Advertising Compliance
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|Advertising Compliance |
|2019 IBA Marketing Conference |
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|The information contained in this training outline is provided solely for general education purpose. Every |
|effort is made to accurately summarize and analyze these laws and regulations; however, no responsibility it |
|assumed for any use that may be made of such information and transactions should not be undertaken on the basis of|
|this information alone. Bankers planning transactions that will be affected by any of the laws or regulations |
|summarized herein should seek advice of experienced bank counsel and/or state and federal regulatory agency |
|personnel. |
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|4/25/19 |
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Table of Contents
|Advertising Deposit Accounts | 3 |
|FDIC Membership | 3 |
|Truth in Savings Act, Regulation DD | 6 |
|General Disclosure Requirements | 6 |
|Permissible Rates | 8 |
|Triggering Terms | 9 |
|Bonus |10 |
|Reduced Disclosures for Certain Media |12 |
|Record Retention |13 |
|Overdraft Protection Programs |13 |
|Advertising Consumer Loans |17 |
|Fair Housing Act |17 |
|Truth in Lending Act, Regulation Z |18 |
|Advertisements Defined |18 |
|Exceptions |19 |
|General Requirements |20 |
|Closed-End Credit Requirements |21 |
|Open-End (non-dwelling secured) Credit Requirements |28 |
|Home Equity Line of Credit Requirements |30 |
|Oral Rate Disclosures |36 |
|Advertising Non-Deposit Investment Products (NDIPs) |38 |
|Advertising Insurance Products or Annuities |40 |
|Unfair or Deceptive Acts and Practices (UDAP) |42 |
|Unfair, Deceptive or Abusive Acts and Practices (UDAAP) |46 |
|Use of Trade Names |48 |
|Displaying Currency in Advertisements |49 |
|Advertisement of Promotional Games |50 |
|Right of Publicity |52 |
|Music in Advertising |53 |
|Telemarketing Sales Rule |55 |
|Internet Advertising |60 |
|Privacy Protections |62 |
|Children’s Online Privacy Protection Act |63 |
|E-Mail Considerations |65 |
|CAN-SPAM Act of 2003 |65 |
|Other E-Mail Considerations |66 |
|Social Media |69 |
|Additional Resources |72 |
|Sample Advertising Policy Follows page 72 |
|Sample Advertising Approval Form Follows Sample Advertising Policy |
|Advertising Checklists Follows Sample Advertising Approval Form |
Advertising Deposit Accounts
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|Overview |When advertising FDIC-insured deposit accounts (checking, savings, NOW, money market savings, certificates of |
| |deposit and other time deposit accounts), there are primarily two rules and regulations with which to comply: |
| | |
| |1. FDIC Advertisement of Membership, and |
| | |
| |2. Truth in Savings Act (Regulation DD). |
| | |
|FDIC Advertisement of |“Advertisement” is defined as “a commercial message, in any medium, designed to attract public attention or |
|Membership |patronage to a product or business.” |
|12 CFR 328.3 | |
| |The FDIC’s official advertising statement: “Member of the Federal Deposit Insurance Corporation.” However, |
| |insured depository institutions may use the short title: |
| | |
| |“Member of the FDIC”; or |
| | |
| |“Member FDIC”; or |
| | |
| |Reproduction of the symbol of the FDI Corporation. |
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| |[pic] |
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| |If FDIC symbol is used, it must be of a size and print to be clearly legible. |
| | |
| |If symbol of the Corporation is used as the official advertising statement, and the symbol must be reduced to |
| |such proportions that the two lines of smaller type above and below “FDIC” are indistinct and illegible, those |
| |lines of smaller type may be blocked out or dropped, for example: FDIC. |
| | |
| |Use of official statement in advertising: |
| | |
| |Include In all advertisements that either: |
| | |
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| |Promote deposit products and services, or |
| | |
| |Promote-non-specific banking products and services offered by the bank |
| | |
| |NOTE: An ad “promotes non-specific banking products and services” if it includes the name of the insured |
| |depository institution but doesn’t list or describe particular products or services. |
| |EXAMPLE: |
| |“Anytown Bank, offering a full range of banking services.” |
| | |
| |Exceptions. Types of ads that do not require the official advertising statement: |
| | |
| |Statements of condition (call reports); |
| | |
| |Supplies such as stationery (except when used for marketing purposes), envelopes, deposit slips, checks, drafts,|
| |signature cards, deposit passbooks, certificates of deposit, etc.; |
| | |
| |Signs or plates in the insured depository institution offices or attached to the buildings in which such offices|
| |are located; |
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| |Listings in directories; |
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| |Advertisements not setting forth the name of the depository institution; |
| | |
| |Entries in a depository institution directory, provided the name of the insured depository institution is listed|
| |on any page in the directory with a symbol or other descriptive matter indicating it is a member of the Federal |
| |Deposit Insurance Corporation. |
| | |
| |Joint or group advertisements of depository institution services where the names of insured depository |
| |institutions and noninsured institutions are listed and form a part of such advertisements; |
| | |
| |Advertisements by radio or television, other than display advertisements, which do not exceed thirty (30) |
| |seconds in time; |
| | |
| |Advertisements which are of the type or character that make it impractical to include the official advertising |
| |statement, including, but not limited to, promotional items such as calendars, matchbooks, pens, pencils, and |
| |key chains; and |
| | |
| | |
| |Advertisements which contain a statement to the effect that the depository institution is a member of the FDIC, |
| |or that the depository institution is insured by the FDIC, or that its deposits or depositors are insured by the|
| |FDIC to at least $250,000 for each depositor. |
| | |
| |Restrictions on use of official statement when advertising non-deposit products: |
| | |
| |“Non-deposit products” includes, but is not limited to, insurance products, annuities, mutual funds, securities |
| |and credit products. |
| | |
| |“Hybrid product” means a product or service that has both deposit product features and non-deposit product |
| |features, e.g., a sweep account. |
| | |
| |Non-deposit products and/or hybrid product advertisements: |
| | |
| |Shall not contain the official advertising statement or any other statement or symbol implying or suggesting the|
| |existence of FDIC insurance, in any ad relating solely to non-deposit products or hybrid products. |
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| |Mixed advertisements: |
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| |In ads containing information about both insured deposit products and non-deposit products or hybrid products, |
| |clearly segregate the official advertising statement or any similar statement from that portion of the ad that |
| |relates to the uninsured products. |
| | |
| |A non-English equivalent of the official advertising statement may be used in any advertisement, provided that |
| |the translation has had the prior written approval of the FDIC. |
| | |
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|Truth In Savings |Reg. DD requires minimum disclosures related to the deposit account being advertised, including the annual |
|Act, Reg. DD |percentage yield, if applicable. Under Reg. DD, an advertisement includes any commercial message, in any medium,|
|12 CFR 1030.8 and |promoting a deposit account. Reg. DD does not exclude any type of advertisement from disclosure requirements, |
|1030.11 |but reduces the required elements for advertising via: |
| | |
| |Broadcast or electronic media, such as television or radio; |
| | |
| |Outdoor media, such as billboards; and |
| | |
| |Telephone response machines. |
| | |
| |Reg. DD exempts lobby boards inside the bank from the general advertising disclosure requirements, even if they |
| |can be seen from outside the bank, with certain provisions, discussed below. |
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| |General Disclosure Requirements |
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| |Misleading or inaccurate statements. Any advertisement, regardless of the medium, must be true and accurate in |
| |content. Ads must never misrepresent the bank’s deposit contract. In addition, ads may not contain the terms |
| |“free” or “no cost” or other similar terms (such as “fees waived”) if any maintenance or activity fee may be |
| |charged to the account. Maintenance and activity fees include: |
| | |
| |Any fee imposed when a minimum balance requirement is not met; |
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| |Any fee imposed when the consumer exceeds a specified number of transactions in the account; |
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| |Transaction and service fees the consumer may reasonably expect to be imposed on a regular basis; |
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| |Flat fees, such as a monthly service fee; |
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| |Fees for deposits, withdrawals or funds transfer, including per-check or per-transaction charges. |
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| |Fees that are not considered maintenance or activity fees include: |
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| |Fees not required to be disclosed under the initial disclosure requirement (e.g., fees for services offered to |
| |both account and non-account holders, such as traveler’s checks fees or wire transfer fees); and incidental fees,|
| |such as dormant account fees, garnishment or attorney |
| | |
| |fees and fees for photocopying; |
| | |
| |Check printing fees; |
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| |Balance inquiry fees; |
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| |Stop payment fees and fees associated with checks returned unpaid (insufficient funds or overdraft charges); and |
| | |
| |Fees for ATM or electronic transfer services (such as preauthorized transfers or home banking services) not |
| |required to obtain an account. |
| | |
| |Banks may always advertise specific account services as free if no fee will be charged for the service. For |
| |example, if the bank imposes no per-transaction fee for withdrawals, the ad could state “free withdrawals.” |
| |However, the ad must not further imply the account is free if a monthly service fee may be charged. Banks may |
| |also advertise accounts (or specific services) as free for a limited time, if the time period is also stated. |
| |Accounts may also be advertised as “free” for customers meeting certain conditions not related to the deposit |
| |account, such as the customer’s age. For example, banks may advertise an account as “free for age 62 and over” |
| |or “free with direct deposit of payroll,” even though a maintenance or activity fee will be assessed on accounts |
| |held by customers not meeting the conditions. |
| | |
| |If advertising an account-related service on a “free” account, for which there will be a fee for account-related |
| |service, must clearly and conspicuously indicate there is a cost related to the specific service. |
| | |
| |Example: |
| |Totally Free Checking, now with Online Banking!* |
| |*Online banking monthly service charges apply. |
| | |
| |NOTE: See discussion of overdraft protection programs, below, for further guidance on use of “free” or “no cost”|
| |in relation to accounts having overdraft protection. |
| | |
| |The term “profit” may never be used in an ad when referring to interest rates. |
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| |Permissible rates |
| | |
| |APY. Whenever an ad states a rate of return, it must state the rate as an “annual percentage yield” using that |
| |term. The abbreviation “APY” may be used provided the term “annual percentage yield” is spelled out at least |
| |once in the ad. The term “interest rate” may be stated in conjunction with, but no more prominently than, the |
| |APY to which it relates. |
| | |
| |For tiered rate accounts, if the APY is stated for any tier, then the APY and corresponding minimum balance |
| |requirements must be stated for each tier. The minimum balance must be shown in close proximity and equal |
| |prominence to the applicable APY. For example: |
| | |
| |2.40% APY for balances $1,000 to $9,999.99 |
| |3.00% APY for balances $10,000 to $49,999.99 |
| |3.50% APY for balances $50,000 and over. |
| | |
| |NOTE: If the bank wishes to feature a particular tier in the ad, it is not required that all tiers be disclosed |
| |in the same type size as the featured tier. |
| | |
| |For stepped-rate accounts (accounts with two or more interest rates that are applied to specified balance |
| |levels), the ad must state all interest rates and the time period for which each rate is effective. For example:|
| | |
| |“4.00% APY for first six months, 3.40% APY for remaining six months.” |
| | |
| |If the bank wants to advertise rates for an account that may vary depending on the amount of the initial deposit |
| |or the length of time the funds will remain on deposit, it need not list each balance level and term offered. |
| |Instead, the ad may either: |
| | |
| |Provide a representative example of the APYs offered with a clear description of the example. |
| | |
| |“For example, our one-year certificate of deposit currently pays 3.25% annual percentage yield.” |
| | |
| |or |
| | |
| |Indicate various rates are available by stating short-term and longer-term maturities along with the applicable |
| |APY. |
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| | |
| | |
| | |
| |“We offer certificates of deposit with annual percentage yields that depend on the maturity you select. |
| |Currently, our six-month CD earns 1.50% APY. Or, select a two-year CD and earn 2.25% APY.” |
| | |
| |If no interest accrues on balances below the required minimum, no APY is required for such balances. To |
| |illustrate, using the above example, the bank is not required to show “0.00% APY for balances $0.01 to $999.99”. |
| |Only when a rate of return will be paid on balances is the APY required to be disclosed. |
| | |
| |Triggering Terms – Additional Disclosures |
| | |
| |Just as the mention of the bank name triggers the requirement to include the FDIC membership statement, the |
| |mention of certain terms requires additional disclosures under Reg. DD. |
| | |
| |Annual Percentage Yield (APY). Any ad containing the APY for an account triggers additional disclosures to be |
| |included in the ad. However, simple references to “rates” in an ad do not require the additional disclosures (so|
| |long as the rates are |
| |not determinable from the ad). For example, the following statements would not trigger the additional |
| |disclosures: |
| | |
| |“Eight- and fifteen-month CDs available.” |
| |“Bonus rates available.” |
| |“1% over our current rates” |
| | |
| |When the APY appears in the ad, include the following: |
| | |
| |For variable rate accounts, a statement that the rate may change after the account is opened. |
| |The period of time the annual percentage yield will be offered, or a statement that the APY is accurate as of a |
| |specified date. Example: |
| | |
| |“APY available through August 1, 2019.” |
| |“APY effective 6/15/2019 and subject to change.” |
| | |
| |Ads may refer to the APY as being accurate as of the date of publication, if the publication shows a date. For |
| |example: |
| | |
| |“APY current through date of this issue.” |
| | |
| |The minimum balance required to obtain the advertised APY. (Don’t forget the rule about tiered rate accounts, |
| |disclosing the minimum balance and APY for each tier.) |
| | |
| | |
| |The minimum opening deposit required for the account, if it is greater than the minimum required to obtain the |
| |advertised APY. |
| | |
| |A statement that fees could reduce the earnings, if the account will be subject to maintenance or activity fees. |
| | |
| |For time accounts, also include: |
| |The term of the account, and |
| |A statement that an early withdrawal penalty may be imposed. |
| | |
| |Special rule for club accounts. If a club account has a specified maturity date, but the term varies depending |
| |on when the account was opened, the disclosure may state: |
| | |
| |“Account matures on December 15, 2019; its term varies depending on when the account is opened.” |
| | |
| |Bonuses |
| | |
| |Just as the inclusion of the APY in an ad triggers additional disclosures, so does the mention of a specific |
| |bonus. A “bonus” for Reg. DD means, “any premium, gift, award or other consideration worth more than $10 |
| |(whether in the form of cash, credit, merchandise or any equivalent) given or offered to a consumer during a year|
| |in exchange for opening, maintaining, renewing or increasing an account balance.” The term does not include |
| |interest, other consideration worth $10 or less given during a year, the waiver or reduction of a fee or the |
| |absorption of expenses. |
| | |
| |There are no limitations on the fair market value of bonuses paid on interest-bearing accounts. However, there |
| |are limitations on the amount of bonuses that may be paid to non-interest-bearing accounts, as described in the |
| |FDIC interpretive rule (12 CFR 330.101): |
| | |
| |Premiums, whether in the form of merchandise, credit or cash, given by a bank to the account holder if: |
| | |
| |The premium is given to the depositor only at the time of the opening of a new account or an addition to an |
| |existing account; |
| | |
| |No more than two premiums per deposit are given in any twelve-month interval; and |
| | |
| |The value of the premium (the total cost to the bank, including shipping, warehousing, packaging and handling |
| |costs) does not exceed $10 for a deposit less than $5,000 or $20 for a deposit of |
| | |
| |$5,000 or more. |
| | |
| |Any premium in any amount so long as the premium is not directly or indirectly related to, or dependent on, the |
| |balance in a demand deposit account and the duration of the account balance. |
| | |
| |In general, a simple reference to a “bonus” will not trigger additional disclosures. Statements such as “bonus |
| |checking” or “get a bonus when you open a checking account” do not trigger the disclosures. However, the |
| |inclusion of the specific bonus being offered triggers the following additional disclosures: |
| | |
| |The “annual percentage yield,” using that term; |
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| |The time requirement to obtain the bonus; |
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| |The minimum balance required to obtain the bonus; |
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| |The minimum balance required to open the account, if greater than the minimum to obtain the bonus; and |
| | |
| |When the bonus will be provided. |
| | |
| |Example: Your bank wants to pay $20 cash at opening to every customer depositing $5,000 or more into a new money|
| |market savings account. Your ad reads: Make a fast $20*. Open an Advantage Savings Account today! |
| | |
| |To fully comply with Reg. DD requirements, the ad must also include the required disclosures set forth above. To|
| |illustrate: |
| |*3.75% annual percentage yield effective June 25, 2019 and subject to change without notice. Fees may reduce |
| |earnings. Minimum balance $5,000. Fast cash bonus available through August 1, 2019. Bonus deposited to account|
| |on date of opening. Member FDIC. |
| | |
| |Bonuses and Tax Reporting |
| | |
| |Whenever a bonus is paid directly to a depositor or credited to an account, the Internal Revenue Service treats |
| |the bonus as taxable income to the recipient unless exempted as "de minimis premium" as detailed below. Report |
| |on Form 1099-INT amounts paid directly to a depositor or credited to an account regardless of whether it is |
| |designated as interest, if the total is $10 or more in a calendar year. This includes the fair market value of |
| |gifts to account holders to open, continue or add to an account UNLESS the gift meets the “de minimis premium” |
| |definition under IRS Rev. Proc. 2000-30. Effective 01/01/2000, a “de minimis premium” is a non-cash premium that|
| |has a value of $10 or less for a deposit of less than $5,000; or a value of $20 or less for a deposit of $5,000 |
| |or more. Use the bank’s purchase price to determine “fair market value.” |
| | |
| | |
| | |
| |Example #1: If a customer receives a binder with a fair market value of $9 to open an interest-bearing account |
| |with a deposit of $5,000, the financial institution does not report on a 1099-INT unless other interest is $10 or|
| |more. The binder cost of $9 is not considered interest even if a Form 1099-INT is filed. |
| | |
| |Example #2: Same facts, but the fair market value for the binder is $22. Now the financial institution must |
| |file a 1099-INT and include the $22 with any other interest paid on the account. |
| | |
| |Reduced Disclosures For Certain Media |
| | |
| |If an ad is made through one of the following, reduced disclosures are allowed: |
| |Broadcast or electronic media, such as television or radio; |
| | |
| |Outdoor media, such as billboards; |
| | |
| |Telephone response machines. |
| | |
| |Ads made via the above media and mentioning either the APY or bonus offered in relation to the account, require |
| |the following disclosures: |
| | |
| |The annual percentage yield (for solicitations made through telephone response machines for tiered rate accounts,|
| |the APY and balance requirements for each tier must be mentioned); |
| | |
| |The minimum balance to obtain the APY (or earn the bonus); and |
| | |
| |The term of the account (for time accounts) or the time required to earn the bonus. |
| | |
| |If an ad made via the above media does not mention either the APY or a bonus, no additional disclosures are |
| |required. |
| | |
| |Lobby boards and indoor signs. Lobby boards and other indoor signs, such as lobby computer screen displays, |
| |banners, preprinted posters and chalk or peg boards are exempt from the general advertising disclosure |
| |requirements, even though they may be viewed by customers from the outside, such as a banner placed behind a |
| |teller counter that can be seen through the bank’s lobby windows. However, indoor signs stating a rate of return|
| |for any account must also include: |
| | |
| |The “annual percentage yield” using that term or the term “APY”; |
| | |
| |A statement to contact a bank employee for more information about applicable fees and terms. |
| | |
| |NOTE: Ads that can be retained by the customer, such as a brochure or computer printout, are not considered |
| |indoor signs, and therefore must contain full disclosures. |
| | |
| |Record Retention |
| | |
| |Reg. DD requires banks to retain evidence of compliance for a minimum of two years after the date the disclosures|
| |are made. This can be done by retaining copies of all advertisements, including print ads, marketing letters and|
| |flyers, and text of radio, television and telephone response machine ads. Records should include the dates of |
| |the ad or promotion, the account(s) affected by the ad, the amount of any bonus given and the bonus recipient’s |
| |tax identification number. |
| | |
| |Overdraft Protection Programs |
| | |
| |Truth in Savings Act – Reg. DD Amendments |
| |Final rule issued May 19, 2005. Effective date: July 1, 2006 |
| |boarddocs/press/bcreg/2005/20050519/attachment.pdf |
| | |
| |Applicable to those institutions that “advertise” or “promote” the payment of overdrafts |
| |"Advertise” or “promote” includes: |
| | |
| |Advertisements using broadcast media, brochures, telephone solicitations or electronic mail, or on Internet |
| |sites, ATM screens or receipts, billboards or indoor signs. |
| | |
| |Periodic statements: |
| | |
| |Messages informing consumer of an overdraft limit or amount available for overdrafts, e.g. “$500 overdraft limit”|
| |or “$300 remaining on the overdraft limit.” |
| | |
| |Disclosure of overdraft limit, or inclusion of dollar amount of overdraft limit in a balance by any means, |
| |including on ATM receipt or any automated system, such as telephone response machine, ATM screen or Internet |
| |banking. |
| | |
| |Expanded disclosures for institutions paying overdrafts |
| | |
| |Initial disclosure: |
| | |
| |Detail separately the fees for overdrawing an account (OD) vs. fees for items returned unpaid (NSF); |
| | |
| | |
| |Specify the types of transactions which may overdraw account. |
| | |
| |For example, state that the fee applies to overdrafts “created by check, in-person withdrawal, ATM withdrawal, or|
| |other electronic means,” as applicable. |
| | |
| |Periodic statements: Applicable to all accounts for which payment of overdrafts has been advertised. |
| | |
| |The total dollar amount of fees and charges for paying items into overdraft, for both the statement period and |
| |year-to-date totals. |
| | |
| |“Total dollar amount” includes per-item fees as well as interest charges, daily or other periodic fees, fees |
| |charged for maintaining OD balance, and fees charged on insufficient funds because previously deposited funds are|
| |subject to a hold or are uncollected. |
| | |
| |The total dollar amount for fees for returning items unpaid, for both the statement period and year-to-date |
| |totals. |
| | |
| |These disclosures must be included for the first statement period that begins after an institution advertises the|
| |payment of overdrafts. |
| | |
| |YTD totals – may aggregate fees since beginning of calendar year, or since the beginning of the first statement |
| |period for which such disclosures are required. |
| | |
| |For statement periods that don’t coincide with a calendar month, aggregate fees for 12 monthly cycles staring |
| |with period that begins during January and ends during December (see Official Staff Commentary for |
| |illustrations). |
| | |
| |NOTE: These disclosures are not applicable for transfer services where funds are transferred from another |
| |deposit account of the consumer to cover the overdraft, nor for overdraft lines of credit properly disclosed |
| |under Reg. Z. |
| | |
| |Advertising |
| | |
| |Must not misrepresent deposit contract. |
| | |
| |Examples that would ordinarily be misleading, inaccurate or misrepresent the account contract: |
| | |
| |Represent an overdraft protection service as “line of credit” UNLESS it is a bona-fide open-end line subject to |
| |Reg. Z. |
| | |
| |Represent the institution will honor all checks or authorize all transactions that overdraw the account, with or |
| |without a specified dollar limit, if institution retains discretion to not honor or authorize. |
| | |
| |Represent that consumers with overdrawn accounts are allowed to maintain a negative balance. |
| | |
| |Describe the service as protection against bounced “checks” when consumers may overdraw accounts by other means, |
| |including ATM withdrawals, debit card transactions or other EFTs. |
| | |
| |Additional disclosures in connection with automated OD services (for institutions that promote payment of |
| |overdrafts). |
| | |
| |Fee for EACH overdraft; |
| | |
| |Types of transactions covered by OD services; |
| | |
| |Model language: “Created by check, in-person withdrawal, ATM withdrawal or other electronic means.” |
| | |
| |Time period by which consumer must repay OD balance; AND |
| |Circumstances under which OD would not be paid. |
| | |
| |Model language: “Whether your overdrafts will be paid is discretionary and we reserve the right not to pay. For |
| |example, we typically do not pay overdrafts if your account is not in good standing, or you are not making |
| |regular deposits, or you have too many overdrafts.” |
| | |
| |Exception for broadcast or electronic media at 1030.8(e)(1) (see outline page 9). Additional disclosures not |
| |required for: |
| | |
| |Broadcast or electronic media (TV, radio) |
| | |
| |Ads on ATM screen; |
| | |
| |Ads provided on telephone response machine; or |
| | |
| |Ads on indoor signs. |
| | |
| |Putting it all together: |
| | |
| |Example #1: |
| | |
| |Totally FREE checking!* |
| |No kidding! No minimum balance. No monthly fees. No activity fees. |
| |Free balance inquiries and telebanking transfers. ATM card and Online Banking available. |
| | |
| |* Fees for ATM card issuance/replacement and Online Banking apply. |
| | |
| |Example #2: |
| |Made a mistake in your checkbook? |
| |Forgot about that monthly automated payment? |
| |We have you covered with “Rapid Reserve.”* |
| | |
| |* $30 annual fee. $33 for each overdraft advance, created by check, draft, in-person withdrawal, ACH or other |
| |preauthorized transfer. “Rapid Reserve” balances must be repaid in 20 days. Whether your overdrafts will be |
| |paid is discretionary and we reserve the right not to pay. For example, we typically don’t pay overdrafts if |
| |your account is not in good standing, you are not making regular deposits, or you have too many overdrafts. |
Advertising Consumer Loans
| | |
|Fair Housing Act |The Fair Housing Act (FHA) requires nondiscriminatory advertising and the inclusion of the “Equal Housing |
|42 U.S.C. 3601-3619 |Lender” logotype and legend (or statement) in all ads related to loans secured by a consumer’s dwelling. |
| | |
| |Advertisements of loans for the purpose of purchasing, constructing, improving, repairing or maintaining a |
| |dwelling, or any loan secured by a dwelling, must prominently indicate the bank makes such loans without |
| |regard to race, color, religion, national origin, sex, handicap or familial status. |
| | |
| |In written and visual ads, include a copy of the “Equal Housing Lender” logotype and legend (house with |
| |equal sign and text “Equal Housing Lender” or “Equal Opportunity Lender”). |
| | |
| |For oral advertisements, include in the spoken text that the bank is an “Equal Housing Lender” or an “Equal|
| |Opportunity Lender.” |
| | |
| |Unlike the official FDIC membership statement, the FHA requirement for oral advertisements does not exempt |
| |any advertisement due to a short duration of 30-seconds or less. |
| | |
| |[pic] [pic] |
| | |
| |No advertisement should contain words, symbols, models or other forms of communication that express, |
| |suggest or imply a discriminatory preference of policy of exclusion. For example, print or visual ads must|
| |not exclude any racial or ethnic groups represented in the bank’s primary assessment area. |
| | |
| |Lobby Poster Requirements |
| | |
| |“Conspicuously display” the Equal Housing Lender posters in the bank lobby and in other areas where |
| |deposits are received or loans are made. |
| |Must be “clearly visible” to public |
| |Must be exactly 11” x 14” in size |
| |Must be printed in English |
| | |
| | |
| |Spanish language posters may be displayed in addition to the English language posters in banks having a |
| |large Spanish-speaking customer base. |
| | |
| |NOTE: “Dwelling” is defined as any building or structure, including a mobile home or any portion thereof, |
| |occupied, designed or intended for occupancy as, a residence by one or more natural persons. A dwelling |
| |also includes any vacant land offered for sale or lease for the construction or location thereon of any |
| |such building, structure or portion of a building or structure. |
| | |
| |NOTE: Potential fair lending issues arise due to the mere placement of advertisements. By placing ads in |
| |publications in only one language when two or more are predominantly in use in the bank’s assessment area |
| |could be a violation. For example, in bilingual communities, if the bank advertises mortgage loans only in|
| |English-language newspaper(s), and ignores placing the ad in the local Spanish-language newspaper(s), the |
| |bank could be found to be illegally discriminating on the basis of national origin. |
| | |
| | |
|Truth in Lending Act |Truth in Lending Act (Regulation Z) spells out the minimum disclosure requirements for advertising open-end|
|Regulation Z 1026.16 |credit (12 CFR 1026.16) and closed-end credit (12 CFR 1026.24). |
|and 1026.24 | |
| |Advertisements Defined |
| | |
| |For purposes of the two regulations mentioned above, an advertisement means any commercial message in any |
| |medium promoting, directly or indirectly, credit transactions. This includes advertisements in: |
| | |
| |Newspapers, |
| | |
| |Magazines, |
| | |
| |Leaflets, flyers or catalogs, |
| | |
| |On the radio or television, |
| | |
| |Direct mail or other printed material, |
| | |
| |On any interior or exterior sign or display, or |
| | |
| | |
| |On point-of-sale transaction literature or price tags containing credit or lease information. |
| | |
| |Messages inviting, offering or announcing the availability of credit transactions or consumer leases, |
| |whether in visual, oral or print medium, are all covered by the definition of “advertisement” under the |
| |regulation. Telephone calls and letters sent to customers as part of an organized solicitation are also |
| |considered advertisements. |
| | |
| |Lobby display boards are also considered advertising and require the inclusion of appropriate disclosures |
| |when mentioning loan products. |
| | |
| |Exceptions |
| | |
| |Specifically excluded from the definition of “advertisements” are: |
| | |
| |Direct personal contacts, such as follow-up letters, cost estimates for individual consumers, or oral or |
| |written communications relating to the negotiation of a specific transaction; |
| | |
| |Informational material distributed only to businesses (e.g., interest rate and loan term memos distributed |
| |to local realtors); |
| | |
| |Notices required by federal or state law, if the law mandates specific information be displayed and only |
| |the information so required is included in the notice; |
| | |
| |News articles controlled by the news media; and |
| | |
| |Market research or educational materials that do not solicit business. |
| | |
| |NOTE: Internet web sites featuring the bank’s loan products must be treated as advertising. According to |
| |the FDIC, a “page” on the Internet for purposes of advertising is “all of the information on one site that |
| |can be viewed using just the scroll bar or arrow keys. The Internet address displayed on your toolbar will|
| |not change if you use only the scroll bar and/or arrow keys. If the Internet address displayed on your |
| |toolbar changes, you have gone on to a different ‘page’.” As will be described later, there are separate |
| |rules governing single page ads from those governing multiple page ads. In addition, Internet or other |
| |systems accepting credit applications on-line may be considered “places of business” under HUD’s rules |
| |prescribing lobby notices, particularly in the case of interactive systems. |
| | |
| | |
| | |
| |General Advertising Requirements |
| | |
| |Credit terms stated in the ad must reflect the terms actually available to the customer. |
| | |
| |May not advertise specific installment payment or down payment unless bank is prepared to agree to those |
| |terms. |
| | |
| |May not show a very low annual percentage rate that will not, in fact, be available from the bank at any |
| |time. |
| | |
| |Advertisements MAY promote terms offered for a limited period or that will become available at a future |
| |date. |
| | |
| |Disclosures must be “clear and conspicuous,” meaning legible and presented in a reasonably understandable |
| |form. |
| | |
| |With the exception of credit card applications and solicitations, there are no prescribed rules for format |
| |of disclosures or minimum type size. |
| | |
| |For credit card applications and solicitations, APR must be disclosed in 18-point type; all other “material|
| |disclosures” must be disclosed in 12-point type. |
| | |
| |State law requires a minimum of 6-point type for any disclosure required by law. |
| | |
| |Annual percentage rates described in ads may use the abbreviation “APR.” |
| | |
| |Advertisements consisting of a series of sequentially numbered pages qualify as “multiple page |
| |advertisements” requiring only a single set of disclosures provided in a table or chart. |
| | |
| |Credit terms appearing in the ad must include a clear and conspicuous reference to the page containing the |
| |table of disclosures. |
| | |
| |Separate pieces of paper mailed together in the same envelope are treated as separate ads, each requiring a|
| |full set of disclosures if “triggering terms” appear. |
| | |
| | |
| | |
| | |
| | |
| | |
|Reg. Z |Closed-End Credit |
|12 CFR 1026.24 | |
| |In addition to the previously mentioned general requirements and those set out under the Fair Housing Act, |
| |advertisements for closed-end credit (loans or other credit where the terms, payment, interest rate, etc., |
| |are established when the loan is made) must comply with requirements set out in the Truth in Lending Act |
| |(Regulation Z). |
| | |
| |Clear and Conspicuous Standard |
| | |
| |Loan and credit terms need not be printed in a certain type size, nor appear in any particular place in the|
| |ad. |
| | |
| |For loans and credit secured by a dwelling, “clear and conspicuous” means: |
| | |
| |In visual text advertisements, the required disclosures must appear with equal prominence and in close |
| |proximity to the advertised rates or payment triggering the required disclosures. |
| | |
| |“Equal prominence and in close proximity” means: Same type size and located immediately next to or directly|
| |above or below the advertised rates or payment(s), without any intervening text or graphical displays (may |
| |not appear as a footnote). |
| | |
| |This requirement applies to the rates or payments disclosed in the ad, and the amount of payment(s) over |
| |the term of the loan, and period of time for which each payment applies. |
| | |
| |In Internet advertisements, “clear and conspicuous” means that the required disclosures are not obscured by|
| |techniques such as graphical displays, shading, coloration, or other devices. |
| | |
| |In televised advertisements, visual text must not be obscured by techniques such as graphical displays, |
| |shading, coloration, or other devised, and must be displayed in a manner that allows a consumer to read the|
| |information required to be disclosed. |
| | |
| |In oral advertisements, whether by radio, television, or other medium (e.g., on-hold phone messaging), the |
| |disclosures must be given at a speed and volume sufficient for a consumer to hear and comprehend them. |
| | |
| | |
| | |
| |“Triggering Terms” |
| | |
| |The mention of certain loan terms triggers the disclosure of certain other terms of the advertised loan, |
| |including the annual percentage rate (APR). Triggering terms include: |
| | |
| |The amount of the down payment, expressed as either a percentage or dollar amount (for credit sales |
| |transactions); |
| | |
| |The amount of any payment; |
| | |
| |The number of payments or the period of repayment; or |
| | |
| |The amount of any finance charge (such as “Financing costs less than $300 per year” or “1% origination |
| |fee”). |
| | |
| |Required Disclosures |
| | |
| |If the ad for closed-end credit uses a “triggering term” as defined above, the ad must include the |
| |following disclosures, as applicable: |
| | |
| |The amount or percentage of the down-payment; |
| | |
| |In disclosing the down-payment, the term “down-payment” need not be used, so long as the amount or percent |
| |of down-payment can be derived from the ad, for example: |
| | |
| |“10% cash required from buyer” or |
| |“Credit terms require minimum $1,000 trade-in.” |
| | |
| |The terms of repayment; |
| | |
| |A description of the payment schedule, including the number, timing and amount of payments, and any final |
| |“balloon” payment, scheduled to repay the debt. Repayment terms can be expressed in a variety of ways, so |
| |long as they convey the required information. A unit cost approach may be used, for example: |
| | |
| |“48 monthly payments of $27.83 per $1,000 borrowed.” |
| | |
| |The “annual percentage rate,” using that term or the abbreviation “APR.” |
| | |
| | |
| |If the APR may be increased after loan closing, that fact must also be stated in the ad. |
| |Exceptions |
| | |
| |Some credit terms are so general they do not trigger the additional disclosures. Examples of such terms |
| |include: |
| | |
| |“No down-payment” or “no trade-in required.” |
| | |
| |“Pay weekly,” “monthly payment terms arranged,” or “take years to repay.” |
| | |
| |“Monthly payments to suit your needs” or “regular monthly payments.” |
| | |
| |“No closing costs.” |
| | |
| |“Loans available at 5% below our standard APR.” |
| | |
| |Advertising a Range of Credit Terms |
| | |
| |When an ad describes a range of possible combinations of credit terms offered, an example of one or more |
| |typical extensions of credit with a statement of all the terms applicable to each may be used. |
| | |
| |Label as examples. |
| | |
| |Must reflect representative credit terms available to current and prospective customers. For example: |
| | |
| |“60-month financing available. Example: 2019 models 20% down, $575 per month, 4.5% APR. On approved |
| |credit.” |
| | |
| |In some situations, several examples may need to be included in the advertisement to be sure “typical” |
| |credit terms are being illustrated. For example, if the bank advertises 30-year financing on select houses|
| |in a development, some of which are eligible for FHA financing, but others require larger loan amounts with|
| |higher financing terms, the ad would have to provide two examples, each including the down-payment, terms |
| |of repayment and APR. |
| | |
| | |
| | |
| |Advertising Rates |
| | |
| |If the ad shows the finance charge as a rate, it must be the annual percentage rate, even if it is the same|
| |as the simple interest rate. |
| | |
| |If the bank wishes to show only a rate, state the rate as the APR and no other credit information need be |
| |included, since the APR is not a “triggering term.” For example: |
| | |
| |“7% APR available on car loans.” |
| | |
| |NOTE: Be careful to state the APR accurately, including other fees and charges in the finance charge that |
| |must be included in the calculation of the APR. |
| | |
| |Advertisement of Annual Percentage Rate |
| | |
| |If an ad states a rate of finance charge, it must state the rate as an “annual percentage rate,” using that|
| |term or the abbreviation “APR.” |
| | |
| |If the annual percentage rate may be increased after consummation, the ad must state that fact. |
| | |
| |Ads for loans or credit NOT secured by a dwelling: The ad must not state any other rate, except that the |
| |ad may state a simple annual rate or periodic rate that is applied to an unpaid balance, but such rate must|
| |be stated in conjunction with and not more conspicuously than the annual percentage rate. |
| | |
| |Ads for loans or credit secured by a dwelling: The ad must not state any other rate, except that the ad |
| |may state a simple annual rate that is applied to the unpaid balance in conjunction with, but not more |
| |conspicuously than, the annual percentage rate. |
| | |
| |Variable rates |
| | |
| |Must state the rate may increase or that it is subject to change. |
| | |
| |No need to explain how the changes will be made. |
| | |
| |Example: “3.5% APR subject to increase or decrease.” |
| | |
| |Discounted variable rates |
| | |
| |Adjustable rate mortgages (ARMs) often have a first-year “discount” or “teaser” feature that substantially |
| |reduces the initial rate. |
| | |
| |Show the simple interest rate during the discount period, the term of the discount period and the composite|
| |APR for the term of the loan. |
| | |
| |Example: A plan with a low first year interest rate at 8% and a 10.25% rate in subsequent years plus |
| |additional finance charges (known at closing) could be advertised: |
| |“8% first-year financing. APR 10.41%. APR subject to increase after closing.” |
| | |
| |Disclosure of Rates and Payment in Ads for Credit Secured by a Dwelling |
| | |
| |If an ad states a simple annual rate of interest, and more than one simple annual rate of interest will |
| |apply over the term of the advertised loan, the ad must disclose in clear and conspicuous manner: |
| | |
| |Each simple annual rate of interest that will apply. |
| | |
| |In variable rate transactions, a rate determined by adding an index and margin shall be disclosed based on |
| |a reasonably current index and margin. |
| | |
| |“Reasonably current index and margin” means: |
| | |
| |For direct mail, an index and margin in effect within 60 days before mailing; |
| | |
| |For ads in electronic form, an index and margin in effect within 30 days before ad is delivered via |
| |Internet or e-mail; or |
| | |
| |For printed ads, an index and margin in effect within 30 days before publication. |
| | |
| |The period of time during which each simple annual rate of interest will apply; and |
| | |
| |The annual percentage rate for the loan. |
| | |
| |If such rate is variable, the annual percentage rate must comply with accuracy standards of §§ 1026.17(c) |
| |and 1026.22 (APR tolerances). |
| | |
| |If an ad states the amount of any payment, the ad must |
| | |
| |clearly and conspicuously disclose: |
| | |
| |The amount of each payment that will apply over the term of the loan, including any balloon payment. |
| | |
| |In variable rate transactions, payments that will be determined based on the application of the sum of an |
| |index and margin must be disclosed based on a reasonably current index and margin. |
| | |
| |The period of time during which each payment will apply; and |
| | |
| |In an advertisement for credit secured by a FIRST LIEN on a dwelling, the fact that the payments do not |
| |include amounts for taxes and insurance premiums, if applicable, and that the actual payment obligation |
| |will be greater. |
| |Exclusions |
| | |
| |The provisions related to disclosure of rates and payments, above, do not apply to an envelope in which an |
| |application or solicitation is mailed, or to a banner or pop-up advertisement linked to an application or |
| |solicitation provided electronically. |
| | |
| |Alternative Disclosures for Television or Radio Advertisements |
| | |
| |Ads stating any “triggering term” may alternatively comply with the disclosure requirements by stating that|
| |information about the APR(s), the down payment requirements, terms of repayment and any other cost |
| |information may be obtained by calling a toll-free or collect-call phone number of the bank. |
| | |
| |Example: “…call 1-800-xxx-xxxx for details about credit costs and terms.” |
| | |
| |Tax Implications |
| | |
| |In print advertisements, whether in paper form or via the Internet (but not via radio or television), for |
| |loans secured by the consumer’s principal dwelling, if the ad states that the advertised extension of |
| |credit may exceed the fair market value of the dwelling, the ad must state: |
| | |
| |The interest on the portion of the credit that is greater than the fair market value of the dwelling is not|
| |tax deductible for Federal income |
| | |
| |tax purposes; and |
| | |
| |The consumer should consult a tax adviser for further information regarding the deductibility of interest |
| |and charges. |
| | |
| |Prohibited Acts in Advertisements for Credit Secured by a Dwelling |
| | |
| |May not use the word “fixed” to refer to rates, payments or the credit transaction in an advertisement for |
| |a variable-rate transactions or other transactions where the payment will increase. (Certain exceptions |
| |detailed within the regulation at Section 1026.24(i)(1)(i).) |
| | |
| |For any advertisement in any medium, including radio or television: May not compare a consumer’s actual or|
| |hypothetical current payments or rates and any payment that would apply if the consumer obtains the |
| |advertised loan UNLESS the advertisement includes: |
| | |
| |A comparison to all applicable payments or rates for the advertised product that will occur over the term |
| |of the loan; and |
| | |
| |A statement that the advertised payments do not include amounts for taxes and insurance, if applicable. |
| | |
| |A comparison includes a claim about the amount a consumer may save under the advertised product. A |
| |statement such as “save $300 per month on a $300,000 loan” implies a comparison between the advertised |
| |product’s payment and a consumer’s current payment. |
| | |
| |May not advertise a product as being endorsed or sponsored by a governmental entity, unless the ad is for |
| |an FHA, VA, or similar loan program that is so endorsed or sponsored. |
| | |
| |May not mislead consumers in an advertisement that is not sent by or on behalf of the current lender by |
| |displaying the name of the consumer’s current lender in an ad, unless the ad also prominently discloses |
| |that it is not associated with the customer’s current lender. |
| | |
| |May not claim that the advertised product will eliminate debt or result in a waiver or forgiveness of the |
| |consumer’s existing loan obligations with another creditor. |
| | |
| |Cannot use such phrases as “Wipe out personal debt,” “New |
| |DEBT-FREE Payment,” “Set yourself free: get out of debt today,” “Refinance today and wipe your debt clean,”|
| |etc. |
| | |
| |May not give the false impression that a broker or lender has a fiduciary relationship on behalf of the |
| |borrower by using the term “counselor” in the ad. |
| | |
| |May not provide information about trigger terms or required disclosures only in a foreign language, but |
| |provide other trigger terms or required disclosures only in English. |
| | |
|Regulation Z |Open-End Credit (non-dwelling secured) |
|12 CFR 1026.16 | |
| |Triggering Terms |
| | |
| |The periodic rate used to compute the finance charge or APR; |
| | |
| |NOTE: This is different from closed-end credit where the APR is not considered a triggering term. |
| | |
| |A statement of when the finance charge begins to accrue, including the “free ride period,” if any; |
| | |
| |The method of determining the balance on which a finance charge may be imposed; |
| | |
| |The method of determining the finance charge, including a description of how any finance charge other than |
| |the periodic rate will be determined; |
| | |
| |The amount of any charge other than a finance charge that may be imposed as part of the plan or an |
| |explanation how that charge was determined. |
| | |
| |Required Disclosures |
| | |
| |Any minimum, fixed, transaction, activity or similar charge that could be imposed; |
| | |
| |Any periodic rate that may be applied, expressed as “annual percentage rate” or “APR.” If the plan |
| |provides for a variable periodic rate, that fact must be disclosed (for example, “The APR may vary.”); and |
| | |
| |Any membership or participation fee. |
| | |
| | |
| |NOTE: With the exception of advertisements for home equity plans, an advertisement for open-end credit |
| |must state the credit term as a positive number to trigger disclosures. For example, “no annual membership|
| |fee” would not trigger the additional disclosures. |
| | |
| |Examples of terms that trigger additional disclosures in open-end credit advertisements: |
| | |
| |“12% APR.” |
| |“Small monthly service charge on the remaining balance” |
| | |
| |Examples of terms that do not trigger additional disclosures in open-end credit advertisements: |
| | |
| |“Credit cards available.” |
| |“Just say ‘charge it.’” |
| |“Take some credit back to school.” |
| | |
| |Variable Rates |
| | |
| |Requirements for advertising open-end variable rate credit differ somewhat from those for closed-end. |
| |Specifically, in an ad for an open-end, variable rate plan containing a triggering term, the APR may be |
| |stated in several ways. The advertisement may: |
| | |
| |Use an insert showing the current APR; |
| | |
| |Give the APR as of a specified date; or |
| | |
| |Disclose an estimated APR (based on the best information reasonably available at the time of the |
| |advertisement, and the ad must state explicitly the rate disclosed is an estimate). |
| | |
| |NOTE: Any qualifying conditions or limitations on the APR must be made clear in the ad and not buried in |
| |fine print. |
| | |
| |Discounted Variable Rates |
| | |
| |If an ad for this type of credit plan contains a triggering term, in addition to the three required |
| |disclosures (stated above), the ad must also include: |
| | |
| |The introductory APR; |
| | |
| |The time period the introductory discounted variable rate will remain in effect; and |
| | |
| |The current indexed rate, with a statement that the second rate may vary. |
| | |
| |Example: |
| |“4.5% APR for the first six months. After first six months, APR is 7.5% (as of May 1, 2019), subject to |
| |increase based on market conditions.” |
| | |
| |NOTE: The ad need not give details about the adjustments, such as the index used or the method of |
| |computing the rate. |
| | |
| |Deferred-Billing and Deferred Payment Plans |
| | |
| |A statement such as “No finance charge until December” or any other statement indicating when finance |
| |charges begin to accrue is considered a triggering term. This is true whether the statement appears along |
| |or in conjunction with a description of a deferred-billing or deferred-payment program. However, |
| |statements such as “Skip your January payment” or “Charge it – you won’t be billed until December” are not |
| |considered triggering terms. |
| | |
|Regulation Z |Home Equity Lines of Credit |
|12 CFR 1026.16(d) | |
| |Advertisements for home equity lines of credit are subject to special requirements, in addition to the |
| |general requirements for open-end credit previously identified. The additional disclosure requirements |
| |identified in the following segment apply to consumer purpose, open-end credit, secured by the consumer’s |
| |dwelling, including a vacation or second home. |
| | |
| |Triggering Terms |
| |When stated in either the affirmative or negative(for example, “no annual fee” or “closing fees waived”) |
| | |
| |The periodic rate used to compute the finance charge or the APR (e.g., “Pay only ½% per month” or “Home |
| |Equity Lines for only 8% APR”); |
| | |
| |A statement of when the finance charge begins to accrue, including the “free ride” period, if any; |
| | |
| |The method of determining the balance on which a finance charge may be imposed; |
| | |
| |The method of determining the finance charge, including a description of how any finance charge other than |
| |the periodic rate will be determined (such as “Pay only $1.00 to use your home equity line.”); |
| | |
| |The amount of any charge other than a finance charge that may be imposed as part of the plan (for example, |
| |“No annual fee on our equity lines.”); or |
| | |
| |The payment terms of the plan, such as the length of the draw period and the minimum periodic payments. |
| | |
| |Disclosures when triggering term appears in ad |
| | |
| |Any loan fee that is a percentage of the credit limit under the plan, and an estimate of any other fees for|
| |opening the plan stated as a single dollar amount or a reasonable range; |
| | |
| |Any periodic rate used to compute the finance charge, expressed as an annual percentage rate; and |
| | |
| |The maximum annual percentage rate that may be imposed in a variable rate plan. |
| | |
| |If property insurance is required to open the credit line, the advertisement must include either an |
| |estimate of the cost of insurance or a statement that such insurance is required. |
| | |
| |NOTE: When disclosing the required third-party fees to open the credit line, they may be stated using a |
| |range. |
| | |
| |Misleading Terms Expressly Prohibited |
| | |
| |Ad may not refer to home equity lines as “free money.” |
| | |
| |Ad may not state “no closing costs” if consumer required to pay even minimal charges, such as recording |
| |fees. |
| | |
| |Statement of Tax Deductibility |
| | |
| |If ad contains a reference to potential deductibility of the interest for tax purposes, it must include the|
| |statement, “Consult a tax advisor regarding the deductibility of interest.” |
| | |
| |Tax implications: |
| | |
| |For print ads (paper form or via Internet), if the ad states that the extension of credit may exceed the |
| |fair market value of the dwelling, the ad must clearly and conspicuously state that: |
| | |
| |The interest on the portion of the credit extension that is greater than the fair market value of the |
| |dwelling is not tax deductible for Federal income tax purposes; and |
| | |
| |The consumer should consult a tax adviser for further information regarding the deductibility of interest |
| |and charges. |
| | |
| |“Clearly and conspicuously” means: |
| | |
| |In visual text, the required disclosures are not obscured by techniques such as graphical displays, |
| |shading, coloration, or other devices. |
| | |
| |In televised advertisements, the required disclosures are not obscured by techniques such as graphical |
| |displays, shading, coloration, or other devices; and are displayed in a manner that allows the consumer to |
| |read the disclosures. |
| | |
| |In oral advertisements (whether by radio, television, Internet audio, or other medium), the required |
| |disclosures are given at a speed and volume sufficient for a consumer to hear and comprehend them. |
| | |
| |Discounted and Premium Rates |
| | |
| |Ads stating an initial APR not based on the index and margin used to make later adjustments must also state|
| |the period of time the initial rate will be in effect. |
| | |
| |Include a reasonably current APR, in equal prominence to the initial rate, showing what APR would have been|
| |effect using the current index and margin. |
| | |
| |For ads stating discounted or premium rates: |
| | |
| |If an ad states an initial rate that is not based on the index and margin used to make later rate |
| |adjustments in a variable-rate plan, the advertisement also must state with equal prominence and in close |
| |proximity to the initial rate: |
| | |
| |The period of time the initial rate will be in effect; and |
| | |
| |A reasonably current annual percentage rate that would have been in effect using the index and margin. |
| | |
| |“Equal prominence and in close proximity” means: |
| | |
| |Same type size and located immediately next to or directly above or below the promotional rate or payment |
| |to which it applies. |
| | |
| |Promotional rates and payments |
| | |
| |“Promotional rate” means, in a variable rate plan, any APR that is not based on the index and margin that |
| |will be used to make rate adjustments under the plan, if that rate is less than a reasonably current APR |
| |that would be in effect under the index and margin that will be used to make rate adjustments under the |
| |plan. |
| | |
| |“Promotional payment” means, |
| | |
| |For a variable rate plan: |
| | |
| |Any minimum payment applicable for a promotional period that: |
| | |
| |Is not derived by applying the index and margin to the outstanding balance when such index and margin will |
| |be used to determine other minimum payments under the plan; and |
| | |
| |Is less than other minimum payments under the plan derived by applying a reasonably current index and |
| |margin that will be used to determine the amount of such payments, given an assumed balance. |
| | |
| |For a fixed-rate plan: |
| | |
| |Any minimum payment applicable for the promotional period if that payment is less than other payments |
| |required under the plan given an assumed balance. |
| | |
| | |
| |“Promotional period” means a period of time, less than the full term of the loan, that the promotional rate|
| |or promotional payment may be applicable. |
| | |
| |Stating the promotional period and post-promotional rate or payments: |
| | |
| |If any APR that may be applied to a plan is a “promotional rate,” or any payment applicable to a plan is a |
| |“promotional payment,” the following disclosures must be disclosed (other than in television or radio ads) |
| |“clearly and conspicuously” and with “equal prominence and in close proximity” to each listing of the |
| |promotional rate or payment: |
| | |
| |The period of time during which the promotional rate or promotional payment will apply; |
| | |
| |In the case of a promotional rate, any APR that will apply under the plan. If such rate is variable, the |
| |APR must be disclosed in accordance with the accuracy standards in §§ 1026.5b, or 1026.16(b)(1)(ii) (APR |
| |tolerances), as applicable; and |
| | |
| |In the case of a promotional payment, the amounts and time periods of any payments that will apply under |
| |the plan. In variable-rate transactions, payments that will be determined based on application of an index|
| |and margin shall be disclosed based on a reasonably current index and margin. |
| | |
| |Exceptions: The requirements regarding the “promotional period and post-promotional rate or payment” do |
| |not apply to: |
| | |
| |Envelopes in which an application or solicitation is made; or |
| | |
| |Banner advertisements or pop-ups linked to |
| |an application or solicitation provided electronically. |
| | |
| | |
| | |
| | |
| |Minimum Periodic Payment |
| | |
| |Ads containing a statement about any minimum periodic payment (e.g., “Pay only $150 per month”) must also |
| |disclose, if applicable, a balloon payment will result. |
| | |
| |Example: “Minimum payments may not be sufficient to fully repay the principal outstanding on the credit |
| |line. If not, entire outstanding balance will be required in a single payment.” |
| | |
| |Balloon payments: |
| | |
| |If an ad contains a statement of any minimum periodic payment and a balloon payment may result if only the |
| |minimum periodic payments are made, the ad must also state with equal prominence and in close proximity to |
| |the minimum periodic payment disclosure that a balloon payment may result, if applicable, the ad must also |
| |state with equal prominence and in close proximity to the minimum periodic payment: |
| | |
| |That a balloon payment will result; and |
| | |
| |The amount and timing of the balloon payment that will result if the consumer makes only the minimum |
| |payments for the maximum period of time that the consumer is permitted to make such payment. |
| | |
| |“Equal prominence and in close proximity” means: |
| | |
| |Same type size and located immediately next to or directly above or below the promotional rate or payment |
| |to which it applies. |
| | |
| |Conversion to Repayment Phase |
| | |
| |Some home equity plans provide for conversion to a repayment phase at the end of a certain time period, and|
| |no additional advances are allowed beyond that date. The promotion of this type of plan is covered by the |
| |general open-end and special home equity rules, and not by the closed-end advertising rules. For example, |
| |an ad stating, “Five year draw period, with ten additional |
| |years to pay off the balance,” must also include disclosures as to: |
| | |
| |The fees related to the plan, |
| | |
| |The fees to open the plan, |
| | |
| |The current APR, and |
| | |
| |The maximum APR. |
| | |
| |Example: |
| |“Only $150 to open this credit line. 10.75% APR, subject to increase, maximum 18.9% APR.” |
| | |
| |Alternative Disclosures for Television or Radio Advertisements |
| | |
| |HELOC ads stating any “triggering term” may alternatively comply with the disclosure requirements by |
| |stating that information about the APR(s), the reasonably current APR based on the plan’s index and margin,|
| |and fees that are a percentage of the credit limit may be obtained by calling a toll-free or collect-call |
| |phone number of the bank. |
| | |
|Reg. Z |Oral Rate Disclosures |
|12 CFR 24 | |
| |Nothing in Reg. Z requires a creditor to respond orally to a consumer’s request for credit information. |
| |However, if the bank chooses to respond orally to such inquiries, it must provide certain information in |
| |accordance with the regulation. |
| | |
| |Closed-end Credit |
| | |
| |Simply state the APR. |
| | |
| |If the APR cannot be determined in advance, the APR for a sample transaction must be stated. |
| | |
| |The periodic rate may also be stated if it is applied to an unpaid balance. (This allows for disclosure of|
| |the simple interest rate, but not an add-on, discount or similar rate.) |
| | |
| |May give consumer other cost information about a specific transaction, but not required. For example, a |
| |consumer may inquire about a mortgage loan and the creditor may be unable to provide the precise APR |
| |without knowing the exact |
| |amount to be financed, the amount of loan fees or mortgage insurance premiums, etc. In this case, the |
| |creditor may state an APR for a sample transaction, and may also provide details about the consumer’s |
| |specific inquiry, such as the contract interest rate, points, other finance charges and fees. |
| | |
| |Oral advertisements (radio, television or other) for credit secured by a dwelling must be given at a speed |
| |and volume |
| |sufficient for a consumer to hear and comprehend them. |
| | |
| |Open-end Credit |
| | |
| |State the APR |
| | |
| |Periodic rate may also be stated, but is not required. |
| | |
| |May also give, but not required, information about other fees and finance charges. |
| | |
| |Oral advertisements (radio, television or other) for home equity plans (HELOCs) must be given at a speed |
| |and volume sufficient for a consumer to hear and comprehend them. |
Advertising Nondeposit Investment Products
| | |
|Interagency Guidance |Advertisements including solicitations for uninsured, nondeposit investment products (such as mutual funds,|
|2-15-1994 |stocks, bonds, etc.) must be separate and distinct from bank products and deposit accounts that are FDIC |
| |insured. Ads and other promotional and sales material, written or otherwise, about nondeposit investment |
|Joint Interpretations |products should conspicuously disclose, at a minimum, the product is: |
|9-12-1995 | |
| |Not insured by the FDIC; |
| | |
| |Not a deposit or other obligation of, or guaranteed by, the depository institution; and |
| | |
| |Subject to investment risks, including possible loss of the principal amount invested. |
| | |
| |A shorter, logo format disclosure may be used in visual media, such as television broadcasts, ATM screens, |
| |billboards, signs, posters and in written advertisements and promotional materials, such as brochures. The|
| |text of an acceptable logo format would include the following statements: |
| | |
| |Not FDIC Insured |
| |No Bank Guarantee |
| |May Lose Value |
| | |
| |The logo format would be boxed, set in boldface type and displayed in a conspicuous manner. An example of |
| |an acceptable logo disclosure is: |
| | |
| |NOT |
| |FDIC |
| |INSURED |
| | |
| |No bank guarantee |
| |May lose value |
| | |
| | |
| |The ad must not suggest or convey any inaccurate or misleading impression about the nature of the product |
| |or its lack of FDIC insurance. |
| | |
| |The above minimum disclosures must be emphasized in all telemarketing contacts. Third party ads or |
| |promotional material should clearly identify the company selling the nondeposit investment product and |
| |should not suggest the depository institution is the seller. |
| | |
| |If the ad, brochures, signs or other written material contain information about both FDIC-insured deposits |
| |and nondeposit |
| | |
| |investment products, the materials should clearly segregate information about nondeposit investment |
| |products from the information about deposit accounts and products. |
| | |
| |If the sales materials include any written representations concerning insurance coverage provided by any |
| |entity other than the FDIC, e.g., the Securities Investor Protection Corporation (SIPC), a state insurance |
| |fund or a private insurance company, then clear and accurate written or oral explanations of the coverage |
| |must be provided. Such representations should not suggest or imply that alternative insurance coverage is |
| |the same or similar to FDIC insurance. |
Advertising Insurance Products or Annuities
| | |
|Gramm-Leach-Bliley Act:|Any advertisement or promotional material for insurance products or annuities (except for advertisements |
|Consumer Protections in|and promotional materials that are of a general nature describing or listing the services or products |
|Sales of Insurance, |offered by the bank) must contain the following disclosures (to the extent that the disclosures would be |
|Regulation H, Subpart H|accurate): |
|12 CFR 208.81 to 208.86| |
| |The insurance product or annuity is not a deposit or other obligation of, or guaranteed by, the bank or an |
| |affiliate of the bank; |
| | |
| |The insurance product or annuity is not insured by the Federal Deposit Insurance Corporation (FDIC) or any |
| |other agency of the United States, the bank, or (if applicable) an affiliate of the bank; and |
| | |
| |In the case of an insurance product or annuity that involves an investment risk, there is investment risk |
| |associated with the product, including the possible loss of value. |
| | |
| |Short form disclosures may be used in visual media, such as television broadcasting, ATM screens, |
| |billboards, signs, posters and written advertisements and promotional materials, provided they are |
| |conspicuous, simple, direct, readily understandable and designed to call attention to the nature and |
| |significance of the information provided. Model disclosures suggest the following format (to the extent |
| |their inclusion is accurate): |
| | |
| |Not a deposit; |
| |Not FDIC-insured; |
| |Not insured by any federal government agency; |
| |Not guaranteed by the bank; and |
| |May go down in value. |
| | |
| |Disclosures must be “meaningful” – designed to call attention to the nature and significance of the |
| |information provided (segregation rule): |
| | |
| |Plain language heading to call attention to the disclosures; |
| | |
| |Typeface and type size that are easy to read; |
| | |
| |Wide margins, ample line spacing; |
| | |
| |Boldface or italics for key words; and |
| | |
| |Distinctive type size, style, and graphic devices, such as shading or sidebars, when the disclosures are |
| |combined with other information. |
| | |
| | |
| |Exception: Disclosures described above are not required in advertisements that are of a general nature |
| |describing or listing the services or products offered by the bank, where both insurance products and |
| |traditional banking products are listed. |
| | |
| |Examples that would NOT trigger insurance disclosures: |
| |“First State Bank…Banking. Insurance. Investments.” |
| |“See us for all your financial needs: Deposits, Loans, Trust, Insurance, Investments.” |
| | |
| |CAUTION: While the insurance disclosures need not be included in ads of a general nature, the NDIP |
| |disclosures are still required. |
| | |
Unfair and Deceptive Practices
news/news/financial/2002/fil0257.html
boarddocs/press/bcreg/2004/20040311/attachment.pdf
| | |
|Federal Trade |Both the Federal Trade Commission (FTC) and the federal banking regulatory agencies have increasingly used |
|Commission Act |a general consumer protection statute to address “unethical” or otherwise “bad” business practices that |
|15 U.S.C. § |may not necessarily fall directly under the purview of a specific banking or consumer finance law. The law |
|45 |of choice for enforcement against such business practices has been Section 5 of the FTC Act (15 U.S.C 41 et|
| |seq.) —the primary federal law that prohibits unfair or deceptive acts or practices and unfair methods of |
|Federal Deposit |competition in or affecting commerce (“UDAP” or “FTC Act”). |
|Insurance Act, 12 | |
|U.S.C. § 1818 |“Unfair” Defined |
| | |
| |Causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers|
| |themselves and not outweighed by countervailing benefits to consumers or to competition. |
| | |
| |Likely to cause substantial injury (monetary harm): |
| | |
| |Small amount of harm to large number of people. |
| | |
| |Not reasonably avoidable by consumers: |
| | |
| |Interferes with consumer’s ability to make decision. |
| | |
| |Subjects consumer to undue influence or coercion. |
| | |
| |Not outweighed by countervailing benefits. |
| | |
| |Injurious in its net effects: |
| | |
| |Offsetting benefits may include lower prices or wider variety of products and services. |
| | |
| |Public policy considerations: |
| | |
| |Practices affirmatively allowed by statute, regulation or judicial decision. |
| | |
| |Costs for remedies or measures to prevent the injury; costs to society as a whole of increased burden. |
| | |
| | |
| |“Deceptive” Defined |
| | |
| |Representation, omission, or practice that misleads or is likely to mislead the consumer. |
| | |
| |Evaluated in context of the entire advertisement, transaction or course of dealing: |
| | |
| |Misleading cost or price claims. |
| | |
| |Omitting material limitations or conditions from an offer. |
| | |
| |Offering to provide product or service that is not in fact available. |
| | |
| |Considered from perspective of the reasonable consumer. |
| | |
| |Be careful with targeted marketing, particularly to elderly, financially vulnerable or unsophisticated. |
| | |
| |If representation conveys two or more meanings, one of which may be misleading, may be deemed deceptive. |
| | |
| |Written disclosures must include qualifying limitations. |
| | |
| |Oral disclosures or fine print may be insufficient to correct a misleading or prominent written |
| |representation. |
| | |
| |Representation, omission or practice must be material. |
| | |
| |Material if the financial institution knew or should have known: |
| | |
| |Claim is false; or |
| | |
| |The consumer needed the information to evaluate the product or service. |
| | |
| |Relationship to other laws |
| | |
| |TILA and TISA |
| | |
| | |
| |“Clear and conspicuous” disclosures. |
| | |
| |May be technically compliant, but still unfair or deceptive. |
| | |
| |Vendor relationships |
| | |
| |Bank conduct due diligence. |
| | |
| |GLBA information security guidelines. |
| | |
| |Fair Debt Collection Practices Act third-party debt collector obligations. |
| | |
| |“Best Practices” |
| | |
| |Fully and adequately disclose costs, qualifications and limitations of products and services – regulatory |
| |“clear and conspicuous” standard. |
| | |
| |Describe when products and services are OPTIONAL. |
| | |
| |Fully and adequately disclose costs and benefits of optional or related products. |
| | |
| |Avoid statements that consumers may pay less than minimum amounts due when such payment will result in late|
| |fees, over limit fees or other account fees. |
| | |
| |Clearly disclose phone numbers and/or mailing addresses to which consumers may address complaints. |
| | |
| |Conduct adequate risk management in selection of third-party vendors. |
| | |
| |Review compensation arrangements to avoid unintended incentives to engage in unfair or deceptive practices.|
| | |
| |Implement appropriate procedures to ensure consumer payments are credited in a timely manner. |
| | |
| |Describe how monthly payments will be applied, for example, if first to fees, penalties or other charges |
| |before regular interest and principal amounts. |
| | |
| |Ensure advertisements and disclosures are sensitive to the target market. |
| | |
| | |
| |Provide adequate notice upon change in terms, including changes to past business practice. |
| | |
| |Free Products |
| | |
| |A product that’s advertised as free if another is purchased – “buy one, get one” – indicates the consumer |
| |will pay nothing for the one item and no more than the regular price for the other. Ads like these should |
| |describe all the terms and conditions of the free offer clearly and prominently. Under the Truth in |
| |Savings Act, an account may not be advertised as “free” or “no cost” if any maintenance fee or activity |
| |charge will be imposed. |
| | |
| |NOTE: The FTC’s “four Ps” test can assist the evaluation of whether a representation, omission, act or |
| |practice is likely to mislead: |
| |Is the statement prominent enough for the consumer to notice? |
| |Is the information presented in an easy-to-understand format that does not contradict other information in |
| |the package and at a time when the consumer’s attention is not distracted elsewhere? |
| |Is the placement of the information in a location where consumers can be expected to look or hear? |
| |Is the information in close proximity to the claim it qualifies? |
|Prohibition Against Unfair Deceptive or Abusive Acts or Practices |
| |
| |
| | |
|Dodd-Frank Act |The Dodd-Frank Act added “abusive” as an element to the FTC Acts existing prohibitions on unfair or |
|Title X, Subtitle C, |deceptive practices. “Abusive” is defined as: |
|Section 1031 | |
| |SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR PRACTICES. |
| |(d) ABUSIVE.—The Bureau shall have no authority under this section to declare an act or practice abusive in|
| |connection with the provision of a consumer financial product or service, unless the act or practice— |
| |(1) materially interferes with the ability of a consumer to understand a term or condition of a consumer |
| |financial product or service; or |
| |(2) takes unreasonable advantage of— |
| |(A) a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the |
| |product or service; |
| |(B) the inability of the consumer to protect the interests of the consumer in selecting or using a consumer|
| |financial product or service; or |
| |(C) the reasonable reliance by the consumer on a covered person to act in the interests of the consumer. |
| | |
| |The Consumer Financial Protection Bureau (CFPB), in its examination manual, explains that consumer |
| |complaints play a key role in detecting and determining unfair, deceptive or abusive practices. |
| | |
| |For example, complaints alleging that consumers did not understand the terms of a product or service would |
| |lead examiners to conduct a detailed review of the practice. This is true particularly if numerous |
| |consumers make similar complaints about the same product or service. |
| | |
| |Example: An ad that is technically compliant with Reg. DD or Reg. Z disclosure requirements, but does not |
| |include additional qualifying criteria or conditions that must be met to obtain the product or service. |
| | |
| |For this reason, it’s critical that banks have a formal process by which to monitor and respond to |
| |complaints from consumers. Of particular concern will be complaints that allege misleading or false |
| |statements or missing disclosure information contained within the bank’s advertisements. |
| | |
| |Also, the bank should monitor its volume of charge-backs or refunds for products or services. These |
| |“customer service” matters may never appear in the bank’s complaint records, but should be considered in |
| |light of “abusive” practices. |
| | |
| |Advertising Best Practices |
| |Review all marketing materials to determine: |
| | |
| |All representations are factually based. |
| | |
| |All materials describe clearly, prominently and accurately: |
| | |
| |Costs, benefits and other material terms of the products or services offered; |
| | |
| |Related products or services offered either as an option or required to obtain certain terms; and |
| | |
| |Material limitations or conditions on the terms or availability of products and services, such as time |
| |limitations for favorable rates, promotional features, expiration dates, prerequisites for obtaining |
| |particular products or services or conditions for canceling services. |
| | |
| |The customer’s attention is drawn to key terms, including limitations and conditions that are important to |
| |enable the consumer to make an informed decision (clear and conspicuous standard). |
| | |
| |All materials clearly and prominently disclose the fees, penalties and other charges that may be imposed |
| |and the reason for the imposition. |
| | |
| |Contracts clearly inform customers of contract provisions that permit changes in terms and conditions of |
| |the product or service. |
| | |
| |All materials clearly communicate the costs, benefits, availability and other terms in language that can be|
| |understood when products are targeted to particular populations, such as reverse mortgage loans for the |
| |elderly. |
| | |
| |Materials do not misrepresent costs, conditions, limitations, or other terms either affirmatively or by |
| |omission. |
| | |
| |The advertisement avoids terms that are generally not available to the typical targeted consumer. |
|Use of Trade Names |
| |
| | |
|Interagency Statement |This Interagency Statement clarifies that banks using names other than their corporate names for branches |
|on Branch Names |or delivery of services over the Internet must take reasonable steps to ensure that customers will not |
|5-1-1998 |incorrectly assume the branch or outlet is a separate institution or that deposits in the different |
| |facilities are separately insured. At a minimum, banks must: |
| | |
| |Disclose, clearly and conspicuously, in signs, advertising and similar materials that the facility is a |
| |branch, division or other unit of the insured institution. The institution should exercise care that the |
| |signs and advertising do not create a deceptive and/or misleading impression. |
| | |
| |Use the legal name (full name as reflected in its charter; may abbreviate terms that are indicators or |
| |corporate status, e.g. N.A., F.S.B., Inc., Corp.) of the insured institution for legal documents, |
| |certificates of deposit, signature cards, loan agreements, account statements, checks, drafts and other |
| |similar documents. |
| | |
| |Educate the staff of the insured depository institution regarding the possibility of customer confusion |
| |with respect to deposit insurance. The Agencies recommend that the insured depository institution instruct|
| |staff at the branch and any other facilities operating under trade names to inquire of customers, prior to |
| |opening new accounts, whether they have deposits at the depository institution’s other facilities or |
| |branches. In addition, during the time period soon after one institution acquires or combines with |
| |another, staff should be reminded to call customers’ attention to disclosures that identify a particular |
| |branch or facility as part of an institution. |
| | |
| |Obtain from depositors opening new accounts at the branch a signed statement acknowledging they are aware |
| |the branch and other facilities are in fact parts of the same insured institution and that deposits held at|
| |each facility are not separately insured. |
|Displaying Currency in Advertisements |
| |
| | |
|31 CFR 441 |Displaying currency in advertisements is governed by the Counterfeit Detection Act of 1992, Public Law |
| |102-550 |
| | |
| |Color Reproductions |
| | |
| |Section 411 of Title 31 of the Code of Federal Regulations permits the printing, publishing or importation,|
| |or the making or importation of the necessary plates or items for such printing or publication, of color |
| |illustrations of U.S. currency provided that: |
| | |
| |The illustration must be of a size less than three-fourths or more than one and one-half, in linear |
| |dimension, of each part of any matter so illustrated; |
| | |
| |The illustration must be one sided; and |
| | |
| |All negatives, plates, digitized storage medium, graphic files, magnetic medium, optical storage devices, |
| |and any other thing used in the making of the illustration that contain an image of the illustration or any|
| |part thereof shall be destroyed and or deleted or erased after their final use in accordance with this |
| |section. |
| | |
| |Black and White Reproductions |
| |Title 18, United States Code, Section 504 permits black and white reproductions of currency and other |
| |obligations, provided such reproductions meet the size requirement. |
| | |
| | |
| |[pic] |
Advertisement of Promotional Games
| | |
|Federal Deposit |Banks are prohibited from announcing, advertising or publicizing the existence of a lottery. Banks may not|
|Insurance Act |announce, advertise or publicize the existence or identity of any participant or winner, as such, in a |
|12 U.S.C. 1829a(a) |lottery. |
| | |
|Iowa Code |National Banks (OCC) – 12 U.S.C. 25(a) |
|Section 99B.18 |State Member Banks (FRB) – 12 U.S.C. 339 |
| |State Nonmember Banks (FDIC) – 12 U.S.C. 1829(a) |
|Iowa Code Section | |
|725.12 |However, promotional games of chance that give away prizes to attract customers can be legal, and legally |
| |advertised, if properly constructed. The key to designing a “legal” promotion is ensuring that |
| |participants do not have to give any consideration in exchange for the opportunity to win prizes. |
| | |
| |Using a prize promotion to attract potential customers may be accomplished by not limiting the entrants to |
| |the game (e.g., do not limit to customers only), opening the prize drawing up to the general public. Banks|
| |wishing to advertise a prize promotion should follow these guidelines: |
| | |
| |Clearly disclose in all advertisements, “No purchase or account required to enter or win.” |
| | |
| |Impose no requirement that winners must be present upon prize drawing (i.e., “Need not be present to win.”)|
| | |
| |Disclose the odds of winning (e.g., “Odds of winning dependent upon number of entries.”) |
| | |
| |Make entry forms reasonably available to non-customers as well as customers (e.g., entry slips available in|
| |bank lobby for anyone to register). |
| | |
| |Ensure that customers do not have a significantly better chance of winning than non-customers. |
| | |
| |Advertise the availability of the prize promotion in a way that provides a reasonable possibility of being |
| |seen by non-customers (e.g., newspaper, radio or other public media; signs in bank windows that can be seen|
| |by passers-by.). |
| | |
| |The bank must take into consideration several other issues when planning a prize promotion. Under IRS |
| |rules, if a prize or award has a fair market value of $600 or more, a 1099-MISC must be issued to the |
| |prizewinner at year-end. State law also requires state income taxes to be deducted from the prize and |
| | |
| |remitted to the Department of Revenue, if the value of the prize exceeds $600. Iowa Code § 99B.21. |
| | |
| |Records of prize promotions and winners may be subject to review by Iowa’s Attorney General for a period of|
| |up to one year following the promotion. Records of any advertisements related to the prize promotions must|
| |be retained for at least two years for review by federal regulatory agencies during compliance |
| |examinations. |
Right of Publicity
| | |
|Common Law Right of |The “right of publicity” has evolved over the last one hundred years from the much older right of privacy. |
|Publicity |The right of publicity protects the commercial interest in a person’s name and likeness, and in some |
| |jurisdictions, a person’s nickname, voice, mannerisms, characterizations and performing style. Nearly half|
| |of the fifty states have enacted some form of protection for the right of publicity, providing criminal and|
| |civil penalties for unauthorized use of the name, portrait or picture of any living person for advertising |
| |or purposes of trade. |
| | |
| |As yet, Iowa does not have a law governing the right of publicity, however the State Legislature is |
| |considering enacting such a law. To protect an individual’s right of publicity in the online environment |
| |(for example, names and/or pictures of employees and/or customers), it is recommended that the individual’s|
| |permission and release for commercial use of their name and/or picture be obtained prior to use in |
| |advertising (including both traditional advertising media and the online environment). |
|Music in Advertising |
| |
| | |
|17 U.S.C. 1101 |In order to effectively and efficiently enforce their rights under the copyright laws, American composers, |
| |lyricists, and publishers usually join one of three performing rights organizations. These groups grant |
| |licensees the right to publicly perform the works of all their members or affiliates, for whom the |
| |societies collect and distribute fees for the licenses granted. More than 80% of the fees collected by the|
| |two largest organizations are paid to composers and publishers as royalties for the performance of their |
| |copyrighted works. |
| | |
| |Foreign writers and publishers are also represented by these organizations. Under this system, composers |
| |and publishers are relieved of the burden of monitoring their copyrights throughout the world. Moreover, |
| |those who wish to publicly perform copyrighted works need not negotiate royalties with each composer or |
| |publisher whose works they want to use. |
| | |
| |Three organizations license performance rights for most of the music copyright holders in the United |
| |States. They are: the American Society of Composers, Authors and Publishers (ASCAP); Broadcast Music, Inc.|
| |(BMI); and SESAC, Inc. These organizations serve as clearinghouses for the royalties collected on their |
| |writers’ and publishers’ copyrighted works. A composer or publisher who owns the copyrights to musical |
| |works grants these organizations the right to license performances of the works, and the right to prevent |
| |others from doing so without permission. The organization, SESAC, ASCAP, or BMI, will issue, for a fee, a |
| |license to individuals and organizations that use music in public places. Whether music is performed live,|
| |recorded, or broadcast, a license allows a licensee to use such copyrighted music in their repertory. |
| | |
| |ASCAP’s, SESAC’s, and BMI’s performance rights are non-exclusive; individuals or entities that wish to may |
| |negotiate separate royalty agreements with individual composers and/or publishers to perform their music. |
| |However, when faced with the prospect of expending considerable time, effort, and money in trying to |
| |negotiate separate licenses directly with each composer or publisher whose music will be performed, most |
| |businesses using publicly performed music will choose to obtain a blanket license from one or more of the |
| |performing rights organizations. A blanket license permits the license holder to perform any or all the |
| |works in the performing rights organization’s repertory. If a choice is made to publicly perform only music|
| |that is in the public domain—that is, music that is no longer or never was protected by copyright—no |
| |license is necessary. |
| | |
| |For answers to questions about performing rights organizations, license agreements, or rights and |
| |responsibilities under the United States Copyright |
| | |
| |Law should contact their attorney or the following organizations at the offices below: |
| |BMI |
| |10 Music Square East |
| |Nashville, TN 37203 |
| |800.925.8451 |
| |SESAC |
| |55 Music Square East |
| |Nashville, TN 37203 |
| |800.826.9996 |
| | |
| |American Society of Composers, |
| |Authors and Publishers |
| |2690 Cumberland Pkwy, Ste. 490 |
| |Atlanta, GA 30339 |
| |800.505.4052 |
| |U.S. Copyright Office |
| |202.707.3000 |
| | |
| |Additional information about business use of copyrighted music can be found in the article “Music in the |
| |Marketplace,” at the Better Business Bureau’s website: alerts/article.asp?ID=451. |
Telemarketing Sales Rules
Federal Communication Commission “Telephone Consumer Protection Act” (TCPA)
Federal Trade Commission “Telemarketing Sales Rule” (TSR)
| | |
|FTC Telephone Consumer|“Do Not Call” |
|Protection Act (TCPA) | |
|47 U.S.C. § |On December 18, 2002, the Federal Trade Commission (FTC) announced amendments to its 1995 Telemarketing |
|227 |Sales Rule (TSR), including the development of a national “Do Not Call” list (DNC) that allowed consumers to|
| |opt out of most unwanted telemarketing calls. While the FTC exempted banks from coverage under its TSR, any|
|FCC Tele-marketing |third-party telemarketing firm engaged by the bank to market the bank’s products and services is required to|
|Sales Rule (TSR) |comply with the FTC TSR. Compliance with the FTC TSR includes: |
|16 CFR 310 | |
| |Subscribing to the DNC registry; |
| |(Data for up to five area codes is free. Effective since October 1, 2009, the annual fee is $55 per area |
| |code of data (after five) up to a maximum annual fee of $15,058.) |
| | |
| |Eliminate calls to any phone number included on the DNC registry (except calls to phone numbers of consumers|
| |with an “established business relationship” may be made); |
| | |
| |Search the registry once each 31 days, dropping from call lists phone numbers of consumers who have |
| |subsequently registered; and |
| | |
| |When marketing to consumers with whom the business has “established business relationships,” honor requests |
| |from these customers to be added to the business’s internal “do not call” list. |
| | |
| |“Established business relationship” defined as: |
| |Consumer engaging in a purchase or transaction. |
| |Business may telemarket to that consumer for 18 months from the date of the last transaction. |
| | |
| |Consumer inquires about or applies for any product or service. |
| |Business may telemarket to that consumer for three months following the inquiry or application. |
| | |
| |Even though banks are exempt from the FTC TSR, the Federal Communications Commission published on July 25, |
| |2003, nearly identical final rules implementing its Telephone Consumer Protection Act (TCPA) of 1991. |
| |Generally, the effect of the FCC action was that banks must comply with the national “Do Not Call” |
| |regulations. Under the FCC’s rule, the national DNC registry covers all telemarketers with a limited |
| |exception for certain non-profit organizations (political, charitable and “legitimate” surveys). The |
| | |
| |FTC administers the national DNC database, and enforcement is coordinated between the FTC and the FCC. |
| | |
| |Additional requirements of the FCC TCPA: |
| |Telemarketers must make certain oral disclosures during outbound telemarketing calls; |
| | |
| |Identity of the seller; and |
| | |
| |Nature of goods or services being solicited. |
| | |
| |If the telemarketing call relates to a prize promotion, additional disclosures required; |
| | |
| |Description of the prize; and |
| | |
| |Statement that no purchase is necessary to enter or win. |
| | |
| |Before consumer pays for any goods or services, costs and contingencies must be disclosed. |
| | |
| |Telemarketers may not misrepresent the characteristics of the goods or services being offered. |
| | |
| |Telemarketers cannot obtain access to a person’s financial institution accounts without first obtaining |
| |express, verifiable authorization to do so from the customer; |
| | |
| |Tape recorded conversation acceptable. |
| | |
| |Seller and telemarketer must maintain specific records for 24 months: |
| | |
| |Advertisements and brochures related to goods and services offered; |
| | |
| |Telemarketing scripts; |
| | |
| |Promotional materials; |
| | |
| |Name and last known address of each prize recipient; and |
| | |
| |Verifiable authorization for account access. |
| | |
| |Penalties for violations: |
| |Up to $11,000 per violation. |
| | |
| |Action steps for compliance, as suggested in the FCC final rule: |
| |Establish policy; provide to anyone who asks for copy. |
| | |
| |EXAMPLE: |
| |Whereas Bank desires to comply with all aspects of the Federal Communication Commission “Telephone Consumer |
| |Protection Act of 1991” (47 CFR 64.1200), the following policy is adopted. |
| |Bank employees and/or agents will initiate unsolicited telephone calls for marketing purposes only to |
| |persons who have established business relationships with the Bank. Such calls will be placed only between |
| |the hours of 8:00 a.m. and 9:00 p.m. |
| |When making unsolicited telephone calls for marketing purposes, Bank employees and/or agents will identify |
| |themselves by name, and provide the Bank name and phone number. |
| |Bank employees and/or agents receiving an oral, written or electronic request from a person having an |
| |established business relationship with the Bank to be placed on the Bank’s internal do-not-call list shall |
| |record the request, and place the person’s name and residential telephone number(s) on the Bank’s |
| |do-not-call list, not later than 30 days after the date of the request. Such request will be honored for a |
| |period of five years beyond the initial date of the request. Customer names and telephone numbers placed on|
| |the Bank’s internal do-not-call list will be blocked from further unsolicited telephone calls made for |
| |marketing purposes, until the expiration of the original request, unless revoked or subsequently renewed by |
| |the consumer. |
| |Bank employees and/or agents receiving requests from persons for a copy of this policy will immediately |
| |forward such requests to the Bank compliance officer for prompt response. The Bank compliance officer will |
| |provide a copy of this policy to requestors within five business days of the request, and maintain a record |
| |of all such requests and responses. |
| |Resolved this ___ day of ________, 2019. |
| | |
| |Establish and implement written procedures to comply with DNC rules. |
| | |
| |Train personnel, and any entity assisting with marketing, in DNC procedures. |
| | |
| |Ensure use of updated DNC lists when making outbound calls. |
| | |
| |Ensure internal procedures prevent telemarketing to any telephone number on any list (national DNC registry |
| |or internal list of consumers having “established business relationships”). |
| | |
| |Procedure to verify that subsequent calls made to telephone numbers on any list are the result of error. |
| | |
| |Consumers may register any residential telephone number, including wireless numbers by calling 888-382-1222 |
| |or online at . Registration is effective for 5 years. |
| | |
| |Specific information regarding subscribing to the registry and managing compliance may be found at: |
| | |
| | |
| |“Do Not Fax” |
| | |
| |A telephone facsimile, or “fax” machine is able to send and receive data (text or images) over a telephone |
| |line. The TCPA and FCC rules prohibit sending unsolicited advertisements, also known as “junk faxes,” to a |
| |fax machine. This prohibition applies to fax machines at both businesses and residences, including fax |
| |servers and delivery to personal computers. |
| | |
| |Effective July, 1, 2005, it is unlawful to send an unsolicited advertisement to a facsimile machine without |
| |the prior written permission of the recipient: |
| | |
| |Signed, written statement must include the fax number to which fax advertisements may be sent. |
| | |
| |Businesses and entities may still respond to direct inquiries via fax. |
| | |
| |All faxes must identify the business or entity on whose behalf the fax is being sent – in the top or bottom |
| |margin of each page, or on the first page of the fax message – and must include its telephone number and the|
| |date and time the fax it sent. |
| | |
| |If faxes are sent by a facsimile broadcaster on behalf of a business or entity, the facsimile broadcaster’s |
| |name must appear on the fax. |
| | |
| |EXCEPTION |
| | |
| |A fax advertisement may be sent to a customer with which the sender has an established business |
| |relationship if the sender also: |
| | |
| |Obtains the fax number directly from the recipient, through, for example, an application, contact |
| |information form or membership renewal form; or |
| | |
| |Obtains the fax number from the recipient’s own directory, advertisement, or site on the Internet, unless |
| |the recipient has noted on such materials that it does not accept unsolicited advertisements at the fax |
| |number in question; or |
| | |
| |Has taken reasonable steps to verify that the recipient consented to have the number listed, if obtained |
| |from a directory or other source of information compiled by a third party. |
| | |
| |When sending faxes with the express written permission of the recipient or under an exception for |
| |established business relationship, the sender must also provide an “opt-out” of further unsolicited faxes. |
| |The opt-out notice must: |
| | |
| |Be clear and conspicuous and on the first page of the advertisement; |
| | |
| |State that the recipient may make a request to the sender not to send any future faxes and that failure to |
| |comply with the request within 30 days is unlawful; and |
| | |
| |Include a telephone number, fax number, and cost-free mechanism (including a toll-free telephone number, |
| |local number for local recipients, toll-free fax number, website address or email address) to opt-out of |
| |faxes. These numbers and cost-free mechanism must permit consumers to make opt-out requests 24 hours a day, |
| |seven days a week. |
| | |
| |Senders who receive a request not to send further faxes that meets the requirements listed in the next |
| |section must honor that request within the shortest reasonable time from the date of the request, not to |
| |exceed 30 days. They are also prohibited from sending future fax advertisements to the recipient unless the |
| |recipient subsequently provides prior express permission to the sender. |
| | |
| |Additional guidance available at: |
| |. |
Internet Advertising
| | |
| |Many of the same rules that apply to other forms of advertising apply to electronic marketing. These |
| |rules and guidelines protect businesses and consumers, and help maintain the credibility of the Internet |
| |as an advertising medium. |
| | |
| |Internet web sites must be treated as advertising. The “Member FDIC” logo must appear if the bank name |
| |appears on the web site and the site (or page) refers to deposit accounts. Specifically, the official |
| |FDIC membership statement must appear on the bank’s home page and on any subsequent page that advertises |
| |insured deposit products. If specific deposit or loan accounts are featured, required disclosures under |
| |Reg. DD or Reg. Z must be included when “triggering terms” appear. |
| | |
| |If Internet web sites promote uninsured, nondeposit investment products, insurance products or annuities,|
| |they must also include the required disclosures as previously stated. |
| | |
| |General offers and claims for products and services |
| | |
| |Federal financial institution regulators, the Federal Trade Commission and the Iowa Attorney General act |
| |in the interest of all consumers to prevent deceptive and unfair acts or practices in advertising. Under|
| |various laws and regulations, a representation, omission or practice is deceptive if it is likely to: |
| | |
| |Mislead consumers; and |
| | |
| |Affect consumers’ behavior or decisions about the product or service. |
| | |
| |In addition, an act or practice is unfair if the injury caused, or likely to cause, is: |
| | |
| |Substantial; |
| | |
| |Not outweighed by other benefits; and |
| | |
| |Not reasonably avoidable. |
| | |
| |Federal and state laws prohibit unfair or deceptive advertising in any medium. That is, advertising must|
| |tell the truth and not mislead consumers. A claim can be misleading if relevant information is left out |
| |or if the claim implies something that’s not true. For example, a lease advertisement for an automobile |
| |that promotes “$0 Down” may be misleading if significant and undisclosed charges are due at lease |
| |signing. |
| | |
| |In addition, claims must be substantiated, especially when they concern health, safety or performance. |
| |The type of evidence may depend on the product, the claims, and what claim – “tests show X” – you must |
| |have at least that level of support and information to substantiate the claim. |
| | |
| |Sellers are responsible for claims they make about their products and services. Third parties, such as |
| |advertising agencies or web site designers and catalog marketers, also may be liable for making or |
| |disseminating deceptive representations if they participate in the preparation or distribution of the |
| |advertising or know about the deceptive claims. |
| | |
| |Advertising agencies or web site designers are responsible for reviewing the information used to |
| |substantiate ad claims. They may not simply rely on an advertiser’s assurance that the claims are |
| |substantiated. In determining whether an ad agency should be held liable, the FTC looks at the extent of|
| |the agency’s participation in the preparation of the challenged ad, and whether the agency knew or should|
| |have known the ad included false or deceptive claims. |
| | |
| |Other Fair Practices Considerations |
| | |
| |Disclaimers and disclosures must be clear and conspicuous. Consumers must be able to notice, read or |
| |hear, and understand the information. Still, a disclaimer or disclosure alone usually is not enough to |
| |remedy a false or deceptive claim. |
| | |
| |Demonstrations must show how the product will perform under normal use. |
| | |
| |Refunds must be made to dissatisfied consumers, if you promise to make them. |
| | |
| |Advertising directed to children raises special issues. That’s because children may have greater |
| |difficulty evaluating advertising claims and understanding the nature of the information you provide. |
| |Sellers should take special care not to misrepresent a product or its performance when advertising to |
| |children. The Children’s Advertising Review Unit (CARU) of the Council of Better Business Bureaus has |
| |published specific guidelines for children’s advertising. See the FTC’s web site at for a |
| |copy of CARU’s guidelines. |
| | |
| | |
| | |
| |Protecting Consumer Privacy Online |
| | |
| |The Internet provides unprecedented opportunities for the collection and sharing of information from and |
| |about consumers. Studies show consumers have very strong concerns about the security and confidentiality|
| |of their personal information in the on-line marketplace. Many consumers also report being wary of |
| |engaging in on-line commerce, in part because they fear their personal information can be misused. |
| | |
| |These consumer concerns present an opportunity to build consumer trust by implementing effective |
| |industry-wide practices to protect consumers’ information privacy. The American Bankers Association |
| |(ABA), Independent Bankers Association of America (IBAA), Bankers Roundtable and Consumer Bankers |
| |Association (CBA) jointly issued privacy principles and urge all community bankers to adopt and implement|
| |customer privacy principles for their own banks. |
| | |
| |Regulatory agencies have also issued guidance on privacy initiatives. On Nov. 3, 1998, the Office of |
| |Thrift Supervision (OTS) was the first financial institution regulatory agency to issue a policy |
| |statement on privacy and accuracy of personal customer information (OTS 98-78). This was similar to |
| |guidance offered in a financial institution letter from the FDIC regarding practices for collecting |
| |customer information on the Internet (FIL-86-98). The key privacy principles advocated by the agencies |
| |and trade organizations include: |
| | |
| |Notice to consumers about information practices before any personal information is collected. |
| | |
| |Choice for consumers about the collection and use of information, and the consumers’ right and choice to |
| |restrict use of information (ability of consumer to “opt out” of information sharing). |
| | |
| |Security and accuracy of consumer information collected, protecting against loss and unauthorized access |
| |and disclosure of information. |
| | |
| |Access for consumers to information collected and the ability to identify and correct errors in a timely,|
| |inexpensive manner. |
| | |
| |Enforcement and consumer “redress” to ensure compliance with the privacy policy and information |
| |practices, and a means of recourse for an injured party. |
| | |
| |The FTC monitors the World Wide Web to see whether commercial Web sites are posting privacy policies and |
| |honoring consumers’ privacy preferences. |
| | |
| | |
| |Privacy Provisions of the Gramm-Leach-Bliley Act |
| | |
| |The Gramm-Leach-Bliley Act imposed new privacy disclosure requirements on financial institutions. |
| |According to implementing regulations, Privacy of Consumer Financial Information (Reg. P), a financial |
| |institution must disclose its privacy practices, via written (or electronic) notice, to consumers at the |
| |time of establishing a customer relationship and at least annually. Content of the privacy notice must |
| |include: |
| | |
| |The policy and practices of the institution with respect to disclosing nonpublic personal information to |
| |nonaffiliated third parties; |
| | |
| |The consumer’s right to opt out of information sharing with nonaffiliated third parties (if the bank |
| |shares nonpublic personal information with nonaffiliates) and a “reasonable means” to opt out; |
| | |
| |The types of nonpublic personal information collected by the institution; |
| | |
| |The policies the institution maintains to protect the confidentiality and security of nonpublic personal |
| |information; and |
| | |
| |The disclosures required under the Fair Credit Reporting Act (i.e., the consumer’s right to opt-out of |
| |consumer credit information sharing). |
| | |
| |The implementing regulations governing privacy of consumer financial information became effective |
| |November 13, 2000, with compliance mandatory by July 1, 2001. |
| | |
| | |
| | |
| | |
| |Children’s Online Privacy Protection Act |
| | |
| | |
| |The Federal Trade Commission’s (FTC) “Children’s Online Privacy Protection Act” (COPPA) became effective |
| |April 21, 2000. The Children's Online Privacy Protection Act and Rule apply to individually identifiable|
| |information about a child that is collected online, such as full name, home address, email address, |
| |telephone number or any other information that would allow someone to identify or contact the child. The |
| |Act and Rule also cover other types of information -- for example, hobbies, interests and information |
| |collected through cookies or other types of tracking mechanisms -- when they are tied to individually |
| |identifiable information. For financial institutions that conduct online marketing to children under age|
| |13, COPPA requires: |
| | |
| |The operator of any website or online service directed to children that collects personal information |
| |from children or the operator of a website or online service that has actual knowledge that it is |
| |collecting personal information from a child— |
| | |
| |To provide notice on the website of what information is collected from children by the operator, how the |
| |operator uses such information, and the operator’s disclosure practices for such information; and |
| | |
| |To obtain verifiable parental consent for the collection, use, or disclosure of personal information from|
| |children; |
| | |
| |Provide, upon request of a parent under this subparagraph whose child has provided personal information |
| |to that website or online service, upon proper identification of that parent, to such parent— |
| | |
| |A description of the specific types of personal information collected from the child by that operator; |
| | |
| |The opportunity at any time to refuse to permit the operator’s further use or maintenance in retrievable |
| |form, or future online collection, of personal information from that child; and |
| | |
| |Notwithstanding any other provision of law, a means that is reasonable under the circumstances for the |
| |parent to obtain any personal |
| | |
| |information collected from that child; |
| | |
| |Prohibit conditioning a child’s participation in a game, the offering of a prize, or another activity on |
| |the child disclosing more personal information than is reasonably necessary to participate in such |
| |activity; and |
| | |
| |Require the operator of such a website or online service to establish and maintain reasonable procedures |
| |to protect the confidentiality, security, and integrity of personal information collected from children. |
E-mail Considerations
| | |
|15 U.S.C. 7701, et |CAN-SPAM Act of 2003 |
|seq. | |
| | |
| |Effective January 1, 2004, the Act regulates “commercial electronic mail messages” (CEMMs), the primary |
| |purpose of which is the commercial advertisement or promotion of a commercial product or service, including |
| |content on an Internet website operated for a commercial purpose. |
| | |
| |Exempts “transactional or relationship message” |
| | |
| |Messages that facilitate complete or confirm a commercial transaction at the request of the recipient. |
| | |
| |Messages that provide information in connection with the transaction. |
| | |
| |Communication that is needed to help manage a requested account, relationship or transaction. |
| | |
| |NOTE: Even though “transactional or relationship messages” are exempt from the definition of CEMMs, |
| |businesses must respect requests from their own customers who wish not to receive unsolicited e-mail |
| |messages. The business must take action on the request within 10 days, and block all future messages. |
| | |
| |Unsolicited commercial e-mail messages are subject to format and “labeling” requirements: |
| | |
| |Avoid sending false or misleading transmission information, including “header” information that implies or |
| |misleads recipients as to the source or content of the message. |
| | |
| |Avoid sending messages with deceptive subject headings. |
| | |
| |Must include electronic return address or a comparable mechanism for recipients to reply easily to the |
| |message if they wish to opt out of receiving future solicitations, and must include the postal address of |
| |the |
| | |
| |sender. |
| | |
| |Clear and conspicuous identification that the message is an |
| |advertisement or solicitation (for example, “ADV” included in subject line). |
| | |
| |Example: |
| |This e-mail advertises products or services offered by Iowa Bankers Association. To unsubscribe, reply to |
| |webmaster@. |
| |Iowa Bankers Association, 8800 NW 62nd Avenue, Johnston, IA 50131. |
| | |
| |Additional guidance for businesses in managing commercial e-mail can be found at |
| |. |
| | |
| |Other e-mail considerations: |
| | |
| |While e-mail can be one of the most cost-effective, flexible, fast and reliable methods of communication in |
| |today’s business environment, it can also pose some unique problems for regulated industries, such as |
| |banking. With the passage of “E-Sign,” certain outgoing e-mail may become part of a legal obligation |
| |between parties. There are privacy concerns if e-mail communication is transmitted over unsecured |
| |connections. Also, in a transactional, online environment, credit applications transmitted without the |
| |required disclosures can cause compliance violations (e.g., failure to deliver program disclosures and “When|
| |Your Home is on the Line” for home equity credit line applications). |
| | |
| |Other potential compliance violations resulting from outgoing e-mail include: |
| | |
| |Missing FDIC membership statement on e-mail promoting insured deposits; |
| | |
| |Missing FHA logotype (house with equal sign) and legend (“Equal Housing Lender”) on e-mail promoting loans |
| |covered under the FHA; |
| | |
| |Rate quotation problems, including errors in calculations and failure to use correct terminology (e.g. APY |
| |and interest rate, APR); the failure to mention variable rate features, discounted or premium rates, etc.; |
| | |
| |Reg. Z and Reg. DD “triggering terms;” and |
| | |
| |Reg. B considerations related to discrimination, promotional redlining, prescreening or discouraging |
| |applications. |
| | |
| |In addition, e-mail used for marketing purposes should be carefully designed to avoid complaints by |
| |consumers as “spam.” (NOTE: In 1999, Iowa passed a law making Internet “spam” illegal. Chapter 714E of |
| |the Iowa Code requires that unsolicited e-mail include an address where recipients can write to decline |
| |future e-mail from the sender. Persons who receive unsolicited e-mails in violation of this law may sue the|
| |sender for the greater of actual monetary damages or $500, plus court costs and attorney fees. Internet |
| |service providers also have a cause of action if they are injured by the unsolicited e-mails to sue and |
| |receive a minimum of $25,000 or actual damages. Violations of this law are also per se violations of the |
| |Consumer Fraud Act, enforced by Iowa’s Attorney General.) |
| | |
| | |
| | |
| |Also, beware of “stale rates” (rates that have not been adequately updated to reflect current rates) – this |
| |can lead to consumer claims of unfair and deceptive practices, such as “bait & switch” advertising. Prior |
| |to sending any “bulk e-mail,” be sure the compliance department reviews the message and intended audience to|
| |ensure accuracy and avoid illegal delivery. |
| | |
| |Perhaps the greatest compliance concerns related to incoming e-mail are appropriate handling of and response|
| |to error notifications from consumers. Reg. Z, Reg. E and RESPA have specific procedures for responding to |
| |consumer notifications related to billing errors, unauthorized transactions or “qualified written requests.”|
| |Other requests received via e-mail requiring prompt attention include: |
| | |
| |Consumer credit applications or requests for credit limit increases; |
| | |
| |PMI cancellation requests; |
| | |
| |Requests for specific reasons for adverse action (from either commercial or consumer borrowers); |
| | |
| |CRA public file comments; |
| | |
| |Requests for various Truth in Savings disclosures (current rates and fees); and |
| | |
| |Notification of billing errors or unauthorized EFTs. |
| | |
| |At minimum, the bank should include a disclosure on its web site for e-mail communication, advising the |
| |customer whether or not e-mail is transmitted via a secured or unsecured connection. Also, advise the |
| |consumer that information transmitted over an unsecured connection is subject to interception. Disclose an |
| |alternate means for customers to communicate sensitive and/or nonpublic personal financial information to |
| |the bank in a more confidential manner (e.g. via telephone or “snail mail”). Establish internal procedures |
| |to handle incoming e-mail and route the communication to the appropriate department or employee to provide a|
| |timely response and resolution to inquiries and complaints. For compliance purposes, the bank may direct |
| |customers, through initial account disclosures, as to the appropriate method for error resolution (e.g. for |
| |Reg. E, “Telephone us at [insert phone number] or write us at [insert address]…”) in order to avoid |
| |triggering the regulatory error-resolution time limitations through e-mail communication. |
|Social Media |
| | |
|Social Media |Facebook, LinkedIn, Twitter, You Tube and Other Social Media |
| | |
| |A primary reason banks consider use of social media (“social commerce”) sites is to assist in cultivating |
| |the bank’s “brand.” Typical uses of social media sites include: |
| | |
| |Promote products and services to customers and the public |
| | |
| |Obtain feedback and “testimonials” from customers about bank’s products and services |
| | |
| |Provide information about bank’s community involvement, contests, promotions, etc. |
| | |
| |Respond to customer inquiries and complaints |
| | |
| |Advertising Compliance |
| | |
| |Any social medium site representing a financial institution will be deemed to be advertising. All |
| |regulatory compliance requirements relative to advertisements will apply to social media sites: |
| | |
| |FDIC membership statement (“Member FDIC”) |
| | |
| |Must be included if bank name appears and/or deposit account is advertised |
| | |
| |Reg. Z disclosures if “triggering term” appears |
| | |
| |Equal prominence and close proximity |
| | |
| |Beware of non-compliant postings, such as: |
| | |
| |“Limited time only ~ Home Equity Lines with no closing costs. |
| |Apply today!” |
| |~OR~ |
| |“Auto loans with terms up to 7 years.” |
| | |
| |Reg. DD disclosures if APY or bonus appears |
| | |
| |Beware of non-compliance postings, such as: |
| | |
| | |
| | |
| | |
| |“$50 bonus cash when you sign up for e-statements.” |
| |~OR~ |
| |“30 month CD ~ now 3%. Call me today.” |
| | |
| | |
| |Investment disclosures |
| | |
| |Financial Industry Regulatory Authority (FINRA) regulations apply when bank mentions a product or displays|
| |product information on its social networking site: |
| | |
| |Prohibits exaggerations |
| | |
| |Requires disclosure of all material facts |
| | |
| |Prohibits “forward-looking” statements |
| | |
| |If advertising mutual funds, must file disclosures in advance with FINRA |
| | |
| |Insurance disclosures |
| | |
| |As required by Gramm-Leach-Bliley Act, “Consumer Protections in Bank Sales of Insurance” |
| | |
| |Unfair or Deceptive Acts & Practices (UDAP) covers statements or practices that: |
| | |
| |Cause “injury” to consumers; |
| | |
| |Create undue influence or coercion; or, interfere with consumer’s ability to make decision; |
| | |
| |Material representation, omission or practice that is misleading |
| | |
| |Record retention |
| | |
| |Duration varies based on content of communication and applicable regulation |
| | |
| |FINRA records must be maintained for three years |
| | |
| |E-discovery requirements will apply to all records maintained through social commerce forums |
| | |
| | |
| |Information Security |
| | |
| |Social Media sites may be more susceptible to hacking and phishing attacks. |
| | |
| |It’s critical to employ appropriate information security and regular screening of messages to ensure |
| |sensitive consumer information is not accessed or misused. |
| | |
| |Legal Considerations |
| | |
| |Conduct adequate due diligence before launching a social media site. |
| | |
| | |
| |Know and comply with the contract rules for participating on a particular social media site. |
| | |
| |Protect intellectual property of bank and others’ sites. |
| | |
| |Guard your words carefully to avoid lawsuits and related damages for defamation of character. |
| | |
| |Understand FTC and other federal regulations governing online statements; unfair and deceptive practices |
| |rules prohibit misleading statements and misrepresentations. |
| | |
| |Additional Resources |
| | |
| |For further assistance with advertising compliance, contact your primary federal regulator or Iowa Bankers|
| |Association Compliance Department, 800-532-1423 or 515-286-4300, fax 515-280-4140. |
| | |
| |Check the Iowa Code § 714.16 on “Consumer Frauds” for Iowa’s regulations governing advertising. |
| | |
| |Also, the FTC publishes a series of publications to help businesses understand compliance requirements no |
| |matter where advertised. For printed copies, contact: Consumer Response Center, Federal Trade Commission,|
| |Washington, D.C. 20580, phone: 202-FTC-HELP (202-326-2505). |
ADVERTISING POLICY
It is the Bank’s policy that all forms of marketing and advertising be approved by the compliance department and senior management prior to use.
REQUESTS FOR APPROVAL OF ADVERTISING
Officers may request approval of advertising and marketing by submitting a copy the item (if applicable) together with a completed Advertising Approval Request Form. One copy of the request form should be submitted to senior management and one copy to the compliance department. The Advertising Approval Request Form should include a complete description of the advertisement or promotion and how or where it will be used.
The officer submitting a request is responsible for obtaining the necessary approvals from compliance and senior management on the Advertising Approval Request Form before proceeding with an advertisement, promotion or marketing effort.
REGULATORY REQUIREMENTS/RESTRICTIONS
Certain regulatory disclosures are required for almost all bank advertising. Some forms of advertising and marketing, such as lotteries are legally restricted. Proper approval must be obtained from the compliance department and senior management before running any promotion. The compliance department will ensure that all regulatory and disclosure requirements have been met and will maintain copies of all advertising for review by examiners. Senior management will approve content and cost.
Marketing efforts will be reviewed to ensure that target markets are not selected using a prohibited basis: race, color, religion, national origin, sex, marital status, age, handicap, familial status, receipt of public assistance income, or because an applicant has in good faith exercised any rights under the Consumer Credit Protection Act. In addition, Advertising to all of the Bank’s assessment area will be included in the overall plan (as applicable to the products being marketed).
COMMON MEDIUMS USED FOR ADVERTISING AND MARKETING
As defined by various regulations and laws many of the communications the Bank issues to the public and its’ customers are forms of advertising.
The following are common mediums used for advertising and marketing:
1. Television and radio commercials;
2. Billboards; signs, and banners
3. Ads in magazines, newspapers, phonebooks, and directories;
4. Direct mail marketing and form letters;
5. Flyers, handouts and pamphlets;
6. Clothing items, hats, buttons, pens;
7. Information on the Bank’s website;
8. Lists of names used for marketing purposes;
9. Special offers to waive fees or specially structure accounts;
10. Lotteries, drawings, and contests;
11. Sponsoring fund raisers in exchange for free advertising;
12. Links to other companies’ websites;
13. Allowing other companies to advertise their products or services on bank premises; and
14. Advertisements for products added to customer statements or receipts.
When in doubt as to whether a promotion is considered advertising officers are directed to contact the compliance department for assistance.
Question regarding this policy should be directed to the Vice President, Compliance Department.
Advertising Approval Request Form
Please provide a complete description of the item or promotion and attach a copy if applicable:
Please indicate the dates the ad or promotion will run:
Please indicate how or where the item or promotion will be used:
Approval Requested By: _____________________________ Date: ______________________
Compliance Department Comments:
Additional Disclosures Required if Any:
|Compliance Department Approval | |Senior Management Approval |
| | | |
|Signature | |Signature |
| | | |
|Date | |Date |
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