How many triggering terms must be used before you are required to provide additional disclosures
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Is there a complete list of triggering terms for open-end credit (credit cards namely) somewhere? I have scoured the internet and cannot find a definitive list. Answer: Yes. You'll find it in §1026.16(b). The following is from our training manual on Advertising: 1. “Triggering” Terms [§1026.16(b)]: a. Periodic Rate: b. Finance Charge Accrual Timing: c. Balance Computation Method: d. Finance Charge Calculations: e. Other Charges: Additional disclosures are required even if the triggering term is not stated explicitly, but may be readily determined from the advertisement; e.g., “small monthly service charge on the remaining balance”, describes how the amount of a finance charge will be determined. The use of positive numbers also triggers further disclosure: e.g. “12 percent Annual Percentage Rate”, or “a $15 annual membership fee buys you $2,000 in credit”. 2. Triggered” Terms [§1026.16(b)]: a. Charges: b. Periodic
Rates: c. Variable Rate Feature: d. Membership or Participation Fees There are different triggering terms and triggered disclosures for Open-End Home Equity Plans (HELOC's) First published on 03/25/2018 What Is a Triggering Term?•••JGI/Jamie Grill / Getty Images A triggering term is a word or phrase that legally requires one or more disclosures when used in advertising. Triggering terms are defined by the Truth in Lending Act (TILA) and are designed to protect consumers from predatory lending practices. Definition and Examples of Triggering TermsTriggering terms are words or phrases that must be accompanied by a disclosure when they’re used in advertising. These disclosures are mandated by the TILA, which is designed to protect consumers from inaccurate and unfair credit billing and credit card practices. For example, when advertising closed-end credit products such as mortgages or auto loans, lenders are required by Subpart C of the TILA to include disclosures when they mention the following triggering terms:
Open-end credit products such as HELOCs are covered by Subpart B of the TILA, which details triggering terms like:
Both affirmative (“12% APR”) and negative (“no interest for three months”) references to triggering terms for open-end credit products like HELOCs require disclosures. How Triggering Terms WorkHow triggering terms work depends on the specific products they are regulating; but generally, if one of these terms is used in an advertisement, the provider must also include one or more mandatory disclosures. The TILA requires these disclosures be “clear and conspicuous” so unscrupulous lenders can’t try to hide them or use confusing language. For example, if a lender uses one or more of the triggering terms listed above in an advertisement for a mortgage, the ad must also include:
However, disclosures aren’t required when lenders use phrases that aren’t defined as triggering terms for closed-end credit products, such as:
What Triggering Terms Mean for YouTriggering terms exist to protect consumers and make it easier to comparison shop for loans and mortgages. If you come across a lender that uses triggering terms without also including the legally required disclosures, be wary. Triggering terms can make it easier to understand key elements of a loan, such as the repayment terms and whether the APR is variable or fixed. Fully reading and understanding the disclosures can help you see how much borrowing that money will actually cost you in the long run, so you can choose a credit product that fits your needs. Skipping the disclosures might mean you wind up spending more than you had planned on interest and fees. Key Takeaways
Which of the following is a triggering term that requires additional disclosures?Payment information in an advertisement is also a triggering term requiring additional disclosures.
What are trigger terms in an advertisement?A triggering term is a word or phrase that, when used in advertising literature, requires the presentation of the terms of a credit agreement. Triggering terms are intended to help consumers compare credit and lease offers on a fair and equal basis.
What are considered trigger terms?Trigger terms are words or phrases, whether positively or negatively mentioned (e.g., “no annual fee”), that prompt additional regulatory disclosures in the headline, subhead, and/or disclosure of the advertisement to clarify the credit costs and terms that are being promoted.
What are the trigger terms for Closed End credit?The triggering terms are:. The amount of the down payment, expressed either as a percentage or as a dollar amount. ... . The amount of any payment expressed either as a percentage or as a dollar amount. ... . The number of payments. ... . The period of repayment (the total time required to repay). ... . The amount of any finance charge.. |
