In a recent press release, the Federal Deposit Insurance Corporation (FDIC) announced that it has taken action against five entities for spreading false or misleading information about deposit insurance. The entities involved are Atmos Financial, PBC (Atmos), BybitcoinEx, Inc. (BybitcoinEx), ORGANO Payments, Inc. and its subsidiary OGPay (OGPay), Horizon Globex GmbH (Horizon), and Zil Money Corporation (Zil).
The FDIC has demanded that these entities and their associated parties cease making false and misleading statements about FDIC deposit insurance. The evidence collected by the FDIC shows that these entities have made false representations by claiming to be FDIC-insured or suggesting that certain uninsured financial products are insured by the FDIC. They have also misused the FDIC name and logo, misrepresented the nature or extent of deposit insurance, and failed to clearly identify the insured depository institutions with which they have a relationship.
The FDIC views these false and misleading statements as harmful to consumers and damaging to the stability and public confidence in the banking system. Chairman Martin J. Gruenberg emphasized the importance of combatting such misrepresentations and stated that if left unchecked, they could undermine confidence in the FDIC, FDIC-insured banks, and the U.S. banking system.
According to the Federal Deposit Insurance Act (FDI Act), it is prohibited to represent or imply that an uninsured financial product is FDIC-insured or to knowingly misrepresent the extent and manner of deposit insurance. Companies are also prohibited from using the term “FDIC” in their name, advertisements, or other documents to imply that they are FDIC-insured or their products are guaranteed by the FDIC.
To address these issues, the FDIC has recently adopted a final rule to amend its regulations regarding false advertising, misrepresentations of deposit insurance coverage, and misuse of the FDIC’s name and logo. The rule clarifies that terms or images associated with the FDIC cannot be used inaccurately to imply or represent that any uninsured financial product or non-bank entity is insured or guaranteed by the FDIC.
FDIC deposit insurance is in place to protect customers in case of the failure of an insured depository institution. Customers can determine if an institution is FDIC-insured by asking a representative of the institution, looking for the FDIC sign, or using the FDIC’s BankFind tool. More information about FDIC deposit insurance can be found in the frequently asked questions section on the FDIC’s website.
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The FDIC’s actions against these entities serve as a reminder of the importance of truthful and accurate information when it comes to deposit insurance. Consumers should always be vigilant in verifying the FDIC insurance status of any financial products or services they engage with.
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