FDIC Issues Cease and Desist Letters to Multiple Entities for Misleading Consumers

On January 19, 2024, the FDIC issued cease and desist letters to multiple entities demanding each stop its false and misleading statements that their products or companies are FDIC-insured.  The FDIC details in the letters some examples from the company websites or other media, including social media, of each entity’s alleged false and misleading statements and representations.

In the letters, the FDIC cites its authority to enforce section 18(a)(4) of the Federal Deposit Insurance Act, 12 U.S.C. § 1828(a)(4), and its implementing regulation, 12 C.F.R. Part 328, Subpart B (which was recently amended).  This section of the FDI Act prohibits knowingly misrepresenting FDI Act insurance status.  The FDIC also asserts that under the implementing regulation it is a material omission for a non-insured entity to fail to identify its related insured depository institution, if applicable, when it advertises deposit insurance.

Among other things, the FDIC demands these entities:

• Remove any statement that explicitly or implicitly implies that the entities are FDIC insured;
• Cease from making further misrepresentations related to FDIC insurance;
• Identify in their representations any related insured depository institutions; and
• Notify the FDIC within the stated time period of the entity’s compliance.