Joint Advertising
Lucy Griffin, Editor
Compliance Action
Question: We have builders and Realtors in our community who would like to do joint advertising with our bank. This seems to be a common practice in our market area but I am concerned about RESPA and Truth in Lending rules. Is it possible to run joint ads? How can this best be done to avoid any compliance issues?
Answer: RESPA is the biggest hurdle for joint advertisements. For purposes of RESPA, the question is payment for services and getting nothing for free. Joint ads are possible if everyone pays their share of the cost. The fact that joint ads may result in a savings for each advertiser is not a problem. However, all advertising costs - including ad development - should be carefully documented. Also watch carefully for other arrangements that could be considered related to the advertising arrangements, such as referrals for specific loan terms. This type of tie-in could raise section 8 issues.
For purposes of Truth in Lending, the critical concern is trigger terms and proper presentation of the APR if rates are advertised. To be certain that all ads comply with Truth in Lending, we recommend that the lender - who will pay the price for TIL violations - be the last to sign off to approve the ad. That way, no-one else can insert a violation for you.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 5, 4/05
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