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4000 - Advisory Opinions

Possible Misleading Advertisement Regarding FDIC Coverage


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.

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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