The final rule issued in December 2023 by the Federal Deposit Insurance Corporation (FDIC) amending its regulations at 12 CFR Part 328 (“Final Rule“), which address use of the official FDIC sign and banks’ advertising statements as well as misrepresentations of insured status and misuse of the FDIC’s name or logo, will take effect April 1, 2024, with full compliance required by January 1, 2025. The Final Rule generally adopts the amendments to 12 CFR Part 328 proposed in the FDIC’s Notice of Proposed Rulemaking (“NPRM”) issued in December 2022, with some changes and clarifications to address comments submitted with respect to the NPRM.

Like the proposed rule set forth in the NPRM, the Final Rule completely revises Subpart A of 12 CFR Part 328, and makes material amendments to Subpart B. Subpart A “describes the official signs 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,” while Subpart B addresses false advertising, misrepresentation of insured status, and misuse of the FDIC’s name or logo.

The Final Rule aims to “bring the certainty and confidence historically provided by the FDIC official sign found at banks’ teller windows” by aligning the FDIC’s signage regulations with current and evolving bank technology, adding requirements governing display of the FDIC sign across all banking channels where deposit transactions occur. In addition to continuing to require signage at traditional branch locations, the Final Rule includes signage requirements for “other premises in which customers have access to or transact with deposits”, and requires banks to display a new “official digital sign” on bank websites, mobile applications, and certain automated teller machine (ATMs) and other similar devices (which the FDIC explains actually constitute “digital teller windows”). The Final Rule also requires disclosure to differentiate between deposits and non-deposit products, clarifies rules regarding misrepresentation of deposit insurance coverage, adds crypto-assets to the definition of “non-deposit products”, and directs banks to establish and maintain written policies and procedures addressing compliance with 12 CFR Part 328.

Like the proposed rule, the Final Rule completely revises Subpart A of 12 CFR Part 328, and makes material amendments to Subpart B. Subpart A “describes the official signs 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,” while Subpart B prohibits false advertising, misrepresentation of insured status, and misuse of the FDIC’s name or logo.

Changes from the NPRM reflected in the Final Rule in response to comments include a clarification that banks are not required to display a “non-deposit products” sign in connection with safe deposit boxes, and an adjustment to the digital signage requirements for certain ATMs giving flexibility to meet the signage requirement for ATMs put into service before January 1, 2025 by either (1) displaying the FDIC official digital sign on ATM screens, or (2) displaying a physical official sign as described in the regulation by attaching or posting it to the ATM.

As does the proposed rule, the Final Rule includes detail about prohibited misuse of FDIC-associated terms and images by non-banks, and provides examples of practices that would constitute a material omission prohibited by the regulation, such as a statement by a non-bank regarding depository insurance that fails to clearly and conspicuously disclose that the person is a non-bank and that FDIC insurance covers only the failure of an FDIC-insured depository institution.

With respect to the extended compliance date of January 1, 2025, the Supplementary Information published with the Final Rule provides:

The amendments made by this final rule will take effect on April 1, 2024. However, full compliance with the amendments made by this final rule is extended to January 1, 2025. The extended compliance date is intended to provide sufficient time for financial institutions to put in place processes, systems and technological updates to implement the new regulatory requirements described below.

We encourage all banks, fintechs, and industry service providers to carefully review this final rule and consult with legal counsel as to any questions arising in connection with compliance, including, in accordance with revised 12 CFR § 328.8, the establishment of appropriate written policies and procedures including “as appropriate, provisions related to monitoring and evaluating 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.”

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