(1) No seller or lessor shall engage in this state in false or misleading advertising concerning the terms or conditions of credit with respect to a consumer credit sale or consumer lease.

(2) Without limiting the generality of subsection (1) of this section and without requiring a statement of rate of credit service charge if the credit service charge is not more than Five Dollars ($5.00) when the amount financed does not exceed Seventy-five Dollars ($75.00), or Seven Dollars and fifty cents ($7.50) when the amount financed exceeds Seventy-five Dollars ($75.00), an advertisement with respect to a consumer credit sale made by the posting of a public sign, or by catalog, magazine, newspaper, radio, television or similar mass media, is misleading if:

(a)it states the rate of credit service charge and the rate is not stated in the form required by the provisions on calculation of rate to be disclosed under Section 2-304 of this title; or

(b)it states the dollar amounts of the credit service charge or installment payments, and does not also state the rate of any credit service charge, the downpayment, if any, and the terms of repayment.

(3) In this section a catalog or other multiple-page advertisement is considered a single advertisement if it clearly and conspicuously displays a credit terms table setting forth the information required by this section.

(4) This section imposes no liability on the owner or personnel, as such, of any medium in which an advertisement appears or through which it is disseminated.

(5) Advertising which complies with the Federal Consumer Credit Protection Act does not violate subsection (2) of this section.

(6) The provisions of this section do not apply to advertisements of residential real estate except to the extent required by Administrator's rule.

(7) If any advertisement to aid, promote, or assist, directly or indirectly, the extension of consumer credit through a revolving charge account plan under which extensions of credit are secured by the consumer's principal dwelling states, affirmatively or negatively, any of the specific terms of the plan, including any periodic payment amount required under such plan, such advertisement shall also clearly and conspicuously set forth the following information, in such form and manner as the Administrator may require:

(a)Any fee the amount of which is determined as a percentage of the credit limit applicable to an account under the plan and an estimate of the aggregate amount of other fees for opening the account, based on the creditor's experience with the plan and stated as a single amount or as a reasonable range;

(b)In any case in which periodic rates may be used to compute the credit service charge, the periodic rates expressed as an annual percentage rate;

(c)The highest annual percentage rate which may be imposed under the plan; and

(d)Any other information the Administrator may by rule require.

(8) If any advertisement described in subsection (7) of this section contains a statement that any interest expense incurred with respect to the plan is or may be tax deductible, the advertisement shall not be misleading with respect to such deductibility.

(9) No advertisement described in subsection (7) of this section with respect to any home equity account may refer to such credit as "free money" or use other terms determined by the Administrator by rule to be misleading.

(10)(a)If any advertisement described in subsection (7) of this section includes an initial annual percentage rate that is not determined by the index or formula used to make later interest rate adjustments, the advertisement shall also state with equal prominence the current annual percentage rate that would have been applied using the index or formula if such initial rate had not been offered;

(b)The annual percentage rate required to be disclosed under the paragraph (a) rate of this subsection rate must be current as of a reasonable time given the media involved; and

(c)Any advertisement to which paragraph (a) of this subsection applies shall also state the period of time during which the initial annual percentage rate referred to in such paragraph will be in effect.

(11) If any advertisement described in subsection (7) of this section contains a statement regarding the minimum monthly payment under the plan, the advertisement shall also disclose, if applicable, the fact that the plan includes a balloon payment.

(12) For purposes of this section and Section 2-310.2 of this title, the term "balloon payment" means, with respect to any revolving charge account plan under which extensions of credit are secured by the consumer's principal dwelling, any repayment option under which:

(a)the account holder is required to repay the entire amount of any outstanding balance as of a specified date or at the end of a specified period of time, as determined in accordance with the terms of the agreement pursuant to which such credit is extended; and

(b)the aggregate amount of the minimum periodic payments required would not fully amortize such outstanding balance by such date or at the end of such period.

(13)(a)If an advertisement for a consumer lease includes a statement of the amount of any payment or a statement that any or no initial payment is required, the advertisement shall clearly and conspicuously state, as applicable:

(i)the transaction advertised is a lease;

(ii)the total amount of any initial payments required on or before consummation of the lease or delivery of the property, whichever is later;

(iii)that a security deposit is required;

(iv)the number, amount, and timing of scheduled payments; and

(v)with respect to a lease in which the liability of the consumer at the end of the lease term is based on the anticipated residual value of the property, that an extra charge may be imposed at the end of the lease term.

(b)No owner or employee of any entity that serves as a medium in which an advertisement appears or through which an advertisement is disseminated, shall be liable under this subsection.

(c)(i)An advertisement by radio broadcast to aid, promote, or assist, directly or indirectly, any consumer lease shall be deemed to be in compliance with the requirements of paragraph (a) of this subsection if such advertisement clearly and conspicuously:

(aa)states the information required by subparagraphs (i) and (ii) of paragraph (a) of this subsection;

(bb)states the number, amounts, due dates or periods of scheduled payments, and the total of such payments under the lease;

(cc)includes:

(I)a referral to:

(A)a toll-free telephone number established in accordance with subparagraph (ii) of this paragraph that may be used by consumers to obtain the information required under paragraph (a) of this subsection; or

(B)a written advertisement that appears in a publication in general circulation in the community served by the radio station on which such advertisement is broadcast during the period beginning three (3) days before any such broadcast and ending ten (10) days after such broadcast and includes the information required to be disclosed under paragraph (a) of this subsection; and

(II)the name and dates of any publication referred to in clause (B) of subdivision (I) of this division; and

(dd)any other information which the Administrator determines necessary.

(ii)In the case of a radio broadcast advertisement described in subparagraph (i) of this paragraph that includes a referral to a toll-free telephone number, the lessor who offers the consumer lease shall:

(aa)establish such a toll-free telephone number not later than the date on which the advertisement including the referral is broadcast;

(bb)maintain such telephone number for a period of not less than ten (10) days, beginning on the date of any such broadcast; and

(cc)provide the information required under paragraph (a) of this subsection with respect to the lease to any person who calls such number.

The information required to be provided in division (cc) of this subparagraph shall be provided verbally or, if requested by the consumer, in written form.

Nothing in this paragraph shall affect the requirements of law as such requirements apply to advertisement by any medium other than radio broadcast.

Added by Laws 1969, c. 352, § 2-313, eff. July 1, 1969. Amended by Laws 1982, c. 335, § 23, operative Oct. 1, 1982; Laws 1990, c. 260, § 16, operative July 1, 1990; Laws 2000, c. 217, § 4, eff. July 1, 2000.