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#2098589 - 09/15/16 02:22 AM Loan Promo - How loans proceed to be used
pskadot671 Offline
Junior Member
Joined: Jan 2013
Posts: 27
Marketing is very great at coming up with new ideas!!!!

Not sure if anyone every came across this and if so, if they could chime in maybe provide guidance and thoughts.

Scenario:

Business Customer of the Bank approached us asking if we would be willing to do a of co-marketing/joint marketing of preapproved consumer loans specifically for their product. As for co-marketing/joint marketing, I am not too sure whether that is the right words but I'll explain further below.

1) Business customer would like to pay for campaign cost/marketing.
2) Bank does a pre-approval loan promotion using Credit Bureau selection process meeting certain criteria's to determine pre-approved status and mails out the flier.
3) Loan promotion advertising makes suggest to the loan pre-approval notices..."Uses the money for ______________"
For example…. Congratulations, you’ve been preapproved for $XX,XXX. Take that long awaited vacation (promote a certain airline carrier); Buy a new car (promote a certain car dealership); Turn Green and purchase solar panel (promote a certain go green company) ....etc
4) this raising many issues, I believer such as :

1. Should we be concerned about any fair lending, ECOA or UDAAP violations as a result of our special program offered only to specified borrowers? I believe it would
2. How should we document the program to avoid any concerns of disparate treatment? If there is any?
3. What would happen if a consumer used one of the 'recommended' businesses and had a bad experience? This is what would scare me.
4) Specific business goes out of business
5) UDAP issues?
6) Deceptive

All of these things are coming up. Can any one refer me to any documentation/guidance. Any thoughts?


Praying for answer

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Lending Compliance
#2099294 - 09/19/16 11:55 PM Re: Loan Promo - How loans proceed to be used pskadot671
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,935
Galveston, TX
All such specialized programs should be reviewed by legal counsel. Without a copy of any proposed agreement between this company and the bank, there are way too many unanswered questions to opine.

Most of these prepaid loan approval programs have limited success and unless you plan out mailing thousands - your return is going to be pretty dismal compared to the costs involved. Response rates range from about 1-3%. Manyt high score customers have already opted out of prescreened offers.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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