarding a product provided by 
the IDI.
    Commenters also suggested that the policies and procedures 
requirement should exclude non-contractual relationships. While the 
FDIC understands that IDIs often have provisions in their contracts 
with third parties to review certain marketing materials, the FDIC 
believes that limiting the scope of this requirement to only situations 
where IDIs have contractual relationships with third parties would not 
capture IDI relationships with certain third parties that the rule is 
intended to capture.
    In response to commenter concerns about the scope of this 
requirement, the FDIC notes that the policies and procedures related to 
certain third parties are required to be commensurate with the nature, 
size, complexity, scope, and potential risk of the deposit-taking 
activities. With regard to third-party relationships, IDIs will be 
expected to utilize a risk-based approach in determining the nature and 
extent of the policies and procedures that are needed to monitor and 
evaluate certain third parties' compliance with part 328 subpart B. For 
example, there may be third parties that have long-standing, well-
established relationships with the IDI such that the third party has 
been offering products and services on the IDI's behalf for many years 
and appropriately representing deposit insurance. In such instances, 
the IDI might deem the relationship to be one that warrants less 
extensive monitoring and evaluation, depending on the relationship and 
potential risk. The FDIC notes, however, that such relationships could 
experience significant changes, including in personnel, risk management 
philosophy, or new types of products offered, that may warrant more 
extensive policies and procedures. Likewise, the IDI may be involved in 
nascent relationships with novel arrangements and products that present 
a greater risk of consumer confusion and warrant more extensive 
monitoring and evaluation. As such, IDIs should ensure that the nature 
and scope of the policies and procedures under the final rule are 
tailored to the risks identified. The policies and procedures should 
effectively identify, address, and mitigate potential deposit insurance 
misrepresentations identified by the IDI. It is also prudent for 
policies and procedures to include provisions ensuring that third 
parties that provide marketing or joint marketing services, web and 
other electronic channel design, or similar services, are aware of the 
IDI's compliance responsibilities under part 328.
    Finally, the FDIC notes that if a non-bank misrepresents deposit 
insurance, the FDIC would still expect to devote attention to taking 
action against the non-bank, formally or informally, under part 328 
subpart B, regardless of the presence of a bank partner.

8. Crypto-Assets

Proposed Rule
    Among other things, part 328 prohibits any person from representing 
or implying that any uninsured financial product is insured or 
guaranteed by the FDIC.\52\ This prohibition applies to advertisements, 
publications, and other disseminations of information. The FDIC has 
noted a number of misrepresentations of deposit insurance coverage for 
crypto-assets,\53\ and proposed to amend part 328 to reinforce that 
representations regarding deposit insurance in the crypto-asset 
marketplace fall within its scope. Specifically, the FDIC proposed to 
amend the definitions of ``Non-Deposit Product'' and ``Uninsured 
Financial Product'' in subpart B to include crypto-assets and define 
crypto-asset as ``any digital asset implemented using cryptographic 
techniques.''
---------------------------------------------------------------------------

    \52\ ``Uninsured Financial Product'' is currently defined to 
include non-deposit products, hybrid products, investments, 
securities, obligations, certificates, shares, or financial products 
other than insured deposits.
    \53\ See FDIC Press Release PR-60-2022, FDIC Issues Cease and 
Desist Letters to Five Companies for Making Crypto Related False or 
Misleading Representations About Deposit Insurance (Aug. 19, 2022); 
FDIC Press Release PR-9-2023, FDIC Demands Four Entities Cease 
Making False or Misleading Representations About Deposit Insurance 
(Feb. 15, 2023).
---------------------------------------------------------------------------

    The proposed rule also included crypto-assets in subpart A's 
definition of ``non-deposit product'' using the definition of ``crypto-
asset'' described above. Accordingly, the non-deposit sign requirements 
proposed in subpart A would apply to crypto-assets. For example, if an 
IDI's ATM offered customers the ability to purchase crypto-assets, the 
ATM would be required to clearly, continuously, and conspicuously 
display disclosures indicating that the crypto-assets are not insured 
by the FDIC, are not deposits, and may lose value.
Discussion of Comments
    Commenters generally supported the FDIC's efforts to address 
deposit insurance misrepresentations involving crypto-assets. 
Commenters also supported including crypto-assets in the definition of 
``uninsured financial product'' and applying disclosure requirements 
for non-deposit products to crypto-assets. One commenter noted that 
misrepresentations made by prominent crypto-related entities 
demonstrate the necessity of the FDIC's proposed rules.
    Commenters also raised concerns with the proposed definition of 
``crypto-asset.'' A venture capital firm commented that the proposed 
definition of ``crypto-asset'' was over inclusive and vague. 
Specifically, the commenter explained that ``cryptographic techniques'' 
could refer to a variety of technologies not associated with the 
crypto-asset ecosystem, such as the end-to-end encryption technology 
that secures common communications applications. The commenter stated 
that the broader context of the FDIC's proposal did not indicate an 
intent to

[[Page 3521]]

capture such usage. The commenter recommended an alternative definition 
and suggested that it did not present the same ambiguities as the 
proposal, making the amendment to part 328 more practicable.
    A trade association and a consortium composed of banks and 
technology firms each raised the concern that the proposed definition 
of ``crypto-asset'' could be problematic for banks that seek to employ 
blockchain technology in offering their deposit products. These 
commenters suggested that the proposed rule's broad definition of 
``crypto-asset'' might be read to include a traditional deposit product 
if the bank offering it were to employ blockchain technology. The 
consortium stated that equating a traditional deposit product to the 
crypto-asset products offered by non-banks would disadvantage regulated 
financial institutions and deter banks from leveraging blockchain 
technology to improve their products.
    Another trade association stated that regulators will need to pay 
close attention to the rapidly expanding landscape of bank products, 
particularly offerings involving cryptocurrencies and tokenized assets 
that reside on blockchains. The commenter further stated that as 
tokenization increases in popularity, the risk of a traded asset being 
confused with a bank deposit will increase as customers navigate 
complex product offerings that blur the lines between bank deposits and 
non-deposit products.
Final Rule
    The FDIC recognizes that the proposed definition of ``crypto-
asset'' may have been over inclusive for the purposes of this 
regulation. This definition was not intended to capture, for example, 
the use of encrypted communications technology by firms developing or 
offering financial products. As pointed out by commenters, however, the 
proposed definition of ``crypto-asset'' included language (``any 
digital asset implemented using cryptographic techniques'') susceptible 
to a broad interpretation. The FDIC notes that the proposed definition 
of ``crypto-asset'' was limited to ``digital asset[s]'' that are 
implemented using cryptographic techniques, and it is not clear that 
traditional deposit products could be considered ``digital assets.'' 
Nevertheless, the FDIC agrees that the proposed definition was somewhat 
ambiguous in this respect.
    While one commenter recommended an alternative definition for the 
term ``crypto-asset,'' the FDIC is concerned that the commenter's 
proposed two-part test--(1) that the asset confers economic, 
proprietary, or access rights or powers, and (2) is recorded using a 
cryptographically secured distributed ledger or similar technology--
could be too narrow to capture some digital assets that are broadly 
recognized as crypto-assets by market participants today. This could be 
interpreted to exempt digital assets lacking certain specific 
characteristics from the regulations regarding misrepresentation of 
deposit insurance, which would be inconsistent with the FDIC's policy 
goals. The FDIC is also mindful that, as noted by a commenter, the 
landscape of these products continues to evolve rapidly.
    The FDIC further notes that the proposed definition of ``uninsured 
financial product'' included any financial product that is not a 
deposit. The definition's enumerated list of uninsured products serve 
as examples, rather than an exhaustive list, of the products that are 
not insured by the FDIC. In determining whether a particular product is 
an ``uninsured financial product'' for purposes of part 328, the test 
is whether that product falls within the statutory definition of 
``deposit.'' \54\ The FDIC also notes that, of the products listed in 
the proposed definition of ``uninsured financial product,'' only 
``crypto-asset'' was specifically defined in the proposal.
---------------------------------------------------------------------------

    \54\ See 12 U.S.C. 1813(l).
---------------------------------------------------------------------------

    In light of this, the final rule adopts a more flexible approach 
better suited to an evolving landscape. While ``crypto-asset'' is 
included in the products listed in the definition of ``uninsured 
financial product,'' the FDIC is not including a specific definition of 
``crypto-asset'' in part 328. The FDIC believes this approach will 
signal that representations regarding deposit insurance in the crypto-
asset marketplace are subject to the prohibitions of section 18(a) and 
part 328, like other financial products, without relying on a specific 
regulatory definition of ``crypto-asset'' that could quickly become 
obsolete. The FDIC has publicly stated that crypto-assets are not 
insured by the FDIC.\55\ As noted above, the test of whether a 
particular financial product is an ``uninsured financial product'' will 
continue to be based upon application of the statutory definition of 
``deposit,'' and is by its nature fact specific.
---------------------------------------------------------------------------

    \55\ See Fact Sheet, What the Public Needs to Know About FDIC 
Deposit Insurance and Crypto Companies (July 28, 2022), available 
at: https://www.fdic.gov/news/fact-sheets/crypto-fact-sheet-7-28-22.pdf. While blockchain technology may be used for purposes other 
than the creation of crypto-assets, the FDIC is not expressing a 
view with respect to whether a product employing such technology 
could meet the definition of a ''deposit'' in this final rule.
---------------------------------------------------------------------------

D. Expected Effects

Costs

    The costs of the final rule will be incurred by IDIs, as well as 
some non-banks that may need to update disclosures or marketing 
materials. This section addresses these two groups separately.
Costs to IDIs
    According to data from recent Reports of Condition and Income (Call 
Reports), the FDIC insures the deposits of 4,654 IDIs operating 
approximately 80 thousand branches in the United States.\56\ These IDIs 
are currently subject to the existing requirements of part 328, so the 
costs incurred by these IDIs due to the final rule will be limited to 
activities to ensure compliance with the new provisions in the final 
rule and ameliorated by the extent to which IDIs are already complying 
with the new provisions. These activities include updating the display 
of FDIC signs in both physical and digital locations where deposits are 
normally received (including ATMs and websites), creating and 
maintaining signs for non-deposit products, segregating areas related 
to the sale of non-deposit products from areas where insured deposits 
are normally received, and ensuring that FDIC signs are not displayed 
in close proximity with non-deposit product signs.
---------------------------------------------------------------------------

    \56\ Call Reports as of June 30, 2023.
---------------------------------------------------------------------------

    Data on the costs of updating the displays of signs and segregating 
physical areas within bank premises are unavailable, but the FDIC 
expects these costs would depend on the number of branches operated by 
each IDI as well as the complexities of each IDI's branches and other 
premises. The FDIC expects that larger banks are more likely to have 
branches that are nontraditional, complex, and/or offer both deposit 
and non-deposit products. For purposes of the final rule, the FDIC 
estimates that IDIs with less than $10 billion in assets will spend, on 
average, approximately one hour per year to complete these activities 
at each branch while IDIs with at least $10 billion in total 
consolidated assets (assets) will spend, on average, approximately two 
hours per year per branch, for a total estimated annual burden of 
approximately 120 thousand hours per year across all IDIs \57\ at an

[[Page 3522]]

estimated annual cost of approximately $10 million.\58\
---------------------------------------------------------------------------

    \57\ According to Call Reports as of June 30, 2023, there were 
4,496 IDIs with assets less than $10 billion operating 33,479 
branches and 158 IDIs with assets at least $10 billion operating 
44,133 branches.
    \58\ Dollar costs for this analysis are based on a $82.38 total 
hourly cost of compensation, a weighted average of the 75th 
percentile hourly wages reported by the Bureau of Labor Statistics 
(BLS) National Industry-Specific Occupational Employment and Wage 
Estimates (OEWS) across five occupational groups in the Depository 
Credit Intermediation sector, as of May 2022, and adjusted by 1.51 
to include non-wage compensation and 1.05 to account for the change 
in the seasonally adjusted Employment Cost Index for the Credit 
Intermediation and Related Activities sector (NAICS Code 522) 
between March 2022 and June 2023. For this analysis, the FDIC uses 
the following estimated occupational burden weights and occupational 
hourly labor costs: 14.6 percent for executives and managers at 
$131.66 per hour, 2.8 percent for lawyers at $169.85 per hour, 35.7 
percent for compliance officers at $65.27 per hour, 28.5 percent for 
IT professionals at $103.74 per hour, and 18.3 percent for clerical 
workers at $37.09 per hour.
---------------------------------------------------------------------------

    The costs of complying with the final rule's requirements for 
digital deposit-taking channels will also depend on the complexities of 
each IDI's digital deposit-taking operations. The FDIC expects that 
larger banks are more likely to have more complex digital operations or 
offer both deposit and non-deposit products through their digital 
deposit-taking operations. For purposes of the final rule, the FDIC 
estimates that, on average, IDIs will incur a one-time burden of sixty 
hours to update their digital operations to incorporate the 
requirements in the final rule, at an approximate cost of $23 million 
for the industry.\59\ The FDIC also estimates that, in years subsequent 
to the enactment of the final rule, IDIs with less than $10 billion in 
assets will spend, on average, approximately ten additional hours per 
year to comply with the digital deposit-taking operation requirements 
of the final rule, while IDIs with at least $10 billion in assets will 
spend, on average, approximately twenty additional hours per year, at 
an estimated annual cost of approximately $4 million for the 
industry.\60\
---------------------------------------------------------------------------

    \59\ According to Call Reports as of June 30, 2023: $23 million 
= 4,654 IDIs x 60 hours per IDI x $82.38 per hour.
    \60\ According to Call Reports as of June 30, 2023: $4 million = 
4,496 IDIs x 10 hours per IDI x $82.38 per hour + 158 IDIs x 20 
hours per IDI x $82.38 per hour.
---------------------------------------------------------------------------

    Finally, all IDIs must update their policies and procedures to 
comply with the final rule. These policies and procedures are required 
to include, as appropriate, provisions related to monitoring and 
evaluating whether certain third parties are in compliance with subpart 
B. The FDIC recognizes that the costs to implement and maintain these 
policies and procedures will vary across IDIs in ways that depend on 
the specifics of each IDI's operations or relationships with certain 
third parties. For purposes of the final rule, the FDIC estimates that, 
on average, IDIs will incur a one-time burden of eighty hours to update 
their policies and procedures to incorporate the requirements in the 
final rule, at an approximately cost of $31 million for the 
industry.\61\ The FDIC also estimates that, in years subsequent to the 
enactment of the proposed rule, IDIs will spend, on average, 
approximately seventeen additional hours per year to ensure that their 
policies and procedures maintain compliance with the final rule,\62\ at 
an estimated annual cost of approximately $7 million for the 
industry.\63\ Based on the preceding analysis, the FDIC expects that 
the banking industry will incur approximately $64 million in the first 
year after adoption and approximately $20 million in each subsequent 
year to comply with the amendments to part 328.
---------------------------------------------------------------------------

    \61\ According to Call Reports as of June 30, 2023: $31 million 
= 4,654 IDIs x 80 hours per IDI x $82.38 per hour.
    \62\ The FDIC estimates that twelve of the seventeen hours are 
recordkeeping costs under the Paperwork Reduction Act. The five 
remaining hours are regulatory costs of compliance that are not 
under the Paperwork Reduction Act.
    \63\ According to Call Reports as of June 30, 2023: $7 million = 
4,654 IDIs x 17 hours per IDI x $82.38 per hour.
---------------------------------------------------------------------------

Costs to Non-Banks
    The FDIC does not have direct data on the number of non-banks that 
will be affected by the final rule. FDIC staff believe that the non-
banks affected by the final rule would generally be classified in the 
following North American Industry Classification System (NAICS) 
industries: Miscellaneous Financial Investment Activities (NAICS Code 
523999), Financial Transaction Processing, Reserve & Clearinghouse 
Activities (NAICS Code 522320), Computer System Design and Related 
Services (NAICS Code 5415), and Investment Advice (NAICS Code 523930). 
According to recent Census data, there were 148,235 firms in these 
NAICS industries in 2020, the most recent year for which such data is 
available.\64\ However, not all of these firms enter into agreements 
with IDIs or otherwise engage in operations related to insured 
deposits; FDIC staff believe that the number of non-banks engaged in 
such operations is likely considerably less than the number of IDIs. 
For purposes of the final rule, the FDIC estimates that the number of 
affected non-banks will be approximately one percent of firms in the 
NAICS industries listed above. Therefore, the FDIC estimates that 
approximately 1,500 non-banks will be affected by the proposed rule.
---------------------------------------------------------------------------

    \64\ See United States Census Bureau, 2020 SUSB Annual Data 
Tables by Establishment Industry, available at: https://www.census.gov/data/tables/2020/econ/susb/2020-susb-annual.html, 
last retrieved on October 23, 2023.
---------------------------------------------------------------------------

    Non-banks have been statutorily prohibited from falsely 
representing that uninsured financial products are FDIC-insured for 
many years. Thus, the final rule will not create a new prohibition on 
such misrepresentations, but will clarify the types of communications 
that can materially misrepresent deposit insurance coverage. The non-
banks affected by the final rule may need to update their disclosures 
and marketing materials to ensure that they neither misuse the FDIC's 
official sign or any FDIC-associated terms or images, nor omit or fail 
to clearly and conspicuously disclose material information that could 
lead to a reasonable consumer being unable to understand the extent or 
manner of deposit insurance provided. For purposes of the final rule, 
the FDIC estimates that, on average, each non-bank will spend an 
additional 2.5 hours in the first year to implement these changes and 
one hour per year to maintain compliance with the amendments to subpart 
B, for a total cost of approximately $300 thousand for the first year 
and $125 thousand for each subsequent year across all non-banks 
affected by the rule.\65\
---------------------------------------------------------------------------

    \65\ Assuming the same average hourly wage as calculated for 
IDIs: 1,500 non-banks x 2.5 hours per non-bank x $82.38 per hour = 
approximately $300 thousand. 1,500 non-banks x 1 hour per non-bank x 
$82.38 per hour = approximately $125 thousand.
---------------------------------------------------------------------------

E. Benefits

    Provided that affected entities are not already complying with 
certain aspects of the final rule, the FDIC expects the final rule to 
produce benefits for the general public by providing clarity, and 
requiring affected entities to provide such clarity, to consumers about 
the extent to which or the manner in which products are insured by the 
FDIC. This clarity is expected to help consumers to more clearly 
understand when they are conducting business with IDIs and when their 
funds are protected by FDIC deposit insurance, thereby helping them 
avoid incurring financial losses as a result of investing in products 
they mistakenly thought were FDIC-insured. The final rule will reduce 
ambiguity about the nature of deposit insurance in situations where 
non-deposit products are offered by IDIs, where insured deposits are 
advertised by non-banks, or where both non-deposit products and deposit 
products are offered at the same location. The final rule will extend 
these benefits to digital deposit-taking channels where physical 
segregation is

[[Page 3523]]

not possible. The final rule will also require the clear, conspicuous, 
and consistent use of the official FDIC sign and symbol in both 
physical and digital locations. These requirements are expected to 
enhance consumers' recognition of the FDIC's guarantee and reassure 
them of the nature of deposit insurance for those products. This effect 
will reinforce the role of FDIC deposit insurance and may bolster 
confidence in the U.S. banking sector.
    As discussed previously, the final rule will further clarify the 
FDIC's procedures for evaluating potential violations of section 
18(a)(4). The final rule will generally be consistent with existing 
practices used by the FDIC with respect to these matters. Furthermore, 
the final rule will not affect the application of related criminal 
prohibitions under 18 U.S.C. 709. Therefore, the FDIC believes that 
this aspect of the final rule is unlikely to have any significant 
effect on formal or informal enforcement of the section 18(a)(4) 
prohibitions.
    By providing the clarity described above, the FDIC believes the 
final rule is likely to curtail instances in which IDIs or non-banks 
potentially misuse or misrepresent the FDIC's name or logo.\66\ 
Consumers' uncertainty as to the safety of their funds may weaken the 
confidence that underpins bank stability and our nation's broader 
financial system. The final rule is likely to reduce the frequency of 
these types of instances going forward. The FDIC does not have the data 
to quantify the cost savings of this effect but expects that the 
reduction in such instances would strengthen public confidence in the 
FDIC deposit insurance and the nation's banking system.
---------------------------------------------------------------------------

    \66\ There have been at least 165 such instances recently. See 
FDIC, 2019 Annual Report, at 38 and FDIC, 2020 Annual Report, at 47.
---------------------------------------------------------------------------

    The FDIC invited comment on the expected effects of the proposed 
rule. Some commenters opined that burden costs borne by smaller banks 
may be similar to or even higher than those borne by larger banks. 
Other commenters noted that the increased digital signage requirements, 
including the pop-up requirements, may require smaller banks to adopt 
more complex and costly digital platforms. The FDIC recognizes that 
there will be variation in the costs of compliance across banks and 
that some small banks may incur higher compliance costs than others. 
After consideration of the public comments, the final rule has narrowed 
the one-time notification requirement to reduce the cost and complexity 
while also achieving the relevant policy goals, and maintains the 
hourly compliance estimates presented in the proposed rule. The cost 
estimates described in this section reflect the FDIC's supervisory 
experience that larger banks have, on average, higher costs for the 
maintenance of signage at their physical branches and the maintenance 
of their digital operations.

F. Alternatives Considered

    The FDIC has considered a number of alternatives to the final rule 
that could meet its objectives in this rulemaking, including proposals 
suggested by commenters in response to the 2020 and 2021 RFIs and the 
NPR. Some of these alternatives have been discussed above and 
additional alternatives are described below. For the reasons described, 
the FDIC views the final rule as the most appropriate and effective 
means of achieving its policy objectives with respect to part 328.

Alternatives to Digital Official Sign for Digital Deposit-Taking 
Channels

    With respect to digital deposit-taking channels, the FDIC 
considered alternatives to the digital official sign required by the 
final rule, including plain text signage and disclosure 
requirements.\67\ As discussed above, the FDIC official digital sign is 
intended to quickly and visually convey to consumers that they are 
dealing directly with an IDI rather than a non-bank entity. This 
distinction is critical to understanding the risks a consumer faces, 
and the FDIC believes that it warrants a requirement for consistent 
visual signage. Plain text signage or disclosures would not achieve 
this objective as effectively.
---------------------------------------------------------------------------

    \67\ See e.g., Hancock Whitney Bank Comment Letter to 2021 RFI 
(May 24, 2021); Kasasa Comment Letter to 2020 RFI (March 24, 2020) 
(stating that the official sign should not be required on an IDI's 
website or mobile applications but suggesting the FDIC require, at 
minimum, the FDIC advertising statement on certain pages).
---------------------------------------------------------------------------

Official Advertising Statement Requirements--Allow ``One-Click-Away'' 
Disclosures

    Some commenters recommended that the FDIC adopt a ``one click 
away'' approach for electronic or digital advertisements (where the 
advertising statement may not be immediately visible to consumers but 
could be reached through one mouse click) in order to permit greater 
flexibility in advertising formats.\68\ The FDIC believes that the 
final rule better meets its objectives, as a ``one click away'' 
approach places the burden on consumers to obtain the necessary 
information and makes it less likely that they will do so. In addition, 
the advertising statement options available to IDIs under the final 
rule allow significant flexibility in advertising formats, as IDIs 
could use short titles including ``Member of FDIC'', ``Member FDIC'', 
or ``FDIC-insured''. The FDIC believes that these options are 
sufficient to permit advertising flexibility.
---------------------------------------------------------------------------

    \68\ See Hancock Whitney Bank Comment Letter to 2021 RFI (May 
24, 2021); American Bankers Association and Bank Policy Institute 
joint comment letter to 2021 RFI (May 21, 2021); Kasasa Comment 
Letter to 2020 RFI (March 24, 2020).
---------------------------------------------------------------------------

Additional Disclosures Requiring a Consumer's Signature for Non-Deposit 
Products Offered Within an IDI's Physical Premises

    One commenter recommended that the FDIC require written and oral 
disclosures with respect to the sale or recommendation of any non-
deposit product offered within an IDI's premises and to require a 
consumer's signature affirming their understanding. The FDIC believes 
that such additional requirements would be overly burdensome for IDIs. 
Accordingly, the final rule will not adopt this recommendation. 
However, nothing contained in this regulation should be read to limit 
the authority of any state or Federal agency or individual under any 
other laws that may require such disclosures.

G. Administrative Law Matters

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency, 
in connection with a final rule, to prepare and make available for 
public comment an initial regulatory flexibility analysis that 
describes the impact of a proposed rule on small entities.\69\ However, 
a final regulatory flexibility analysis is not required if the agency 
certifies that the final rule will not have a significant economic 
impact on a substantial number of small entities. The Small Business 
Administration (SBA) has defined ``small entities'' to include banking 
organizations with total assets of less than or equal to $850 
million.\70\

[[Page 3524]]

Generally, the FDIC considers a significant economic impact to be a 
quantified effect in excess of 5 percent of total annual salaries and 
benefits per institution, or 2.5 percent of total noninterest expenses. 
The FDIC believes that effects in excess of these thresholds typically 
represent significant effects for FDIC-supervised institutions. For the 
reasons described below, the FDIC certifies that the final rule will 
not have a significant economic impact on a substantial number of small 
entities.
---------------------------------------------------------------------------

    \69\ 5 U.S.C. 601 et seq.
    \70\ The SBA defines a small banking organization as having $850 
million or less in assets, where an organization's ''assets are 
determined by averaging the assets reported on its four quarterly 
financial statements for the preceding year.'' See 13 CFR 121.201 
(as amended by 87 FR 69118, effective December 19, 2022). In its 
determination, the ''SBA counts the receipts, employees, or other 
measure of size of the concern whose size is at issue and all of its 
domestic and foreign affiliates.'' See 13 CFR 121.103. Following 
these regulations, the FDIC uses an insured depository institution's 
affiliated and acquired assets, averaged over the preceding four 
quarters, to determine whether the insured depository institution is 
''small'' for the purposes of RFA.
---------------------------------------------------------------------------

    As described in the Expected Effects section, the proposed rule is 
expected to affect all institutions whose deposits are insured by the 
FDIC, as well as non-banks who may potentially use the official FDIC 
sign, advertising statements, or otherwise make representations that 
their products are insured or guaranteed by the FDIC. According to 
recent Call Reports, there are 4,654 IDIs.\71\ Of these, approximately 
3,373 are considered small entities for the purposes of RFA.\72\ These 
small IDIs operate approximately 13 thousand deposit-taking offices. 
The number of deposit-taking offices at each small IDI ranges from 1 to 
21. As discussed in the Expected Effects section, the FDIC expects 
affected IDIs with less than $10 billion in assets, which are likely to 
have less complex deposit-taking operations and fewer offices than 
larger IDIs, to spend, on average, 60 hours to update their digital 
operations, 80 hours to implement policies and procedures, and seven 
hours to update physical signage at branches in the first year. At 
average labor costs of $82.38 per hour, the expected first-year costs 
of complying with the proposed rule would average less than a percent 
of the small IDIs' total annual salaries and benefits. These expected 
first-year costs would exceed five percent of the total annual salaries 
and benefits for fewer than 20 small IDIs (comprising less than one 
percent of the total number of affected small IDIs). For subsequent 
years, the costs of maintaining compliance are even smaller. Thus, the 
proposed rule would not significantly affect a substantial number of 
small IDIs.
---------------------------------------------------------------------------

    \71\ Call Reports as of June 30, 2023.
    \72\ Id.
---------------------------------------------------------------------------

    As described in the Expected Effects section, the FDIC estimates 
that 1,500 non-banks would be affected by the final rule. The FDIC does 
not have data on the number of non-banks that would be considered small 
entities for the purposes of RFA. As a conservative estimate, the FDIC 
assumes all 1,500 affected non-banks are small. As discussed in the 
Expected Effects section, the FDIC estimates that each non-bank, on 
average, would incur an additional 2.5 hours in the first year and 1 
hour in each subsequent year to comply with the proposed amendments to 
subpart B. At an estimated compensation rate of $82.38, the expected 
costs of complying with the proposed rule would be less than $300 per 
year per non-bank, on average.
    The final rule may also affect private individuals who may 
potentially misuse the FDIC name or logo or misrepresent the nature of 
deposit insurance. Private individuals are not considered ``small 
entities'' under the RFA.
    Given that the expected costs of the proposed rule would be 
relatively small, the FDIC certifies that the proposed rule would not 
have a significant economic impact on a substantial number of small 
entities.

Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA) (44 U.S.C. 3501-3521), the FDIC may not conduct or 
sponsor, and a respondent is not required to respond to, an information 
collection unless it displays a currently valid Office of Management 
and Budget (OMB) control number. Certain provisions of the proposed 
rule contain ``collection of information'' requirements within the 
meaning of the PRA.\73\ The information collection requirements (IC) 
contained in this final rule have been submitted to OMB for review and 
approval by the FDIC under section 3507(d) of the PRA and section 
1320.11 of OMB's implementing regulations (5 CFR part 1320) as a new 
information collection.
---------------------------------------------------------------------------

    \73\ Information collection is defined under OMB's regulations 
at 5 CFR 1320(c). Certain requirements in part 328 for public 
disclosure of the FDIC name and/or logo are not information 
collections. See 5 CFR 1320(c)(2).
---------------------------------------------------------------------------

    Title of Proposed Information Collection: Disclosure, Recordkeeping 
and Reporting Requirements Related to FDIC's Official Sign and 
Advertising Requirements, False Advertising, Misrepresentation of 
Insured Status, and Misuse of the FDIC's Name or Logo.
    OMB Control Number: 3064-0219
    Affected Public: Businesses or other for-profit.
    Respondents: Any FDIC-insured depository institution and persons 
that provide deposit-related services to insured depository 
institutions or offer insured depository institution's deposit-related 
products or services to other parties.
    Estimated Annual Burden:
    The final rule contains the following ten (10) information 
collection requirements:
    1. Signs within Institution Premises--Banks <$10B, 12 CFR 328.3 
(Third-Party Disclosure; Mandatory). Section 328.3 imposes PRA third-
party disclosure burden governing signage within the premises of 
insured depository institutions. This burden is associated with the 
display of signage for non-deposit products, segregating areas offering 
non-deposit products, and the use of electronic media. The FDIC 
believes the hourly burden for these activities differs among 
respondents. For purposes of PRA, the FDIC would split the burden into 
two information collection categories: one for banks with less than $10 
billion in total consolidated assets (assets) and one for banks with at 
least $10 billion in assets. This IC captures the burden for the former 
group.
    2. Signs within Institution Premises--Banks $10B, 12 CFR 
328.3 (Third-Party Disclosure; Mandatory). Section 328.3 imposes PRA 
third-party disclosure burden governing signage within the premises of 
insured depository institutions. This burden is associated with the 
display of signage for non-deposit products, segregating areas offering 
non-deposit products, and the use of electronic media. The FDIC 
believes the hourly burden for these activities differs among 
respondents. For purposes of PRA, the FDIC would split the burden into 
two ICs: one for banks with less than $10 billion in total consolidated 
assets (assets) and one for banks with at least $10 billion in assets. 
This IC captures the burden for the latter group.
    3. Signage for ATMs and Digital Deposit-taking Channels--
Implementation, Sec. Sec.  328.4 and 328.5 (Third-Party Disclosure; 
Mandatory). Sections 328.4 and 328.5 impose PRA third-party disclosure 
burden governing signs for ATMs as well as digital deposit-taking 
channels. This burden is associated with the display of signage for 
both deposit and non-deposit products. The FDIC believes banks will 
incur burdens in the first year to update their digital channels to 
incorporate the amended requirements in the rule. This IC captures the 
burden for these implementation activities.
    4. Signage for ATMs and Digital Deposit-taking Channels--Banks 
<$10B--Ongoing, Sec. Sec.  328.4 and 328.5 (Third-Party Disclosure; 
Mandatory). Sections 328.4 and 328.5 impose PRA third-party disclosure 
burden governing signs for ATMs as well as digital deposit-taking 
channels. This burden is associated with the display of signage

[[Page 3525]]

for deposit and non-deposit products. The FDIC believes that, in years 
subsequent to implementation, banks would incur ongoing burdens to 
update and maintain their digital channels to ensure continual 
compliance with the requirements in the rule. For purposes of PRA, the 
FDIC would split this ongoing burden into two ICs: one for banks with 
less than $10 billion in total consolidated assets (assets) and one for 
banks with at least $10 billion in assets. This IC captures the burden 
for the former group.
    5. Signage for ATMs and Digital Deposit-taking Channels--Banks 
=$10B--Ongoing, Sec. Sec.  328.4 and 328.5 (Third-Party 
Disclosure; Mandatory). Sections 328.4 and 328.5 impose PRA third-party 
disclosure burden governing signs for ATMs as well as digital deposit-
taking channels. This burden is associated with the display of signage 
for deposit and non-deposit products. The FDIC believes that, in years 
subsequent to implementation, banks would incur ongoing burdens to 
update and maintain their digital channels to ensure continual 
compliance with the requirements in the rule. For purposes of PRA, the 
FDIC would split the burden into two ICs: one for banks with less than 
$10 billion in total consolidated assets (assets) and one for banks 
with at least $10 billion in assets. This IC captures the burden for 
the latter group.
    6. Policies and Procedures--Implementation, 12 CFR 328.8 
(Recordkeeping; Mandatory). Section 328.8 requires IDIs to establish 
and maintain written policies and procedures to achieve compliance with 
part 328 including provisions related to monitor and evaluate the 
activities of persons that provide deposit-related services to the IDI 
or offer the IDI's deposit-related products or services to other 
parties. The FDIC believes the hourly burden for these activities can 
be categorized into two distinct ICs covering: (1) implementation 
burdens incurred in the first year in which the policies and procedures 
are implemented; and (2) ongoing burden incurred every subsequent year 
to maintain compliance. This IC captures the implementation burden.
    7. Policies and Procedures--Ongoing, 12 CFR 328.8 (Recordkeeping; 
Mandatory). Section 328.8 requires IDIs to establish and maintain 
written policies and procedures to achieve compliance with part 328 
including provisions related to monitoring and evaluating the 
activities of persons that provide deposit-related services to the 
Insured Depository Institution or offer the Insured Depository 
Institution's deposit-related products or services to other parties. 
The FDIC believes the hourly burden for these activities can be 
categorized into two distinct ICs covering: (1) implementation burdens 
incurred in the first year in which the policies and procedures are 
implemented; and (2) ongoing burden incurred every subsequent year to 
maintain compliance. This IC captures the ongoing burden.
    8. Insured Depository Institution Relationships--Implementation 12 
CFR 328.102(b)(5) (Third-Party Disclosure; Mandatory). Section 
328.102(b)(5) requires covered non-banks to ensure that their public 
statements regarding deposit insurance comply with the requirements in 
part 328. The FDIC believes the hourly burden for these activities can 
be categorized into two distinct ICs covering: (1) implementation 
burdens incurred in the first year in which the public statements are 
amended; and (2) ongoing burden incurred every subsequent year to 
ensure continual compliance. This IC captures the implementation 
burden.
    9. Insured Depository Institution Relationships--Ongoing 12 CFR 
328.102(b)(5) (Third-Party Disclosure; Mandatory). Section 
328.102(b)(5) requires covered non-banks to ensure that their public 
statements regarding deposit insurance comply with the requirements in 
part 328. The FDIC believes the hourly burden for these activities can 
be categorized into two distinct ICs covering: (1) implementation 
burdens incurred in the first year in which the public statements are 
amended; and (2) ongoing burden incurred every subsequent year to 
ensure continual compliance. This IC captures the ongoing burden.
    10. Request for Consent to Use Non-English Language Advertising 
Statement--12 CFR 328.3(f), proposed 12 CFR 328.6(f) (Reporting; 
Required to Obtain or Retain a Benefit). Existing Sec.  328.3(f), which 
the proposed rule moves to Sec.  328.6(f), requires IDIs to obtain 
prior written approval of the FDIC before using a non-English 
equivalent of the official FDIC advertising statement in an 
advertisement.

Methodology and Assumptions

Estimated Annual Number of Respondents
    ICs 1-7 and IC 10 capture PRA burdens incurred by IDIs. According 
to recent Call Reports, the FDIC supervised approximately 4,564 
IDIs.\74\ These include 158 IDIs with assets at least $10 billion and 
4,496 IDIs with assets less than $10 billion. Of these, 3,373 IDIs are 
considered small entities for purposes of the Regulatory Flexibility 
Act.
---------------------------------------------------------------------------

    \74\ According to Call Reports as of June 30, 2023.
---------------------------------------------------------------------------

    IC 1 captures PRA burdens incurred by all IDIs with less than $10 
billion in assets, and IC 2 captures PRA burdens incurred by all IDIs 
with at least $10 billion in assets. Using the Call Report data 
summarized above, the FDIC estimates 4,496 annual respondents for IC 1 
and 158 annual respondents for IC 2.
    ICs 3 and 6 capture implementation burdens incurred by all 4,496 
IDIs. Implementation burdens are incurred in the first year after the 
proposed rule would become effective. Given that this information 
collection request (ICR) covers PRA burdens over three years, the FDIC 
annualizes the counts of respondents by dividing the total number of 
respondents by three. Thus, the FDIC estimates 1,551 annual respondents 
for ICs 3 and 6.
    ICs 4, 5, and 7 capture the ongoing PRA burdens incurred by the 
4,496 IDIs with less than $10 billion in assets, the 158 IDIs with at 
least $10 billion in assets, and all 4,654 IDIs, respectively. Ongoing 
burdens are incurred in two of the three years after the rule would 
become effective. The FDIC annualizes the counts of respondents 
accordingly. Thus, the FDIC estimates 2,997 annual respondents for IC 
4, 105 annual respondents for IC 5 and 3,103 annual respondents for IC 
7.
    ICs 8 and 9 capture PRA requirements incurred by non-banks. The 
FDIC does not have direct data on the number of non-banks that would be 
subject to part 328. The FDIC assumes that the affected non-banks would 
generally be classified in the following North American Industry 
Classification System (NAICS) industries: Miscellaneous Financial 
Investment Activities (NAICS Code 523999), Financial Transaction 
Processing, Reserve & Clearinghouse Activities (NAICS Code 522320), 
Computer System Design and Related Services (NAICS Code 5415), and 
Investment Advice (NAICS Code 523930). As discussed in the Expected 
Effects section, there were 148,235 firms in these NAICS industries in 
2020, the most recent year for which such data is available. However, 
not all of these firms enter into agreements with IDIs or otherwise 
engage in operations related to insured deposits; the FDIC assumes that 
the number of non-banks engaged in such operations would be 
considerably less than the number of IDIs. For purposes of this 
estimation, the FDIC assumes that the number of covered non-banks would 
be approximately one percent of firms in the NAICS industries listed 
above.

[[Page 3526]]

Therefore, the FDIC estimates that approximately 1,500 non-banks will 
incur burdens associated with part 328. ICs 8 and 9 are implementation 
and ongoing burdens, respectively. The FDIC annualizes the count of 
respondents accordingly. Thus, the FDIC estimates 500 annual 
respondents for IC 8 and 1,000 annual respondents for IC 9.
    IC 10 captures PRA requirements incurred by IDIs that submit 
requests to the FDIC for the use of a non-English equivalent of the 
official FDIC advertising statement. The FDIC does not have data on the 
historical annual number of such requests submitted. However, the FDIC 
has not handled such a request since at least January 1, 2021, and 
believes it is unlikely that such a request from an IDI would be 
received within the next three years. As OMB's system of record for PRA 
burdens does not allow non-positive respondent counts, the FDIC uses an 
annual respondent count of one for IC 10 to preserve the estimated 
burden calculations.
Estimated Annual Number of Responses per Respondent
    ICs 1 and 2 capture the activities that respondents undertake at 
each of their branches to comply with the PRA requirements in 12 CFR 
328.3. For purposes of this ICR, the FDIC designates the activities at 
a single branch as a single response by the respondent. According to 
recent Call Reports, IDIs with assets less than $10 billion operate 
approximately seven branches each, on average, while IDIs with assets 
of at least $10 billion have approximately 279 branches each, on 
average.\75\ Accordingly, the FDIC estimates seven responses per year 
for IC 1 and 279 responses per year for IC 2.
---------------------------------------------------------------------------

    \75\ According to Call Reports as of June 30, 2023, there were 
4,496 IDIs with assets less than $10 billion operating 33,479 
branches and 158 IDIs with assets at least $10 billion operating 
44,133 branches.
---------------------------------------------------------------------------

    For ICs 3-10, the activities that respondents undergo throughout 
the year to comply with the PRA requirements in each IC can all be 
considered part of a single annual response to that IC. Therefore, the 
FDIC uses one as the number of annual responses per respondent for 
these ICs.
Estimated Burden Hours per Response
    ICs 1 and 2 capture the third-party disclosure burden of ensuring 
that signage within the premises of insured depository institutions 
comply with part 328. Data on this burden is unavailable. The FDIC 
assumes that larger banks are more likely to have branches that are 
nontraditional, complex, and/or offer both deposit and non-deposit 
products. While smaller IDIs are more likely to operate simple branches 
that offer only deposit products and may not require extensive 
revisions of signage, those that do may require updates to their 
designated areas. For purposes of this ICR, the FDIC estimates the 
burden would be approximately one hour per branch, on average, for 
institutions with less than $10 billion in assets and approximately two 
hours per branch, on average, for institutions with at least $10 
billion in assets. Accordingly, the FDIC estimates burdens as one hour 
per response for IC 1 and two hours per response for IC 2.
    ICs 3, 4, and 5 capture the third-party disclosure burden of 
ensuring that signs for ATMs and digital deposit-taking channels comply 
with part 328. Data on this burden is unavailable. The FDIC assumes 
that larger banks are more likely to have more complex digital 
operations or offer both deposit and non-deposit products through their 
digital deposit-taking operations. However, these larger banks may also 
have permanent IT teams in place that could facilitate and/or reduce 
the hourly burden of these changes. Conversely, for smaller banks 
relying on third-party web service providers, many may be seeking 
compliance through the same channel as others, which could create a 
backlog of work on the third-party web service providers, making it so 
other small banks experience a delay in compliance timelines. For 
purposes of this ICR, FDIC assumes that each IDI will spend 60 hours, 
on average, in the first year to implement the changes to its ATM and 
digital deposit-taking channels to comply with part 328. In subsequent 
years, IDIs with less than $10 billion in assets would spend 
approximately 10 additional hours per year, on average, to maintain 
ongoing compliance, while IDIs with at least $10 billion in assets 
would spend approximately 20 additional hours per year, on average, to 
maintain ongoing compliance. As such, FDIC estimates burdens as 60 
hours per response for IC 3, 10 hours per response for IC 4, and 20 
hours per response for IC 5.
    ICs 6 and 7 capture the recordkeeping burden of ensuring that the 
IDIs' policies and procedures comply with part 328. The FDIC assumes 
the recordkeeping burden imposed relates to documenting the development 
of policies and procedures by compliance officers and senior management 
that would be appropriate to the institution's risk profile. This 
program would then be reviewed, revised, and then approved by the board 
of directors or other executives at the institution. In addition, part 
328 requires that IDIs monitor and evaluate certain third parties to 
ensure that these third parties are also in compliance with part 328. 
Additional recordkeeping burden would be incurred in documenting the 
results of such monitoring activities. Data on the hourly burden of 
these activities is unavailable. For purposes of this ICR, the FDIC 
assumes that each IDI, on average, would spend approximately 80 hours 
in the first year to establish and/or implement policies and 
approximately 12 hours in each subsequent year to revise and update 
these documents. The FDIC estimates burdens as 80 hours per response 
for IC 6 and 12 hours per response for IC 7.
    ICs 8 and 9 capture the burden of ensuring that covered non-banks' 
third-party disclosures comply with part 328. Data on this burden is 
unavailable. The FDIC assumes each covered non-bank entity, on average, 
would spend approximately two and one-half hours in the first year to 
implement these procedures and approximately one hour in each 
subsequent year to revise and maintain ongoing compliance. The FDIC 
estimates burdens as two and one-half hours per response for IC 8 and 
one hour per response for IC 9.
    IC 10 captures the reporting burden incurred when an IDI requests 
approval from the FDIC to use the non-English equivalent of the 
official advertising statement in any of its advertisements. The FDIC 
believes that an IDI would spend approximately two hours per year, on 
average, to prepare and submit such requests.
Estimated Annual Burden Summary
    The estimated PRA burdens for the proposed rule are summarized in 
the Summary of Estimated Annual Burden table below. For each IC, the 
burden table lists the estimated annual number of responses per 
respondent and estimated time per response, as described in the 
sections above. Note that the counts of annual respondents for ICs 3-9 
have been annualized to reflect a three-year PRA cycle in which 
respondents incur implementation costs in the first year and ongoing 
costs in the second and third years.

[[Page 3527]]



                                     Summary of Estimated Annual PRA Burden
----------------------------------------------------------------------------------------------------------------
                                                                      Average
    Information collection       Type of burden      Number of       number of     Average time    Annual burden
    (obligation to respond)       (frequency of     respondents    responses per   per response       (hours)
                                    response)                       respondent        (HH:MM)
----------------------------------------------------------------------------------------------------------------
1. Signs within Institution     Third-Party                4,496               7            1:00          31,472
 Premises--Banks <$10B, 12 CFR   Disclosure
 328.3 (Mandatory).              (Annual).
2. Signs within Institution     Third-Party                  158             279            2:00          88,164
 Premises--Banks >=$10B, 12      Disclosure
 CFR 328.3 (Mandatory).          (Annual).
3. Signage for ATMs and         Third-Party                1,551               1           60:00          93,060
 Digital Deposit-taking          Disclosure
 Channels--Implementation, 12    (Annual).
 CFR 328.4 and .5 (Mandatory).
4. Signage for ATMs and         Third-Party                2,997               1           10:00          29,970
 Digital Deposit-taking          Disclosure
 Channels--Banks <$10B--         (Annual).
 Ongoing, 12 CFR 328.4 and .5
 (Mandatory).
5. Signage for ATMs and         Third-Party                  105               1           20:00           2,100
 Digital Deposit-taking          Disclosure
 Channels--Banks >=$10B--        (Annual).
 Ongoing, 12 CFR 328.4 and .5
 (Mandatory).
6. Policies and Procedures--    Recordkeeping              1,551               1           80:00         124,080
 Implementation, 12 CFR 328.8    (Annual).
 (Mandatory).
7. Policies and Procedures--    Recordkeeping              3,103               1           12:00          37,236
 Ongoing, 12 CFR 328.8           (Annual).
 (Mandatory).
8. Insured Depository           Third-Party                  500               1            2:30           1,250
 Institution Relationships--     Disclosure
 Implementation 12 CFR           (Annual).
 328.102(b)(5) (Mandatory).
9. Insured Depository           Third-Party                1,000               1            1:00           1,000
 Institution Relationships--     Disclosure
 Ongoing 12 CFR 328.102(b)(5)    (Annual).
 (Mandatory).
10. Request for Consent to Use  Reporting (On                  1               1            2:00               2
 Non-English Language            occasion).
 Advertising Statement--12 CFR
 328.6(f) (Required to Obtain
 or Retain a Benefit).
                                                 ---------------------------------------------------------------
    Total Annual Burden         ................  ..............  ..............  ..............         408,334
     (Hours).
----------------------------------------------------------------------------------------------------------------
Source: FDIC.
Note: The annual burden estimate for a given collection is calculated in two steps. First, the total number of
  annual responses is calculated as the whole number closest to the product of the annual number of respondents
  and the annual number of responses per respondent. Then, the total number of annual responses is multiplied by
  the time per response and rounded to the nearest hour to obtain the estimated annual burden for that
  collection. This rounding ensures the annual burden hours in the table are consistent with the values recorded
  in the OMB's regulatory tracking system.

Riegle Community Development and Regulatory Improvement Act

    Section 302 of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (RCDRIA) requires that the Federal banking 
agencies, including the FDIC, in determining the effective date and 
administrative compliance requirements of new regulations that impose 
additional reporting, disclosure, or other requirements on insured 
depository institutions, consider, consistent with principles of safety 
and soundness and the public interest, any administrative burdens that 
such regulations would place on depository institutions, including 
small depository institutions, and customers of depository 
institutions, as well as the benefits of such regulations subject to 
certain exceptions, new regulations and amendments to regulations 
prescribed by a Federal banking agency which impose additional 
reporting, disclosures, or other new requirements on insured depository 
institutions shall take effect on the first day of a calendar quarter 
which begins on or after the date on which the regulations are 
published in final form.

Congressional Review Act

    For purposes of the Congressional Review Act (5 U.S.C. 801 et 
seq.), the OMB makes a determination as to whether a final rule 
constitutes a ``major rule.'' If a rule is deemed a ``major rule'' by 
the OMB, the Congressional Review Act generally provides that the rule 
may not take effect until at least 60 days following its publication. 
The Congressional Review Act defines a ``major rule'' as any rule that 
the Administrator of the Office of Information and Regulatory Affairs 
of the OMB finds has resulted in or is likely to result in: (1) an 
annual effect on the economy of $100 million or more; (2) a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies or geographic regions; or 
(3) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.\76\ The FDIC has submitted the final rule to the OMB 
for this major rule determination. As required by the Congressional 
Review Act, the FDIC will also submit the final rule and other 
appropriate reports to Congress and the Government Accountability 
Office for review.\77\
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    \76\ See 5 U.S.C. 804(2).
    \77\ See 5 U.S.C. 801(a)(1).
---------------------------------------------------------------------------

Plain Language

    Section 722 of the Gramm-Leach-Bliley Act requires the Federal 
banking agencies to use plain language in all proposed and final 
rulemakings published in the Federal Register after January 1, 2000. 
The FDIC invited comment regarding the use of plain language, but did 
not receive any comments on this topic.

List of Subjects in 12 CFR Part 328

    Advertising, Bank deposit insurance, Savings associations, Signs 
and symbols.

[[Page 3528]]

Authority and Issuance

    For the reasons stated in the preamble, the Federal Deposit 
Insurance Corporation amends part 328 of title 12 of the Code of 
Federal Regulations as follows:

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

0
1. The authority citation for part 328 continues to read as follows:

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


0
2. Revise the part heading to read as set forth above.

0
3. Revise subpart A to read as follows:
Subpart A--FDIC Official Signs and Advertisement of Membership
Sec.
328.0 Purpose.
328.1 Definitions.
328.2 Official sign.
328.3 Signs within institution premises and offering of non-deposit 
products within institution premises.
328.4 Signs for automated teller machines and like devices.
328.5 Signs for digital deposit-taking channels.
328.6 Official advertising statement requirements.
328.7 Prohibition against receiving deposits at same teller station 
or window as noninsured institution.
328.8 Policies and procedures.


Sec.  328.0   Purpose.

    Subpart A of this part describes the official signs and advertising 
statement and prescribes their use by insured depository institutions, 
as well as other signs to prevent customer confusion in the event non-
deposit products are offered by an insured depository institution. 
Subpart A applies to insured depository institutions, including insured 
branches of foreign banks, but does not apply to non-insured offices or 
branches of insured depository institutions located in foreign 
countries.


Sec.  328.1   Definitions.

    Branch has the same meaning as the term ``domestic branch'' as set 
forth under section 3(o) of the Federal Deposit Insurance Act, 12 
U.S.C. 1813(o).
    Corporation means the Federal Deposit Insurance Corporation.
    Deposit has the same meaning as set forth under section 3(l) of the 
Federal Deposit Insurance Act, 12 U.S.C. 1813(l).
    Digital deposit-taking channel means websites, banking 
applications, and any other electronic communications method through 
which an insured depository institution accepts deposits. Hybrid 
product means a product or service that has both deposit product 
features and non-deposit product features. A sweep account is an 
example of a hybrid product.
    Insured depository institution has the same meaning as set forth 
under section 3(c)(2) of the Federal Deposit Insurance Act, 12 U.S.C. 
1813(c)(2).
    Non-deposit product means any product that is not a ``deposit'', 
including, but not limited to: insurance products, annuities, mutual 
funds, securities and crypto-assets. For purposes of this definition, 
credit products and safe deposit boxes are not non-deposit products.


Sec.  328.2   Official sign.

    (a) Design. Except as otherwise provided in this section, the 
official sign referred to in this part shall be 7'' by 3'' in size, 
with black lettering and gold background, and has the following design:
[GRAPHIC] [TIFF OMITTED] TR18JA24.001

    (b) Symbol. The ``symbol'' of the Corporation, as used in this 
subpart, shall be that portion of the official sign consisting of 
``FDIC'' and the two lines of smaller type above and below ``FDIC.''
    (c) Procuring signage. An insured depository institution may 
procure the official sign from the Corporation for official use at no 
charge. Information on obtaining the official sign is posted on the 
FDIC's internet website, https://www.fdic.gov. Alternatively, insured 
depository institutions may, at their expense, procure from commercial 
suppliers, signs that vary from the official sign in size, color, or 
material. Any insured depository institution which has promptly 
submitted a written request for an official sign to the Corporation 
shall not be deemed to have violated this subpart by failing to display 
the official sign, unless the insured depository institution fails to 
display the official sign after receipt thereof.
    (d) Required changes in signage. The Corporation may require any 
insured depository institution, upon at least thirty (30) days' written 
notice, to change the wording or color of the official sign in a manner 
deemed necessary for the protection of depositors or others.


Sec.  328.3  Signs within institution premises and offering of non-
deposit products within institution premises.

    (a) Scope. This section governs signage within the premises of 
insured depository institutions and the offering of non-deposit 
products within the premises of insured depository institutions.
    (b) Display of official sign. Each insured depository institution 
must continuously, clearly, and conspicuously display the official sign 
at each place of business where

[[Page 3529]]

consumers have access to or transact with deposits, including all of 
its branches (except branches excluded from the scope of this subpart 
under Sec.  328.0) and other premises in which customers have access to 
or transact with deposits, in the manner described in this paragraph 
(b).
    (1) Deposits received at teller windows or stations. If insured 
deposits are usually and normally received at teller windows or 
stations, the insured depository institution must display the official 
sign:
    (i) At each teller window or station where insured deposits are 
usually and normally received, in a size of 7'' by 3'' or larger with 
black lettering on a gold background as described in Sec.  328.2(a); or
    (ii) If the insured depository institution does not offer non-
deposit products on the premises, at one or more locations visible from 
the teller windows or stations in a manner that ensures a copy of the 
official sign is large enough so as to be legible from anywhere in that 
area.
    (2) Deposits received in areas other than teller windows or 
stations. If insured deposits are usually and normally received in 
areas of the premises other than teller windows or stations, the 
insured depository institution must display the official sign in one or 
more locations in a manner that ensures a copy of the official sign is 
large enough so as to be legible from anywhere in those areas.
    (3) Other locations within the premises. An insured depository 
institution may display the official sign in locations at the 
institution other than those required by this section, except for areas 
where non-deposit products are offered.
    (4) Varied signs. An insured depository institution may display 
signs that vary from the official sign in size, color, or material at 
any location where display of the official sign is required or 
permitted under this paragraph. However, any such varied sign that is 
displayed in locations where display of the official sign is required 
must not be smaller in size than the official sign, must have the same 
color for the text and graphics, and includes the same content.
    (5) Newly insured institutions. An insured depository institution 
shall display the official sign as described in this section no later 
than its twenty-first calendar day of operation as an insured 
depository institution, unless the institution promptly requested the 
official sign from the Corporation but did not receive it before that 
date.
    (c) Non-deposit products offered on insured depository institution 
premises--
    (1) Segregated areas. Except as provided in paragraph (c)(3) of 
this section, if non-deposit products are offered within the premises, 
those products must be physically segregated from areas where insured 
deposits are usually and normally accepted. The institution must 
identify areas where activities related to the sale of non-deposit 
products occur and clearly delineate and distinguish those areas from 
the areas where insured deposit-taking activities occur.
    (2) Non-deposit signage. At each location within the premises where 
non-deposit products are offered, an insured depository institution 
must continuously, clearly, and conspicuously display signage 
indicating that the non-deposit products: are not insured by the FDIC; 
are not deposits; and may lose value. Such signage may not be displayed 
in close proximity to the official sign.
    (3) Physical area limitations. In limited situations where physical 
considerations present challenges to offering non-deposit products in a 
distinct area, an institution must take prudent and reasonable steps to 
minimize customer confusion.
    (d) Electronic media. Insured depository institutions may use 
electronic media to display the official sign and non-deposit sign 
required by this section.


Sec.  328.4  Signs for automated teller machines and like devices.

    (a) Scope. This section governs signage for insured depository 
institutions' automated teller machines or other remote electronic 
facilities that receive deposits.
    (b) ATMs or like devices that do not offer access to non-deposit 
products. Except as provided in paragraph (e), an insured depository 
institution's automated teller machine or like device that receives 
deposits for an insured depository institution and does not offer 
access to non-deposit products may comply with the official sign 
requirement of this section by either:
    (1) Displaying the physical official sign as described in Sec.  
328.2 on the automated teller machine, subject to paragraph (f); or
    (2) Displaying the FDIC official digital sign as described in 
paragraph (c) of this section.
    (c) Display of FDIC official digital sign. An insured depository 
institution's automated teller machine or like device that receives 
deposits for an insured depository institution and offers access to 
non-deposit products must clearly, continuously, and conspicuously 
display the FDIC official digital sign as described in Sec.  328.5 on 
its home page or screen and on each transaction page or screen relating 
to deposits.
    (d) Non-deposit signage. An insured depository institution's 
automated teller machine or like device that receives deposits for an 
insured depository institution and offers access to non-deposit 
products must clearly, continuously, and conspicuously display 
electronic disclosures indicating that such non-deposit products: are 
not insured by the FDIC; are not deposits; and may lose value. These 
disclosures must be displayed on each transaction page or screen 
relating to non-deposit products. Such signage may not be displayed in 
close proximity to the FDIC official digital sign.
    (e) Automated teller machines and like devices placed into service 
after January 1, 2025. An insured depository institution's automated 
teller machine or like device that receives deposits for an insured 
depository institution and does not offer access to non-deposit 
products, that is placed into service after January 1, 2025 must 
display the official digital sign as described in paragraph (c) of this 
section.
    (f) Degraded or defaced physical official signs. A physical 
official sign that is displayed on an insured depository institution's 
automated teller machine or like device under paragraph (b)(1) that is 
degraded or defaced would not be displayed ``clearly, continuously, and 
conspicuously'' for purposes of paragraph (b)(1) of this section.


Sec.  328.5  Signs for digital deposit-taking channels.

    (a) Scope. This section governs signage for digital deposit-taking 
channels, including insured depository institutions' websites and web-
based or mobile applications that offer the ability to make deposits 
electronically and provide access to deposits at insured depository 
institutions.
    (b) Design. In general, the ``FDIC'' in the FDIC official digital 
sign shall be displayed with a wordmark size of 37.36 x 15.74px, in 
navy blue (hexadecimal color code #003256), and the ``FDIC-Insured--
Backed by the full faith and credit of the U.S. Government'' shall be 
displayed in regular 400 italic (12.8px) and with black (hexadecimal 
color code #000000) lettering. The entire FDIC official digital sign 
shall be displayed in Source Sans Pro Web. If the FDIC official digital 
sign in these colors would be illegible in a digital-taking channel, 
due to the color of the background, the entire FDIC official

[[Page 3530]]

digital sign shall be displayed in white (hexadecimal color code 
#FFFFFF). The official digital sign required by the provisions of this 
section shall have the following design:
[GRAPHIC] [TIFF OMITTED] TR18JA24.002

    (c) Digital symbol. The ``digital symbol'' of the Corporation, as 
used in this subpart, shall be that portion of the FDIC official 
digital sign consisting of ``FDIC'' and the one line of smaller type to 
the right of ``FDIC''.
    (d) Display of FDIC official digital sign. An insured depository 
institution must clearly, continuously and conspicuously display the 
FDIC official digital sign specified in paragraph (b) of this section 
on its digital deposit-taking channels on the following pages or 
screens:
    (1) Initial or homepage of the website or application;
    (2) Landing or login pages; and
    (3) Pages where the customer may transact with deposits.
    (e) Legibility. The FDIC official digital sign shall be clearly 
legible across all insured depository institution deposit-taking 
channels.
    (f) Clear and conspicuous placement of FDIC official digital sign. 
An official digital sign continuously displayed near the top of the 
relevant page or screen and in close proximity to the insured 
depository institution's name would be considered clear and 
conspicuous.
    (g) Display of non-deposit signage. (1) Continuous Display of Non-
deposit signage. If a digital deposit-taking channel offers both access 
to deposits at an insured depository institution and non-deposit 
products, the insured depository institution must clearly and 
conspicuously display signage indicating that the non-deposit products: 
are not insured by the FDIC; are not deposits; and may lose value. This 
signage must be displayed continuously on each page relating to non-
deposit products. This non-deposit signage may not be displayed in 
close proximity to the digital sign required by paragraph (d) of this 
section.
    (2) One-Time Notification for Bank Customers Related to Third-Party 
Non-deposit Products. If a digital deposit-taking channel offers access 
to non-deposit products from a non-bank third party's online platform, 
and a logged-in bank customer attempts to access such non-deposit 
products, the insured depository institution must provide a one-time 
per web session notification on the insured depository institution's 
deposit-taking channel before the customer leaves the insured 
depository institution's digital deposit-taking channel. The 
notification must be dismissed by an action of the bank customer before 
initially accessing the third party's online platform and it must 
clearly, conspicuously indicate that the third party's non-deposit 
products: are not insured by the FDIC; are not deposits; and may lose 
value. Nothing in this paragraph shall be read to limit an insured 
depository institution's ability to include additional disclosures in 
the notification that may help prevent consumer confusion, including, 
for example, that the bank customer is leaving the insured depository 
institution's website.
    (h) Required changes in digital signage. The Corporation may 
require any insured depository institution, upon at least thirty (30) 
days' written notice, to change the wording, color or placement of the 
FDIC official digital sign and other signs for digital deposit-taking 
channels when it is deemed necessary for the protection of depositors 
or others or to ensure consistency with this part's requirement.


Sec.  328.6   Official advertising statement requirements.

    (a) Advertisement defined. The term ``advertisement,'' as used in 
this subpart, shall mean a commercial message, in any medium, that is 
designed to attract public attention or patronage to a product or 
business.
    (b) Official advertising statement. The official advertising 
statement shall be in substance as follows: ``Member of the Federal 
Deposit Insurance Corporation.''
    (1) Optional short title and symbol. The short title ``Member of 
FDIC'', ``Member FDIC'', ``FDIC-Insured'', or a reproduction of the 
symbol of the Corporation (as described in Sec.  328.2(b)), may be used 
by insured depository institutions at their option as the official 
advertising statement.
    (2) Size and print. The official advertising statement shall be of 
such size and print to be clearly legible. If the symbol of the 
Corporation is used as the official advertising statement, and the 
symbol must be reduced to such proportions that the two lines of 
smaller type above and below ``FDIC'' are indistinct and illegible, 
those lines of smaller type may be blocked out or dropped.
    (c) Use of official advertising statement in advertisements--(1) 
General requirement. Except as provided in paragraph (d) of this 
section, each insured depository institution shall include the official 
advertising statement prescribed in paragraph (b) of this section in 
all advertisements that either promote deposit products and services or 
promote non-specific banking products and services offered by the 
institution. For purposes of this section, an advertisement promotes 
non-specific banking products and services if it includes the name of 
the insured depository institution but does not list or describe 
particular products or services offered by the institution. An example 
of such an advertisement would be, ``Anytown Bank, offering a full 
range of banking services.''
    (2) Foreign depository institutions. When a foreign depository 
institution has both insured and noninsured U.S. branches, the 
depository institution must also identify which branches are insured 
and which branches are not insured in all of its advertisements 
requiring use of the official advertising statement.
    (3) Newly insured institutions. A depository institution shall 
include the official advertising statement in its advertisements no 
later than its twenty-first day of operation as an insured depository 
institution.
    (d) Types of advertisements which do not require the official 
advertising statement. The following types of advertisements do not 
require use of the official advertising statement:
    (1) Statements of condition and reports of condition of an insured 
depository institution which are required to be published by State or 
Federal law;
    (2) Insured depository institution supplies such as stationery 
(except when used for circular letters), envelopes, deposit slips, 
checks, drafts, signature cards, deposit passbooks, certificates of 
deposit, etc.;
    (3) Signs or plates in the insured depository institution offices 
or attached to the building or buildings in which such offices are 
located;
    (4) Listings in directories;

[[Page 3531]]

    (5) Advertisements not setting forth the name of the insured 
depository institution;
    (6) Entries in a depository institution directory, provided the 
name of the insured depository institution is listed on any page in the 
directory with a symbol or other descriptive matter indicating it is a 
member of the Federal Deposit Insurance Corporation;
    (7) Joint or group advertisements of depository institution 
services where the names of insured depository institutions and 
noninsured institutions are listed and form a part of such 
advertisements;
    (8) Advertisements by radio or television, other than display 
advertisements, which do not exceed thirty (30) seconds in time;
    (9) Advertisements which are of the type or character that make it 
impractical to include the official advertising statement, including, 
but not limited to, promotional items such as calendars, matchbooks, 
pens, pencils, and key chains; and
    (10) Advertisements which contain a statement to the effect that 
the depository institution is a member of the Federal Deposit Insurance 
Corporation, or that the depository institution is insured by the 
Federal Deposit Insurance Corporation, or that its deposits or 
depositors are insured by the Federal Deposit Insurance Corporation to 
at least the standard maximum deposit insurance amount (as defined in 
Sec.  330.1(o)) for each depositor.
    (e) Restrictions on using the official advertising statement when 
advertising non-deposit products--(1) Non-deposit product 
advertisements. Except as provided in paragraph (e)(3) of this section, 
an insured depository institution shall not include the official 
advertising statement, or any other statement or symbol which implies 
or suggests the existence of Federal deposit insurance, in any 
advertisement relating solely to non-deposit products.
    (2) Hybrid product advertisements. Except as provided in paragraph 
(e)(3) of this section, an insured depository institution shall not 
include the official advertising statement, or any other statement or 
symbol which implies or suggests the existence of Federal deposit 
insurance, in any advertisement relating solely to hybrid products.
    (3) Mixed advertisements. In advertisements containing information 
about both insured deposit products and non-deposit products or hybrid 
products, an insured depository institution shall clearly segregate the 
official advertising statement or any similar statement from that 
portion of the advertisement that relates to the non-deposit products.
    (f) Official advertising statement in non-English language. The 
non-English equivalent of the official advertising statement may be 
used in any advertisement, provided that the translation has had the 
prior written approval of the Corporation.


Sec.  328.7  Prohibition against receiving deposits at same teller 
station or window as noninsured institution.

    (a) Prohibition. An insured depository institution may not receive 
deposits at any teller station or window where any noninsured 
institution receives deposits or similar liabilities.
    (b) Exception. This section does not apply to deposits received at 
an automated teller machine or other remote electronic facility that 
receives deposits for an insured depository institution, or to deposits 
facilitated through a digital deposit-taking channel.


Sec.  328.8  Policies and procedures.

    (a) Policies and Procedures. An insured depository institution must 
establish and maintain written policies and procedures to achieve 
compliance with this part. Such policies and procedures must be 
commensurate with the nature, size, complexity, scope, and potential 
risk of the deposit-taking activities of the insured depository 
institution and must include, as appropriate, provisions related to 
monitoring and evaluating activities of persons that provide deposit-
related services to the insured depository institution or offer the 
insured depository institution's deposit-related products or services 
to other parties.
    (b) Reservation of authority. Nothing in this section shall be 
construed to limit the FDIC's authority to address violations of this 
part, the FDIC's authority to interpret the rules in this part, or any 
other authority the FDIC has pursuant to any other laws or regulations.

0
3. Amend Sec.  328.101 by adding the definition for ``Deposit'' in 
alphabetical order, and revising the definitions for ``FDIC-Associated 
Images'', ``Hybrid Product'', ``Non-Deposit Product'', and ``Uninsured 
Financial Product'' to read as follows:


Sec.  328.101  Definitions.

* * * * *
    Deposit has the same meaning as set forth under section 3(l) of the 
Federal Deposit Insurance Act, 12 U.S.C. 1813(l).
* * * * *
    FDIC-Associated Images means the Seal of the FDIC, alone or within 
the letter C of the term FDIC; the Official Sign and Symbol of the 
FDIC, as set forth in Sec.  328.2; the FDIC Official Digital Sign and 
Digital Symbol set forth in Sec.  328.5; the Official Advertising 
Statement, as set forth in Sec.  328.6; any similar images; and any 
other signs and symbols that may represent or imply that any deposit, 
liability, obligation certificate, or share is insured or guaranteed in 
whole or in part by the FDIC.
* * * * *
    Hybrid Product has the same meaning as set forth under Sec.  328.1.
* * * * *
    Non-Deposit Product means any product that is not a ``deposit'', 
including, but not limited to: insurance products, annuities, mutual 
funds, securities, and crypto-assets. For purposes of this definition, 
credit products and safe deposit box services are not Non-Deposit 
Products.
* * * * *
    Uninsured Financial Product means any Non-Deposit Product, Hybrid-
Product, investment, security, obligation, certificate, share, crypto-
asset or financial product other than an ``Insured Deposit'' as defined 
in this section.

0
4. Amend Sec.  328.102 by adding paragraph (a)(3)(viii) and (b)(1)(iv) 
and revising paragraphs (b)(3)(ii), (b)(5), and (b)(6)(ii) to read as 
follows:


Sec.  328.102   Prohibition.

    (a) * * *
    (3) * * *
    (viii) Use of FDIC-Associated Terms or FDIC-Associated Images, in a 
manner that inaccurately states or implies that a person other than an 
insured depository institution is insured by the FDIC.
    (b) * * *
    (1) * * *
    (iv) A person other than an insured depository institution is an 
FDIC-insured depository institution. This includes use of FDIC-
Associated Terms or FDIC-Associated Images, in a manner that 
inaccurately states or implies that a person other than an insured 
depository institution is insured by the FDIC.
    (3) * * *
    (ii) The statement omits or fails to clearly and conspicuously 
disclose material information that would be necessary to prevent a 
reasonable consumer from being misled, regardless of whether any such 
consumer was actually misled.
    (5) Without limitation, a statement regarding deposit insurance 
will be deemed to omit or fail to clearly and conspicuously disclose 
material information if the absence of such

[[Page 3532]]

information could lead a reasonable consumer to believe any of the 
material misrepresentations set forth in paragraph (b)(4) of this 
section or could otherwise result in a reasonable consumer being unable 
to understand the extent or manner of deposit insurance provided. 
Examples of such material information include, but are not limited to, 
the following:
    (i) A statement made by a person other than an insured depository 
institution that represents or implies that an advertised product is 
insured by the FDIC that fails to clearly and conspicuously identify 
the insured depository institution(s) with which the representing party 
has a direct or indirect business relationship for the placement of 
deposits and into which the consumer's deposits may be placed;
    (ii) A statement made by a person that is not an insured depository 
institution regarding deposit insurance that fails to clearly and 
conspicuously disclose that the person is not an FDIC-insured 
depository institution and that FDIC insurance only covers the failure 
of the FDIC-insured depository institution. A statement that a person 
is not an FDIC-insured bank and deposit insurance covers the failure of 
an insured bank would be considered a clear statement for purposes of 
this provision.
    (iii) A statement made by a person regarding deposit insurance in a 
context where deposits and Non-Deposit products are both offered on a 
website in close proximity, that fails to clearly and conspicuously 
differentiate between insured deposits and Non-Deposit Products by 
disclosing that Non-Deposit Products: are not insured by the FDIC; are 
not deposits; and may lose value, except that:
    (A) Services unrelated to financial products or investments and 
physical goods shall not be considered Non-Deposit Products for 
purposes of clause (b)(5)(iii) of this section; and
    (B) In the case of a Non-Deposit Product that is a product that 
allows consumers to store, send, or receive fiat money and does not 
fluctuate in value, failure to disclose that the Non-Deposit Product 
may lose value will not be a material omission for purposes of clause 
(b)(5)(iii) of this section.
    (iv) A statement made by a person regarding pass-through deposit 
insurance coverage that fails to clearly and conspicuously disclose 
that certain conditions must be satisfied for pass-through deposit 
insurance coverage to apply.
    (6) * * *
    (ii) Has been advised by the FDIC in an advisory letter, as 
provided in Sec.  328.106(a), or has been advised by another 
governmental or regulatory authority, including, but not limited to, 
another Federal banking agency, the Federal Trade Commission, the 
Bureau of Consumer Financial Protection, the U.S. Department of 
Justice, or a state bank supervisor, that such representations are 
false or misleading; and
* * * * *

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on December 20, 2023.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2023-28629 Filed 1-17-24; 8:45 am]
BILLING CODE 6714-01-P

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