FDIC Seeks Views on Bank Advertising

The Federal Deposit Insurance Corporation (FDIC) is seeking the public’s input on potential modernization of its advertising rules to better reflect how banks and savings associations operate and how consumers use their services.

As banks continue to innovate through adoption of new technologies and the expansion of digital banking, the FDIC said there had been significant changes in the banking sector since its advertising rules were last significantly updated in 2006.

The regulator is considering how it might modernize them in a manner that better reflects today’s market dynamics. The agency is also exploring ways to reduce consumer confusion and to support the banking industry’s efforts to understand and apply these rules.

Importantly, the FDIC is also soliciting information on methods to prevent situations where consumers may have difficulty determining whether they are dealing with an FDIC-insured depository institution.

Specifically, the agency is pursuing information about how technological or other solutions may help consumers distinguish FDIC-insured banks and savings associations from non-bank entities, particularly those operating across digital and mobile channels.

“Technology has advanced the business of banking in many ways, including how and where depositors interface with banks and savings associations when making deposits,” the FDIC said in its request for information (RFI).

“The internet, through online and mobile banking, smart phone applications (apps), digital wallets, and other tools, has had a profound effect on the way banking and deposit-taking is conducted.”

The FDIC further explained that some banks had no physical branches, or had shifted to remote deposit capture, electronically-staffed kiosks, or “pop-up facilities and teller-less cafes where deposits can be accepted on tablets”.

The existing rules also did not account for the rise of fintechs involved in the deposit space.

The FDIC said it was issuing an RFI to “inform… efforts to align the policy objectives of its rules with how today’s banks and savings associations offer deposit products and services and how consumers connect with banks and savings associations, including through evolving channels”.

The current rules regarding signs and advertising require banks to continuously display the FDIC sign wherever insured deposits are “usually and normally received in the bank’s principal place of business and at all of its branches”. Banks must also use an official advertising statement, such as “Member FDIC”, when advertising insured products such as deposits.

The comment period will close on May 24, 2021.