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Advertising was sent out to all of the bank’s service area to tell consumers about the bank’s lending products – in general terms. There were no triggering terms – as it relates to compliance disclosures under Regulation Z. The purpose was to tell consumers that the bank is here and available to help with credit needs for homes, cars, credit cards, etc. Would UDAAP apply to such a general advertisement?
Potentially. Regulation B states that “A creditor shall not make any oral or written statement, in advertising or otherwise, to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application.”
If, for example, the wording in the advertisement could be construed to discourage a potential applicant, it could be a Regulation B and a UDAAP concern.
Similarly, if for some reason, the bank didn’t list on some of the advertisements the branches or offices in certain areas; or encouraged people to go to mortgage offices only in certain areas that aren’t in minority communities, it could be viewed as discriminatory.
Whenever the bank advertises, it must ensure that all aspects of the marketing and follow up that accompanies the advertising compliments the marketing strategy including intent of the message, listing all offices, targets all of the service area; that marketing scripts for follow up calls are in compliance and support the message, and that personnel are trained accordingly.
Fair lending is always a consideration for advertisements with regard to potential redlining, steering, and disparate treatment issues.
Reference: FED Consumer Compliance Handbook, UDAAP, December 2016 page 4. Regulation B 12 CFR 1002.4 Fair lending examination procedures.