CFPB Unveils New Regulations Coming as FDIC Announces Proposed Rule Related False Advertising
On December 20th, 2023, the Consumer Financial Protection Bureau (CFPB) announced a significant crackdown on FDIC-related false advertising. Federal regulators emphasize that many non-traditional financial institutions are making material misrepresentations to consumers—misleading them into believing that their account is FDIC insured when that is not the case. Within this blog post, our Miami deceptive and unfair trade practice lawyer discusses the new regulations from the CFPB.
What is FDIC Insurance?
FDIC insurance is a protection provided by the Federal Deposit Insurance Corporation in the United States. It safeguards people’s bank deposits up to a certain amount—ensuring that even if a bank fails, the protected customer (depositor) will not lose all their money. The insurance covers checking and savings accounts, as well as some other deposit types. For 2024, FDIC insurance is up to $250,000 per account.
An Overview of the Proposed FDIC Insurance False Advertising Regulation
In December, the FDIC Board of Directors voted in favor of updating its regulations regarding FDIC signs, advertising, and misrepresentations related to federal deposit insurance. The decision is designed to address the increasingly blurred lines between banks and non-banks (non traditional financial institutions) that offer deposit-like products in association with banks.
The proposed changes aim to clarify and modernize the rules last revised in 2006. They include new requirements for digital banking signs and disclosures, segregation of insured and non-insured products within bank branches, and clear notifications that non-deposit products offered by banks are not FDIC-insured, are not deposits, and could lose value.
The FDIC Board of Directors emphasizes that it believes that these updates are crucial to adapting to the ever-evolving financial landscape whereby many non-banks—including popular financial servers such as Venmo, Cash App, and PayPal—offer balance products that resemble deposits but lack FDIC protection without clearly stating such.
The FDUPTA Protects Businesses and Consumers Against Losses Caused By Deception
For any businesses or consumers that have suffered losses due to misrepresentations related to FDIC federal deposit insurance, Florida state law offers some important legal protections. The Florida Deceptive and Unfair Trade Practices Act (FDUTPA) is a law that shields businesses and consumers from dishonest practices that cause financial harm. It ensures fair play in the marketplace—making it unlawful for companies to mislead customers about the products or services that they offer. Under the FDUTPA, a plaintiff can file a private lawsuit to seek financial relief for any actual losses that were suffered due to an unlawful deceptive or unfair commercial practice.
Speak to a Miami Deceptive and Unfair Trade Practices Lawyer Today
At Pike & Lustig, LLP, our Miami FDUTPA lawyers are committed to helping our clients solve problems. If you have any questions about a deceptive and unfair trade practices case, we are here to help you navigate the legal process. Contact our law firm today to set up a confidential initial appointment. From our Miami office, we represent clients in Miami-Dade County and beyond.