Question: The bank is going to be offering free checking for life starting July 1, 2009. What are the guidelines in placing an ad in the newspaper and advertising our new product services in the bank lobby? Do we have to have the starting period and ending period of the promotion?
Answer: Reg DD, at 230.8(a)7 in the OSC is specific that the time period of the offer to be free, must be specified. If an account (or a specific account service) is free only for a limited period of time—for example, for one year following the account opening—the account (or service) may be advertised as free if the time period is also stated.
You are not required to state how long the offer will be available, but doing so could create a sense of urgency in your prospective new customers to open an account now, rather than six months for now. Even using "for a limited time" could do this if you don't have an end date in mind.
You may have to be specific that it is for the lifetime of the original owner, and you may need an explanation as to any future change in terms notice. I say this because, let's say mom and dad open a free account. At some point they decide that one of their children should be added, in the event they need assistance managing the account. If added as an owner, and not a convenience signer, this repeating cycle could be free for several lifetimes. Also, is there any guarantee to them that the terms won't be changed via a thirty day notice that there will be a minimum fee added to the account? A standard "we can change the terms..." phrase would seem to conflict with the ad and raise deceptive acts questions.
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