3 firms told to stop making false, misleading statements about FDIC deposit insurance

Demands to cease and desist from making false and misleading statements about federal deposit insurance was issued in letters to three firms Thursday by the Federal Deposit Insurance Corp. (FDIC).

The FDIC letters to Bodega Importadora de Pallets (“Bodega”), Money Avenue, LLC, and OKCoin USA, Inc. demand that the three “take immediate corrective action.”

The agency pointed to evidence that the companies and certain officers made false representations by stating or suggesting “that the companies are FDIC-insured, uninsured financial products are insured by the FDIC, misusing the FDIC name or logo, misrepresenting the nature or extent of deposit insurance, and/or failing to identify insured depository institutions with which it has a relationship for the placement of customer deposits and into which funds can be deposited.”

The FDIC said these “material misrepresentations and omissions” are false and misleading and could harm consumers. It issued a Spanish language letter to Bodega in addition to the English language version, noting the company’s misrepresentations were contained on a Spanish website.

“The FDIC has observed an increasing number of instances online where firms or individuals have misused the FDIC’s name or logo, or have made false or misleading representations about deposit insurance,” FDIC Chairman Martin J. Gruenberg said in a statement in Thursday’s release. “These practices can confuse consumers about whether they are dealing with an insured institution and if they are protected by deposit insurance.”

The FDIC noted that the Federal Deposit Insurance Act (FDI Act) prohibits any person from representing or implying that an uninsured financial product is FDIC–insured or from knowingly misrepresenting the extent and manner of deposit insurance. The act, the agency said, further prohibits companies from implying that they are FDIC-insured or their products are FDIC–insured by using “FDIC” in the company’s name, advertisements, or other documents.

FDIC Demands Three Companies Cease Making False or Misleading Representations about Deposit Insurance