that the applicant has in good faith exercised any
right under the Consumer Credit Protection Act.
Similarly, the Fair Housing Act (FHA) prohibits
creditors involved in residential real estate transac-
tions from discriminating against any person on the
basis of race, color, religion, sex, handicap, familial
status, or national origin. Unfair or deceptive
practices that target or have a disparate impact on
consumers who are members of these protected
classes may violate the ECOA or the FHA, as well
as the FTC Act.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act prohibits
unfair, deceptive, and abusive practices related to
the collection of consumer debts. Although this
statute does not by its terms apply to banks that
collect their own debts, failure to adhere to the
standards set by this act may support a claim of
unfair or deceptive practices in violation of the FTC
Act. Moreover, banks that either affirmatively
or through lack of oversight permit a third-party
debt collector acting on their behalf to engage in
deception, harassment, or threats in the collection
of monies due may be exposed to liability for
approving or assisting in an unfair or deceptive act
or practice.
Managing Risks Related to Unfair or
Deceptive Acts or Practices
Since the release of the FDIC’s statement and the
Board’s letter on unfair and deceptive practices in
May 2002, bankers have asked for guidance on
strategies for managing risk in this area. This
section outlines guidance on best practices to
address some areas with the greatest potential for
unfair or deceptive acts and practices, including
advertising and solicitation, servicing and collec-
tions, and the management and monitoring of
employees and third-party service providers. Banks
should also monitor compliance with their own
policies in these areas and should have proce-
dures for receiving and addressing consumer
complaints and monitoring activities performed by
third parties on behalf of the bank.
To avoid engaging in unfair or deceptive activity,
the agencies encourage use of the following
practices, which have already been adopted by
many institutions:
• Review all promotional materials, marketing
scripts, and customer agreements and disclo-
sures to ensure that they fairly and adequately
describe the terms, benefits, and material
limitations of the product or service being
offered, including any related or optional prod-
ucts or services, and that they do not misrepre-
sent such terms either affirmatively or by
omission. Ensure that these materials do not use
fine print, separate statements, or inconspicu-
ous disclosures to correct potentially misleading
headlines, and ensure that there is a reasonable
factual basis for all representations made.
• Draw the attention of customers to key terms,
including limitations and conditions, that are
important in enabling the customer to make an
informed decision regarding whether the product
or service meets the customer’s needs.
• Clearly disclose all material limitations or condi-
tions on the terms or availability of products or
services, such as a limitation that applies a
special interest rate only to balance transfers; the
expiration date for terms that apply only during
an introductory period; material prerequisites for
obtaining particular products, services, or terms
(for example, minimum transaction amounts,
introductory or other fees, or other qualifications);
or conditions for canceling a service without
charge when the service is offered on a free trial
basis.
• Inform consumers in a clear and timely manner
about any fees, penalties, or other charges
(including charges for any force-placed prod-
ucts) that have been imposed, and the reasons
for their imposition.
• Clearly inform customers of contract provisions
that permit a change in the terms and conditions
of an agreement.
• When using terms such as ‘‘preapproved’’ or
‘‘guaranteed,’’ clearly disclose any limitations,
conditions, or restrictions on the offer.
• Clearly inform consumers when the account
terms approved by the bank for the consumer are
less favorable than the advertised terms or terms
previously disclosed.
• Tailor advertisements, promotional materials, dis-
closures, and scripts to take account of the
sophistication and experience of the target
audience. Do not make claims, representations,
or statements that mislead members of the target
audience about the cost, value, availability, cost
savings, benefits, or terms of the product or
service.
• Avoid advertising that a particular service will be
provided in connection with an account if the
bank does not intend, or is not able, to provide
the service to account holders.
• Clearly disclose when optional products and
services—such as insurance, travel services,
credit protection, and consumer report update
services that are offered simultaneously with
credit—are not required to obtain credit or
considered in decisions to grant credit.
Section 5: Appendix
10 (6/08) • FTC Act Consumer Compliance Handbook