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Deposit Advertising Disclosure Policy and Procedures
INTRODUCTION
The bank is engaged in a highly regulated business enterprise. There are rules that specify what
information must be disclosed to individuals for whom the bank has entered into an account relationship
other than a loan or lease relationship. The bank's marketing department and/or outside advertising
agency must be familiar with the consumer protection laws and regulations that affect advertising and
other promotional activities.
Even if the bank uses an outside firm for consulting or marketing, the board appoints [insert the name or
title of person responsible] as the marketing officer for the bank. The marketing officer is responsible for
the coordination of all marketing activities of the bank (i.e., ensuring marketing activities are in
compliance with state and federal regulations and developing various marketing concepts, objectives,
materials, advertisements, programs, press releases, and other special events approved by senior
management and the board of directors). He or she will provide guidance and coordinate implementation
efforts with respect to the installation of new or existing products and services. The marketing officer is
also responsible for being the primary contact of public relations and media contacts, advertising, and
certain business development activities that promote the spirit, philosophy, dedication, and general
direction of the bank.
This policy will address the various guidelines the bank needs to follow to remain in compliance with the
consumer protection regulations that cover advertising. The regulations that cover this topic are complex
and specify what the bank can or cannot put in advertisements.
This statement has been approved by the board of directors and is an official statement of board policy
that must be followed by all personnel. The bank's officers should consult and follow these policies and
procedures to ensure that the bank's advertisements are handled in accordance with bank policy.
If an exception to policy is needed, the policy contains procedures for obtaining approval for the
exception. Bank personnel should follow these policies and procedures routinely because they represent
the desires and wishes of the board of directors and senior management. The policy will be updated or
modified as necessary to accommodate economic changes and to coincide with regulatory changes.
APPLICABLE REGULATIONS
The regulations that contain specific advertising guidelines and requirements are as follows:
•
Federal Deposit Insurance Corporation (FDIC) — advertisement of deposit insurance rules
•
Regulation DD (12 CFR 1030) — deposits
•
Retail sales of nondeposit investment products and consumer insurance sales
POLICY
The bank will not engage in any advertising that is inaccurate or misleading or that misrepresents the
bank's products or services. This policy also contains rules and regulations for the advertisement of nondeposit investment products and consumer insurance sales. This means that advertisements must contain
the required disclosures, and the disclosures must be made clearly and conspicuously and must be legible
and reasonably understandable.
[Note: State-chartered institutions should also consult their state's regulations concerning advertising.
Any existing regulations should be incorporated into this policy.]
ADVERTISING MEDIA
An advertisement is any commercial message that directly or indirectly promotes a product. The obvious
media for advertisements include television, radio, newspapers, and billboards. The following also can be
media for advertisements (the list is not all-inclusive):
•
Electronic media — Internet advertising and e-mail
•
Brochures, pamphlets, and fliers
•
Outdoor displays — posters, banners, and window signs
•
Lobby boards
•
Statement stuffers
•
Statement messages
•
Telephone response machines
•
Internally prepared rate sheets
•
Direct mail
•
Money desk quotes
•
Point-of-sale materials
•
Facsimiles
This list includes statement messages and stuffers. However, if such statements refer to existing accounts,
they are not advertisements. If the bank includes information regarding another type or category of
account in the statement messages and stuffers, such information would be considered an advertisement
and subject to the bank's advertising policy.
Externally published rate sheets will not be considered an advertisement if the bank has no control over
the publication of the information and does not pay a fee for its publication.
The bank’s policy will also apply to any agents or representatives it retained to help promote its products.
Any person or entity who works on behalf of the bank is subject to the same rules as the bank itself,
except for deposit brokers.
FDIC OFFICIAL ADVERTISING STATEMENT
The bank will follow the FDIC advertising rules in all its advertisements. All bank advertisements or
promotions will include either the FDIC's official advertisement sign or an abbreviated statement.
FDIC Advertising Sign
All deposit advertisements will include either the FDIC official symbol or an abbreviated statement.
However, if the FDIC official symbol in the advertisement is so small that the two small lines of type
become indistinct, the bank will use the FDIC advertising statement.
FDIC Advertising Statement
The FDIC's official advertisement statement is: "Member of the Federal Deposit Insurance Corporation."
We may, at our option, use the short title "Member of FDIC" or "Member FDIC," or a reproduction of the
FDIC symbol as the official advertising statement.
When to Use the Statement or Symbol
The bank will include the official FDIC advertising statement or symbol in all deposit account
advertisements except for the following:
•
Advertisements that do not reflect the name of the financial institution
•
Display advertisements in a bank directory, as long as the bank's name is listed on any page in the
directory with the FDIC symbol or other descriptive matter indicating the bank's membership
•
Joint advertisements that include noninsured banks or other institutions
•
Radio advertisements that are 30 seconds or less
•
Television advertisements that are 30 seconds or less
•
Advertisements that make it impractical to include the official statement (e.g., promotional
materials such as pens, pencils, key chains)
•
Advertisements that already contain a statement to the effect that the bank is a member of or
insured by the FDIC, or that deposits or depositors are insured by the FDIC
Official Advertising Statement in Non-English Language
We may use the non-English equivalent of the official advertising statement in any advertisement, if we
obtain the prior written approval of the FDIC for the translation.
Nondeposit and Hybrid Products
The term “nondeposit product” includes, but is not limited to:
•
Insurance products
•
Annuities
•
Mutual funds
•
Securities
The term “hybrid product” means a product or service that has both deposit product features and
nondeposit product features. A sweep account is an example of a hybrid product. (See initial disclosure
requirements concerning FDIC insurance for sweep accounts in Deposit Policy and Procedures.)
Nondeposit Product Advertisements
We will not include the official advertising statement, or any other statement or symbol which implies or
suggests the existence of federal deposit insurance, in any advertisement relating solely to nondeposit
products.
Hybrid Product Advertisements
We will not include the official advertising statement, or any other statement or symbol which implies or
suggests the existence of federal deposit insurance, in any advertisement relating solely to hybrid
products. However, in advertisements containing information about both insured deposit products and
nondeposit products or hybrid products, we must clearly segregate the official advertising statement or
any similar statement from that portion of the advertisement that relates to the nondeposit products.
DEPOSITS
It will be bank policy to:
•
Not use any misleading or inaccurate advertisements
•
Include specific rate information whenever rates are included in advertisements
•
Provide additional information in advertisements that contain or advertise information about rates
or bonuses
•
[Banks only] Not state that a deposit with the bank is safer than a deposit with an insured savings
and loan association or credit union
Annual Percentage Yield
All deposit account advertising will state a rate of return. All such advertisements must reflect the rate as
an “annual percentage yield,” using that term. The bank may also use the abbreviation “APY,” as long as
the full term “annual percentage yield” appears at least once in the advertisement.
The only other rate that the bank can include in a deposit advertisement is the interest rate related to the
APY. The bank must use the actual term "interest rate." It must appear with the APY and cannot be
shown more conspicuously. No deposit advertising can include the term "annual percentage rate" in any
context. This term can be used, together with "interest rate," in account disclosures but not in
advertisements.
Accuracy of Rate Information
The APY must be calculated in accordance with the rules and formulas that appear in 12 CFR 1030,
Appendix A to Part 1030. The APY quoted in the advertisement must be accurate to within plus or minus
0.05 percent of the correct APY. This means that if the bank inadvertently misstates an APY in an
advertisement by 0.05 percent or less, it would still be in compliance with the regulation.
The bank must not intentionally overstate the APY payable on a deposit account, even if the overstated
rate is within the 0.05 percent tolerance limit. Overstatement of the APY will be considered a violation of
Regulation DD and could subject the bank to a penalty of up to $500,000.
If an interest rate is included in an advertisement, it must be correct. There is no tolerance limit for
incorrectly disclosing the interest rate offered for a deposit account.
Use of Term “Free” or Phrase “No Cost”
The bank will prohibit the use or inclusion of the word “free,” the phrase “no cost,” or words or phrases
of similar meaning in advertisements to describe deposit accounts where it can impose any maintenance
or activity charge on the account. Bank advertisements must not use such words or phrases with respect to
a deposit account where the bank routinely charges such fees. This policy also applies when account
terms either (1) require a consumer to maintain a minimum balance for any period to avoid such charges
for that period or (2) allow for charges to be imposed when the number of transactions during a period
exceeds an established allowable limit.
This policy does not prohibit the bank from offering accounts that are subject to charges under such
conditions, nor does it prohibit the advertising of accounts carrying charges, but it should prevent the
bank from falsely advertising such accounts as “free” or “no cost.”
Maintenance and Activity Charges
The prohibition against the use of “free” or “no cost” applies only when a customer can incur activity or
maintenance fees. Other types of fees (e.g., a charge for handling legal process) are not included in the
prohibition. The bank can still advertise some deposit accounts as free if it imposes other service fees,
provided the charges are not subject to regulatory disclosure rules.
Use of the Term “Profit”
The bank will not use the word "profit" in any advertisements when referring in any way to interest
earned on a deposit account. This prohibition is limited to use of the word "profit" in the context of
interest or earnings on an account. The bank can still use the word in other respects. For example, the
sentence, “Customers profit when they bank with [your bank]” will not violate the policy.
Use of Trigger Terms and Required Disclosures
Any one of several different terms appearing in an advertisement acts as a trigger — meaning that its
inclusion in the advertisement requires that the bank provide additional information. Under Regulation
DD, there are two trigger terms that apply to advertisements for deposit accounts:
•
Inclusion of the APY
•
Reference to a bonus
Annual Percentage Yield
The bank must disclose the following information whenever its advertisements include the APY. The first
five, listed below, can apply to advertisements for deposit accounts. The last three are required on time
deposits. The disclosures are required only to the extent that each applies, and they must be stated clearly
and conspicuously.
• A statement that the interest rate may change after the customer opens the account. This
requirement applies only to deposit accounts that offer a variable interest rate.
• The period of time the APY advertised is offered. This refers to the period during which the offer
will remain available to a customer who opens the advertised account. This provision does not
address the frequency with which the bank can change the interest rate payable on the account.
• The minimum balance required to obtain the APY disclosed in the advertisement. For tiered-rate
deposit accounts, the advertisement must state the minimum balance requirement for each tier in
close proximity to the APY (or range of yields, for type B tiered-rate accounts). This information
must be disclosed with equal prominence.
• The minimum deposit required to open the deposit account. If the account is subject to both a
minimum balance and a minimum deposit requirement, the advertisement must disclose both if
the initial deposit required is greater than the minimum balance. If the initial deposit is not
greater, then this requirement does not apply.
• A statement that fees could reduce the earnings on the account. This statement is required only if
the bank imposes any activity or maintenance fees on the deposit account.
Additional disclosures for time deposits:
• Time requirements. The term of the account (e.g., 30 months).
• Early withdrawal requirements. A statement that a penalty will or may be imposed for early
withdrawal from the time account.
• Required interest payouts. For noncompounding time accounts with a stated maturity greater than
one year that do not compound interest on an annual or more frequent basis, that require interest
payouts at least annually, and that disclose an APY, a statement that interest cannot remain on
deposit and that payout of interest is mandatory.
Bonuses
A deposit account advertisement that contains an offer of a bonus will trigger a host of disclosures. A
premium, gift, award, or similar consideration is a bonus if its value is more than $10 and it is given or
offered to the consumer in exchange for:
•
Opening a deposit account
•
Maintaining a deposit account
•
Depositing funds into an existing deposit account
An item will be considered a bonus only if it is given to a depositor. Any premium that the bank gives to a
third party would not be considered a bonus.
When the advertisement includes the offer of a bonus, the advertisement must include:
•
The annual percentage yield, using that term (which triggers the disclosures noted above for
deposit or term accounts)
•
Any time requirement to receive the bonus (e.g., making a bonus payable only if a customer's
deposit to the account remains in the account for one full year)
•
The minimum balance required for the customer to obtain the bonus
•
The minimum balance required to open the deposit account, if it is greater than the minimum
necessary to obtain the bonus
•
When the bonus will be paid or given to the customer
The bank can combine the disclosures if the balance requirements for earning the advertised APY are the
same as those required to obtain the bonus.
Not every consideration given to a consumer constitutes a bonus. The bank will make a distinction by
excluding from the definition of "bonus" items it gives away during a year that are worth $10 or less,
regardless of the dollar amount in the customer's account. The bank can also exclude promotional
expenses from the definition of bonus. Each promotional expense must be considered separately.
If the bank agrees to absorb, reduce, or waive certain fees or expenses, this also will not be considered a
bonus.
Advertising the Paying of Overdrafts
Regardless of whether our bank promotes the payment of overdrafts in an advertisement, we will
separately disclose the total amount of fees or charges imposed on the deposit account for paying
overdrafts and the total amount of fees charged for returning items unpaid on its periodic statements.
The bank will not advertise its [insert the name of your bank’s bounced check program] in a way that will
be misleading. Specifically, the bank will not:
•
Represent an overdraft service as a “line of credit”
•
Represent that the bank will honor all checks or transactions when the bank actually retains
discretion at any time not to honor any transaction
•
Represent that consumers with an overdrawn account are allowed to maintain a negative balance
when the terms of the account’s overdraft service require consumers to promptly return the
deposit account to a positive balance
•
Describe an overdraft service solely as protection against bounced checks, when the bank also
permit overdrafts for a fee in connection with ATM withdrawals and other electronic fund
transfers that permit consumers to overdraw their account
•
Describe an account as “free” or “no cost” in an advertisement that also promotes a service for
which there is a fee (including an overdraft service), unless the advertisement clearly and
conspicuously indicates there is a cost associated with the service
It will also include in the advertisement the following information:
•
The fee or fees for the payment of each overdraft
•
The categories of transactions for which a fee for paying an overdraft may be imposed
•
The time period by which the consumer must repay or cover any overdraft
•
The circumstances under which the institution will not pay an overdraft
Partial Exemption for Certain Advertisements
The following categories of advertisements are exempted from the above policy:
• Broadcast or electronic media. Television and radio are specified, but other electronic media
(e.g., videocassette and audio tape) would also seem to qualify.
• Outdoor media. Billboards, bus signs, and similar media qualify.
• Telephone response machines. This exemption is intended for automated devices, not live
operators.
Advertisements posted on the bank's Internet web site are subject to Regulation DD general advertising
rules. They do not qualify for the partial exemption.
If the bank uses the above-mentioned media sources, it does not have to:
•
Provide the statement about rate changes required for variable-rate accounts.
•
Describe the period during which the rates will be available.
•
State the minimum deposit required to open the account, even if this amount is greater than the
minimum balance required to obtain the APY.
•
Provide a statement that fees may reduce earnings on the account.
•
State when an offered bonus will be provided.
The exempted advertisement mediums must still comply with the other policy requirements (i.e., include
no misleading or inaccurate advertisements, use the term “annual percentage yield” to describe rate
information, and specify any minimum balances required to earn the APY, if this figure is stated).
Disclosure of Balance Information
If we provide account balance information through an automated system, we must provide a balance that
does not include additional funds that may be available to cover overdrafts.
Indoor Signs
The term “sign” is intended to include any item placed inside a bank that advertises or describes the
bank's deposit products. Signs include:
•
Posters
•
Banners
•
Rate boards
•
Computer screens
•
Chalkboards
•
Pegboards
An advertisement qualifies as an indoor sign if it hangs from the ceiling or is placed on a wall, an easel, or
a countertop.
Lobby Signs
Lobby signs are not subject to advertising policies. However, they remain subject to the general rule that
prohibits advertising in a manner that is misleading, inaccurate, or misrepresentative of the bank's deposit
contracts. The limitations (discussed earlier) on use of the word "free" or the phrase "no cost" continue to
apply to lobby signs.
In addition, lobby signs that state a rate of return must comply with the following:
•
State the rate as an “annual percentage yield,” using that term. The abbreviation “APY” also may
be used, without first defining it.
•
Not state any other rate, except that the interest rate can be stated in conjunction with the APY to
which it relates.
•
Contain a notice that advises consumers to contact an employee for further information about
applicable fees and terms. For example, the statement might say: “Ask us for further information
about the fees and other terms that apply to these accounts.”
INSURANCE, MUTUAL FUNDS, AND OTHER NONDEPOSIT-RELATED BANK ACTIVITIES
All advertisements and other promotional and sales material (e.g., brochures), written or otherwise, about
nondeposit investment products, including consumer insurance, sold to bank customers should
conspicuously state that the product is:
•
Not insured by the FDIC
•
Not insured by any government agency
•
Not a deposit or other form of obligation of the bank
•
Not guaranteed by the bank
The advertisement of these products must not suggest or convey any inaccurate or misleading impression
about the nature of the product or its lack of FDIC insurance. These basic disclosures should also be
emphasized in any telemarketing contacts with prospective customers.
If the nondeposit product is offered through a third party, any brochures and similar documents should
clearly identify the company that is selling the product. Care should be taken to avoid any suggestion that
the bank is the seller of the product.
Any brochures or similar documents that contain information regarding both the bank's FDIC-insured
products and nondeposit investment products should clearly segregate the nondeposit investment product
information from the FDIC-insured product information.
[Insert the type of insurance or annuity] is not a deposit or other obligation of, or guaranteed by, the bank
or any of its affiliates. It is not insured by the Federal Deposit Insurance Corporation (FDIC), or any
other agency of the United States, the bank, or any of its affiliates.
For insurance with an investment risk, the advertisement must also include the following statement:
There is investment risk associated with [insert the type of product or name], including the possible loss of value.
Electronic Media (Internet, TV, Radio)
Electronic advertisements for consumer insurance products must contain the following abbreviated
disclosure:
NOT A DEPOSIT
NOT FDIC-INSURED
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
NOT GUARANTEED BY THE BANK [OR SAVINGS ASSOCIATION]
MAY GO DOWN IN VALUE.
These disclosures are required in all advertisements and promotional material for insurance products or
annuities, unless the advertisements and promotional materials are of a general nature describing or listing
the services or products offered by the bank.
CONSUMER INSURANCE
If consumer insurance products are advertised by the bank, the bank’s affiliates, or anyone on the bank’s
premises, printed advertisements must include the disclosures noted above.
The board of directors approved and adopted this policy on ________________________.