(a) Actually available terms. If an advertisement for credit states
specific credit terms, it shall state only those terms that actually
are or will be arranged or offered by the creditor.
(b) Advertisement of terms that require
additional disclosures.
(1) Any term required to be disclosed under
section 1026.6(b)(3) set forth affirmatively or negatively in an advertisement
for an open-end (not home-secured) credit plan triggers additional
disclosures under this section. Any term required to be disclosed
under section 1026.6(a)(1) or (a)(2) set forth affirmatively or negatively
in an advertisement for a home-equity plan subject to the requirements
of section 1026.40 triggers additional disclosures under this section.
If any of the terms that trigger additional disclosures under this
paragraph is set forth in an advertisement, the advertisement shall
also clearly and conspicuously set forth the following:
(i) Any
minimum, fixed, transaction, activity or similar charge that is a
finance charge under section 1026.4 that could be imposed.
(ii) Any periodic rate
that may be applied expressed as an annual percentage rate as determined
under section 1026.14(b). If the plan provides for a variable periodic
rate, that fact shall be disclosed.
(iii) Any membership or participation
fee that could be imposed.
(2) If an advertisement for credit to finance
the purchase of goods or services specified in the advertisement states
a periodic payment amount, the advertisement shall also state the
total of payments and the time period to repay the obligation, assuming
that the consumer pays only the periodic payment amount advertised.
The disclosure of the total of payments and the time period to repay
the obligation must be equally prominent to the statement of the periodic
payment amount.
6-5809
(c) Catalogs or other multiple-page advertisements;
electronic advertisements.
(1) If a catalog or other multiple-page
advertisement, or an electronic advertisement (such as an advertisement
appearing on an Internet Web site), gives information in a table or
schedule in sufficient detail to permit determination of the disclosures
required by paragraph (b) of this section, it shall be considered
a single advertisement if:
(i) The table or schedule is clearly
and conspicuously set forth; and
(ii) Any statement of terms set forth
in section 1026.6 appearing anywhere else in the catalog or advertisement
clearly refers to the page or location where the table or schedule
begins.
(2) A catalog or other multiple-page advertisement or an electronic
advertisement (such as an advertisement appearing on an Internet Web
site) complies with this paragraph if the table or schedule of terms
includes all appropriate disclosures for a representative scale of
amounts up to the level of the more commonly sold higher-priced property
or services offered.
6-5810
(d) Additional requirements for home-equity plans.
(1) Advertisement of terms that require additional disclosures. If
any of the terms required to be disclosed under section 1026.6(a)(1)
or (a)(2) or the payment terms of the plan are set forth, affirmatively
or negatively, in an advertisement for a home-equity plan subject
to the requirements of section 1026.40, the advertisement also shall
clearly and conspicuously set forth the following:
(i) Any
loan fee that is a percentage of the credit limit under the plan and
an estimate
of any other fees imposed for opening the plan, stated as a single
dollar amount or a reasonable range.
(ii) Any periodic rate used to compute
the finance charge, expressed as an annual percentage rate as determined
under section 1026.14(b).
(iii) The maximum annual percentage
rate that may be imposed in a variable-rate plan.
6-5811
(2) Discounted and premium rates. If an advertisement states an
initial annual percentage rate that is not based on the index and
margin used to make later rate adjustments in a variable-rate plan,
the advertisement also shall state with equal prominence and in close
proximity to the initial rate:
(i) The period of time such
initial rate will be in effect; and
(ii) A reasonably current annual percentage
rate that would have been in effect using the index and margin.
(3) Balloon payment. If an advertisement contains
a statement of any minimum periodic payment and a balloon payment
may result if only the minimum periodic payments are made, even if
such a payment is uncertain or unlikely, the advertisement also shall
state with equal prominence and in close proximity to the minimum
periodic payment statement that a balloon payment may result, if applicable.
A balloon payment results if paying the minimum periodic payments
does not fully amortize the outstanding balance by a specified date
or time, and the consumer is required to repay the entire outstanding
balance at such time. If a balloon payment will occur when the consumer
makes only the minimum payments required under the plan, an advertisement
for such a program which contains any statement of any minimum periodic
payment shall also state with equal prominence and in close proximity
to the minimum periodic payment statement:
(i) That a balloon payment
will result; and
(ii) The amount and timing of the balloon payment that will result
if the consumer makes only the minimum payments for the maximum period
of time that the consumer is permitted to make such payments.
(4) Tax implications. An advertisement that
states that any interest expense incurred under the home-equity plan
is or may be tax deductible may not be misleading in this regard.
If an advertisement distributed in paper form or through the Internet
(rather than by radio or television) is for a home-equity plan secured
by the consumer’s principal dwelling, and the advertisement states
that the advertised extension of credit may exceed the fair market
value of the dwelling, the advertisement shall clearly and conspicuously
state that:
(i) The interest on the portion of the
credit extension that is greater than the fair market value of the
dwelling is not tax deductible for Federal income tax purposes; and
(ii) The consumer
should consult a tax adviser for further information regarding the
deductibility of interest and charges.
(5) Misleading
terms. An advertisement may not refer to a home-equity plan as
“free money” or contain a similarly misleading term.
(6) Promotional
rates and payments.
(i) Definitions. The following definitions apply for purposes of paragraph (d)(6)
of this section:
(A) Promotional
rate. The term “promotional rate” means, in a variable-rate plan,
any annual percentage rate that is not based on the index and margin
that will be used to make rate adjustments under the plan, if that
rate is less than a reasonably current annual percentage rate that
would be in effect under the index and margin that will be used to
make rate adjustments under the plan.
(B) Promotional
payment. The term “promotional payment” means:
(1) For a variable-rate plan, any
minimum payment applicable for a promotional period that:
(i) Is not derived by applying the index and
margin to the outstanding balance when such index and margin will
be used to determine other minimum payments under the plan; and
(ii) Is less than
other minimum payments under the plan derived by applying a reasonably
current index and margin that will be used to determine the amount
of such payments, given an assumed balance.
(2) For a plan other than
a variable-rate plan, any minimum payment applicable for a promotional
period if that payment is less than other payments required under
the plan given an assumed balance.
(C) Promotional
period. A “promotional period” means a period of time, less than
the full term of the loan, that the promotional rate or promotional
payment may be applicable.
(ii) Stating
the promotional period and post-promotional rate or payments. If any annual percentage rate that may be applied to a plan is a
promotional rate, or if any payment applicable to a plan is a promotional
payment, the following must be disclosed in any advertisement, other
than television or radio advertisements, in a clear and conspicuous
manner with equal prominence and in close proximity to each listing
of the promotional rate or payment:
(A) The period of time during
which the promotional rate or promotional payment will apply;
(B) In the case of a promotional
rate, any annual percentage rate that will apply under the plan. If
such rate is variable, the annual percentage rate must be disclosed
in accordance with the accuracy standards in sections 1026.40 or 1026.16(b)(1)(ii)
as applicable; and
(C)
In the case of a promotional payment, the amounts and time periods
of any payments that will apply under the plan. In variable-rate transactions,
payments that will be determined based on application of an index
and margin shall be disclosed based on a reasonably current index
and margin.
(iii) Envelope
excluded. The requirements in paragraph (d)(6)(ii) of this section
do not apply to an envelope in which an application or solicitation
is mailed, or to a banner advertisement or pop-up advertisement linked
to an application or solicitation provided electronically.
(e) Alternative
disclosures—television or radio advertisements. An advertisement
made through television or radio stating any of the terms requiring
additional disclosures under paragraphs (b)(1) or (d)(1) of this section
may alternatively comply with paragraphs (b)(1) or (d)(1) of this
section by stating the information required by paragraphs (b)(1)(ii)
or (d)(1)(ii) of this section, as applicable, and listing a toll-free
telephone number, or any telephone number that allows a consumer to
reverse the phone charges when calling for information, along with
a reference that such number may be used by consumers to obtain the
additional cost information.
(f) Misleading terms. An advertisement may
not refer to an annual percentage rate as “fixed,” or use a similar
term, unless the advertisement also specifies a time period that the
rate will be fixed and the rate will not increase during that period,
or if no such time period is provided, the rate will not increase
while the plan is open.
(g) Promotional rates and fees.
(1) Scope. The requirements of this paragraph apply to any advertisement of
an open-end (not home-secured) plan, including promotional materials
accompanying applications or solicitations subject to section 1026.60(c)
or accompanying applications or solicitations subject to section 1026.60(e).
(2) Definitions.
(i) Promotional
rate means any annual percentage rate applicable to one or more
balances or transactions on an open-end (not home-secured) plan for
a specified period of time that is lower than the annual percentage
rate that will be in effect at the end of that period on such balances
or transactions.
(ii) Introductory rate means a promotional rate offered in
connection with the opening of an account.
(iii) Promotional period means
the maximum time period for which a promotional rate or promotional
fee may be applicable.
(iv) Promotional fee means a fee required to be disclosed
under section 1026.6(b)(1) and (2) applicable to an open-end (not
home-secured) plan, or to one or more balances or transactions on
an open-end (not home-secured) plan, for a specified period of time
that is lower than the fee that will be in effect at the end of that
period for such plan or types of balances or transactions.
(v) Introductory fee means a promotional fee offered in connection with the opening of
an account.
(3) Stating the term “introductory”. If any annual percentage rate or fee that may be applied to the
account is an introductory rate or introductory fee, the term introductory
or intro must be in immediate proximity to each listing of the introductory
rate or introductory fee in a written or electronic advertisement.
(4) Stating the promotional period and post-promotional
rate or fee. If any annual percentage rate that may be applied
to the account is a promotional rate under paragraph (g)(2)(i) of
this section or any fee that may be applied to the account is a promotional
fee under paragraph (g)(2)(iv) of this section, the information in
paragraphs (g)(4)(i) and, as applicable, (g)(4)(ii) or (iii) of this
section must be stated in a clear and conspicuous manner in the advertisement.
If the rate or fee is stated in a written or electronic advertisement,
the information in paragraphs (g)(4)(i) and, as applicable, (g)(4)(ii)
or (iii) of this section must also be stated in a prominent location
closely proximate to the first listing of the promotional rate or
promotional fee.
(i) When the promotional rate or promotional
fee will end;
(ii)
The annual percentage rate that will apply after the end of the promotional
period. If such rate is variable, the annual percentage rate must
comply with the accuracy standards in sections 1026.60(c)(2), 1026.60(d)(3),
1026.60(e)(4), or 1026.16(b)(1)(ii), as applicable. If such rate cannot
be determined at the time disclosures are given because the rate depends
at least in part on a later determination of the consumer’s creditworthiness,
the advertisement must disclose the specific rates or the range of
rates that might apply; and
(iii) The fee that will apply after
the end of the promotional period.
(5) Envelope
excluded. The requirements in paragraph (g)(4) of this section
do not apply to an envelope or other enclosure in which an application
or solicitation is mailed, or to a banner advertisement or pop-up
advertisement, linked to an application or solicitation provided electronically.
(h) Deferred
interest or similar offers.
(1) Scope. The requirements of this paragraph apply to any advertisement of
an open-end credit plan not subject to section 1026.40, including
promotional materials accompanying applications or solicitations subject
to section 1026.60(c) or accompanying applications or solicitations
subject to section 1026.60(e).
(2) Definitions. “Deferred interest” means finance charges, accrued on balances or
transactions, that a consumer is not obligated to pay or that will
be waived or refunded to a consumer if those balances or transactions
are paid in full by a specified date. The maximum period from the
date the consumer becomes obligated for the balance or transaction
until the specified date by which the consumer must pay the balance
or transaction in full in order to avoid finance charges, or receive
a waiver or refund of finance charges, is the “deferred interest period.”
“Deferred interest” does not include any finance charges the consumer
avoids paying in connection with any recurring grace period.
(3) Stating the deferred interest period. If a deferred interest
offer is advertised, the deferred interest period must be stated in
a clear and conspicuous manner in the advertisement. If the phrase
“no interest” or similar term regarding the possible avoidance of
interest obligations under the deferred interest program is stated,
the term “if paid in full” must also be stated in a clear and conspicuous
manner preceding the disclosure of the deferred interest period in
the advertisement. If the deferred interest offer is included in a
written or electronic advertisement, the deferred interest period
and, if applicable, the term “if paid in full” must also be stated
in immediate proximity to each statement of “no interest,” “no payments,”
“deferred interest,” “same as cash,” or similar term regarding interest
or payments during the deferred interest period.
(4) Stating the
terms of the deferred interest or similar offer. If any deferred
interest offer is advertised, the information in paragraphs (h)(4)(i)
and (h)(4)(ii) of this section must be stated in the advertisement,
in language similar to Sample G-24 in Appendix G to this part. If
the deferred interest offer is included in a written or electronic
advertisement, the information in paragraphs (h)(4)(i) and (h)(4)(ii)
of this section must also be stated in a prominent location closely
proximate to the first statement of “no interest,” “no payments,”
“deferred interest,” “same as cash,” or similar term regarding interest
or payments during the deferred interest period.
(i) A statement
that interest will be charged from the date the consumer becomes obligated
for the balance or transaction subject to the deferred interest offer
if the balance or transaction is not paid in full within the deferred
interest period; and
(ii) A statement, if applicable, that interest will be charged from
the date the consumer incurs the balance or transaction subject to
the deferred interest offer if the account is in default before the
end of the deferred interest period.
(5) Envelope
excluded. The requirements in paragraph (h)(4) of this section
do not apply to an envelope or other enclosure in which an application
or solicitation is mailed, or to a banner advertisement or pop-up
advertisement linked to an application or solicitation provided electronically.
