The Massachusetts Commissioner of Banks has issued an advisory letter addressing compliance issues with the advertising of deposit accounts under the federal and Massachusetts Truth in Savings laws and Chapter 93A of the General Laws—the Massachusetts consumer protection statute. The March 8 letter gives examples of 2 advertisements discovered by the Division of Banks during recent monitoring that illustrate practices that may be considered unfair or deceptive in violation of those laws. The first is a newspaper ad prominently displaying a high yield savings rate, which is qualified by a note that the rate may change at any time and stating that the date the advertised interest rate was accurate was 20 days before it was published. The Commissioner’s advisory points out that federal Truth in Savings regulations require that an advertisement disclose an APY as of a specified date that must be recent in relation to the publication. The official commentary accompanying the regulation adds that a daily newspaper ad must reflect rates offered “shortly before” the date the rate is published. The second example given in the advisory letter describes a newspaper ad stating an interest rate and APY for a “free” checking account with no ATM fees. However, the fine print discloses that failure to comply with 4 qualifying terms of the account each statement cycle would result in a substantially reduced interest rate as well as charges for ATM transactions. The Commissioner’s advisory recommends that any and all key component terms governing the availability or the effectiveness of an advertised APY should be prominently stated in the body of the advertisement.

Nutter Notes: The Commissioner’s advisory focuses on whether terms of a deposit account are disclosed in a clear and conspicuous manner. The most prominent account term in each of the problematic advertisements highlighted in the advisory letter was the APY. However, the Division found that the most important term—when the offered rate was available or in effect—was included in the least conspicuous part of each advertisement and that other promotional aspects of the account were featured more prominently. In particular, the letter warns that the advertisement of a “free” account should conspicuously list any requirements that could negate that statement, especially when other promotional narrative comments appear in the advertisement. According to the advisory letter, such strategic adverse placement of vital information is not fair to consumers and is inconsistent with the purpose of the laws intended to provide consumers with a means to compare savings rates and terms. The Commissioner’s letter also appeals to depository institutions to review their advertisements to ensure that consumers receive full and fair disclosure of all material terms of an offer, clearly and conspicuously.