[Annmichele]

Our marketing team wants to post an ad that states, “Grand Opening Special 15-month certificate of deposit. Call for Rate.” Is this allowed? Not to give a rate. UDAAP is in the back of my mind….
Thanks,
Ann Michele

[Kimberly Boatwright, CAMS, CRCM]

For CD advertisement or anything account earing interest for that matter. Reg DD states:

RATES AND YIELDS
Section 230.8(b) restricts the use of rates in advertisements. First, if an advertisement states a rate of return, the rate must be identified as an “annual percentage yield” (using that term). No other term can be used except for “interest rate,” provided it is stated in conjunction with the annual percentage yield. The abbreviation “APY” may be used if the term “annual percentage yield” is stated at least once in the advertisement. Often, advertisements will use the abbreviation in the text of the advertisement and direct the consumer to the bottom of the advertisement for the expansion of the abbreviation. Second, if the annual percentage yield is stated in an advertisement, §230.8(c) requires that the following additional disclosures be made clearly and conspicuously:
• Variable rates. For variable-rate accounts, a statement that the rate may change after the account is opened.
• Time annual percentage yield is offered. The period of time the annual percentage yield will be offered or a statement that the annual percentage yield is accurate as of a specified date.
• Minimum balance. The minimum balance required to obtain the advertised annual percentage yield. For tiered-rate accounts, the minimum balance required for each tier shall be stated in close proximity and with equal prominence to the applicable annual percentage yield.
• Minimum opening deposit. The minimum deposit required to open the account, if it is greater than the minimum balance necessary to obtain the advertised annual percentage yield.
• Effect of fees. A statement that fees could reduce the earnings on the account.
• Features of time accounts. For time accounts:
o Time requirements. The term of the account.
o Early withdrawal penalties. A statement that a penalty will or may be imposed for early withdrawal.
o Required interest payouts. For noncompounding time accounts with a stated maturity greater than one year that do not compound interest on an annual or more frequent basis, that require interest payouts at least annually, and that disclose an APY determined in accordance with section E of Appendix A of the regulation, a statement that interest cannot remain on deposit and that payout of interest is mandatory.

Recognizing Reg DD doesn’t address when no rate is used, but UDAAP and UDAP speak to unfairness and is a foundation to Fair Banking. I can see your concern with no rate. Because the question in my mind is someone getting quoted something different? Why can’t the rate and APY be in the add? etc.

Ultimately, this would be a business decision. But I agree it needs to be looked at through a UDAP lens.

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