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?
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
- 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. More information on credit union advertising regulations can be found on the National Credit Union Administration website.
Banks and credit unions of all sizes need to remain competitive with marketing. However, it’s equally as important to check your ad campaigns for compliance. Financial institutions should take time to determine if their ads are truthful, have proper disclosures present, and use the correct terminology. If your bank prides itself on offering quality service and care to your customers, being truthful in advertising is the least you can do.