By Carl Pry
Advertising isn’t the only form of communication that banks produce, of course. It is but one of the many tools available to communicate with customers, prospects, investors and other interested parties. Press releases are another. Are they also considered advertisements?
Press releases serve many functions, such as introducing a new product line or announcing new branch locations or additional outreach efforts, for example. Is there any provision in the marketing and advertising laws and regulations exempting press releases from the many required disclosures and other mandates?
The answer is no. FDIC regulations define an advertisement as “a commercial message, in any medium, that is designed to attract public attention or patronage to a product or business.” That “in any medium” language means it does not matter whether the message appears in a letter, magazine, or on television or a website. But it also means the presentation of the information (i.e., what you call it) is not determinative of whether the message is considered an advertisement.
This doesn’t mean all press releases are advertisements. Like any “commercial message,” it depends on what information is presented. If the communication deals with financial results, general bank strategy or plans, or an announcement of an acquisition, for example, it would not be an ad. No product or service is even mentioned, so there is nothing to advertise. No compliance requirements apply.
What is the message’s purpose?
But what if the message does contain information about a product or service, such as a mortgage loan or checking account? Is that an ad? The next question to ask then is about the purpose of the message. Why are you sending it out? Is it to “attract public attention or patronage” to that product? If yes, the press release will indeed be considered an advertisement and all relevant regulatory rules apply. If the product discussed is a consumer loan, for example, Regulation Z’s (Truth in Lending’s) required disclosures may be necessary.
What about the “Member FDIC” symbol or statement? Must that appear on press releases? The question here is similar: is an FDIC-insured depository product discussed, and if so, is a purpose of the press release to attract attention or patronage to it? If the answer is yes, then “Member FDIC” must appear in the press release.
Note again this is not true for every press release; it applies only to those that deal with applicable deposit products and where attention is drawn to them (or if the ad promotes “nonspecific banking products.”) For example, there is an exception in FDIC regulations for “reports of condition … required … by State or Federal law.” If this is the purpose of the press release and no products are mentioned, no “Member FDIC” is necessary.
If the bank would like someone to obtain a product mentioned within the message (press release or otherwise) after reading it, it is considered an advertisement and “Member FDIC” must appear within it. After all, if it were truly that easy to avoid the many advertising requirements, all ads would be labeled “Press Releases” and be published that way.
Carl G. Pry, CRCM, is a managing director for Treliant Risk Advisors in Washington, D.C., where he advises clients on a wide variety of compliance, fair lending, corporate treasury, and risk management issues. Email: cpry@treliant.com