which statement is false regarding advertising

The proposed rule would 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-bank entities, or where both non-deposit products and deposit products are offered at the same premise. The proposed rule would require IDIs to establish written policies and procedures related to these requirements that are commensurate with the nature, size, complexity, scope, and potential risk of the deposit-taking activities of the institution. If not, how could the material be better organized? Also consistent with current regulations, the proposed rule would define the symbol of the FDIC as the portion of the official sign that consists of FDIC and the statements Each depositor insured to at least $250,000 and Federal Deposit Insurance Corporation Public Inspection: In some cases, we will ask the drug company to fix the misimpression made by the violative ad. For the reasons stated in the preamble, the Federal Deposit Insurance Corporation proposes to amend 12 CFR part 328 as follows: 1. James P. Sheesley, Assistant Executive Secretary, Attention: CommentsRIN 3064-AF26, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. Does the FDA require drug companies to use hard-to-understand medical language in ads directed to consumers? See The FDIC expects that a digital sign 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. [14] 35. [48] A statement or representation in an advertisement may also be false or fraudulent when it constitutes a half-truth. As a conservative estimate, the FDIC assumes all 1,500 affected non-bank entities are small. Some of these uninsured products may be speculative. This IC captures the burden for these implementation activities. Section 328.4 of the proposed rule governs signage requirements for IDIs' automated teller machines (ATMs) and other remote electronic facilities that receive deposits. An insured depository institution must clearly, continuously and conspicuously display the digital sign specified in paragraph (b) of this section on its digital deposit taking channels in the following pages or screens: (1) The initial or homepage of the website or application; (3) Pages where the customer may transact with deposits. Can the FDA limit the amount of money spent on prescription drug ads? A. The FDIC views these pages as environments where the customer may interact directly with the IDI, rather than as "advertisements" as defined in the rule's advertising statement requirements. (2) Continuously on each page relating to non-deposit products. OMB Control Number: To find out if a medical condition is something you should be concerned about or if a particular drug is right for you, talk with your doctor or other healthcare provider. Find legal resources and guidance to understand your business responsibilities and comply with the law. 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. ASK AN EXPERT Business Accounting Multiple Choice Which of the following statements is false regarding PATENT [technology-based intangible asset]? 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). Therefore, the FDIC estimates that approximately 1,500 non-bank entities would be affected by the proposed rule. At the same time, commenters generally favored greater flexibility in terms of the size, design, and location of the official FDIC sign at IDIs' branches. 3. The information collection requirements (IC) contained in this notice of proposed rulemaking have been submitted to OMB for review and approval by FDIC under section 3507(d) of the PRA and 1320.11 of OMB's implementing regulations (5 CFR part 1320) as a new information collection. These branches may, or may not, include traditional teller windows or stations. Absent additional context, such statements misrepresent the insured status of the non-bank and suggest that the FDIC's deposit insurance will protect consumers in the event of the non-bank's insolvency. legal research should verify their results against an official edition of the Federal Register. without change to Hybrid product advertisements. The FTC also monitors and writes reports about ad industry practices regarding the marketing of alcohol and tobacco. An insured depository institution may procure the official sign from the Corporation for official use at no charge. According to data from recent Reports of Condition and Income (Call Reports), the FDIC insures the deposits of 4,780 IDIs operating approximately 80 thousand branches in the United States. Respondents: 87 FR 33415 (June 2, 2022); Subpart B to 12 CFR part 328 (328.100 through 328.109). 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. Certain provisions of the proposed rule contain collection of information requirements within the meaning of the PRA. Subpart A of this part describes the official sign 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. As discussed above, the proposed digital sign would be displayed on an IDI's homepage, landing and login pages, and transactional pages involving insured deposits. These changes are intended to enhance consistency of signage between IDIs' digital deposit-taking channels and other traditional channels, providing helpful clarity for consumers. This IC captures the burden for the latter group. These markup elements allow the user to see how the document follows the Comments may be hand delivered to the guard station at the rear of the 550 17th Street NW building (located on F Street NW) on business days between 7 a.m. and 5 p.m. Also consistent with current regulations, an IDI would be required to display the official sign at its premises no later than its twenty-first calendar day of operation as an insured institution, unless it promptly requested the official sign from the FDIC but did not receive the official sign before that date. FDIC's BankFind Suite, available at: (a) A major difference between reminder advertising and pioneering advertising is that: 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. The proposed rule provides that the official FDIC sign must be electronically displayed clearly and conspicuously. Non-banks that purport to deposit their customers' funds at IDIs sometimes make statements regarding deposit insurance coverage for those funds. 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. 43. Following these regulations, the FDIC uses an IDI's affiliated and acquired assets, averaged over the preceding four quarters, to determine whether the IDI is small for the purposes of RFA. The FDIC may post only a single representative example of identical or substantially identical comments, and in such cases will generally identify the number of identical or substantially identical comments represented by the posted example. 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 Comments to the RFIs can be found on the FDIC's website, Symbol. 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. (10) Given potential requirements for signs in physical branches, ATMs, and digital channels, how long would it take to revise systems and process for the purposes of complying with a rule; what should the compliance date(s) for the rule be? publication in the future. Looking for legal documents or records? We require different types of benefit and risk disclosures for different types of promotions. The documents posted on this site are XML renditions of published Federal 26. The site is secure. Proposed 328.8 would require 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. headings within the legal text of Federal Register documents. Start Printed Page 78030 21 To the extent these pages can be considered "advertisements," the inclusion of the digital sign on these pages would make clear that the IDI is . Certain requirements in part 328 for public disclosure of the FDIC name and/or logo are not information collections. e.g., 12 U.S.C. This includes, for example, policies related to training staff to review the marketing and advertising materials to evaluate whether such materials contain misrepresentations about deposit insurance. (6) Should the proposed rule require, rather than permit, IDIs to link the digital sign to the FDIC BankFind tool? 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. The FDIC recognizes that IDIs have been increasingly entering into business relationships with non-bank third parties to provide banking products and other financial services to new customers and expand the IDIs' access to deposits. As the homepage and landing page are generally the primary point of interaction between IDIs and consumers, such display would prominently disclose to consumers that the entity is FDIC-insured. [20] 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. Document page views are updated periodically throughout the day and are cumulative counts for this document. 53. While some consumers continue to visit branches, others rely on ATM access and digital channels such as online banking and mobile banking. In particular, would this proposed rule have any significant effects on small entities that the FDIC has not identified? (a) A. (5) In addition, the proposed rule would require the continuous display of the non-deposit signage on each page relating to non-deposit products and prohibit displaying the non-deposit signage in close proximity to the digital FDIC sign. 14. Assuming all other relevant factors are equal, it would be reasonable for an IDI to view the former relationship as lower risk vis--vis the latter, which would be considered higher risk. In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. In particular, the FDIC is concerned that certain business relationships between IDIs and non-banks may be confusing to consumers, and proposes to require clear disclosures that would better inform consumers as to when their funds are protected by FDIC deposit insurance. [56] Reason: Effectiveness of an advertisement is measured by satisfaction which a consumer deriv View the full answer Previous question Next question Not the exact question you're looking for? As noted above, however, the official advertising statement and FDIC-Associated Terms and FDIC-Associated Images have increasingly been used by non-banks that purport to deposit their customers' funds at IDIs. et seq. The Regulatory Flexibility Act (RFA) generally requires an agency, in connection with a proposed 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. To prevent consumer confusion, the proposed rule provides 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. By the end of the 19th century, abuses in advertising flourished in the United States and in Europe, along with consumers suspicions about advertised food. The Corporation may require any insured depository institution, upon at least thirty (30) days' written notice, to change the wording of the official sign in a manner deemed necessary for the protection of depositors or others. Consistent with current regulations, all IDIs would be required to continuously, clearly, and conspicuously display the official sign in their principal place of business and all their U.S. Even then, however, manufacturers devised and implemented skillful and boastful advertising to sell potentially harmful or bad products. The proposed rule may also affect private individuals who may potentially misuse the FDIC name or logo or may potentially misrepresent the nature of deposit insurance. 15. These include 161 IDIs with assets at least $10 billion and 4,619 IDIs entities with assets less than $10 billion. The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely. This distinction is critical to understanding the risks a consumer faces, and the FDIC believes that it warrants a requirement for consistent visual signage. While various channels are used to access bank products, the FDIC aims to establish sign and advertising requirements that enable IDIs' customers to clearly understand when their funds are protected by the FDIC's deposit insurance coverage. (a) means the Federal Deposit Insurance Corporation. Such display of non-deposit disclosures would not satisfy the clear, continuous, and conspicuous display requirement of the proposed rule. 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 such cases, the requirement to display the official sign could 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. For purposes of the proposed rule, the FDIC estimates that, on average, IDIs would incur a one-time burden of sixty hours to update their digital operations to incorporate the requirements in the proposed rule, at an approximately cost of $23 million for the industry. IDIs, however, would remain responsible for complying with the official advertising statement requirements for other qualifying advertisements, including those contained on other web pages. Types of advertisements which do not require the official advertising statement. FIL-9-94 (Feb. 17, 1994). The FDIC recognizes that requiring a physical sign may lead to formatting issues, maintenance costs, and difficulty in updating devices when signage requirements change. 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. 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 and provide consistent sign requirements for digital channels. ATMs and like devices must, at a minimum, display the official FDIC sign on the home page or screen and each transaction page or screen relating to deposits. Our editors will review what youve submitted and determine whether to revise the article. B. 12 U.S.C. However, it is sometimes difficult to express scientific and medical language in simpler terms without changing the meaning. $7 million = 1,500 non-bank entities 0.5 hours per IDI $81.12 per hour. According to recent Census data, there were 144,556 firms in these NAICS industries in 2019, the most recent year for which such data is available. Specifically, the FDIC hopes to bring the certainty and confidence historically provided by the FDIC sign at traditional IDI branch teller windows to the varied and evolving digital channels through which depositors are increasingly handling their banking needs today. Branch Such representations, however, may be inaccurate and 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. 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. Summary of Estimated Annual Burden Insured Depository Institution RelationshipsImplementation, 9. The FDIC does not have direct data on the number of non-bank entities that would be affected by the proposed rule. 6. 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. It generally asks the drug company to remove the ad and stop the unlawful behavior. For example, ABC Co. is not an FDIC-insured depository institution; banking services provided by XYZ Bank, Member FDIC.. In other instances, firms have represented to their consumers 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. Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand. The advertiser would have committed false advertising if it had no reasonable basis to support the truth of this claim (such as through comparative tests), even if it turned out to be true. 1503 & 1507. (a) Commenters also suggested that the FDIC clarify how sign requirements apply to digital and mobile banking channels. The FDIC believes that such signage would ensure that customers are aware that their deposits are protected by deposit insurance. Advertisement defined. Lina M. Khan was sworn in as Chair of the Federal Trade Commission on June 15, 2021. 12. We develop a game theoretical model to study interactions between dishonest firms, skeptical consumers, and regulations. Let us know if you have suggestions to improve this article (requires login). Additional requirements apply to arrangements involving multiple levels of relationships. (a) Since OMB's system of record for PRA burdens does not allow non-positive respondent counts, FDIC uses an annual respondent of one for IC 10 to preserve the estimated burden calculations. In the FDIC's view, this additional disclosure is necessary to prevent consumers from misinterpreting a non-bank's assertions regarding deposit insurance coverage. The FDIC may review, redact, or refrain from posting all or any portion of any comment that it may deem to be inappropriate for publication, such as irrelevant or obscene material. Non-deposit signage. This approach gives non-banks that wish to make statements regarding deposit insurance coverage some flexibility in how they communicate the required information. An example involves Anacin, a brand of aspirin. Signage for ATMs and Digital Deposit-taking ChannelsBanks <$10B-Ongoing. In response to consumers and regulators, firms can make their false claims deceptive to impede investigation. Absent adequate signs or disclosures, simultaneous offering of both insured deposits and non-deposit products may lead consumers (who are aware that the IDI is insured by the FDIC) to mistakenly conclude that all of the products being offered are insured. 1813( (7) Does the proposed rule sufficiently address the risk of confusion where In such instances, the IDI's display of the official FDIC sign could lead consumers to believe that the non-deposit products are insured, absent additional information. If the advertisement is deceptive in nature, the defendant faces legal problems even if he or she has the best intentions. Display of digital sign. Contact FDA's Office of Prescription Drug Promotion (OPDP) about prescription drug ads you believe violate the law by being false, misleading, or lacking in "fair balance". 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. 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. Federal and state laws in the United States and the establishment of the Federal Trade Commission (FTC) accompanied this self-regulation. suggested by commenters in response to the 2020 and 2021 RFIs. 18. The proposed rule provides 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. Are there any additional or alternative requirements that would draw a clear distinction between deposits and non-deposit products on digital channels? This feature is not available for this document. (11) With respect to the proposed requirement for IDI's to establish policies and procedures to comply with part 328, are there additional, or more specific, criteria that institutions should consider as part of its policies and procedures? (c) This prohibition applies to advertisements, publications, and other disseminations of information. With regard to third party relationships, IDIs would be expected to focus on the relationships that pose a higher degree of risk to consumers. Notice of proposed rulemaking and request for comment. on September 8, 2022. $31 million = 4,780 IDIs 80 hours per IDI $81.12 per hour. IDIs would be required to display this non-deposit signage via a one-time notification when consumers initially access such a page. Policies and ProceduresImplementation, 12 CFR 328.8 (Recordkeeping; Mandatory). Id. 4. Real estate licensees may charge a fee for preparing a CMA. A Proposed Rule by the Federal Deposit Insurance Corporation on 12/21/2022. The FDIC would not view postage stamps sold at ATMs to require these disclosures. 1828(a)(4). 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. An example would be an advertisement for a vehicle that states that the vehicle uses less gasoline than any comparable vehicle. As such, under the proposed rule, and as appropriate, IDIs would 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. For example, an IDI might enter into an arrangement with the fintech company to offer the IDI's products to the fintech company's customers. Certain commenters' suggestions are discussed in further detail in the Alternatives Considered section of this document.[16]. 85 FR 18528 (Feb. 26, 2020); 86 FR 18528 (Apr. This has caused continuing challenges for consumers in determining whether they are doing business with an IDI and whether their funds are protected by the FDIC's deposit insurance coverage. With respect to digital deposit-taking channels, the FDIC considered alternatives to the digital official sign required by the proposed rule, including plain text signage and disclosure requirements. Thus, the proposed rule would not create a new prohibition on such misrepresentations, but would clarify the types of communications that can materially misrepresent deposit insurance coverage. IDIs would be required to display the digital sign clearly, continuously, and conspicuously on the relevant pages or screens under the proposed rule. For simplicity, requirements applicable to each of these channels are set forth in separate sections of the proposed rule. However, the criminal nature of the sanction, the inclusion of requirements of intent, materiality, and other restrictive elements, and the failure to provide administrative machinery, for enforcement severely limited the effectiveness of these statutes in suppressing false or misleading advertising. 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. 6. 1813(l). 601 These channels serve as the digital teller windows of the modern banking landscape, and it is critical that they provide clear, consistent, and accurate information about deposit insurance upon which consumers, businesses, and other entities may base their financial decisions. Information about this document as published in the Federal Register. 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. During the recent coronavirus (COVID-19) pandemic, the FTC has been sending warning letters to companies that may be violating the FTC Act, to warn them that their conduct is likely unlawful and that they can face serious legal consequences, such as a federal lawsuit, if they do not immediately stop. Cookies have the potential of being used to violate the privacy of users. [13] As explained above, the FDIC is proposing to modernize its sign and advertising requirements to reflect current banking practices, including updating the rules to reflect that deposit-taking via physical branch, digital, and mobile banking channels has evolved since the FDIC last significantly updated its rules in 2006. Meron Wondwosen, Senior Policy Analyst, 202-898-7211, TRUE OR FALSE? [3] Remote Service Facility includes any automated teller machine, cash dispensing machine, point-of-sale terminal, or other remote electronic facility where deposits are received. 34. The .gov means its official. 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. For purposes of this definition, a credit product is not a non-deposit product. Start Printed Page 78027 How do the "brief summary," "prescribing information," "major statement," and "adequate provision" differ? Under the proposed rule, if a digital deposit-taking channel offers both access to deposits and non-deposit products, the ICs 8 and 9 are implementation and ongoing burdens, respectively. FDIC staff believe that the non-bank entities affected by the requirement 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). Rocket Mortgage Human Resources Number, Articles W