Finance Affiliates: Compliance 101 – By Brad Norton, Esq.

by FeedFront Staff on December 2, 2008

Over the past few months, the FTC has filed a number of complaints against affiliates for failing to clearly and conspicuously disclose financial terms as required by Section 144 of the Truth in Lending Act “TILA” and Section 226.24 (c) of Regulation Z.

TILA and Regulation Z require that lending entities disclose finance charges and related aspects of credit transactions in writing, that finance charges are expressed as an annual percentage rate, and establish certain requirements for advertisers of credit terms.

TILA, along with other regulations , was created to prevent businesses from engaging in unfair acts or practices, to ensure representations do not mislead consumers and affect consumers’ behavior or decisions about a particular product or service, and to prevent consumer fraud by encouraging business to accurately and honestly represent products and services.

As an affiliate, you may be responsible for compliance with these regulations, particularly when using your own creative or driving traffic to a landing page that you host and maintain.

TILA and Regulation Z in particular, have certain terms that are often referred to as “trigger terms” which when used in advertising, require specific disclosures.

Although some rules apply specifically to lenders, affiliates often use such trigger terms, but then fail to provide the required disclosures. As in the recent complaints filed by the FTC, such trigger terms included:

• Stating the amount or percentage of any down-payment;
• Stating the number of payments or periods or repayment;
• Stating the amount of any payment; or
• Stating the amount of any finance charge;

Since compliance can be rigorous, and representing loan terms imposes unnecessary and unwanted liability, the safe bet is to just stay away from TILA trigger terms! Examples of TILA trigger terms include:

• Only $15 per hundred borrowed!
• 0% APR
• Low interest rate!
• No Money Down!

Affiliates’ failure to comply with applicable laws can also result in enforcement actions or civil lawsuits.
For advertisers under the FTC’s jurisdiction, that alone could mean court orders to cease and desist, fines for each violation, injunctions, civil penalties, and/or actual damages.

The overwhelming task of trying to figure out what needs to be done to comply with applicable laws and regulations can be quite daunting.

There is hope, however, and such hope may be found in obtaining proper and competent legal advice along with some good old-fashioned common sense.

***DISCLAIMER*** This article represents independent research and opinion of the author and is not to be considered or construed as legal advice. Affiliates should seek independent legal counsel for assistance in their particular advertising activities.

Brad Norton, Esq. is In-House Counsel for PartnerWeekly, LLC and SellingSource, LLC, an Inc 100 company.

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{ 2 comments… read them below or add one }

rajathe January 23, 2009 at 12:41 pm

Thanks for explaining TILA trigger terms..
What is your facebook ID
facebook ID is given in my mail…

Donna C Carbone February 1, 2009 at 5:00 pm

nice article! nice site. you're in my rss feed now 😉
keep it up

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