FDIC Publishes General Counsel's Opinion Concerning the Insurability of Funds Underlying Stored Value Cards


On November 13, 2008, the Federal Deposit Insurance Corporation (“FDIC”) published General Counsel’s Opinion No. 8 regarding the insurability of funds underlying stored value cards and other nontraditional stored value products (“Opinion”).[1] In particular, the Opinion addresses the issue of whether funds underlying stored value cards—such as prepaid cards, gift cards, payroll cards or government benefit cards—qualify as “deposits” as that term is defined in the Federal Deposit Insurance Act (“FDIA”).[2] The FDIC concludes that funds underlying stored value products will be treated as “deposits,” subject to existing FDIC “pass through” deposit insurance coverage rules, if such funds have been placed at an insured depository institution.[3] The Opinion, however, appears to limit FDIC deposit insurance coverage to deposits underlying bank-issued stored value products as opposed to deposits underlying merchant-issued stored value products.[4] The Opinion replaces the previous General Counsel’s Opinion No. 8 published in 1996 and reverses the FDIC’s previous position that funds underlying stored value products are not insured deposits, even when held by an FDIC-insured depository institution.[5]

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