U.S. Bank Regulators are concerned that Web names for banks or bank products could mislead a consumer into believing that they are doing business with a bank when they are not, or mislead a consumer in some other way. Therefore, financial institutions are being requested to make certain that the trade names used on their Internet sites don't obscure the identity of the institution.
The new regulation goes into effect July 1 and will affect banks whose chartered name and Web site name differ. (One example is Harris Bank of Chicago; their virtual services is "mbanx." )
Many financial institutions choose different names for their Web products so that they can differentiate their brands, fees, and features. The Fed wants the strange names and non-chartered bank names stopped.
Regulators are concerned that different names may cause a bank's existing customer to mistake a Web site of their institution as a separate bank, and inadvertently exceed the FDIC $100,000 insurance limit. Or, a customer may believe a non-bank site is insured, when it is not.
While some states require all branches of depositary institutions to use the same name, there are no federal laws. But, some Fed and OTS regulations dealing with "unfair or deceptive practices" can preclude the use of different names at facilities of the same institution.
