Ad Alert

Bank of America

A direct mail advertisement by Bank of America promoting low refinancing rates for homeowners has some consumer advocates concerned the materials may be misleading.

American Banker reported this week that the ads focused on how the refinance could lower a homeowner’s monthly payment but not on how the new loan could actually increase the interest rate and add more years to the life of the loan. Those details are disclosed in the fine print.

Andrew Pizor, a staff attorney for the National Consumer Law Center, told American Banker:

This ad clearly implies that this refinancing is right for the borrower. I think the pitch is kind of deceptive because it bold mentions  ‘save’ and  ‘savings’ repeatedly, and of course it refers only to the higher interest rate and overall loan amount in the footnotes. Marketers know those details will be overlooked.

In 2011, the federal government strengthened regulations governing mortgage loans in the Mortgage Acts and Practices Advertising Rule. The rule prohibits any misrepresentation in any commercial communication regarding mortgage products, including claims about interest rates, fees, terms and types of mortgages offered.

Our Ad Alerts are not just about false and deceptive marketing issues, but may also be about ads that, although not necessarily deceptive, should be viewed with caution. Ad Alerts can also be about single issues and may not include a comprehensive list of all marketing issues relating to the brand discussed.

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