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4000 - Advisory Opinions

Advertising the Solicitation of Deposits


March 2, 1987

F. Douglas Birdzell, Special Counsel to the Deputy General Counsel

The enclosed advertisement for *** "Insured Certificates of Deposit" has been called to our attention. This letter is intended to inform you that the advertisement does not conform with the FDIC's advertising regulations in several respects.

First, the advertisement could be construed to convey the impression that *** is itself issuing FDIC-insured deposit accounts, in that the advertisement does not make clear that the CDs are deposit obligations of FDIC-insured banks. Second, the advertisement is unclear as to whether the "Rates of Return" are the simple rates of interest or the annualized yields on the CDs. Finally, the advertisement fails to state that there may be a substantial penalty for early withdrawal of the CDs, should the bank elect to impose one.

Section 329.3(g) of FDIC's regulations (12 C.F.R. 329.3(g)) provides that any person or organization which solicits deposits for a bank shall be bound by applicable regulations governing advertising for deposits.

In order to conform your advertising to applicable Federal banking regulations we ask that the following changes in your advertising be made: (1) clearly indicate that the deposits being offered for sale by or through *** are issued by an FDIC or FSLIC insured institution; (2) display with equal prominence the simple rate of interest if the rate now shown is only the annualized yield; (3) clearly indicate that there may be a substantial penalty for early withdrawal of the CDs, depending upon the policy of the depository bank.

A copy of section 329.3 of our regulations, which outlines the above-noted requirements, is enclosed for your reference.

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