Compliance Blog

Oct 02, 2019
Categories: Consumer Lending

CFPB's Supervisory Highlights: One-Click Away Rule

The CFPB recently released Supervisory Highlights, issue number 19 (Supervisory Highlights). The Supervisory Highlights reported some of the CFPB's examination findings for exams that the CFPB completed between December 2018 and March 2019. The Supervisory Highlights covered the following topics:

  • Automobile loan origination and the risk of an unfair, deceptive, or abusive act or practice in the context of guaranteed asset protection (GAP) add-on products.
  • Debt collection and compliance with the Fair Debt Collection Practices Act.
  • The duties of furnishers of information under the Fair Credit Reporting Act related to accuracy and dispute handling requirements.
  • Mortgage origination activities and the failure to provide accurate APR disclosures as required by Regulation Z.
  • Credit card account management and compliance with Regulation Z.

One of the issues that the CFPB found in the context of credit card account management was the failure "to clearly and conspicuously provide certain disclosures if the advertisements contain certain pricing terms ('triggering terms')." The triggering terms are the terms in section 1026.16(b)(1) of Regulation Z - in this case any term required to be disclosed under section 1026.6(b)(3) - that trigger the additional disclosures required by sections 1026.16(b)(1)(i) through (iii). In general, the additional disclosures that are triggered must be disclosed clearly and conspicuously. For electronic advertisements like those found on the internet, section 1026.16(c) allows the additional disclosures described in sections 1026.16(b)(1)(i) through (iii) to be disclosed in a table or schedule as long as the triggering term is "accompanied by a link that directly takes the consumer to the additional information." See, 12 CFR Part 1026, Supp. I, Comment 16(c)(1)-2. This is commonly known as the one-click away rule.

The questionable practices found during examinations included situations that appeared to violate the one-click away rule requirements:

  • Using a hyperlink that was not labeled to refer to the triggered disclosures and then requiring the consumer to go through the entire credit card application before providing the triggered disclosures.
  • Using a series of hyperlinks and not permitting the consumer to view the triggered disclosures until completing a credit card application.

The commentary to Regulation Z seems to suggest that there are no specific rules about what satisfies the clear and conspicuous standard with respect to the additional disclosures required by sections 1026.16(b)(1)(i) through (iii). See, 12 CFR Part 1026, Supp. I, Comment 16-1. That said, the practices described in the Supervisory Highlights appear to run contrary to the guidance in the commentary explaining that the one-click away rule requires that the link directly take the consumer to the additional disclosures.

For more guidance on credit union advertising rules, NAFCU members can obtain the NAFCU Credit Union Compliance Advertising Guide.

About the Author

David Park, NCCO, Senior Regulatory Compliance Counsel, NAFCU

David joined NAFCU in September 2018.  As part of the Regulatory Compliance Team, he provides daily compliance assistance to member credit unions on a variety of topics. 
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