FDIC Cease and Desists Underscore Importance of Reviewing Websites and other Public Materials for Compliance with FDIC Rules
Over the past several weeks, the Federal Deposit Insurance Corporation (“FDIC”) has issued a spate of cease and desist letters targeted to fintech companies over what the FDIC believes are false and/or misleading statements and assertions as to the insured status or coverage of the fintechs’ products. The targeted companies include crypto exchange OKCoin, e-commerce provider Bodega, and Money Avenue, a fintech start-up focused on wealth management operating a banking app. In each case the FDIC cited public statements made by the companies on the webpages, blog posts, youtube videos and other public materials that violated FDIC advertising guidelines. Often, these violations were as simple as the company not adequately identifying a partner bank as the insured depository institution.
The FDIC’s focus on misleading or false statements and advertising concerning the insured status of fintech products is not surprising, particularly in the wake of high-profile bank failures over the past several months. It also serves as a reminder and opportunity for fintechs and their processing and bank partners to review their own materials to ensure they are compliant with FDIC rules.
With that in mind, here are some things to keep mind when reviewing your materials:
- Focus on any statements that include FDIC images / logos or terms or that make any representation, suggestion, or implication with respect to FDIC insurance.
- Be sure that any statements that represent or imply an advertised product is insured or guaranteed by the FDIC identifies the bank as it is the insured depository institution.
- Be sure that any statements accurately reflect any requirements and processes needed to qualify for deposit insurance and that such requirements and processes are consistent with FDIC rules.
Again, a complete review of materials for compliance with FDIC rules should focus not only on website and advertising collateral but also on social media posts (including videos and testimonials) and any other public materials that may include a statement subject to FDIC rules.
Copies of the FDIC Cease and Desist Notices can be found here –
Money Avenue – https://www.fdic.gov/resources/regulations/laws/section-18a4-of-fdi-act/letters/2023-06-15-money-ave.pdf