“ A Consumer Oriented Approach”

1. “ A Consumer Oriented Approach” Deposit Advertising Compliance R. J. Howells Vice President Certified Compliance Officer, CRP Farmington Savings bank

2. What is a “Consumer Oriented Approach”? Simply put – “When designing an advertisement that promotes a product or service, ask yourself the following question; What will a consumer or customer infer from this advertisement?” - -R. J. Howells

3. Therefore; “Make sure that all advertisements, in any form, contain true and accurate statements that cannot be misinterpreted by a perspective customer. Make sure that the stated terms are actually available, and that required disclosures are included.”

4. What is an Advertisement? “A commercial message, in virtually any form that promotes either directly or indirectly, the availability of a product, attract public attention or patronage to a product or service.”

5. All “Media” Is Covered! • Radio • Television • Print Advertisements • Internet Advertisements - - The internet is considered a print medium • Billboards and Signs - - Billboards and in branch Rate Boards are also considered advertising • Customer Provided Rate Sheets - - Publications in which the institution has no control are not covered

6. Regulatory Resources – • Regulation DD – Truth In Savings; TISA - -http://www.federalreserve.gov/regulations/title12/sec230/12cfr230 01.htm • Fed’s Regulation DD Compliance Guide - -http://www.federalreserve.gov/regulations/cg/regddcg.htm • FDIC signs and logo page - -http://www.fdic.gov/regulations/resources/signage/index.html • FDIC new official sign and advertising statement - -http://a257.gakamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/ 2006/pdf/E6-18802.pdf

7. Regulatory Requirements – • 12 CFR 230; Regulation DD – TISA • FDIC Part 328 Advertisement of Membership • FTC Rules – UDAP; Unfair or Deceptive Acts or Practices • CGS §42-110b; CUTPA; Connecticut Unfair Trade Practices Act

8. Advertisement of Terms – • Must advertise the terms that are actually available • Advertisements cannot be misleading or deceptive – “Bait & Switch” • Cannot use the terms “Free” or “No-Cost” unless none exist - - Minimum balance, excessive transactions, service fees, activity charges, etc. - - Fees for ordering checks, NSF fees and dormancy fees are not activity charges - - ATM or electronic service fees are not activity charges if account could be obtained without the service - - A service may be advertised as free, even if the account is not so long as that is stated. - - Advertising an account as “Free” as long as conditions are met, is acceptable as long as the conditions are stated.

9. Triggering Terms – “A triggering term is the use of one particular term that in itself triggers a requirement for additional disclosures.” • If either the “APY” or a “bonus” are disclosed in an advertisement, additional disclosures must also be made in the advertisement • Some exemptions apply depending on the type of media - - In an oral inquiry, the Interest Rate and APY alone are not trigger terms. - - In broadcast media, outdoor media and telephone response machines, certain other disclosures are not required due to the limitations of space and time - - Indoor signs are exempt from certain disclosures as long as a statement that the consumer should ask for more details is provided

10. When an “Interest Rate” is advertised, the “Annual Percentage Yield” must also appear, using that term. • The APY may be stated without an Interest Rate, but the Interest Rate may not be stated without the APY!” • The abbreviation “APY” may be used in the advertisement as long as the term “Annual Percentage Yield” is used at least once in the advertisement • If both the Interest Rate and APY are stated, the Interest Rate cannot be more conspicuous than the “APY” • Both the Interest Rate and “APY” must be disclosed to two decimal places • When advertising a tiered rate (or stepped rate) account, the interest rate and “APY” for each tier must be included Annual Percentage Yield –

11. Bonuses – • A “Bonus” is something, (cash, merchandise) given to a customer in connection with opening or maintaining an account, where the value is over $10, (yearly calculation) If a “Bonus” is stated in an advertisement, the following additional disclosures are required; • The “Annual Percentage Yield”, using that term • The time requirement to obtain the bonus • The minimum balance required to obtain the bonus • The minimum balance required to open the account, if it is greater than the minimum balance required to obtain the bonus • When the bonus will be provided

12. Broadcast Media – Includes radio, TV, outdoor billboards, and telephone. “Internet” disclosures ARE NOT considered broadcast media. If the APY or a Bonus is stated in broadcast media advertisements then the following additional disclosures are required; • The minimum balance required to earn the APY - - For tiered rate accounts the minimum for each tier must be shown • The term of the account for time products • If a bonus is stated, the APY and all related disclosures - - Bonuses cannot be stated by themselves, (without the APY)

13. Print Media – Includes newspaper, magazine, internet, brochures, etc. If the APY or a Bonus is stated in print media advertisements then the following additional disclosures are required; • Variable Rate – For variable rate accounts, a statement that the rate may change after the account is opened • The time period the Annual Percentage Yield will be offered, or a statement that the Annual Percentage Yield is Accurate as of a specified date • The minimum balance required to obtain the APY. For tiered rate accounts, the minimum for each tier must be disclosed • The minimum required to open the account, if it is greater than the minimum required to obtain the APY • A statement that fees could reduce earnings

14. Print Media (Continued) – If the APY or a Bonus is stated in print media advertisements for time accounts, then the following additional disclosures are required; • Time Requirements – The term of the account • Early Withdrawal Penalties – A statement that a penalty may or will be imposed for early withdrawal • Required Interest Payouts – For non-compounding 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 the payout of interest is mandatory. • A statement that the APY assumes interest remains on deposit until maturity and that a withdrawal will reduce earnings

15. Signage – “On premises” signs are exempt from the Broadcast and Print Media requirements, but have their own requirements. An “On premises” sign is any indoor sign, whether or not it can be viewed from outside. * • Rate boards, Computer Screens, counter displays. • Any form of advertising that cannot be obtained and kept by the consumer • Signs posted outside the institution are not “On premises” “On premises” sign advertising requirements – • Rates must be advertized as “APY” • The Interest Rate may also be disclosed, but not alone and using only that term • If the APY is disclosed, a statement that the consumer should ask for more information about fees and terms • For tiered rate accounts, the lower dollar amount to get the listed tier • For Time accounts, the term and substantial penalty statement

16. FDIC Advertisement of Membership – The official FDIC membership statement, “Member FDIC” must appear on certain advertisements. • Must be included on all print advertisements where a deposit product is advertised. • Is permissible on a loan advertisement but not required • Should NOT appear on any advertisement for Non-Deposit investment products • Must appear on your web-site on each page that can be viewed separately by a mouse “Click”. Should also be located where readily viewable. • Not required on building premises signs that only identify your institution, however if a sign that contains only your name is posted at any location other than your own facilities, for example at a town fair, town green or a building construction site that may promote your products or services, the official “Member FDIC” statement is required

17. FDIC Advertisement of Membership – In addition, the official FDIC signs must be place “Wherever customer deposits are excepted? This includes the following areas. • At each teller station, or at least between each but not more than one space away from a teller station and or on top of designated roped line entrances • At deposit preparation counters • In each customer service representative desk where new accounts are opened • At ATM machines where deposits are accepted • Must not be posted in close proximity to any office, sign, brochure or other designated areas where non-deposit investment products are sold or inquired upon, (close proximity means a reasonable distance of not less than 6 feet)

18. Non-Insured Investment Products – When advertising NDIP products, do NOT include the official FDIC membership statement. The following disclosures are required when advertising NDIP products; • NOT FDIC INSURED • MAY LOSE VALUE • NO BANK QUARANTEE When advertising both insured products and non-insured NDIP products, make sure proper disclosures are made for both types of products. In addition, make sure that the insured and un-insured products are properly segregated to ensure that consumers could not confuse the insurance applicability.