New advertising rules for Reg Z took effect July 1, 2010. A major change to note pertains to open-end loans.
Any triggering term under open-end rules, if stated in the positive OR NEGATIVE, triggers additional disclosures!
(In the past, the negative reference only triggered disclosure on HELOC [Home Equity Line of Credit] – now it triggers on all open-end products!). For example, “No annual fee” on a credit card advertisement will now trigger additional disclosure. Many of you routinely state this on your website. So, be sure to check your website and other credit card advertising to see if you want to delete that phrase.
Introductory and Promotional Rates now trigger additional disclosure.
- The word “Introductory” or “Intro” must show in immediate proximity to each listing of the introductory rate.
- For promotional rates, you must state when the promotional rate ends AND the APR after the promotional rate ends.
Remember, too, when you’re advertising HELOC:
- If a promotional rate is advertised, EACH statement of rate must include the period of time and any other rate that will apply (in close proximity and equal prominence to the initial rate – LITERALLY).
- If you advertise that interest may be deductible, you must include, “consult your tax advisor.” However, if the loan amount exceeds FMV of the dwelling, you must disclose non-deductibility of the interest on the excess loan amount.
Bottom line? Remember these three things:
- Reg Z applies to loans with a consumer purpose. So, when promoting business loans we need to be clear it states businesses – otherwise regulators may assume consumer and require additional disclosure.
- And, whenever we are advertising loans, don’t assume that just because it was okay in the past it is now … many things have changed since October 2009!
- There are different rules for closed-end credit vs. open-end credit. So, we need to be clear which type of credit we are advertising so we know which rules apply.
Have a question? Call me! 888.733.4899
— Rhonda
