We would like to place a radio ad for our HELOCs. We want to promote an introductory fixed rate, which will revert to a variable rate after the introductory period ends. How should this be disclosed in the ad? Do we need to make the FDIC and Equal Housing Lender disclosures?

Regulation Z’s advertising requirements require certain disclosures about the fixed introductory rate to be included in your radio advertisement. However, other lengthier disclosures relating to the annual percentage rate (APR) do not have to be included in the radio advertisement, as explained below. We also address the “Member FDIC” and “Equal Housing Lender” disclosures below.

Disclosing the Introductory Rate

Because your advertisement will promote an introductory fixed rate, the advertisement must state the specific time period during which the rate will remain fixed, and you must ensure that the HELOC rates remain fixed during the advertised time frame. 12 CFR 1026.16(f).

If the index and margin used to determine the introductory rate differ from the index and margin used to make later rate adjustments, two additional disclosures are required: (1) the period of time in which the initial rate will be in effect, and (2) a “reasonably current annual percentage rate that would be in effect under the index and margin that will be used to make rate adjustments” after the introductory period. 12 CFR 1026.16(d)(2).

Additional Disclosures for Trigger Terms

If a radio (or television) advertisement mentions any “trigger term” — a statement (whether made affirmatively or negatively) of the finance charge (such as “No Interest Charges until May”), other charges imposed on the HELOC plan (such as “No Annual Fee”), or the payment terms of the plan (such as a reference to the length of the plan) — Regulation Z imposes additional disclosure requirements that are triggered by those terms. 12 CFR 1026.16(d)(1). In such case, the ad also must state the periodic rate used to compute the finance charge and provide a toll-free number together with a statement that the customer may use the toll-free number to obtain “additional cost information.” 12 CFR 1026.16(e).

The Official Staff Commentary to paragraph 16(e) provides more detail on providing the toll-free telephone number. When mentioning the toll-free number, the radio (or television) advertisement should indicate that a consumer can call the number to get additional disclosures, such as “call 1-(800) 000-0000 for details about credit costs and terms.” If the toll-free number connects to a recording that provides the caller with multiple options, the option permitting the caller to request disclosures “should be provided early in the telephone message.” Official Interpretations, 12 CFR Section 16(e), Comments 1 and 2.

The advertising rules and Staff Commentary do not detail exactly what “additional cost information” must be provided via the toll-free phone number. We believe that a common sense approach would be to provide the additional Regulation Z disclosures that are required for print advertisements in the recorded message accessed by the toll-free phone number. These additional disclosures include:

(i) Any loan fee that is a percentage of the credit limit under the plan and an estimate of any other fees imposed for opening the plan, stated as a single dollar amount or a reasonable range.

(ii) Any periodic rate used to compute the finance charge, expressed as an annual percentage rate as determined under § 1026.14(b).

(iii) The maximum annual percentage rate that may be imposed in a variable-rate plan.

See 12 CFR 1026.16(b)(1) and the accompanying Official Staff Commentary for more information on these additional disclosures

If the radio (or television) advertisement does not mention any trigger terms, these disclosures are not required.

(As a side note, the more lenient rule for radio and television advertising is meant to ease the burden of the more fulsome disclosures required for print media when trigger terms are used, due to the “time and space constraints on television and radio advertisements.” Supplementary Information, Final Rule, 73 Fed. Reg. 44522, 44579 (June 30, 2008).

Member FDIC and Fair Lending Disclosures

You are not required to include the “Member FDIC” statement in your radio HELOC advertisements, but you are required to state in the advertisement that the bank is an “Equal Housing Lender” in your radio HELOC ads.

The official “Member FDIC” disclosure requirement applies only to advertisements for deposit products, 12 CFR 328.3(e)(2), and a credit product such as a HELOC is a “non-deposit product.” 12 CFR 328.3(e)(1)(i). In fact, the FDIC prohibits you from using the “Member FDIC” disclosure in an advertisement that relates solely to non-deposit products. 12 CFR 328.3(e)(2). On the other hand, if your advertisement also is marketing one or more deposit products (in addition to the HELOC), then you must include the “Member FDIC” disclosure, and it must be clearly segregated from the part of the advertisement that relates to the non-deposit product (the HELOC). 12 CFR 328.3(e)(4).

The Fair Housing Act requires that any advertisement for a loan secured by a dwelling must include a statement that the lender is an “Equal Housing Lender.” 12 CFR 128.4. Consequently, the “Equal Housing Lender” disclosure must be stated in your radio advertisement.