What You Need to Know About Regulation Z in Online Advertising

By Leora Ruzin

When searching for a mortgage or refinance opportunity, consumers rely heavily on the information presented by mortgage lenders, especially on their websites. Lenders are responsible for providing clear, accurate, and compliant information to potential borrowers. Regulation Z (Reg Z) of the Truth in Lending Act (TILA) are among the regulations governing such disclosures. 

 What is Reg Z? 

Reg Z is the regulation that enforces the requirements of TILA, ensuring that consumers have access to transparent and accurate information while entering into credit transactions. Reg Z aims to promote the informed use of consumer credit by requiring clear disclosure of terms and costs. While it covers a variety of consumer credit products, in the realm of mortgages, it ensures that borrowers are provided with detailed information about the true costs and terms of the credit being offered. 

Mortgage Disclosures on Lender Websites 

 For mortgage lenders who advertise or display terms online, there are several disclosures under Reg Z to consider, including: 

  • Annual Percentage Rate (APR): The APR represents the true cost of the loan to the borrower. It includes not only the interest rate but also other costs like fees. Displaying the APR allows consumers to compare loans more effectively. 
  • Loan Terms: The period over which the loan is to be repaid, and any features like balloon payments must be disclosed. 
  • Changing rates: If an advertisement features a variable rate, the ad should also provide details about how it will vary. 
  • Other Key Features: This includes potential penalties, such as those for early payment, or requirements like mandatory arbitration. 


What Constitutes an "Advertisement" Under Reg Z? 

A primary area of contention and misunderstanding often revolves around what exactly constitutes an "advertisement." Under Reg Z, an advertisement includes any message that promotes consumer credit's terms, whether it's on radio, television, print, or online platforms. 

 For online mortgage lenders, any of the following can be considered as an advertisement: 

  • Banner ads on websites. 
  • Email promotions. 
  • Social media posts promoting mortgage products. 
  • Online video ads
  • Landing pages specifically designed to promote a mortgage product.

However, purely informational material that doesn’t solicit customers may not be considered an advertisement. For instance, an article discussing the benefits of homeownership without actively promoting a lender’s specific terms wouldn't be classified as an ad. Keep in mind – if this “informational” content is included in your blog, and that blog has calls-to-action (like an “apply Now” button), then it may cease to be purely informational and could be considered an advertisement.  

In some cases, the display of loan terms on a lender's website might be considered a "triggering term" under Regulation Z if the terms meet specific criteria. These criteria include factors like the annual percentage rate (APR), the amount of the loan, the repayment terms, and whether any triggering terms are prominently featured. 

If the loan terms on the website meet the criteria for triggering terms, the lender may be required to provide additional disclosures and follow specific advertising rules outlined in Regulation Z.  

 Final Thoughts 

Reg Z plays an essential role in ensuring transparency in the mortgage industry, especially in the digital age where online engagements between lenders and potential borrowers are prevalent. Lenders need to ensure that their online advertisements, whether on their websites or other digital platforms, are compliant with Reg Z's requirements. By doing so, they not only adhere to the law but also foster trust among consumers, enabling them to make informed financial decisions. 

It's important to note that regulatory interpretations and requirements can change, and there might be exceptions or nuances specific to your jurisdiction. If you are dealing with a situation involving Regulation Z, it's recommended to consult with a legal expert or compliance professional who is knowledgeable about current laws and regulations, both federally and in your local area. They can provide you with accurate and up-to-date advice tailored to your specific situation.