Over the years, digital advertising has grown and so have compliance challenges.
Many regulations have not been modernized to reflect the digital era. While others, like those from the FDIC, have updated the rules to align how people transact today. Additionally, indications are that examiners are looking closer at these digital channels. In this article, we'll provide practical examples and share insights to help you effectively navigate the compliance in these situations.
Digital Display and Search Engine Marketing (SEM) Advertising
Limited space in digital display advertisements, or social posts, and the character restrictions that come with search engine marketing (SEM) ads, can make it tricky to promote some products.
Below are three advertisements we created for demonstration purposes (based on real life ads). Put your compliance cap on and see if you can spot the issue(s) with each example.
Example #1: Tiered Checking Account | To Earn Rate Must Meet Qualifications
What do you notice?
Issue #1: Since this is a tiered account, this ad needs to include the balance requirement to earn the APY and it must be in close proximity to the APY.
Reg. DD requires the corresponding minimum balance to be included in close proximity to the APY for each tier. (Note: You can highlight one tier and its corresponding balance — the rest can be included in your disclosure.)
Issue #2: When seeing the ad, it appears that anyone could open the account and get this rate. However, this account has three qualifications the customer must meet every month to receive this APY.
Our Recommendation for #1 and #2: Under the 2.01% APY add something like: “On balances up to $____ when you meet qualifications.” Another option: “On balances up to $______. Terms apply.” This lets the reader know that there are qualifications. Then they can get details one click away.
Additional Insights:
- Some compliance officers want APY spelled out visually on the display ad. Others say one click away in the disclosure is fine. Check with your compliance department to see if they have a preference.
- “Member FDIC” for banks or “Federally insured by NCUA” for credit unions MUST be included in this ad … it cannot be one click away.
Example #2: Home Equity Line of Credit | No Closing Costs and No Annual Fee
What sticks out to you?
Issue #1: We still run across people who do not know what a HELOC is. We recommend spelling out Home Equity Line of Credit. You can include (HELOC) after you spell it out the first time.
Issue #2: Stating “no closing costs and no annual fee” triggers additional disclosure on a HELOC. Which means, this ad needs a call-to-action such as “Learn More” or “Get Details.” The details/disclosure needs to be one click away. The disclosure should be visible on the linked page.
Additional Insights:
- Notice the “house” symbol, it is too small. This would not be compliant, as it is not legible and is missing Equal Housing Lender under the “house.” (Note: Banks regulated by the Office of the Comptroller of the Currency, OCC, are not required to use the “house.” They can simply use the words “Equal Housing Lender,” but it must be legible. Some state credit unions use Equal Housing Opportunity.)
- QR codes cannot be used for one click away. Also, avoid using a QR code on a digital ad or website — they are already on their phone or computer.
Example #3: Search Engine Marketing (SEM) | Checking Ad
What do you see here?
Issue #1: SEM ads have limited characters which can make it difficult to fit Member FDIC (or Equal Housing). We recommend to “pin” it as a headline as shown above.
Additional Insights:
- Avoid using words that trigger additional disclosures (e.g. a deposit rate, a bonus reward for opening an account, the APR for an open-ended line of credit, etc.).
- Keep in mind some disclosures must be in close proximity and equal prominence. In that case, you may need to make your copy more general, so you don’t trigger the disclosures.
Do you have questions about this topic or other compliance-related items?
