I. INTRODUCTION
Nebraska law relating to “non-bank marketing restrictions” may be found at Neb.Rev.Stat. §§ 8-2501 and 8-2502. These statutes are designed to address the practice of non-traditional lenders in their solicitation of existing bank loan customers in what many have determined to be in a “deceptive” marketing practice. Financial institutions have encountered the practice of third party “solicitations” of existing bank loan customers by which these third parties, subsequent to their review of available public records, e.g. records of the Registrar of Deeds, of recorded Trust Deeds or mortgages, will copy the institution’s customer address and loan information. Some third parties will then make deceptive use of an existing lenders’ name and logo for purposes of soliciting consumers for loans or other related services. This practice has resulted in financial institution loan customers questioning whether their own lender has released such information to the third party that has solicited the bank customer.
Neb.Rev.Stat. §§ 8-2501 and 8-2502 prohibit three types of acts: direct solicitation to a lenders’ customers in a deceptive manner; misuse of the lender’s name in third party advertising to confuse or mislead customers; and use of a customer’s loan number, loan amount or other specific loan information for products or services without the customer’s consent. The purpose of this article is to describe in more detain the three prohibited acts listed above and their exceptions.
II. DIRECT SOLICITATION OF A LENDER'S CUSTOMER – § 8-2501(1)
A person may not include the name, trade name, logo or symbol of a financial institution in a written solicitation for financial products or services directed to a consumer who has obtained a loan from the financial institution without the consent of the financial institution. No consent is required if the solicitation clearly and conspicuously states that the person is not sponsored by or affiliated with the financial institution and that the solicitation is not authorized by the financial institution, identifying the financial institution by name.
The mandatory statement required to avoid obtaining consent from the financial institution must be located in close proximity to “the first and most prominent use or uses of the name, trade name, logo or symbol” and it must be printed in at least the same font size. The location requirement applies even if the identifying information, trade name, logo, or symbol is located on an envelope or appears through an envelope window.
Exception to § 8-2501(1). Section 8-2501(1) provides that it is not a violation of state law for a person to use the name, trade name, logo or symbol of a financial institution without the statement described above (and presumably without the lender’s consent) for an advertisement or written solicitation for products or services where the use is exclusively part of a comparison of like products or services in which the person clearly and conspicuously identifies itself. E.g., this exception would protect, a side-by-side comparison of product terms of the solicitor and the recipient’s lender. The rationale for this exception stems from the fact that because the solicitor is required to identify itself, the recipient is less likely to be confused by the solicitation.
III. USE OF LENDER'S NAME IN ADVERTISING – § 8-2501(2)
No person may use the name of a financial institution or a name similar of that of a financial institution in any written solicitation for financial products or services directed to consumers, if doing so could “cause a reasonable person to be confused, mistaken, or deceived initially or otherwise” regarding the financial institution’s (a) sponsorship, affiliation, connection or association with the person using the name; or (b) endorsement of the person using the name of the person or the person’s products or services.
IV. LOAN NUMBER OR AMOUNT – § 8-2502
No person shall include a consumer’s loan number, loan amount or other specific loan information, whether or not publicly available, in a written solicitation for products or services without the consent of the consumer. Consent is not required if the solicitation clearly and conspicuously states (when applicable) that: the person is not sponsored by or affiliated with the financial institution; the statement is not authorized by the financial institution; and the consumer’s loan information was not provided to that person by the financial institution. The same statement location requirements applicable under § 8-2501(1) (described above) applies to these provisions. The prohibition in § 8-2501 does not apply to communications by a financial institution or any of its affiliates, subsidiaries or agents with a current customer of the financial institution or with a person who has been a customer of the financial institution.
V. ENFORCEMENT – § 8-2504
Neb.Rev.Stat. § 8-2504 authorizes the Nebraska Department of Banking and Finance to order any person to cease and desist whenever the Director of Banking and Finance determines that any person has violated the provisions of §§ 8-2501 or 8-2502. Upon entry of a cease and desist order, the Director must promptly notify the affected person that such order has been entered and provide an opportunity for hearing in accordance with the provisions of the Administrative Procedures Act. The Director is further authorized to impose a fine of up to $1,000 for each violation of the act, plus the costs of investigation. Each instance for which a violation of §§ 8-2501 or 8-2502 takes place after receiving a cease and desist order constitutes a separate violation. Note that these statutes do not affect the availability of any remedies otherwise available to a financial institution, including a request for injunctive relief or suit for actual damages.
VI. FINANCIAL INSTITUTION AFFECTED
For the purposes of §§ 8-2501 and 8-2502, the definition of financial institutions includes a state or federally chartered bank, savings and loan association, savings bank, credit union or any affiliate, subsidiary or agent of such institutions.