UDAPP: it's what the customer understands.

• Author: Pry, Carl G.
• Position: MARKETING COMPLIANCE

YOUR COMPLIANCE OFFICER HAS NO DOUBT BEEN TELLING YOU all about Unfair, Deceptive, or Abusive Acts or Practices, or UDAAP. It's probably starting to sound like a broken record, and to marketing professionals it sounds pretty straightforward: Don't say anything that's not true (that would be unfair), distort the truth (deceptive), or suggest that customers do something against their interests (abusive). In other words, just be straightforward when disclosing information in an ad; as long as the proper information is there, it shouldn't be a problem.

Right?

Well, yes and no. For certain, requirements imposed by existing regulations such as Truth in Lending, Truth in Savings and the Fair Housing Act, among others, are being enforced as never before. Missing information under these rules (required disclosures, the Equal Housing Lending logo, etc.) will be found by examiners just about every time and criticized. But UDAAP goes beyond existing requirements.

One of the primary principles of UDAAP is consumers should have all necessary information at their disposal in order to make an educated decision regarding whether a financial product or service is right for their needs. Marketing and advertising materials, whether in written form, electronic, content of sales scripts and so forth, must fairly and accurately represent the benefits, risks, and costs of products and services. What we're seeing now, however, is an evolution of this mandate: It's just as important how you present this information as that you present it.

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Appearances matter. They always did, of course, but no more so than now. What should you be conscious of?

* Don't bury important information in the small print. A classic defense of unfair marketing practices has been, "We did disclose everything according to the rules. It's not our fault the person didn't read everything." Even...