Bank marketing laws you need to know
Marketing for banks and credit unions requires a delicate balance of promoting your unique brand while staying compliant. In a sea of financial institutions offering similar products, this can seem like a tall order. You can’t make false promises to customers, but you also don’t want to bore them with endless statistics and acronyms.
Before you start brainstorming your next bank marketing campaign, make sure you have your bases covered. In this article, we’ll give you an overview of basic bank and credit union marketing regulations along with links to resources for a deeper dive.
Who regulates bank marketing?
Banks and credit unions are cornerstones of the economy and impact consumers and businesses alike. This means they are watched with scrutinizing eyes. If these institutions could advertise whatever they wanted, this would cause ripples throughout the industry.
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Banking regulations are enforced by a variety of agencies, including the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). These agencies have the power to investigate complaints and take action against banks that violate the rules.
The Truth in Savings Act (TISA)
One of the major players in bank marketing is The Truth in Savings Act (TISA). This federal law is designed to help promote competition between banking institutions and make it easier for consumers to compare interest rates, fees, and terms associated with savings institutions’ deposit accounts. It was passed by Congress in December 1991 as part of the Federal Deposit Insurance Corporation (FDIC) Improvement Act of 1991.
The regulations defined in Regulation DD are very important for marketers to follow and require banks to disclose certain information in their deposit advertisements, such as:
- Annual percentage yield (APY)
- Interest rates
- Minimum-balance requirements
- Account-opening disclosures
- Fee schedules
Not only do these disclosures need to be present, but the way they are worded matters. For instance, if an advertisement states a rate of return, the rate must be identified as an “annual percentage yield.” No other term can be used except for “interest rate.” The Federal Reserve website explains other specific verbiage and disclosures that must be present in bank marketing.
Truth in Advertising
Additionally, Regulation DD ensures advertisements created to attract potential customers comply with federal law, are truthful, and are free from misleading information. This means all claims made by the financial institution in their advertisements must:
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- Be reasonable
- Reflect the legal obligation of both the institution and the account holder
- Use consistent terminology
For example: You may have seen ads for banks offering free or no-cost checking accounts. To ensure these ads follow Regulation DD and do not mislead consumers, the account must truly be free and can’t have hidden fees such as:
- monthly service fees
- fees for going above transaction limits
- penalties for not maintaining a minimum account balance
- fees for withdrawing or transferring funds
These are two of the basic principles of Regulation DD that impact advertisers. For more information and fine-tuned details, the American Banking Association is a great resource.
Advertising regulations for credit unions
Credit unions are exempt from Regulation DD. Instead, they’re regulated under the National Credit Union Administration, Part 707 of the Rules and Regulations which has similar laws. Since there is a lot of overlap between this and Regulation DD, we won’t repeat ourselves.
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More information on credit union advertising regulations can be found on the National Credit Union Administration website.
