12 U.S.C. § 4302: Disclosure of interest rates…

Summary

If a bank or deposit broker advertises a specific interest rate for a checking or savings account, the ad must also show other clear facts so people are not misled. Ads must show the annual percentage yield (APY), how long that APY lasts, any minimum balance or time rules needed to earn the APY (and if there are different APYs, each APY must be shown next to its required minimum), the smallest first deposit needed if it is higher than the balance needed to earn the APY, a note that fees or other rules can lower the yield, and a notice that taking money out early can cause an interest penalty. The Consumer Financial Protection Bureau can allow TV, online, or outdoor ads off bank property to skip the initial-deposit or fee-warning if it would be too hard to include. A sign on bank premises only needs the APY and a note to ask an employee for fee and term details. Ads may not call an account “free” or “no cost” if a minimum balance, transaction limit, or regular fee applies. Ads must not be inaccurate or misleading.

Title 12, §4302

Banks and Banking, Source: USLM XML via OLRC

(a)In general

Except as provided in subsections (b) and (c), each advertisement, announcement, or solicitation initiated by any depository institution or deposit broker relating to any demand or interest-bearing account offered by an insured depository institution which includes any reference to a specific rate of interest payable on amounts deposited in such account, or to a specific yield or rate of earnings on amounts so deposited, shall state the following information, to the extent applicable, in a clear and conspicuous manner:

(1)The annual percentage yield.

(2)The period during which such annual percentage yield is in effect.

(3)All minimum account balance and time requirements which must be met in order to earn the advertised yield (and, in the case of accounts for which more than 1 yield is stated, each annual percentage yield and the account minimum balance requirement associated with each such yield shall be in close proximity and have equal prominence).

(4)The minimum amount of the initial deposit which is required to open the account in order to obtain the yield advertised, if such minimum amount is greater than the minimum balance necessary to earn the advertised yield.

(5)A statement that regular fees or other conditions could reduce the yield.

(6)A statement that an interest penalty is required for early withdrawal.

(b)Broadcast and electronic media and outdoor advertising exception

The Bureau may, by regulation, exempt advertisements, announcements, or solicitations made by any broadcast or electronic medium or outdoor advertising display not on the premises of the depository institution from any disclosure requirements described in paragraph (4) or (5) of subsection (a) if the Bureau finds that any such disclosure would be unnecessarily burdensome.

(c)Disclosure required for on-premises displays

The disclosure requirements contained in this section shall not apply to any sign (including a rate board) disclosing a rate or rates of interest which is displayed on the premises of the depository institution if such sign contains—

(1)the accompanying annual percentage yield; and

(2)a statement that the consumer should request further information from an employee of the depository institution concerning the fees and terms applicable to the advertised account.

(d)Misleading descriptions of free or no-cost accounts prohibited

No advertisement, announcement, or solicitation made by any depository institution or deposit broker may refer to or describe an account as a free or no-cost account (or words of similar meaning) if—

(1)in order to avoid fees or service charges for any period—

(A)a minimum balance must be maintained in the account during such period; or

(B)the number of transactions during such period may not exceed a maximum number; or

(2)any regular service or transaction fee is imposed.

(e)Misleading or inaccurate advertisements, etc., prohibited

No depository institution or deposit broker shall make any advertisement, announcement, or solicitation relating to a deposit account that is inaccurate or misleading or that misrepresents its deposit contracts.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2010—Subsec. (b). Pub. L. 111–203 substituted “Bureau” for “Board” in two places. 1996—Subsec. (c). Pub. L. 104–208 redesignated par. (1) as entire subsec. (c) and subpars. (A) and (B) of former par. (1) as pars. (1) and (2), respectively, and struck out former par. (1) heading and heading and text of former par. (2). Text of former par. (2) read as follows: “For purposes of paragraph (1), a sign shall only be considered to be displayed on the premises of a depository institution if the sign is designed to be viewed only from the interior of the premises of the depository institution.” 1992—Subsec. (a). Pub. L. 102–550, § 957(a)(1), substituted “subsections (b) and (c)” for “subsection (b)”. Subsecs. (c) to (e). Pub. L. 102–550, § 957(a)(2), (3), added subsec. (c) and redesignated former subsecs. (c) and (d) as (d) and (e), respectively.

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

§4302 Disclosure of Interest Rates and Terms of Accounts