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#2241182 - 08/18/20 05:44 PM When is a letter an Ad?
bhazzard Offline
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Joined: Dec 2010
Posts: 114
Our institution is getting ready to send letters to existing HELOC customers that offer a low 6 month fixed promotional rate for an taking an advancement of $5,000 or more. The letter states the promo APR and is being sent to individuals who have the availability and meet the credit terms. I sent the letter to two 3rd party services and both stated that it is an advertisement, and we need to include the extended disclosures for a HELOC. I am not arguing that point but the business line is, as we have offered similar ones before and prior compliance reviewers said it was not.

Does anyone have an opinion one way or another, or experience with advertising a similar offer?

Thanks

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#2241187 - 08/18/20 05:58 PM Re: When is a letter an Ad? bhazzard
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,598
Cape Cod
2(a)(2) Advertisement

1. Coverage. Only commercial messages that promote consumer credit transactions requiring disclosures are advertisements. Messages inviting, offering, or otherwise announcing generally to prospective customers the availability of credit transactions, whether in visual, oral, or print media, are covered by Regulation Z (12 CFR part 1026).

i. Examples include:

* * *

H. Letters sent to customers or potential customers as part of an organized solicitation of business.

* * *

J. Communications promoting a new open-end plan or closed-end transaction.

--- (Comment 2(a)(2)- to Reg Z, emphasis added.

The bank is hoping to get added business from the mailing. There is no way it would not be an advertisement.
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#2241190 - 08/18/20 06:04 PM Re: When is a letter an Ad? bhazzard
bhazzard Offline
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Joined: Dec 2010
Posts: 114
Thank you John!

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#2241291 - 08/19/20 07:59 PM Re: When is a letter an Ad? bhazzard
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,598
Cape Cod
I'm going to recant my earlier opinion after re-reading the OP more carefully. The letters in question are to existing HELOC customers that offer a low 6 month fixed promotional rate for taking an advance of $5,000 or more. The letter states the promo APR and is being sent to individuals who have the availability and meet the credit terms.

That sort of letter does fall under a specific exemption under comment 2(a)(2)-1.ii.F:

ii. The term [advertisement] does not include:

***

F. Communications about an existing credit account (for example, a promotion encouraging additional or different uses of an existing credit card account).
Last edited by John Burnett; 08/19/20 08:01 PM.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
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