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4000 - Advisory Opinions
Possible Misleading Advertisement Regarding FDIC Coverage
FDIC--99--1
January 22, 1999
Marc J. Goldstrom, Counsel
By letter dated November 24, 1998, (copy enclosed) the FDIC
objected to an advertisement for certificates of deposit ("CDs")
placed by your City A office. The statement "FDIC-insured" and
its placement in the particular advertisement may mislead consumers
into believing that your firm itself is FDIC-insured. In order to avoid
any further confusion by members of the general public, we asked that
you either remove this statement from future advertisements in any
medium, or amend such advertisements to clarify that the CDs are
FDIC-insured, not your firm.
{{2-29-00 p.4984.35}}
Our letter also indicated that the advertisement was not in
compliance with the Truth in Savings Act ("TISA")
(12 U.S.C. §§ 4302(a)
and 4313(5)) and Regulation DD
issued by the Board of Governors of the Federal Reserve System
(12 CFR Part 230). In
accordance with this regulation we asked that you ensure that future
advertisements state the rate of return as an "annual percentage
yield," rather than "YTM." Finally our letter asked that
within 15 days you let us know the actions you intend to take to
alleviate the potential for confusion and to comply with TISA and
Regulation DD.
You have not yet contacted the FDIC. Furthermore, it has been
brought to our attention that on January 5, 1999, the City B office of
your firm placed an advertisement virtually identical to the
advertisement placed by your City A office (copy enclosed).
The FDIC strongly objects to your company's continued use of this
advertisement. In addition, please be advised that false advertising or
misuse of the FDIC's name or acronym may be a violation of the
criminal code of the United States. See
Title 18, United States Code,
§ 709.
We strongly suggest that within five days of the date of this letter
you let us know the actions you intend to take to alleviate the
potential for confusion in your advertisements and to comply with TISA
and Regulation DD. Failure to contact us within that time period may
force us to take further appropriate action. If you have any questions
or concerns, please feel free to contact me at (202) 898--8807. Thank
you for your cooperation.
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