I was asked to write the disclosure for a HELOC advertisement recently and realized it’s been many years since I had done so. I needed a refresher on the rules so I checked out Regulation Z to find out what the rules are for HELOC ads.  There’s an entirely different set of rules that closed end credit ads but I realized it really boils down to telling the consumer about three important things:

1. What are the costs to obtain the loan and to maintain it each year?
2. What are the terms of the repayment of the loan?
3. What finance charges apply, ie. what’s the APR, and how do you calculate the rate that can change over the term of the loan?

We added a new page that discusses all of these rules for HELOC Ads. Check it out at: HELOC Disclosures – How to Advertise a Home Equity Line of Credit.

Troutman Sanders law firm put out a good article on two recent FTC enforcements. “Given these decisions, it is particularly important for businesses engaged in internet marketing to carefully consider the search terms they use to drive customers to their websites. If words purporting to describe a product or service would not be accurate when stated directly to consumers through traditional advertising, then businesses should not use those words to describe their goods or services through keywords.”

Summary from the Troutman Sanders LLP article: These two companies were charged with deceptive trade practices.
1) Lumos Labs, Inc., the owner of the online “brain game” portal Lumosity was charged for deceptive trade practices for making it sound like their brain puzzle game could help prevent Alzheimer’s disease. The FTC complaint against Lumocity stated: “Defendants have employed an extensive search engine campaign, including through Google AdWords, and have purchased hundreds of keywords, including many variations of words related to memory, attention, intelligence, brain, cognition, dementia, and Alzheimer’s disease.”

2) Stratford, a for profit web-based school offering degrees to students seeking high school diplomas engaged in deceptive trade practices by misrepresenting that their high school equivalency course would give its graduates he program would help students with career advancement and enable them to apply to college (this was not true, the program they offered fell short of the required courses and many employers and colleges did not view this as the equivalent of a high school diploma). “The search terms Strafford bought were “official high school diploma,” “high school diploma equivalent,” and “real high school diploma online,” in order to direct potential students to the Stratford website.”




So what we learn here is we need to be careful about the actual keywords we buy to promote our services if such keywords are not representative of the products or services we are offering. Note that the keyword purchases were a factor among other advertising done by these companies and the totality of the circumstances will likely be reviewed by the regulator to find the violation.

For the entire Troutman Sanders Article – see FTC Looks to Purchased Search Terms in Deceptive Advertising Complaints

Sometimes mortgage advertisers are not fully aware of the Regulation Z “Triggering Terms” rules that require additional disclosures to be made in your mortgage ad. Here’s a quick review of the Triggering Terms that come straight from Reg Z 1026.24:

(d) Advertisement of terms that require additional disclosures—(1) Triggering terms. If any of the following terms is set forth in an advertisement, the advertisement shall meet the requirements of paragraph (d)(2) of this section:

(i) The amount or percentage of any down payment.

(ii) The number of payments or period of repayment.

(iii) The amount of any payment.

(iv) The amount of any finance charge.

If any of the above terms are in your ad the following additional disclosures must be made:

(2) Additional terms. An advertisement stating any of the terms in paragraph (d)(1) of this section shall state the following terms, as applicable (an example of one or more typical extensions of credit with a statement of all the terms applicable to each may be used):

(i) The amount or percentage of the down payment.

(ii) The terms of repayment, which reflect the repayment obligations over the full term of the loan, including any balloon payment.

(iii) The “annual percentage rate,” using that term, and, if the rate may be increased after consummation, that fact.

Application of the Rules:  Stating the amount of down payment and the APR is easy. The more detailed disclosure involves the statement regarding the terms of repayment. If for example you are advertising 3% down payment loans and you do not already have a mortgage payment or interest rate in your ad, the best way to handle this is to disclose a 30 year fixed rate loan example, the payment amount and the rate that was used as of the date of creation of your ad.