Net impression is the overall concept – or “take away” – that a consumer has about a financial product or service from advertisement through transaction. A net impression can be accurate or inaccurate depending on how clearly and conspicuously terms or conditions are communicated throughout the sales process. Net impression is important because what consumers understand about the product or service will influence the choices they make. The Dodd-Frank Act made it unlawful for any provider of consumer financial products or services to engage in unfair, deceptive, or abusive acts and practices (UDAAP) towards consumers. Net impression is part of this: companies must clearly represent what their products or services can do or what they can provide without unfairly or deceptively convincing them to purchase.
What are deceptive practices?
Fairness can seem ambiguous and subject to interpretation. To avoid deceptive practices financial services providers and banks should clearly represent the facts associated with their service offering prior to the sale. Deceptive acts or practices are recognized by these three criteria:
The representation, omission, act, or practice misleads or is likely to mislead the consumer.
The consumer’s interpretation of the representation, omission, act, or practice is reasonable under the circumstances.
The misleading representation, omission, act, or practice is material.
Are disclosures enough to avoid deception?
The short answer here is no. Written or spoken disclosures may not be enough to resolve a misleading headline or prominently written description.
Consumers can be easily misled by a statement or representation addressed in a disclosure if it is delivered in a confusing format or with obscure language. Poor disclosures often
contain jargon or unfamiliar words;
use complex sentence structures;
are presented in small type size (i.e. “fine print”);
are hidden, overshadowed, or poorly designed; or,
are placed far away from the claim they are qualifying so the consumer cannot easily connect them.
Merely offering or having a disclosure is not enough to avoid deception. It has to be a good disclosure – one that target consumers can find, read, understand, and act upon.
What does the government have to say?
The FTC offers “four P’s” that financial services companies can use to evaluate whether they would be considered misleading in their communications to consumers:
Prominence. Is the statement prominent enough for a consumer to notice?
Presentation. Is the information presented in a way that is easy to understand and avoids contradiction to other information, and at a time when the consumer is not distracted by other things?
Placement. Is the placement of information in a location where consumers expect to see or hear it?
Proximity. Is the information in close proximity to the claim it qualifies?
How can you reduce your risk?
Hire an expert. Companies who engage in UDAAP are putting themselves at legal, strategic, and reputational risk. Our team at Kingsley-Kleimann is expert in helping to identify and avoid unfair, deceptive, abusive acts and practices. We are consumer advocates and believe in the use of plain language and clarity of design to direct consumer net impression toward understanding, interpretation, and action.
Use a combination of good design and plain language. Use an uncluttered and easy-to-follow design that emphasizes important terms, conditions, and claims. Create information that consumers want to read – not fine print that they are used to avoiding.
Test with consumers. The ultimate judge of whether your information works is the consumer. Using a combination of testing (qualitative and quantitative), you can be sure that consumers can find, understand, and use your disclosures. Never assume you know what works; test it!
Whether you are the plaintiff, defendant, or simply looking to reduce the risk of UDAAP prior to launching a marketing or advertising campaign, our information design and testing processes are structured to fit your unique situation and timing.