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F ederal Ba n k o f D a lla s DALLAS, TEXAS 75222 reserve Circular No. 70-152 June 26, 1970 REGULATION Q To All State Member Banks in the Eleventh Federal Reserve District: On June 15, 1970, the Board of Governors of the Federal Reserve System issued a ruling stating that the advertisement by member banks of retail prices of merchandise offered as premiums for deposits would be regarded as a violation of §217.6(f) of Regulation Q. The text of the Board's letter is reproduced on the reverse for your information. Yours very truly, P. E. Coldwell President This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BDARD ;*o f g o w * . DF GDVERNDRS □ F THE FEDERAL RESERVE SYSTEM W A S H IN G T O N , D. C. 20551 ADD RESS O F F IC IA L TO CQRRESPO THE BDARD D^ u r 5 ^ * * June 15, 1970 Dear Sir: The question has been raised whether a member bank may advertise a retail price of merchandise offered as a premium for a deposit. The Board considers that such advertising might mislead depositors in comparing premiums offered by competing institutions. Retail prices are generally uncontrolled and vary considerably. Permitting advertising of retail prices might result in some institutions advertising the highest price at which the merchandise has been sold to consumers, and the depositor might believe that he will receive a premium of greater value for his deposit than will actually be the case. Accordingly, the Board would regard an advertisement by a member bank that includes the retail price of premiums offered for deposits as a violation of § 217.6(f) of Regulation Q, which provides that “No member bank shall make any advertisement, announcement, or solicitation relating to the interest paid on deposits that is inaccurate or misleading or that misrepresents its deposit contracts.11 A similar letter is being sent by the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Home Loan Bank Board to their regional offices. Very truly yours, Kenneth A. Kenyon Deputy Secretary
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