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#2115752 - 01/26/17 10:28 PM Advertising a CD rate on the bank
Tabbetha, CRCM Offline
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Joined: Feb 2009
Posts: 44
Mississippi
We have one line on the bank digit sign reading " Celebrate 2017 with our new 15 month 2.017% CD". Is this permissible in the exceptions for 230.8?

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#2115784 - 01/27/17 06:02 AM Re: Advertising a CD rate on the bank Tabbetha, CRCM
David Dickinson Offline
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Central City, NE
No, for several reasons:
1. APY's must be expressed to the hundredths (.01).
2. You don't express the rate as an APY.

I don't know what a "digit sign" is or where it is located.
If this is an indoor sign, then you also need to state "see an employee for further information".
If it's not an indoor sign, you also need to state the minimum balance.
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#2115795 - 01/27/17 02:01 PM Re: Advertising a CD rate on the bank Tabbetha, CRCM
Tabbetha, CRCM Offline
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Posts: 44
Mississippi
The 2.017% is not the APY, it is the interest rate. I can use three decimals for the interest rate and on the TISA, the APY is 2.04% A digit (sorry for the typo) i.e digital meaning the electronic sign in front of our bank. I was thinking there were special exceptions for electronic signage and need more clarification of what is accepted.

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#2116874 - 02/03/17 02:15 AM Re: Advertising a CD rate on the bank Tabbetha, CRCM
David Dickinson Offline
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1. There are exemptions from TISA requirements for electronic signage & outdoor media; however, you must always express rates as an APY (that's not one of the exceptions). You can't just give the interest rate.
2. If the APY is 2.04, why would you want to advertise the interest rate of 2.017%. The APY is higher. Isn't that more enticing?
3. Since it's an outdoor sign & you want to express the rate (the APY), then, you'll need to:
A.) Spell out Annual Percentage Yield once;
B.) Give the minimum balance required to earn the APY;
C.) For time accounts, the term of the account; and
D.) State “Member FDIC”.

Refer to §1030.8(e).
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#2171231 - 03/31/18 02:43 PM Re: Advertising a CD rate on the bank Tabbetha, CRCM
MBTCompliance Offline
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I have been researching Reg DD for what is required on advertising CD rates in newspapers, social media, and billboards.

Can someone help me with how to disclose this in layman's terms without getting wordy, especially for the second bullet point which is required for billboard ads?

• A statement that fees could reduce the earnings on the account.
• If the account has a term greater than one year where the interest is not compounded on an annual or more frequent basis and interest must be paid out at least annually, a statement that interest cannot remain on deposit and that a payout of interest is mandatory.

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#2171510 - 04/03/18 03:30 PM Re: Advertising a CD rate on the bank Tabbetha, CRCM
fmissle Offline
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Joined: Jul 2007
Posts: 977
Pac NW
Quote:

Fees could reduce earnings on the accounts
Interest compounded [some term greater than one year]
Interest paid out [some term].
Interest paid on the deposit cannot remain on deposit. An annual interest payout is mandatory.

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#2171667 - 04/03/18 10:39 PM Re: Advertising a CD rate on the bank Tabbetha, CRCM
David Dickinson Offline
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Central City, NE
You don't need to state "Fees could reduce earnings" on a CD promotion. An early withdrawal penalty is not a fee for Reg DD. It's a contractual penalty. This is true for all types of mediums.

On Billboards, if the APY is mentioned, you need:
1. Spell out Annual Percentage Yield once;
2. The minimum balance required to earn the APY;
3. For time accounts, the term of the account; and
4. The statement “Member FDIC”.
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#2171683 - 04/03/18 11:40 PM Re: Advertising a CD rate on the bank David Dickinson
MBTCompliance Offline
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We do have CDs with maturities greater than one year which we require interest to be paid by check, transfer to another account, or capitalized at least on an annual basis. The only fee we have is a prepayment penalty, so just to clarify, do we not need these in either a newspaper ad or billboard?

• A statement that fees could reduce the earnings on the account. 
• If the account has a term greater than one year where the interest is not compounded on an annual or more frequent basis and interest must be paid out at least annually, a statement that interest cannot remain on deposit and that a payout of interest is mandatory.

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#2172300 - 04/06/18 03:34 PM Re: Advertising a CD rate on the bank Tabbetha, CRCM
David Dickinson Offline
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Central City, NE
An early withdrawal penalty is not a fee. You do have to say "Penalty may be imposed for early withdrawal on "regular" (newspaper) ads, button billboards, as there is an exemption. You also don't need to explain compounding and crediting in an advertisement. I've listed the 4 things you must state for billboards in my previous post.
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#2228651 - 01/09/20 05:57 PM Re: Advertising a CD rate on the bank David Dickinson
Compliance NABW Offline
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My understanding is that if the outdoor ad is actually attached to the building of the Bank, then "Member FDIC" is not required.

(d) Types of advertisements which do not require the official advertising statement. The following types of advertisements do not require use of the official advertising statement:

(3) Signs or plates in the insured depository institution offices or attached to the building or buildings in which such offices are located;

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#2228658 - 01/09/20 06:38 PM Re: Advertising a CD rate on the bank Compliance NABW
TomS Offline
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USA
I agree with your conclusion.
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#2228699 - 01/09/20 10:20 PM Re: Advertising a CD rate on the bank Tabbetha, CRCM
David Dickinson Offline
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David Dickinson
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Central City, NE
I'm going to disagree. The context of the exemption for "(3) Signs or plates in the insured depository institution offices or attached to the building or buildings in which such offices are located" is about the name of the bank on the side of the building. For instance, "XYZ Bank" on the side of a building doesn't trigger "Member FDIC." If you put a rate on a scrolling LED sign attached to a building (or in the yard), I think you trigger "Member FDIC." Same goes with a banner hanging on the side that promotes a product.

You can try to use that argument "it's a sign attached to the building" but I don't think you'd get very far with examiners.
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#2229988 - 01/30/20 10:39 PM Re: Advertising a CD rate on the bank Tabbetha, CRCM
Compliance NABW Offline
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@David - It's in the Advertising exemption section. How do you determine that it is specific to the name of the Bank?

(a) Advertisement defined. The term "advertisement," as used in this part, shall mean a commercial message, in any medium, that is designed to attract public attention or patronage to a product or business.

(d) Types of advertisements which do not require the official advertising statement. The following types of advertisements do not require use of the official advertising statement:

(3) Signs or plates in the insured depository institution offices or attached to the building or buildings in which such offices are located;

I do agree; however, that it might not get you far with examiners, as it comes down to how the word "Signs" is interpreted.

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#2230034 - 01/31/20 05:42 PM Re: Advertising a CD rate on the bank Tabbetha, CRCM
Richard Insley Offline
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Toano, VA
I LOVE this kind of discussion: "it all depends on what 'is' is!"

12 C.F.R. § 328 neither provides an onboard definition of the word "sign" nor assigns interpretive authority to an government official or agency. Whenever there's no official definition or interpretation, the effect of the law or regulation turns on the dictionary definition of the word, and possibly its common usage. Webster defines "sign" (in relevant part) as:
"...a display (such as a lettered board or a configuration of neon tubing) used to identify or advertise a place of business or a product."

Looks like a stand-off! Examiners might say your "display" isn't a "sign" and can't be exempt from the normal rule for advertisements. Webster, on the other hand, says that a display that advertises a product IS a "sign."

To me, it would come down to: do I want to pick a fight over this? There are good arguments on both sides, but what David (as a once-upon-a-time FDIC examiner) might know is that the Corporation has issued informal guidance on these sorts of questions.
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#2230035 - 01/31/20 05:44 PM Re: Advertising a CD rate on the bank Tabbetha, CRCM
BrianC Offline
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Illinois
As the message in front of the church said, "If you're waiting for a sign...this is it!"
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#2230036 - 01/31/20 05:47 PM Re: Advertising a CD rate on the bank BrianC
Richard Insley Offline
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Richard Insley
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Toano, VA
Originally Posted by BrianC
"If you're waiting for a sign...this is it!"
I believe this message meets both of Webster's points!
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#2230079 - 01/31/20 10:30 PM Re: Advertising a CD rate on the bank Richard Insley
Compliance NABW Offline
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Thank you for your input, Richard. Sounds like I can rely on Webster if need be wink. I was an OCC examiner, but we never really looked at Compliance beyond BSA/AML, SCRA, and Flood.

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#2230083 - 02/01/20 12:39 AM Re: Advertising a CD rate on the bank Compliance NABW
Richard Insley Offline
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Richard Insley
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Posts: 10,035
Toano, VA
Originally Posted by Compliance NABW
I was an OCC examiner...BSA/AML, SCRA, and Flood.
Commercial examiner, right?
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#2230484 - 02/07/20 04:31 PM Re: Advertising a CD rate on the bank Richard Insley
Compliance NABW Offline
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Posts: 1,577
We didn't, and still don't from what I understand, have a separate compliance exam. It was all one exam, i.e. we did CAMELS along with Information Technology and Consumer Compliance all at same time. But, for Consumer Compliance we were only mandated to review BSA, Flood, and SCRA. Beyond this we were supposed to pick up other Regulations "as time allowed." Time didn't often allow us to do much else wink

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