The Consumer Financial Protection Bureau (CFPB) is looking out for consumers at risk of succumbing to false advertising stemming from misusing the Federal Deposit Insurance Corporation (FDIC) name or logo, a CFPB press release said Tuesday (May 17).
The CFPB has released an enforcement memorandum saying firms can’t misuse the FDIC’s name or logo, or make deceptive representations for deposit insurance, which is meant to promote confidence in banking.
The issue has emerged with the popularity of crypto assets and stablecoins, which investors may think are covered by the FDIC. The release didn’t name any company guilty of misrepresentation.
The CFPB says misrepresenting the protections “undermines consumer confidence and market competition.” The release said the most common form of deposit insurance comes from the FDIC.
The CFPB emphasized that misusing the FDIC name could put customers at risk of losses if their assets aren’t insured when they thought they were.
“People know and trust the FDIC name and logo, and firms must not prey on that trust by making deceptive representations about deposit insurance,” said CFPB Director Rohit Chopra. “Companies undermine competition, erode confidence in the deposit insurance system, and threaten our hard-earned savings when they engage in false marketing or advertising.”
See also: CFPB Wants Other Agencies to Follow Its Enforcement Views
PYMNTS wrote that the CFPB has announced a new initiative to get other agencies with consumer finance protection responsibilities to apply the rules the same way.
In that spirit, the CFPB plans to issue circulars to government agencies on how to apply the rules. Other agencies involved in consumer finance include state attorneys general and state regulators, the Federal Reserve, and the National Credit Union Administration.
The CFPB is the regulator that administers finance laws such as the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Consumer Financial Protection Act and others, though there are other agencies that do similar things.
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