Everyone always says to read the fine print, but is it really that important?
The simple answer? Yes, it is that important.
While you often may need a magnifying glass or some good overhead lighting to read it, the fine print exists for a reason. It gives people as full of a picture as possible about the product or service they’re considering in order for them to make an educated decision. In this way, it’s simply just ethical for any business to disclose as much information as it can to consumers. More often than not, the fine print is a legal requirement, especially for bank advertising.
If you’re starting to consider advertising for your bank, you can’t just make lofty promises to customers that will never come true, but you also don’t want to bore customers with endless statistics and lose their attention. Bank advertising requires a delicate balance of promoting your unique brand and providing that all-important fine print. When you’re dealing with bank advertising compliance, that’s when these dos and don’ts come in clutch.
DO: Be Honest and Transparent
Bank advertising isn’t the time to get one over on customers. In fact, there’s never a time for that. Any business, bank or otherwise, that purposely misleads or confuses customers needs to be put in the corner to stare at a wall and do some serious self-reflection. Just don’t be shady; it’s as simple as that.
Regulation DD is in place to stop misleading, inaccurate or misrepresentative ads from being spread. So, if you’re talking about an overdraft service that connects to ATM withdrawals, electronic fund transfers, debit card charges, bounced checks and other transactions, it’s misleading to say only that it protects against bounced checks. You also can’t call it a “line of credit” – nice try.
DO: Be Careful About What You Call “Free” or “No Cost”
Sure, offering “free” things attracts consumers. But, more often than not, businesses claim that things are “free” when they actually come with a price. For bank advertising, regulation DD lays out specific guidelines as to when banks can use the terms “free” or “no cost” in their advertising.
If your bank imposes monthly service fees or charges fees for going above transaction limits, not maintaining a minimum account balance, or depositing withdrawing or transferring funds, then you can’t say that your accounts are free or at no cost.
What if your bank charges none of those fees, but you do charge customers for dormant accounts or ATM withdrawals? Sorry, but the same rules apply. The same goes for balance-inquiry, check-printing and electronic transfer fees. Saying something is “free” is surely an incentive, but you have to tell the truth.
It’s one of the golden rules of life.
DO: Mention Any Restrictions or Limitations on Your Products and Services
This one ties back to Regulation DD, too. If there are any limitations or restrictions on the products or services that your bank provides to customers, they have to be crystal clear. No funny business.
Think of it this way. Say that your preliminary advertising claims that your bank will pay a check that’s been written even when an account lacks the funds for it. In reality, this isn’t a one-size-fits-all claim. Your bank has the discretion to decline to honor these checks based on individual circumstances, like whether or not the check is more than a certain dollar limit or if a customer has had more than X number of bounced checks in the past year. which it might do if the check amount is more than a certain dollar limit or if you’ve had more than X number of bounced checks in the past year.
In your bank advertising, it’s crucial to include that your bank has this discretion.
DON’T: Use Terms Other than “APY, “Annual Percentage Yield,” or “Interest Rate”
The words you choose really do make a difference.
When advertising for many deposit products and services, banks often use the term “APY”, which is short for annual percentage yield. While you’re allowed to use the abbreviation in larger print to make your bank advertising easier to read, the actual term itself, “annual percentage yield,” must be spelled out elsewhere.
Now, if your advertising lists the APY, it must include other key information as well. For example, you have to specify for how long this APY is being offered or state that the APY is valid as of a certain date. Be sure to also address any associated minimum deposits and balances and how certain factors, like early withdrawal penalties, might change the amount earned.
You’re also OK to use the term “interest rate,” as long as it’s said in conjunction with annual percentage yield or APY. Being transparent with your offerings and choosing your words carefully will save both you and your customers the trouble.
DON’T: Forget Which Terms Trigger Disclosures
The same wording rules apply here. If you’re advertising loans, then certain terms such as “annual percentage rate,” “APR,” “down payment,” “finance charge,” and “payment amount,” must be elaborated upon elsewhere in the advertising for your bank.
DO: Represent the Population in Your Market Area
If you’re a community bank in northern New Jersey, chances are that the population in your market area is widely diverse, and your bank advertising should reflect that.
Be inclusive in categories such as gender, race and age to cater to all kinds of customers. In fact, doing so is required by the Equal Credit Opportunity Act and other fair lending regulations, and we couldn’t agree more.
DO: Choose Your Advertising and Marketing Partners Wisely
The Federal Trade Commission Act also exits to put a stop to unfair and deceptive practices. It uses a three-part test to determine if advertising falls under this umbrella. To see if your bank advertising meets their requirements, ask yourself these three questions:
- Was something in the ad, whether an omission, representation or practice, misleading or likely to be?
- Was the consumer’s interpretation of the ad reasonable?
- Was the misleading part of the ad substantial enough?
To ensure that no ads fall through the cracks, your bank should have multiple parties review an ad before it goes live – all hands on deck. Also, if you use an outside marketing agency for your bank advertising, your bank is still responsible for the material that is put out. Choose your vendors and third-party service providers very wisely and train your employees so that they don’t misrepresent any product or service that your bank provides. Educate employees, build awareness and communicate clearly with all departments and partners.
DO: See Ethical Advertising as Your Duty
Rather than seeing ethical advertising as an inconvenience, think of it as your duty. If your bank prides itself on offering quality care for your customers, being honest with them through your bank advertising is the least you can do.
So, follow these general rules:
- Explain any terms.
- Give the full picture of a product or service.
- Make disclosures for deposit products and loan services.
- Represent the population in your market area.
To put out bank advertising that is transparent, helpful and legal, you’re going to need to follow this compliance checklist. Looking to experts for help, a.k.a. a marketing agency, is also a smart move.
Ignorance or “Joe in Compliance did it!” just won’t cut it.