Regulation DD: Truth in Savings Act

Regulation DD requires all banks and other depository, savings, and investment institutions to be truthful when they advertise the interest rate they promise to pay the customer who deposits and/or saves with them and the return on investment realized when a customer invests with one of these institutions. Some banks and financial representatives, in their pursuit to attract as many deposits and investments as possible, quote and/or promise higher “interest” or “returns” in their advertising. Regulation DD requires the bank to be complete in advertising the interest rate based on a universal standard format that is used to calculate the interest on deposits, so that the customer can make a fair comparison. This standard will help the consumer compare “apples for apples” and make an educated decision when he/she decides to invest or save. For example, the bank must disclose the method it used when it calculated the promised rate — for example, whether the advertised rate was a compounded or a simple rate.

Fair Credit Reporting Act

The Fair Credit Reporting Act requires all financial institutions and banks to exercise great care to be accurate and truthful while reporting their customers' credit history and pattern of paying back their debts and commitments to recognized credit reporting agencies. It is a known fact that consumers' credit ratings are of prime importance when a bank decides whether to extend credit to and/or to do business with a customer. That is why the regulation stipulates detailed methods, ways, and means to ensure protection of the consumer and the timely correction of errors if these errors occur, as well as charging penalties if the credit report was erroneous — particularly if it was done intentionally.