1. What is Regulation DD?
Enacted as part of the Truth in Savings Act (TISA) in 1991, Regulation DD governs the information depository institutions (excluding credit unions) must disclose regarding deposit accounts. The regulation enables consumers to easily compare account offerings from financial institutions and make more informed financial decisions. In addition to outlining the timing, format and contents of deposit account disclosures, Reg DD also includes stipulations around the advertising of these accounts.
2. Is Social Media Subject to Regulation DD?
While several advertising mediums are specifically exempt from some aspects of these requirements, social media falls into a grey area, as applicability depends on the medium in question. For example, “broadcast or electronic media” are exempt from Reg DD’s advertising requirements, so one could argue that Tik Toks, Instagram Reels and Facebook Live videos (among others) would also be exempt. However, text-based print/electronic media receives no such exemption; therefore, tweets, non-video posts, photo captions and other text-driven posts would likely be subject to these requirements. Thus, banks must pay special attention to the deposit account advertising content shared through their various social media channels.
For example, Reg DD prohibits advertisements that include any misleading, inaccurate information or that misrepresent any aspect of the depository institution’s account contract. One example cited in the regulation is using “free,” “no cost” or other synonyms to describe an account if certain types of maintenance or activities fees can be imposed on the account. Reg DD also forbids banks from using the term “profit” when referring to interest earned or paid on an account. Thus, these would be key terms to add to “watched keyword” lists when monitoring for compliance.
3. The Importance of APY
Reg DD also requires banks to use the phrase “annual percentage yield” to describe accounts’ rate of return. The complete phrase must also appear at least once within the advertisement before being abbreviated to APY, so banks should add both versions of this term to their watched keyword list to ensure compliance.
While information on interest rates can be included with the APY, banks must use the term “interest rate” to describe that information, and the ad cannot contain any other rate-related information. Furthermore, interest rate information cannot overshadow the APY within the context of the advertisement. Depending on the channel and format in question, banks may need to assess both the aesthetics and the text of a social media ad that includes both pieces of information to ensure compliance.
4. Other Required Information
When APY information is included, the ad must also clearly and conspicuously feature the following information as applicable:
Similarly, advertisements that include bonuses must also plainly and prominently state:
Amendments to Reg DD added requirements around disclosing and advertising overdraft services, and, generally speaking, these rules follow the same stipulations and exemptions as deposit accounts. Again, the ad format will dictate the information that must be included per Reg DD. When applicable, ads for overdraft services must outline:
5. Non-Compliance Comes at a Price
While provisions for private civil penalties were repealed in 2001, banks can still be subject to administrative penalties from their prudential regulator for non-compliance. These can include consumer reimbursement, cease and desist orders, civil money penalties and/or downgrades in the bank’s compliance rating. Given the intricacies associated with Reg DD, depository institutions should take special care to determine the types of posts subject to its advertising requirements and put the appropriate reviews/controls in place to prevent non-compliance.
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