Which two states restrict marketing and advertising in a foreign language

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Posted in CFPB, Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation

How to provide financial services to limited-English proficiency (“LEP”) consumers has become a pressing legal issue. Both federal and state laws provide requirements and limitations regarding translations of financial documents. Earlier this year, the Consumer Financial Protection Bureau (“CFPB”) published a comprehensive statement encouraging financial institutions to provide services to LEP consumers. The CFPB also took enforcement action against a company for, among other things, deceptively marketing to Spanish-speaking consumers. Following the trend to protect LEP consumers, a new Nevada law, effective October 1, 2021, makes it a deceptive practice to not  provide translations for certain financial contracts, agreements and disclosures (“Nevada Law”).

Under the Nevada Law, enacted as Assembly Bill No. 359, any person, who in the course of business, advertises and negotiates certain transactions in a language other than English must provide a translation of the contract or agreement that results from the advertising and negotiations. The translation must include every term and condition of the contract or agreement.

Which transactions are covered?

Subsection 3 of Section 4 of the Nevada Law requires that translations be provided for a contract or an agreement with an LEP consumer that results from either of the following:

• A loan or extension of credit secured by property, other than real property, used for personal or household purposes
• A lease, sublease, rental contract or other contract or agreement for a term of at least one month and that involves a dwelling, apartment, mobile home or dwelling unit used as a residence
• An unsecured loan used for personal, family, or household purposes

Who is exempted from the translation requirements?

According to subsection 4 of Section 4, the translation requirements do not apply to banks or savings and loan associations that have physical locations and engage in a transaction other than the issuance of a credit card or automobile loan.

Under Section 5, a financial institution that is required to make disclosures under Regulation M (Consumer Leasing) or Regulation Z (Truth-in-Lending) will be deemed in compliance with the Nevada Law if it provides translations for those disclosures in the same language of the contract and provides the translated disclosure to the contracting parties before execution.

What is not required to be translated?

As detailed above, the law requires that every term and condition be translated. However, under Section 8 of the Nevada Law, the following text does not have to be translated:

• Names and titles of persons
• Addresses
• Brand names, trade names, trademarks, and registered service marks
• Make and model of goods or services
• Numerals, dollar amounts expressed in numerals and dates
• Individual words or expressions that do not have a generally accepted non-English translation

What are the consequences for not complying with the translation requirements?

Section 9 of the law provides the aggrieved party (e.g., LEP consumer) the right to rescind the contract or agreement if the financial institution fails to comply with the translation requirements.

Takeaways

As state attorneys general and legislatures take more measures to protect LEP consumers, financial institutions should revise their LEP policies and guidelines to ensure compliance with state and federal laws and regulations. The consequences for failure to comply with these regulations can be substantial as the new Nevada Law and recent CFPB enforcement activity show.

McGuireWoods has a team of attorneys who advise on laws and regulations impacting LEP consumers and how to implement best practices in servicing LEP consumers.

§ 14.9 Requirements concerning clear and conspicuous disclosures in foreign language advertising and sales materials.

The Federal Trade Commission has noted that, with increasing intensity, advertisers are making special efforts to reach foreign language-speaking consumers. As part of this special effort, advertisements, brochures and sales documents are being printed in foreign languages. In recent years the Commission has issued various cease-and-desist orders as well as rules, guides and other statements, which require affirmative disclosures in connection with certain kinds of representations and business activities. Generally, these disclosures are required to be “clear and conspicuous.” Because questions have arisen as to the meaning and application of the phrase “clear and conspicuous” with respect to foreign language advertisements and sales materials, the Commission deems it appropriate to set forth the following enforcement policy statement:

(a) Where cease-and-desist orders as well as rules, guides and other statements require “clear and conspicuous” disclosure of certain information in an advertisement or sales material in a newspaper, magazine, periodical, or other publication that is not in English, the disclosure shall appear in the predominant language of the publication in which the advertisement or sales material appears. In the case of any other advertisement or sales material, the disclosure shall appear in the language of the target audience (ordinarily the language principally used in the advertisement or sales material).

(b) Any respondent who fails to comply with this requirement may be the subject of a civil penalty or other law enforcement proceeding for violating the terms of a Commission cease-and-desist order or rule.