What’s the Deal with Financial Ad Disclosures?*

(*See below for details.)

Some financial ads look like they were written backwards: leave two inches at the bottom of the ad for disclosure, then put in a big rate, and put the logo in the space that’s left. There are many 60-second radio ads where the disclosure is almost half the spot.

When an ad has more words in the disclosure than the rest of the ad, you have to wonder: Who’s writing the ad copy? The marketing department? Or the compliance officer?

Big brands don’t seem to struggle with this. Washington Mutual once ran three consecutive full-pages of ads — each page promoting a separate product — and the disclosures totaled less than 50 words. That’s a little longer than this paragraph.

Reality Check: From the consumer’s perspective, a ton of disclosure statements makes it look like there’s a catch. It makes it look like you’ve got to jump through hoops. It looks bureaucratic. Complicated. Legalistic. It doesn’t look easy.

“When there’s more disclosure than advertising, you may want to rework the process,” advises Anthony Demangone, Director of Regulatory Compliance, NAFCU. (Demangone is also NAFCU’s chief blogger on compliance issues under the nom-de-com, “The Compliance Guy.”)

“You can over-manage risk. You never can eliminate all risk,” cautions Demangone.

Perhaps part of the problem lies with compliance officers who assume disclosure regulations apply equally to all media, all channels, all the time. The NCUA for instance makes distinctions between what must be disclosed in a branch vs. a brochure vs. websites. They even make a distinction between what must be disclosed in print ads vs. television and radio ads.

When it comes to disputes between marketing and compliance departments, Demangone wonders how these are handled. “Isn’t the CEO the only person they can take the issue to?” he asks. Good point. Ad disclosures seem way beneath a CEO’s radar.

Demangone offers this last bit of advice: “An attorney can help you find the minefields.”

Key Takeaway: If an ad has more than 50 words of disclosure, either the offer is too complicated or the compliance folks are overzealous.

If WaMu can find a way to pull it off, you can too. Considering all the newspapers WaMu runs their ads in… all the compliance people… all the regulatory bodies keeping an eye on them — one of the nation’s biggest banks — there’s clearly a way.

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