Newsletter
FTC ISSUES RULES FOR BANK ADVERTISING
On 24 November 2006 the Fair Trade Commis-sion (FTC) issued its Guidelines on Banking Industry Advertising, which expressly state that an advertisement made by a banking enterprise may not include false or misleading statements or representations of the following types:
Claiming "zero interest" when in fact other fees are charged that are in the nature of in-terest.
The advertised interest rate differs from the interest rate actually applied, to a degree greater than would be acceptable to trading counterparties in general.
Failure to expressly state the eligibility condi-tions, duration, credit limit, charges and pen-alties, or other restrictions applicable to a preferential interest rate.
Claiming "zero establishment fees", "zero processing fees", or "zero fees", when in fact the bank charges fees under other names such as credit check fees or account management fees, or restricts the applicability of fee ex-emptions.
Misleading failure to disclose the method for calculation of maximum loan amounts.
Creating a false impression that lost or stolen traveler's checks may be replaced or refunded within a certain period, when in fact the bank restricts the method or place of resistance, or imposes other restrictions.
Failure to expressly state the charges and penalties to be borne by the cardholder in the case of "zero risk on loss of card."
Creating a false impression that "no pre-set spending limit" applies to a credit card or charge card, when in fact the bank applies a spending limit when authorizing the card-holder's individual transactions.
The price, quantity, quality, content, or place of origin of gift items is not as stated in an advertisement.
Failure to disclose restrictions applicable to gift campaigns, such as duration, number of recipients, quantity, or rules for participation.
The drawing method or date of a prize draw is not as stated in an advertisement.
Failure to verify with goods suppliers, before publishing an advertisement, the content, quality, and performance of the goods to be supplied, such that false or misleading state-ments of representations are made.
The arrangement, positioning, or font size, in an advertisement, of important information regarding prospective transactions, is obvi-ously disproportionate, such as to mislead.
In addition, a banking enterprise that engages in comparative advertising may not make false or misleading statements regarding the products or services of an enterprise that is the subject of comparison.
If an advertisement published by a banking en-terprise violates the above provisions, the enter-prise may be held by the FTC to have violated the Fair Trade Act, and may be subject to penal-ties in the form of administrative fines, or may be held liable for damages to persons or entities that have suffered loss or harm.