Cambridge Savings Bank in suburban Boston has learned just how tricky it can be to comply with the scores of state and federal restrictions on bank advertising.
The bank mailed an open-house invitation to a man listed at a particular address, ignoring the woman who also lived in the house. The woman, Susan von Stuensee, contended that the bank had acted unfairly; she complained to the Massachusetts Commission Against Discrimination.
Experts attending the Bank Administration Institute's compliance conference in Orlando this month said the case highlights the pitfalls banks face every time they advertise.
"You can never know where the potential problem is going to be," said Amy M. Bizar, a senior vice president at Fleet Financial Group.
Though missteps bring fines and bad publicity, a surprising number of lenders aren't complying with major advertising rules, said Ms. Bizar.
Many lenders still don't observe restrictions imposed by the Truth-in- Savings and Truth-in-Lending acts, let alone satisfy the antidiscrimination rules that got Cambridge Savings in trouble, agreed Louise Mickelson, director of regulatory and compliance management at First National Bank, Iowa City.
Some of the biggest gaffes occur in loan-rate promotions.
Lenders forget that they must disclose the annual percentage rate whenever they discuss pricing. For example, any bank ad touting a monthly payment or the amount of a finance charge must include the APR.
Compliance officers also must ensure that ads promoting deposit products include the Federal Deposit Insurance Corp. logo. Even pitches given on the phone while the customer waits on hold must mention FDIC insurance, Ms. Bizar said.
Banks often get in trouble for not realizing that brochures included with a monthly statement, messages on automated teller machine screens, and posters inside branch offices are considered ads, Ms. Mickelson said.
Even the rate boards that adorn most offices are a source of trouble, the experts said. These boards are considered ads once they become visible from outdoors. That means they must include all the disclosures required by Truth-in-Lending and Truth-in-Savings.
Raffles also can get bankers in hot water. Ms. Mickelson said several laws prohibit banks from promoting any raffle, even if it is for a local charity.