A financial institution's advertisement offers totally free checking, but it charges a fee for writing over 10 checks. Is this considered a potential UDAAP?

The scenario presents a situation where a financial institution advertises "totally free checking," but imposes a charge for writing more than 10 checks. This can be considered a potential Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) issue, primarily because the advertisement could mislead customers regarding the true nature of the checking account's cost.

Under UDAAP regulations, advertisements must not be misleading or deceptive. By promoting checking that is described as "totally free," customers may reasonably expect there would be no conditions attached, such as limits on the number of checks that can be written without incurring fees. If the institution charges for certain activities (in this case, writing more than ten checks), it undermines the clarity and accuracy of the advertisement. This lack of transparency could lead customers to believe they are receiving a service at no cost when, in reality, additional fees may apply, making it unfair to consumers.

In summary, any advertisement that fails to clearly communicate terms and conditions or that may reasonably mislead consumers could prompt regulatory scrutiny under UDAAP, hence the identification of the situation as a potential concern.