The Consumer Financial Protection Bureau (CFPB) recently issued an advisory opinion to online search engine companies like Google regarding the use of their services in certain circumstances. This advisory opinion may mean that lenders can advertise their services on these search engines at a much lower cost than previously thought. This opinion has great implications for the mortgage and financial services industry, as the option to advertise this way becomes available to lenders, who can now more effectively reach potential borrowers in an affordable and efficient manner.

The CFPB advisory opinion, issued last week, addresses the question of whether lenders engaging in the use of Internet search engine advertisements can be exempted from Truth in Lending Act (TILA) and Electronic Fund Transfer Act (EFTA) advertising requirements under certain circumstances. The CFPB noted that Internet search engines and their advertisements are “informational” and not “promotional,” and therefore exempt from the regulatory requirements of TILA and EFTA.

The CFPB noted that the exemption from these regulatory requirements applies when a lender is limiting its internet search engine advertisements to the advertisement of its name, services, products, address and contact information, interest and finance charges, and annual percentage rate (APR) information. The CFPB reasoned that this information, which must be provided whether an advertisement is used or not, is not “promotional,” and therefore can be exempted from the TILA and EFTA requirements. This reasoning could mean a savings to lenders who choose to advertise through internet search engines like Google, as they will no longer have to bear the additional regulatory burden of providing additional advertisements and disclosures in their Google ads.

This CFPB advisory opinion is a major boon to the mortgage and financial services industry. It means that lenders now have an additional and attractive option for advertising their services through internet search engines. The lower advertising costs associated with such an arrangement could mean a decrease in overall costs to consumers, and an increase in competition among lenders in the mortgage space. The CFPB has recognized the potential of internet search engine advertisements to be an effective and economical means of reaching potential borrowers.

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