1. Internet Advertising
Compliance

2. Compliance Risk
 Compliance risk is the risk to earnings or capital arising from violations
of, or non-conformance with, law, rules, regulations, prescribed
practices, or ethical standards.
 Compliance risk arises in situations where the laws or rules
governing certain activities or clients may be ambiguous
or untested. Compliance risk exposes the institution to fines, civil
money penalties, payment of damages. * Civil and Criminal *
 Compliance risk can lead to a diminished reputation, limited business
opportunities, and lack of contract enforceability.
 A portion of compliance risk is sometimes referred to as legal risk. This
is not limited solely to risk from failure to comply with consumer
protection laws; it encompasses all laws as well as prudent ethical
standards.

3. Reputation Risk
 Reputation risk is the risk to earnings or capital arising from
negative public opinion.
 This affects your ability to establish new relationships or
services, or continue servicing existing relationships. This
risk can expose you to litigation, financial loss, or damage to
its reputation.
 Reputation risk creates the responsibility to exercise an
abundance of caution in dealing with their customers and
community.
 The assessment of reputation risk recognizes the potential
impact of the public’s opinion on a company’s value. This
risk is inherent in all activities.

4. Why Do I Care About Compliance?
Because I have to…

5. Federal Trade Commission
 Reg Z (12 C.F.R. 226.2 (a)(2))
 an advertisement is any medium that promotes,
directly or indirectly, a credit transaction.
 The FTC has the authority to act in the interest of
all consumers to prevent deceptive or unfair acts
and practices.
 Advertisements must be:
 truthful and fair
 not misleading

6. FTC Advertising Guidance
Truthful and Fair
 Misrepresentation (false or misleading
information):
 Misrepresent material facts or
 Make false promises
In order to influence, persuade or induce an
applicant for a mortgage loan.
 Conceal any material factors, terms or conditions
of a transaction pertinent to an applicant for a
mortgage loan.
 The F word … Fraud

7. Federal Trade Commission
Advertising Guidance
 Puffing: usually not considered
misrepresentation … an opinion that is not
necessarily intended as a representation of
fact “best customer service in town”
 Negligence: misrepresentation through
negligence may not be actionable fraud, but
we are obligated to protect the consumer by
being factually accurate in our advertising.

8. Federal Trade Commission
Advertising Guidance
When claiming fraud or deception …
 May not be necessary to prove financial harm in the
transaction.
 Remember … misstatement, misrepresentation or
ommission.
 Material Facts are those that if known, might
have caused a reasonable consumer to make a
different decision.
 You need to know your required TILA disclosures

9. Triggering Terms Requiring Disclosure
 The amount of the down payment
 The amount of any payment
 The number of payments
 The period of repayment
 The amount of any finance charge

10. Terms That Do NOT Trigger Required
Disclosures
 “No down payment.”
 “12% Annual Percentage Rate loan available
here.”
 “Easy monthly payments.”
 “FHA financing available.” or “100% VA
financing available.”
 “Terms to fit your budget.”

11. Required Advertising Disclosures
 If any triggering terms are used in an ad, all of
these disclosures must be made:
 Amount or percentage of down payment
 Terms of repayment
 APR (spelled out in full); if the note rate may
increase (e.g., ARMs), that fact must also be
disclosed
 If an ad discloses on the APR, the additional
disclosures are not required

12. Reg Z: Misleading Statements and
Misrepresentation
226.24 Prohibits:
 Making any statement that the product offered
is a “government loan program”, government-
sponsored loan”, or is otherwise endorsed by
the gov’t.
 Using the term “counselor” in an
advertisement to refer to a for-profit …

13. Reg Z: Misleading Statements and
Misrepresentation
226.24 Prohibits:
 Using the name of the consumer’s current lender in
an advertisement that is not sent by or on behalf of
the consumer’s current lender, unless the
advertisement also discloses with equal prominence
 the name of the person or the creditor making the
advertisement
 and includes a clear and conspicuous statement that the
person making the advertisement is not associated with, or
acting on behalf of, the consumer’s current lender.

14. FTC Policy Statement on Deception
 An ad is deceptive if it contains a statement – or omits
information – that
 is likely to mislead consumers acting reasonably under the
circumstances or
 is material to a consumer’s decision …
 Practices related to mortgage ads that have been found to
be misleading or deceptive include:
 False representations or omissions
 Misleading price claims
 Use of bait and switch techniques
 Failure to perform promised services

15. FTC Policy Statement on Unfairness
 An ad is unfair if:
 It causes, or is likely to cause, substantial consumer injury
which a consumer could not possibly avoid; and,
 It is not outweighed by the benefit to consumers.
 For an injury to be considered unfair, it must be
substantial and in most cases involves monetary
harm.
 Also, could the consumer have reasonably avoided
injury?
 Ex. predatory lending schemes

16. Questions to Consider
• Does your advertising make your customers satisfied that
they do business with you?
• Are you avoiding impossible promises and guarantees?
• Are your advertised programs readily available?
• Do you mean to sell what you advertise?
• Do your ads avoid misleading inferences?
• Do your advertised terms agree with the facts?
• Is your advertising easy to understand without asterisks and
fine print?
• Do you believe your own comparatives?

17. Clear and Conspicuous
 FTC Dot Com Disclosure provides guidance
on making disclosures clear and conspicuous.
 placement and proximity are critical.
 Place disclosures near, and when possible, on the
same screen as triggering claim.
 Use text or visual cues to encourage consumers to
scroll down when it is necessary to view a
disclosure.

18. Clear and Conspicuous
 If using hyperlinks to lead to disclosures, make
the link obvious, label the hyperlink
appropriately to convey the importance of the
information it leads to, and take consumers
directly to the disclosure.
 Note: burying disclosures in a link probably will
not meet the letter of the law.

19. Clear and Conspicuous
 Prominently display disclosures so they are
noticeable to consumers, and evaluate the size,
color and graphic treatment of the disclosure in
relation to other parts of the page.
 Review the entire ad to ensure that other elements
– text, graphics, hyperlinks or sound – do not
distract consumers’ attention from the
disclosure.
 Repeat disclosures – as needed – on lengthy
websites and in connection with repeated claims.

20. Clear and Conspicuous
 Repeat disclosures – as needed – on lengthy
websites and in connection with repeated claims.
 Display visual disclosures for a duration
sufficient for consumers to notice, read and
understand them.
 Use clear language and syntax so that consumers
understand the disclosures.

21. Federal Fair Housing Act or Title VIII of
the Civil Rights Act of 1968
A. Prohibits discrimination based on:
1. Race
2. Color
3. Religion
4. Sex
5. National origin
6. Disability
7. Familial status
B. Covers all housing transactions and services including
advertising, rentals, sales, lending, and insurance, as well as
harassment.
C. Prohibits using discriminatory advertising or any other notice that
indicates a limitation or preference or intent to make any
limitation, preference, or discrimination.

22. IMPLY vs. INFER
IMPLY = to put the suggestion into the message (sender implies)
INFER = to take the suggestion out of the message (receiver infers)
IMPLICATION = what the sender has implied
INFERENCE = what the receiver has inferred

23. Fair Housing in Advertising
A. Prohibits using discriminatory
advertising that indicates a limitation or
preference.
B. Advertising can not convey a message
• preference for or against any protected
group, whether through words, pictures or
other images.

24. Fair Housing in Advertising
B. Use of Words, Phrases or Symbols
1. The use of words, phrases, and symbols to convey
overt or implicit discriminatory preferences or
limitations is prohibited.

25. Fair Housing in Advertising
catchwords - words and phrases used in a discriminatory context
should be avoided. (e.g.
restricted, exclusive, private, integrated)
Catchwords convey preferences for one group over another or
send signals about a community's makeup.
symbols and logotypes which imply a protected class

26. Fair Housing in Advertising
colloquialisms - words or phrases used regionally or locally that
seeks to imitate informal speech which imply or suggest a
protected class
Colloquialisms or colloquial language is considered to be
characteristic of or only appropriate for
casual, ordinary, familiar, or informal conversation rather
than formal speech or writing.
Slang or Dialect

27. Fair Housing in Advertising
 24 CFR Part 109 is no longer officially part of the Code of
Federal Regulations. Part 109 was withdrawn from the Code
of Federal Regulations by directive no. FR-4029-F-
01, effective May 1, 1996. We have included the Part 109
regulations here because they still apparently represent the
position of HUD on advertising, except as superceded by
Roberta Achtenberg's memo of Jan. 9, 1995.

28. Human Model Advertising
1. Real estate and Lending advertising including photos or
drawings may not be used to indicate exclusiveness.
2. Should be clearly definable as reasonably representing
majority and minority groups in the metropolitan area, both
sexes, and when appropriate, families with children.
3. Should portray persons in equal social settings and indicate to
the general public that the housing is open to all without
regard to race, color, religion, sex, handicap (disability)
familial status or national origin, and is not for the exclusive
use of one such group.

29. D. Equal Housing Opportunity Symbols
1. All advertising for the sale, rental, or financing of housing
should contain an equal housing opportunity logo, statement
or slogan.
2. Logo or statement should be a part of each advertisement and
should be placed in visible location and be a comparable size
of other symbols or text used in the advertisement.
3. Applicable to advertisement for sale, rental and financing of
housing.

30. Ragin v. The New York Times
Ragin v. The New York Times Co., 923 F.2d 995 (2d Cir.), cert. denied, 502
U.S. 821 (1991):
The New York Times, a publisher, was found in violation of the Fair
Housing Act for the longstanding practice of allowing the publication of
advertisements using "human models" that did not reasonably represent
the percentage of blacks and other minorities in the New York City
metropolitan area.
The ruling showed that a plaintiff alleging discrimination need not
establish that the defendant intended to express a racial preference in the
ad.

31. Things to Consider
 Email correspondence
 Websites
 Blog correspondence (posts and comments)
 Links to 3rd Party Sites
 Real Estate Advice Online Services
 Zillow Advice, Trulia Advice. Yahoo!
Answers, LinkedIn Answers
 Interaction in online communities and social
media platforms
 Facebook
 Twitter