Unfortunately, we cannot review and approve any advertisements, as that would have to be done by your bank’s counsel. However, we can provide some general guidance on the regulations that apply to bank marketing.
Regulation Z imposes several requirements on loan advertising, and the version of the advertisement you sent us does not meet all of these requirements (though we understand that it is under revision). All of the advertising requirements for closed-end loans are all in one section of Regulation Z, 12 CFR 1026.24. I have attached a .pdf file that includes both the rule and all of the relevant official staff commentary. The Federal Reserve’s discussion of Regulation Z’s advertising rules starts on page 23 of the TIL section of the Consumer Compliance Handbook (available here).
The general rules to keep in mind while reviewing any advertisement are (a) any specific credit terms in the advertisement must be actually offered and (b) all of the required disclosures must be made “clearly and conspicuously.” 12 CFR 1026.24(a), (b). The Federal Reserve’s Consumer Compliance Handbook explains that “clear and conspicuous” means that “the required information is disclosed with equal prominence and in close proximity to the advertised rates or payments triggering the required disclosures.” FRB Consumer Compliance Handbook, Truth in Lending, page 24.
In any advertisement, the mention of the term of the loan repayment period (here, “2.9% APR* for 29 Months”) “triggers” several other disclosure requirements, which include the following disclosures (12 CFR 1026.24(d)(2)). (Other “triggers” include the amount or percentage of any downpayment, the number of payments, the amount of any payment, and the amount of any finance charge.)
(i) The amount or percentage of the downpayment.
(ii) The terms of repayment, which reflect the repayment obligations over the full term of the loan, including any balloon payment.
(iii) The “annual percentage rate,” using that term [or using the abbreviation “APR,” as discussed in Comment 1 to Section 1026.24(c)], and, if the rate may be increased after consummation, that fact.
Additional disclosure requirements could be triggered if the loan being advertised will be (or could be) secured by a dwelling. However, we do not believe that any of these disclosure requirements apply to the advertisement, as it does not include any of the triggers, which include:
- the statement of a simple interest rate where the rate can change during the term of the loan (subsection (f)(2)),
- the statement of the amount of any loan payment (subsection (f)(3)),
- use of the word “fixed” in connection with a variable rate transaction (subsection (i)(1)),
- misleading comparisons (subsection (i)(2)), or
- other misleading terms (subsections (i)(3)–(7)).