QUESTION
Our Compliance Manager was contacted by the state banking department over an advertisement that, to quote them, was in “poor taste” and was close to violating UDAAP issues. The advertisement may be a little risqué, but I can’t find anything in it that is really in “poor taste.”
And, anyway, as the marketing manager, I was taught that UDAAP violations involve misleading the consumer in various ways. But “poor taste” was not on that list! Is the banking department now becoming an art critic?
I want to know how an advertisement can wind up in “poor taste” in a way that we get in trouble for a UDAAP violation.
What causes a banking department to complain about an advertisement with some risqué elements?
ANSWER
You included an image of your advertisement. I believe the banking department was kind in saying it is in poor taste.
Your advertisement is not merely risqué, which can be indelicate, insensitive, and even provocative, but also gross, indecent, salacious, and ribald. Your advertisement falls into the latter description. You should be grateful that the banking department only called and didn’t write you up.
Maybe you need to revisit your advertising manual. Your manual should require that all advertising be true, honest, in good taste, and not misleading. Note the emphasis on “good taste.”
Although you are the marketing manager, each staff member who plays a part in preparing advertising has the responsibility to see that all advertising conforms to your advertising policies and other standards.
I will provide certain guidelines but do not take them as comprehensive. Most states and the federal government have adopted statutes or regulations prohibiting unfair or deceptive advertising. These often are called “unfair and deceptive acts and practices” (UDAP) or “unfair, deceptive and abusive acts and practices” (UDAAP) laws.
There is much more to evaluating an advertisement for potential UDAAP violations than just focusing on misleading content or inappropriate images.
Here’s a list of nine rules that should be outlined in your advertising manual and handed out to everyone in the advertising process flow.
1. Advertising copy should not have a tendency or capacity to deceive, even if no one would be expected actually to rely on the statements made. The safest approach is to avoid any statement or information that might be perceived as stretching the truth. You do not want to mislead the public, and you do not want your customers or potential customers to think you are in any way trying to “pull a fast one.”
2. You should review each statement in your advertising to be absolutely sure members of the public are not likely to be deceived by it. You should consider the advertising from the viewpoint of a trusting consumer who does not know much about your products and services. If your advertising is challenged in court by someone who claims it was misleading, the court might find the advertising unfair or deceptive even if it does not have the tendency or capacity to deceive everyone. In fact, it might be considered unfair or deceptive if it even has a tendency to deceive only a small portion (such as, say, 10 percent) of the public.
3. If advertising is directed toward a particular group, you should carefully review the ad from the perspective of that group.
4. You should ensure your advertising is not false or deceptive and should investigate and verify its accuracy.
5. You should review the total impression given by the advertising. Even if everything in your advertising is true, the advertising might be considered deceptive if true statements are combined deceptively.
6. Whenever advertising states a benefit, it should describe any conditions that must be satisfied to obtain the benefit. For example, advertising copy that mentions low initial payments for a graduated payment mortgage loan also should mention the higher payments in later years and any required subsidy.
7. You should not rely on other language, such as fine print, to qualify a possibly misleading statement. Instead, you should delete the possibly misleading statement.
8. Advertising should not fail to disclose a material fact. This is particularly true when a consumer is likely to assume something that is not correct.
9. Advertising should avoid any statement that could be interpreted in more than one way.
You must be able to substantiate any factual claim you make in your advertising. For example, if you state that your rates are competitive, you must be prepared to prove the statement is true by producing documents that compare your rates to the rates offered by your competitors during the period of time you claimed your rates were competitive.
Jonathan Foxx, Ph.D., MBAChairman & Managing Director
