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InfoSight Highlight: Advertising Loans
Friday, August 11, 2017 7:00 AM

An advertisement subject to the Truth-in-Lending Act and Regulation Z is any commercial message that promotes consumer credit or a consumer lease. Advertisements may appear:

  1. In newspapers, magazines, leaflets, flyers, catalogs, direct mail literature, or other printed material;
  2. On radio, television, or a public address system;
  3. On an inside or outside sign or display, or a window display; or
  4. In point-of-sale literature, price tags, signs and billboards.

A commercial message is any message that promotes a sale or lease. Thus, materials that are educational and do not solicit business or that are required by law are not advertisements.

For example, a brochure issued by a credit union explaining FHA mortgages is not a commercial message, nor is a rate sheet prepared and used solely for internal business purposes. A state-required sign explaining credit terms is also not an advertisement. On the other hand, a brochure or sign that combines a sales message with educational or state-required information is an advertisement.

Just like deposit advertisements, the credit union's loan advertisements must disclose the terms of the credit clearly and conspicuously. This means that the advertisement must be legible and reasonably understandable. There are no required type or font guidelines under the Act or Regulation Z outside of credit card requirements. However, the credit union will apply a reasonableness standard to insure that all advertising is legible and can be easily understood by the average member.

Also, keep in mind the 8-point type limitations at the lower end of the Schumer Box requirements as some guidance. (NOTE:  Clear and Conspicuous Standard for All Advertisements, effective Oct. 1, 2009, subsection 1026.24(b) was added to Regulation Z, which simply states that the disclosures required in connection with advertisements for closed-end credit must be made clearly and conspicuously. This rule applies to all closed-end loan advertisements.)

The advertisement for a credit product must state the specific terms being offered by the credit union to its members. The credit union should never advertise credit terms that are not actually available. If the credit union imposes a condition on a credit product, this must also be stated in the advertisement. This does not mean the credit union cannot offer a special rate that is available for only a limited time period, nor does it prohibit the credit union from advertising terms that will become available at a future date.

Source:  InfoSight Compliance.

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