Understand triggering terms to keep your advertising in compliance

Navigating requirements and considerations when marketing your financial institution’s products and services can sometimes be overwhelming. Often, the primary consideration is the look and feel of the advertisement, but that should never be at the expense of your need to comply with the advertising requirements within federal regulations.

Triggering terms

Triggering terms can vary depending on the product you are advertising but the basic premise is the same. It is the presence of a specific word or phrase that would “trigger” the advertisement to include additional disclosures to the consumer.

The specific triggering term and related requirements are governed by the Truth in Lending Act (for loan-related products) or the Truth in Savings Act (for deposit-related products). Triggering terms require additional disclosure as they may be seen as misleading or unclear if the required content is not disclosed.

Closed-end credit

For closed-end credit advertisements, the triggering terms include the number of payments or period of repayment (30 years or 360 payments), payment amount or the amount of any finance charge. Consider how often such terms are used in advertisements — “terms of up to 60 months,” “$5 per month carrying charge,” “payments as low as $50 per month.” All of those statements are commonplace in advertisements, and all of them are triggering terms.

When you have a triggering term on an advertisement, you must also disclose, in close proximity, the terms of repayment, APR and if the APR may increase after consummation. The terms of repayment include an example loan amount, loan term and loan payment. 

An example might be, “48 monthly payments of $27.83 per $1,000 borrowed.” This example would also include the APR used, such as “15% APR.” If the loan would have a balloon payment, the amount and timing of the balloon payment must be disclosed in close proximity to the minimum payment statement.

Open-end credit

Open-end credit advertisements also include terms that would trigger additional disclosures within the advertisement, including both affirmative and negative statements. The triggering terms include charges imposed under a non-home secured credit plan such as finance charges, late fees, over-the-limit fees, returned item fees, fees for obtaining a cash advance, fees to obtain additional or replacement cards, expedited card delivery fees, application and membership fees, annual and participation fees, credit limit increase fees, fees to make a payment, termination charges, taxes and fees for voluntary credit insurance, debt cancellation or debt suspension plans.

Triggering terms for home equity lines of credit advertisements include finance charges, periodic rates, late payment or credit limit charges, fees for documentary evidence, fees for title, appraisal, credit report fees, taxes, membership or participation fees and termination fees.

Keep in mind that negative terms, such as “no interest charges until May” or “no annual fee” would trigger additional disclosures. If your advertisement includes any of the triggering terms stated above, you must also provide additional disclosures including any minimum fixed, transaction, activity or similar charge that is a finance charge, any periodic rate (expressed as an annual percentage rate, and whether that rate is variable) and any membership or participation fee.  

Deposits

Deposit advertisements may not be misleading or misrepresent the financial institutions’ products. The word “free” is often used in deposit related advertisements, such as “free checking,” which is one of the most common potential issues with deposit advertisements. The term “free” cannot be used if there are any maintenance or activity fees.

Such fees would include things like monthly service charges, per-check transaction fees (with some limitations), low balance fees and fees to open or close an account. The only triggering term to consider with deposit advertisements is the disclosure of an annual percentage yield (APY).

When the APY is stated, the advertisement must include a statement that the rate may change for variable rate accounts, the time period the APY is offered (or the date the rate is accurate as of), the minimum balance required (tiered accounts must include the APY for each tier), minimum opening deposit, a statement that fees could reduce earnings and features of time accounts, where applicable (term, early withdrawal penalty may apply, and required interest payouts, if applicable). The full term “annual percentage yield” must be disclosed at least once in an advertisement, if an APY is disclosed.

In addition, deposit advertisements that include a bonus require additional disclosures. A bonus under the regulation is something of value, worth more than $10, given or offered to a consumer when they open, renew, increase or maintain an account balance. A good example of a bonus is an advertisement stating “Open a checking account and get a $100 statement credit.”

If a bonus is stated in an advertisement, the additional disclosures required are the annual percentage yield, time requirement to obtain the bonus, minimum balance required to obtain the bonus, minimum balance to open the account (if it is more than the balance to obtain the bonus) and when the bonus would be provided. In meeting the disclosure requirements for bonuses, the disclosure of the APY will trigger the other advertising disclosures above.

Compliance tips

Advertisements are not just about the graphics developed by the marketing department. Your compliance team should be involved in the review and prior approval of marketing materials for any medium. In addition, you also want to include the appropriate departmental staff to ensure advertisements include only terms and products that would actually be available or offered by the financial institution.

An effective way to help ensure your advertisements include all necessary disclosures is through implementing checklists by product type that include what content requires additional disclosure and what those disclosures are, to properly vet them prior to publication. The checklist should also include verifying that deposit insurance is included in the proper form, size and location (FDIC-insured banks have new digital signs in 2025), the Equal Housing Opportunity logo is present when required, review for potential UDAP/UDAAP implications and a review for fair lending concerns. Keep in mind that this process should be done for pages on the financial institution’s website as well.

How Wipfli can help

If your financial institution is in need of regulatory advice, Wipfli can help. Our team of industry professionals can help ensure your advertising is in compliance so you can market your products with confidence. Contact us today to learn more, and consider a subscription to ComplianceHelp, with all the tools you need to tackle any regulatory challenge.