Navigating TILA’s Regulations Within Your Marketing and Advertising Campaigns

By Gabriel Ruzin

Published on January 27, 2025

The Truth in Lending Act (TILA), enacted in 1968, is a cornerstone of consumer protection in the financial industry. Designed to promote informed decisions among prospective borrowers, TILA ensures transparency in lending practices by requiring lenders to provide clear, accurate, and standardized information about loan terms and costs. For mortgage professionals, remaining compliant with TILA is not only a legal requirement but also a mandatory avenue via which they can build lasting trust and credibility with clients.

One key area where TILA compliance comes into play is in marketing and advertising. Mortgage professionals often use various platforms, including social media, email campaigns, and traditional advertising, to reach potential clients. No matter the venue, each of these marketing efforts must strictly adhere to TILA’s guidelines. As with all regulatory considerations, creating effective marketing materials while remaining fully compliant can sometimes be a narrow path to traverse. However, staying informed and using common sense can go a long way in achieve this goal. Let’s focus on how mortgage professionals can ensure total compliance in their marketing and advertising efforts.

 

Understanding TILA and Regulation Z

At its core, TILA’s main requirement is for lenders to disclose any and all key terms and costs associated with credit transactions. Regulation Z, which implements TILA, provides detailed rules for advertising consumer credit, including mortgage loans. These requirements aim to prevent misleading advertisements and make certain that consumers receive accurate information to make decisions based on accurate and complete information.

Key provisions of Regulation Z related to advertising include:

  1. Prohibition of Misleading Terms: Advertisements cannot include statements or terms that mislead or deceive consumers about loan terms. In other words, marketing materials cannot be worded in such a way where the advertised ‘sale’ or terms could have more than one meaning; nor can lenders ‘bait and switch’ customers with promised terms that change once they begin constructing a loan agreement.
  2. Clear and Conspicuous Disclosures: Any required disclosures must be presented clearly and conspicuously on all advertisements.
  3. Trigger Terms: Certain terms, such as the amount of a down payment, monthly payment, or interest rate, trigger additional disclosure requirements. Possible loan provisions cannot be ‘teased’ to entice customers to visit under false pretenses.
  4. Equal Emphasis on Terms: If a certain rate or payment amount is advertised, all terms related to that rate or payment must be equally prominent. This rule means to eliminate so-called ‘fine print’ that protects predatory lenders from falsely promising terms that appear too good to be true.

 

TILA Compliance in Mortgage Advertising

Avoiding Trigger Terms Without Full Disclosures

One of the most common compliance pitfalls that still trips up lenders to this day is using ‘trigger terms’ in advertisements without including the required additional disclosures. Possible trigger terms can include:

  • Down payment amounts (ex: “Only 5% down!”)
  • Specific payment amounts (ex: “Monthly payments as low as $1,500”)
  • Specific interest rates (ex: “low, low 2.5% APR”)

When this style of ‘splashy’ marketing is utilized, the advertisement is required by TILA and Regulation Z to also disclose:

  • The amount or percentage of the down payment
  • The terms of repayment
  • The annual percentage rate (APR), including whether the rate may increase after closing

Failing to include all of these disclosures clearly and as prominently as the terms themselves can result in non-compliance and regulatory action, as well as reputational harm. Mortgage advertisements must be an accurate representation of a loan’s specific terms. Phrases such as “no closing costs” or “low rates” should never be used unless they are 100% accurate and applicable to the advertised loan product. Misrepresented promises can lead to significant penalties and damage consumer trust.

Being Clear and Conspicuous

TILA also requires that all disclosures in advertisements be “clear and conspicuous.” This means they should be easily noticeable and understandable to a typical consumer. Some best practices to ensure this noticeability include:

  • Avoid fine print that is difficult to read. Older clientele may struggle to read small print on marketing materials and all disclosures should be readable for anyone, within reason. “Well I can read it” won’t be a valid excuse if regulators come calling.
  • Ensure the font size, color, and placement of disclosures are comparable to the main message of the advertisement. Disclosures written in a smaller, harder to read, or less eye-catching manner than the terms themselves create compliance red flags.
  • Avoid jargon and overly technical language that could confuse the consumer. Obfuscating the value of undesirable or unnecessary products via complicated terminology is strictly prohibited.

Compliance on Social Media

Social media is a powerful tool for mortgage professionals, but it also presents unique compliance challenges. As we’ve discussed, regulatory oversight applies to any and all marketing efforts, and online platforms are no exception. Posts, tweets, and even replies to followers’ comments or questions are considered advertisements and must fully comply with TILA. Here are a few ways to safeguard your online lending presence against non-compliance:

  1. Avoid Misleading Posts: Avoid using sensational or misleading statements to attract attention. For example, saying “Get the lowest rates in the market today!” without specifying any particular terms can be problematic.
  2. Include Required Disclosures: If a trigger term is included in a social media post, the required disclosures must also be included in the same post or directly linked in a way that is immediately accessible to readers.
  3. Monitor Shared Content: Content shared by loan officers or agents must also comply with TILA. For instance, if a loan officer shares a promotional post, they must ensure the content includes all necessary disclosures. Regulations don’t change depending on company position.

Training and Oversight

To remain compliant, it is imperative that mortgage companies implement robust training programs for their marketing teams and loan officers. Key areas to cover include:

  • Identifying trigger terms
  • Writing clear and compliant advertisements
  • Understanding the unique nuances of advertising on digital platforms

Additionally, companies should establish a compliance oversight process to review advertisements before they are published. This includes constantly monitoring social media activity to ensure compliance with TILA and other regulatory requirements.

 

Best Practices for TILA-Compliant Advertising

  1. Develop a Compliance Checklist - Create a checklist for advertising compliance to ensure all required disclosures are included and presented clearly. This checklist can serve as a reference for marketing teams and loan officers.
  2. Use a Disclosure Template - Develop standardized templates for advertisements that include all required disclosures. These templates can be customized for specific campaigns while ensuring compliance.
  3. Leverage Compliance Technology - Utilize compliance management tools to monitor and review advertising content. Tools like social media monitoring software can help identify non-compliant posts and bring them in line with regulatory guidelines.
  4. Maintain Records - Keep detailed records of all advertisements, including drafts, final versions, and approval documentation. This can help demonstrate enthusiastic adherence to the law in case of an audit or regulatory inquiry.

 

Conclusion

For mortgage professionals, compliance with TILA is not optional. Non-compliance with TILA can result in significant penalties, including fines, enforcement actions, and reputational damage. Regulators such as the Consumer Financial Protection Bureau (CFPB) routinely monitor advertising practices throughout the mortgage industry. And the consequences for violating industry law can be costly.

However, by understanding and adhering to the requirements of Regulation Z, mortgage marketers can create effective and compliant advertisements that not only avoid regulatory pitfalls, but also build customer trust and confidence. Whether you’re crafting a social media post, designing a print ad, or buying space on a prominent billboard, keeping TILA’s guidelines at the forefront of your marketing strategy is essential for success.

Remember, an informed borrower is a happy borrower – and that’s good for business and regulatory peace of mind.