The day and age of marketing exclusively by print and radio advertisements seems to have gone the way of the dinosaur. Now, that is not to say those methods are extinct or not an effective media channel, but rather that banks appear to have fully embraced the movement to a digital marketing universe. Unfortunately, the same cannot be said for the advertising regulations.
As many of us are all too familiar with the regulatory requirements relating to bank advertisements, there is never a bad time to raise the level of awareness around the risk presented for failure to meet these advertising requirements.
First, it is important to remember that at the heart of the regulatory advertising requirements is the idea that consumers should be presented with key information to be able to shop and make informed purchase discussions, whether for a deposit or loan account. To facilitate compliance are two key regulations: Regulation DD, the implementing regulation for the Truth in Savings Act (TISA) and Regulation Z, the implementing regulation for the Truth in Lending Act (TILA).
Under Regulation DD, the advertising provisions can be found under § 1030.8. In summary, an advertisement for deposit products should not be misleading and accurately reflect the terms and conditions of the account. Further, if an advertisement states the annual percentage yield (APY) then additional information is required to be provided with the advertisement, including how long the APY is being offered, minimum balance requirements, and the impact fees can have on the account.
Similar provisions can be found for loan advertisements under Regulation Z for open-end credit (§ 1026.16) and closed-end credit (§ 1026.24). Basically, if trigger terms are displayed in a loan advertisement, then additional information is required to be disclosed in the loan advertisement.
However, there is some good news regarding trigger terms under Regulation DD and Regulation Z when advertising in the digital world. Both regulations provide that if a trigger term is displayed in an electronic advertisement, then the additional information may be provided in what is considered to be “one-click away”. Meaning – the advertisement may provide a link to where the additional information can be found assuming the link is clearly labeled to draw a consumer’s attention (such as “learn more” or “click here for additional information”) and takes a consumer directly to the additional information.
Unfortunately, not all regulations provide for the “one-click away” option. For example, the FDIC Regulation for advertising membership (12 C.F.R. § 328) and the Fair Housing Act are silent on the ability to provide such a link and require the display of the Member FDIC statement and EHL logo, including the legend directly with digital advertisements.
As we continue to see new levels of creativity being reached in the digital marketing world, keep a keen eye out for any regulatory requirements that may be triggered by an advertisement. It is important to take advantage of the options afforded us, but not at the risk of exposing the bank to potential non-compliance with advertising regulations and unintended harm to the bank’s good name.