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The Federal Trade Commission today released a staff report stating that compliance by real estate advertisers with federal credit advertising laws in major newspapers in 42 cities has risen to 90 percent, up from 86 percent in early 1984, as a result of a continuing FTC effort.

Since January 1983, when the compliance rate was below 20 percent, more than 4,000 companies have voluntarily modified their newspaper ads to correct violations of the Truth in Lending Act (TILA).

The program is designed to increase compliance with the federal law, which requires advertisers to provide consumers with information that allows them to compare credit terms.  Under the law, advertisers may not use certain credit terms without making additional disclosures.  For example, if an ad states an interest rate, it must also give the annual percentage rate, representing the total cost of credit.

The FTC staff monitors newspaper ads in 42 cities to identify ads that are not in compliance.  Since the program began, the FTC staff has reviewed more than 250,000 ads, sent more than 7,600 letters and phoned more than 10,000 advertisers.

According to the new report -- the third since the project began -- the compliance rate is 90 percent overall and 95 percent for companies the FTC staff has contacted at least once during the program.  In addition, 97 percent of the 500 largest builders in the country operating in the cities the FTC monitors are in compliance as a result of the program.  The staff said the program may have a "multiplier" effect, because many advertisers it contacts will correct their advertising nationwide and because smaller builders often use ads from large builders as a model for their own ads.

The staff noted that some companies have continued to violate the law despite its efforts to secure voluntary compliance.  In the first case stemming from the program, Nash Phillips/Copus Inc., a large Texas-based developer, agreed in June to pay $300,000 in civil penalties to settle charges it had violated the TILA.  Other investigations are underway.

The report also indicates that recent developments in real estate credit advertising have increased competition within the industry, resulting in more financing options for consumers.  The FTC staff said that the deregulation of financial institutions and the development of technology has encouraged new entrants into the market, including large insurance companies, stockbrokers and credit unions.  One of the most significant changes, according to the staff, has been the arrival of the adjustable rate mortgage.  As a result of these changes, many advertisers have had to become much more knowledgeable about financing terms and how to advertise them correctly, the FTC staff said.

Copies of the staff report, which is entitled "Real Estate Credit Advertising Compliance Project/A Status Report to the Chairman" are available from the FTC's Public Reference Branch, Room 130, 6th St. and Pennsylvania Ave. N.W., Washington, D.C. 20580; 202-523-3598; TTY 202-523-3638.

Contact Information


Mario A. Baldessari,
Office of Public Affairs


Sarah Jane Hughes,
Bureau of Consumer Protection