Facebook, LinkedIn, Instagram, SEM, and website banners are just some of the ways institutions advertise online. When Regulation Z and Regulation DD were implemented in 1969 and 1993, respectively, there was no need to address electronic advertisements. While they have since added commentary to address electronic advertisements, there is also some confusion. Today we are going to break down the most common causes for confusion that Temenos Advisory has seen over the past year regarding electronic ads:
Using QR codes –
QR codes are amazing, right? You can customize their image for marketing purposes, show your institution is progressing forward with technology, and scan the code to bring up the associated link! Wait…stop right there. You can scan the code. Hmmm…how do you achieve this when you are viewing the advertisement electronically? For instance, if I am viewing a social media advertisement on my phone that is advertising 4.00% APY Money Market and the ad only has a QR code to view the additional disclosures, how do I view the additional disclosures? I have to find another device to scan the QR code to obtain the additional disclosures. This would not be considered one-click away as the user does not have any way of obtaining the additional disclosures while looking at the advertisement. A QR code can be included in the advertisement; however, it must be accompanied by a link that will direct the user to the additional disclosures.
Introductory Rates –
What about introductory rates for open-end loans on electronic ads? The institution can advertise a credit card with an introductory 0% APR proudly, and the other disclosures can be one-click away. Sounds great! Not so fast… While that sounds like a marketing dream, unfortunately, Regulation Z does not allow the required promotional disclosures to be one-click away. Therefore, when stating the promotional rate on an open–end loan, the period of time the promotional rate is in effect and the APR that will be in effect after the promotional period are required to be included in the principal portion of the advertisement as well.
Tiered Rates –
Let’s talk about tiered-rate deposit accounts. The institution is getting ready to promote 4.00% APY on their tiered rate Money Market. The minimum required to obtain the 4.00% APY is $10,000, and the tier from $0-9,999.99 is 0.50% APY. The institution obviously would like to promote the 4.00% APY in the principal portion of the ad, and they can just include all of the other information one-click away. You’ve guessed it…it is too good to be true. While you are able to include most of the additional disclosures one click away, Regulation DD and 707.8 state the minimum balance to obtain the 4.00% APY is required to be stated with equal prominence and in close proximity to the APY, which means the $10,000 is required on the advertisement itself, and then the remainder of the tiers can be included one-click away.
FDIC / NCUA / EHL –
Finally, we move on to the most common question regarding one-click away. The institution has its social media ads for the month all lined up with links directing the user to its landing page. The landing page includes the EHL logo and the official advertising statement, so they have their bases covered, right? You know that game by now…unfortunately, at this time, there are not any rules in place permitting these to be one – click away and must be on the advertisement, if applicable.
When in doubt, reach out to our Temenos advisors, who will assist you along the way.