When creating advertisements, financial services licensees may not have licensing at top of mind – but they should.
Many states require that such advertisements include specific license information. Here are a few frequently asked questions on the topic:
Why should financial services licensees include their license information in advertisements?
In many cases, it is required by state law and state regulators may impose penalties on a licensee that fails to do so. Even if not required by state law, some licensees elect to include their license information in advertisements as it validates for consumers their authority to do business.
What type of license information needs to be included?
Financial services licensees are typically required to include some combination of their legal name, licensed business address, telephone number, NMLS unique identifier, license name, and/or license number in their advertisements. Some states also require licensees to include the name of the law that the license is issued under and a statement regarding state agency regulation of the license.
What is considered an advertisement?
The definition of “advertisement” varies by state and may include business cards, websites, and other items presented to the public for the purpose of soliciting clients. In some cases, promotional items (e.g., pens, coffee mugs, balloons) are not considered advertisements.
How do financial services licensees present their license information in advertisements?
Typically, financial services licensees present their license information in a consolidated block at the bottom of their advertisements, including on the home page or a dedicated page of their websites. Some licensees organize the information on their websites by state/license, which makes it easier for consumers and regulators to pinpoint the information required by their state. For radio or streaming audio, licensees typically recite their license information at the end of the advertisement.
Is there a push to reform these requirements?
A few years ago, asserting that the multitude of state-specific license information disclosure requirements are likely “meaningless” to consumers, the Mortgage Bankers Association issued a brief urging state regulators or legislators to adopt a uniform disclosure protocol with respect to mortgage licensees. The MBA suggested that mortgage licensees direct consumers to the NMLS Consumer Access website using specific language depending on the advertisement platform (e.g., newspaper, radio, website, brochure). Excluded from the MBA’s protocol were, among other platforms, business cards, social media account posts, and billboards. Notably, however, mortgage licensees would continue to be required to include their NMLS unique identifier in all advertisements.
Some (but certainly not all) states have amended their licensing laws in this direction, but it is important to remember that not every financial services license type is on NMLS (and thus verifiable via NMLS Consumer Access). Therefore, those licensees with non-NMLS licenses are not squarely within the scope of the MBA’s reform efforts.
I have more questions on this topic. Where can I get help?
For further help with this topic, contact APPROVED, and we will connect you a Buckley attorney who can assist you.