CFPB and FTC Will Be Scrutinizing Your Advertising Dollars at Work


As lenders gear up for 2014 and contemplate ad contents and budget they should keep in mind that both the Consumer Financial Protection Bureau and the Federal Trade Commission have financial advertising in the crosshairs.

The CFPB has reported that the ratio of dollars spent on advertising to consumer education is approximately 25-to-1. This concerns them. The mantra is that consumers need improved access to financial education to make responsible financial choices.

The CFPB report looks at where dollars are coming from to educate consumers. Mostly it comes from nonprofits. The report says $31 million over a one-year period came from the financial industry. This compares to S17 billion the financial industry spent on ads. Hint hint.

Meanwhile, the FTC has an upcoming free workshop on Dec. 4 about native advertising which has nothing to do with Native Americans. Rather native advertising is about the practice of blending news, editorials and ad content in online and digital media.

The FTC will examine how these ads are presented to consumers and how content is being recognized and understood by consumers. Sounds like the old subliminal advertising concerns will be working their way into modern technology.

Switching gears I have heard from the private bank at Merrill Lynch. Their recent viewpoint discussed the topic of rising interest rates and your home for their ultra high net worth clients. Why I received this report puzzles me since I have no clients who are ultra high net worth. Anyway the report suggests thinking about your home as an asset which probably will not sit well with the National Association of Realtors which has told us in the past to think of it as a home and not an asset.

I thought the report was basically an ad since it was filled with stories of how Merrill can help the ultra-rich obtain mortgage loan products to help with different circumstances in life.

The report suggested that many of the ultra-rich have no mortgage on their primary residence and could tap into it for various reasons. ARMs were being promoted with a fixed interest period in the beginning of the loan. I guess this answers the question why B of A bought Merrill.

Finally we again visit the state of Washington. The attorney general there is cracking down on a company that has been trying to sell consumers the deed to their home. Of course the fee is way too high compared to what you can pay for it yourself from the recording office. The company was using a direct mail campaign.

I have seen the same scam in Michigan but the government here has not cracked down. Why someone does not have the deed to their home is beyond me in the first place. Sounds like they need to be educated.

Based in Chelsea, Mich., John McDermott is a real estate and elder care attorney who represents both consumers and businesses. He can be emailed at

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