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4000 - Advisory Opinions
Use of Trade Names and Depositor Confusion
FDIC--99--4
April 15, 1999
Marc J. Goldstrom, Counsel
The FDIC has received several inquiries regarding the insured
status of Bank A.
It appears that your bank is using this trade name to transmit
information to and do business with customers over the Internet.
The FDIC and the other Federal banking regulators are very concerned
about the use of differing trade names by insured depository
institutions. Even though in certain cases there may be valid business
reasons for doing so, this practice has the potential for confusing
depositors regarding their deposit insurance coverage.
As a result of our concerns, the Federal banking regulators have
issued the
"Interagency
Statement on Branch Names" (FIL 46--98) dated May 1, 1998,
(the "Interagency Statement") a copy of which is enclosed. The
Interagency Statement was developed to help prevent customer confusion
when a bank or thrift operates its offices, branches or other outlets
for delivering services under a trade name. It urges banks and thrifts
that intend to use a different name for a branch or other outlet to
take reasonable steps to ensure that customers will not incorrectly
assume that the branch or outlet is a separate institution, or that
deposits in the different facilities are separately insured.
We have reviewed the Bank A world wide web site and are concerned
that the site is likely to mislead customers into believing that the
Bank A is a separate entity from Bank B and that deposits in each are
separately insured. For example, although the Bank A site discloses
that it is a division of Bank B, the web site never clarifies that Bank
A is part of the same bank as Bank B. Also, the listing of certain bank
employees as President, CEO, CFO, and Chief Operating Officer is
similarly misleading. There are numerous other statements that suggest
that Bank A is a separate entity. Indeed, the potential for confusion
is evidenced by the many inquiries the FDIC has received concerning
Bank A.
In light of our concerns, we respectively request that you inform us
as to the additional measures that Bank B has taken or will take to
ensure that customers are not mislead into believing that Bank A is a
separate entity from Bank B and that deposits in each are separately
insured.
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