Compliance Blog

Posted by Sarah Loats

The Federal Reserve provides guidance on the clear and conspicuous standard through new comments in the staff commentary. Which brings up a researching tidbit - always look to see if the rule includes staff commentary. The Federal Reserve hides very useful information in its staff commentary to rules, as we'll see below.

Clear and Conspicuous Standard
In general, all advertisements are subject to a "clear and conspicuous" standard. In the final rule, the Federal Reserve has provided guidance on what is "clear and conspicuous" for certain types of HELOC advertisements.

Promotional Rates and Payments for HELOCs. Additional disclosures that are required due to the advertisement of a promotional rate or payment will be deemed in compliance if they are in the same type size as the trigger terms and appear immediately next to or directly above or below the trigger terms, without any intervening text or graphical displays.

Internet Advertisements for HELOCs. The required disclosures cannot be obscured by such techniques as graphical displays, shading, coloration, or other devices that hinder the consumer's ability to read them. This is true for visual text TV HELOC advertisements as well. Also, for TV advertisements, the consumer should be able to read the disclosures - very fine print would not comply with the standard if consumers cannot read it.

Oral Advertisments for HELOCs. Disclosures should be given at a speed and volume at which consumers can understand them (i.e., not too fast, not too quiet). This applies to all oral advertisements whether over the radio, TV, or internet.

And just a couple of last tidbits for HELOC advertisements. The final rule requires additional disclosures regarding balloon payments if an advertisement states any minimum periodic payment amount. An advertisement that states or implies that the interest expenses under a HELOC plan may be tax deductible must not be misleading, and an advertisement distributed in paper form or via the internet that states the advertised extension of credit may exceed the fair market value of the applicant’s dwelling will trigger additional disclosures.

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NCUA has issued a Regulatory Alert regarding the Credit CARD Act requirements. For regular readers of the blog, I don't know that there's much in here that would be new to you, but they do provide it in a handy-dandy chart form.