News and Commentary

Reviewing Advertising without a Prescription is an Art Form


Advertisement review is likely listed as one of the least-favorite activities a compliance professional must take on. This is saying a lot when you consider that those same compliance professionals spend time doing audits, reviewing details of laws and regulations, and monitoring pipelines for timely adverse action notices. Some of this is likely a result of the difficulty in determining if advertisement is “compliant” with state and federal law. Sure, where the regulation clearly prescribes the requirements – if a simple rate of interest is disclosed, also disclose the corresponding APR – the review is tedious but knowable. But where the law does not prescribe bright lines for compliance, such as requiring the advertising not be “unfair, deceptive or misleading,” that turns compliance review from a science to an art. So what do we do? We look for direction from regulatory agencies to see how they apply the unfair, deceptive or misleading standard when they review advertising.


In a recent Consent Order issued and entered into by the Washington State Department of Finance and Insurance (“DFI”) (Case # C-21-3132-22-CO01), the DFI took exception with the following:

  • Advertising that an appraisal was not required for the FHA streamline refinance offered, but also advertising a FHA cash-out refinance that did require an appraisal without making that clear.

  • Using the name of the recipient’s current lender at the top of the page without including the advertising lender’s name with equal prominence.

  • Representing that the recipient could call today and have “Cash in hand as fast as 15 days,” where historically only 5.7% of the lender’s cash out refinance loans to Washington borrowers received their cash out within that 15 day period.

It’s easy to review the DFI’s findings and consider those as obvious issues. Imagine, though, applying those standards in context. Where in the advertisement was the statement about the FHA cash-out refinance placed in the advertisement? Next to the FHA Streamline statement, or a different paragraph within the advertisement? Is that even significant? If 5.7% is not the appropriate percentage to make the “cash in hand” statement, then what is the appropriate percentage? Perhaps 10% or 35%?


It may be notable that the Consent Order was issued after the DFI discovered repeat findings in several reviews and examinations of the lender over the course of several years. Still, this Consent Order stands for the proposition that lenders must be thoughtful about the messaging in their advertisements and read this from a consumer’s perspective. Also, actual harm does not seem to be necessary for an agency like the DFI to take action. The mere fact that the DFI finds that material to be unacceptable based on their own standards is sufficient to be subject to a Consent Order.


At Firstline, we specialize in helping you protect you and your company by staying in front of compliance rules and regulations. Contact Firstline at (831) 325-3369 or info@firstlinecompliance.com if we can help.