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Financial Institution Letter

Third-Party Referrals Promising Above-Market Rates on Certificates of Deposit


FDIC-insured institutions should be aware of any unsolicited deposits received through third- party referrals. Certain insurance companies and other financial services firms (third parties) are advertising above-market rate certificates of deposit (CDs) to attract customers. When a customer buys the advertised CD, the customer is referred to the Web site of an FDIC-insured institution with the third party "making up" the difference between the insured institution's actual rate and the advertised above-market rate. This practice may cause a contradiction with the terms in the insured institution's Truth-in-Savings disclosures. In some cases, these third parties have used the FDIC official sign, seal, logo, or similar representations in connection with these offers.


  • Financial institution management should be aware if a third party is referring customers to the institution, thereby facilitating the placement of deposits. All insured institutions should have controls in place to flag unusual deposit activity.
  • A deposit broker, according to Part 337.6 of the FDIC Rules and Regulations, places deposits or facilitates the placement of deposits into an FDIC-insured depository institution.
  • Receipt of deposits by a broker must be reported for regulatory purposes as brokered deposits.
  • Financial institutions prohibited from accepting brokered deposits, per the restrictions in Part 337.6, cannot accept these third-party referral deposits.
  • Brokered deposits are considered volatile funding sources. Management must be aware that such deposits impact an insured depository institution's earnings, liquidity, and interest rate risk.
  • Deposits received by an insured institution from a third-party referral also may expose the institution to reputation risk, as customers may be misled about the interest rate and other terms and conditions under which the institution offers deposit products. In addition, insured institutions may be associated with third parties who have misused the FDIC logo.
  • Insured institutions should ensure that any arrangements with third parties – formal or informal – conform with laws and regulations. (Refer to FIL-44-2008, "Third-Party Risk: Guidance for Managing Third-Party Risk.")
  • The FDIC will take legal action against entities that fail to comply with the statutory prohibitions on misuse of FDIC names, symbols, logo, false advertising, and misrepresentation of insured status.

Continuation of FIL-32-2009


FDIC-Supervised Institutions

Suggested Routing

Chief Executive Officer

Chief Financial Officer

Compliance Officer

Internal Auditor


FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at

To receive FILs electronically, please visit

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226.

Last Updated: June 19, 2009