Recent legal community buzz involves talk of a new direction for FTC prosecutions of online marketers. Apparently, the FTC has decided that it’s time to get seriously involved in the protection of consumers responding to ads for any type of “consumer credit.” Obviously, that would potentially affect such verticals as pay day loans, debt consolidation, and credit card offers, among others.
According to attorney and Internet advertising law compliance specialist, Linda Goodman (www.thegoodmanlawfirm.com),
“The FTC recently has become very interested in the advertising of consumer finance online. Payday loans and all types of consumer finance offers are drawing their attention, and they are actively investigating and threatening to begin prosecutions.”
While investigations into finance offers are not necessarily new, what has the legal community scratching its collective head is the FTC’s position on appropriate disclaimers and terms and conditions. While the FTC is consistently enforcing its overall directive that disclaimers, terms and conditions should be “clear and conspicuous,” what’s interesting are the specific disclosures required in this context.
As an example, offers for payday loans are most often not run on behalf of a particular client, but instead are run by a network who will potentially feed those leads to at least several clients. This is where the FTC’s position becomes potentially difficult, if not impossible to implement.
The FTC is apparently requiring that the landing page of offers for consumer finance contain clear and conspicuous disclosure of all requirements under the Truth in Lending Act (15 U.S.C. Sections1601-1667, and Regulation Z, 12 CFR Section 226). These statutes require disclosures which include, but are not limited to, the following:
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The amount or percentage of the down payment;
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The terms of repayment;
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The annual percentage rate (including the potential for increases in that rate).
Because of the nature of our industry, and the fact that leads from a single landing page often are distributed to a variety of finance companies with their own rates, terms and conditions, disclosing particulars on a landing page is not possible. So what’s a publisher in this situation to do?
The critical piece of this puzzle leads to an unusual recommendation. The Truth in Lending Act only applies once someone advertises the amount or percentage of any down payment, the number of payments or period of repayment, the amount of any payment, or the annual amount of any finance charge. If none of these things are mentioned in any way, then the complete disclosure requirements of TILA do not apply.
While normally I espouse as much up front disclosure as possible, in this case less (or none) is actually better. Make sure your landing pages, and all terms and conditions for these types of financial offers remain unambiguously non-specific. And if you are a player in this space and want to be sure you’re not putting yourself unnecessarily in hot water, I highly recommend that you contact a competent legal specialist in this area.
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Come back to the iLegal column every week as we get specific about the rules, regulations, laws and trends that affect the online advertising industry. Each week we discuss important legal issues, talk about how to avoid the pitfalls, and cover the breaking legal and regulatory advertising industry news.
Legal Disclaimer: Information conveyed in this column is provided for informational purposes only and does not constitute legal advice. These materials do not necessarily reflect the opinions of Digital Moses, and is not guaranteed to be complete, correct, or up-to-date. The column is provided for "information purposes" only and should not be relied upon as "legal advice." This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this column without seeking the advice of an attorney.
Mark Meckler is the General Counsel for UniqueLeads.com, Inc., and Unique Lists, Inc. Mark is the Vice Chair of the eCommerce and Technology Committee of the Association of Corporate Counsel, and is a member of the International Association of Privacy Professionals. www.UniqueLeads.com
Copyright 2008 Mark J. Meckler
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