The Federal Deposit Insurance Corp. has launched a campaign meant to drive awareness of FDIC insurance in the wake of bank failures this spring and the emergence of imitation banks in recent years.
WASHINGTON — The Federal Deposit Insurance Corp. announced Wednesday the launch of a new campaign to raise the general public’s awareness about deposit insurance.
The agency said the consumer-focused campaign is intended to target often marginalized consumers who may be less trustworthy of the banking system, including the unbanked, those who use online payment apps as well as consumers who have turned to alternative ‘imitation banks’ — which often appear to be FDIC-insured, but are not.
“Consumers today have a variety of options for where they can put their money. Evidence suggests many people may be confused whether their funds are protected by deposit insurance,” said FDIC Chairman Martin J. Gruenberg. “In light of concerns raised by the bank failures earlier this year, this is an important moment for the FDIC to reach out to the public and ensure that more consumers understand deposit insurance and how it protects their money.”
Under Gruenberg, the FDIC has made defending the credibility of its deposit insurance a top priority — something especially important for rebuilding consumer confidence in the banking system after numerous regional banks failed this year.
In its release, the FDIC noted a Gallup poll following the failures found roughly half of Americans were concerned with the safety of their deposits at banks and other financial institutions.
“This uncertainty also suggests a significant percentage of those surveyed are unaware money deposited into an FDIC-insured bank is protected up to at least $250,000,” the FDIC noted in its release. “More than 99% of deposit accounts in the U.S. today are under this deposit insurance coverage limit and are fully protected by the FDIC.”
The FDIC’s public awareness campaign uses an endangered piggy bank as a metaphor for Americans who may be putting their money at risk by using nonbank financial services that lack deposit insurance. The digital campaign will run through November and will resume in January 2024 with the start of the traditional tax filing season and when many consumers receive refund payments.
In an increasingly online banking ecosystem, consumers who often bank using mobile applications may have trouble discerning FDIC insured online platforms from their nonbank counterparts. In recent years, some nonbanks and companies have seized on such ambiguity to incorrectly claim their products are government-backed, a violation of FDIC rules.
The Federal Deposit Insurance Act empowers the agency to regulate which companies can claim to be FDIC insured, how companies use the agency’s logo and name in advertising and which products companies may represent as FDIC insured. In short, companies are prohibited from employing the agency’s likeness to profit off of the FDIC’s long-cultivated reputation and trust.
In recent years, the FDIC has stepped-up its enforcement against such misleading representations by crypto-based nonbanks. Last July, the agency sent a similar letter to the crypto exchange Voyager, and in August, it issued letters to crypto exchange FTX — which later failed — and other companies, ordering them to remedy deceptive representations of FDIC insurance. It also issued similar cease-and-desist orders to crypto firm Unbanked, Inc. in August, CEX.IO and Zera in February, Bodega Importadora de Pallets — also known as Bodega — OKCoin USA, Inc. and Money Avenue, LLC in June of this year.