A couple of weeks ago, Elizabeth wrote an article describing some of the most common causes for confusion that Temenos Advisory has seen [One Click Go,…Two Clicks NO]. While she did an excellent job, there is still a little confusion about how the one-click rule applies to tiered-rate accounts. Unfortunately, due to space limitations, she was not able to fully explain why we interpret the one-click rule as applied to tiered-rate accounts, and we have received a number of questions from those confused by the commentary. So, today I will explain our reasoning in a little more detail.
First, let’s look at what Regulation DD (12 CFR Part 1030) and The NCUA’s Truth in Savings Regulation (12 CFR Part 707) say about the one-click rule. Comment 8(a)-9 to Regulation DD states*:
9. Electronic advertising. If an electronic advertisement (such as an advertisement appearing on an Internet Web site) displays a triggering term (such as a bonus or annual percentage yield), the advertisement must clearly refer the consumer to the location where the additional required information begins. For example, an advertisement that includes a bonus or annual percentage yield may be accompanied by a link that directly takes the consumer to the additional information.
So, what gives? Isn’t the minimum balance a triggered disclosure when an APY is stated, and this says triggered disclosures can be one-click away? Well, let’s take a look at § 1030.8(c)(3) and 707.8(c)(3):
(c) When additional disclosures are required. Except as provided in paragraph (e) of this section, if the annual percentage yield is stated in an advertisement, the advertisement shall state the following information, to the extent applicable, clearly and conspicuously:
* * *
(3) Minimum balance. The minimum balance required to obtain the advertised annual percentage yield. For tiered-rate accounts, the minimum balance required for each tier shall be stated in close proximity and with equal prominence to the applicable annual percentage yield.
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When you state the APY for a tiered-rate account, among other triggered disclosures, the APY for each and the minimum balance for each tier are triggered disclosures, so you are permitted to state the APY and the minimum balance for each tier one-click away. But, as Elizabeth explained, you need to state the minimum balance for the APY you included in the ad in close proximity and with equal prominence to the APY.
Typically, when reviewing a statute or regulation, the specific will control over the general. Comment 8(a)-9 is a general comment about triggered disclosures. Sections 1030.8(c)(3) and 707.8(c)(3) refer specifically to the minimum balance that applies to the APY that you stated in the ad, not to triggered disclosures generally. This specific language would override the commentary as it applies to stating the minimum balance for a tiered-rate account. In addition, where the commentary and the actual text of the regulation differ, you should read them in a manner that would make them consistent with each other. If they cannot be reconciled, the language of the regulation trumps the commentary. Our interpretation, i.e., that when an APY for a tiered-rate account is advertised, the minimum balance for that tier must be stated in close proximity and with equal prominence to that APY, but the remaining tiers and other triggered disclosures may be stated one click away, reads §§ 1030.8(c)(3) and 707.8(c)(3) and the applicable comments in a manner that makes them consistent with each other.
While neither Regulation DD, Part 707, nor the official commentary to either regulation defines close proximity and equal prominence, where the phrase “in close proximity and with equal prominence” (or substantially similar language) is used in other regulations, it is defined as immediate next to, above, or below with no intervening text or graphics and in the same size font and not in a footnote or on another page (see, e.g., Comment 16-2 to the Official Interpretation to Reg. Z). Including the minimum balance for that tier on a separate page would not be in close proximity and with equal prominence to the advertised APY.
* The NCUA’s version of Comment 8(a)-9 is substantially the same, with only minor grammatical differences.