15 USC 1662(b): When Lenders Lie in Ads (And What You Can Do)

You see the ad: "Get $5,000 with no down payment—guaranteed!" You apply. They ask for $500 upfront. Or they offer you $2,000 instead. That's not just annoying. It's illegal under 15 USC 1662(b).

This federal law, part of the Truth in Lending Act, stops lenders from advertising credit terms they don't routinely offer. If they say it in an ad, they must deliver it in practice. Here's what that means for you and what to do if a lender breaks the rule.

What 15 USC 1662(b) Actually Says

The law is short. It bans two specific lies in credit advertisements:

• Fake installment amounts: Lenders can't advertise a specific monthly payment or loan amount unless they regularly offer those terms. If the ad says "$200/month payments," they must actually arrange $200/month payments as standard practice.
• Misleading down payment claims: Lenders can't say "no down payment required" or advertise a specific down payment unless that's their usual business model. A mortgage company that always requires 10% down can say so. A lender that sometimes waives the down payment can't promise it in ads.

The key phrase in the statute: "unless the creditor usually and customarily arranges" those terms. One-off deals don't count. The advertised terms must be routine.

Why This Law Exists

Before the Truth in Lending Act passed in 1968, lenders ran wild with bait-and-switch schemes. They'd advertise low payments to get you in the door, then hit you with higher rates, hidden fees, or impossible qualifying criteria. Congress decided that if you advertise it, you must offer it consistently. The Federal Trade Commission enforces the rule.

Real-World Examples of Violations

Let's make this concrete. Here's what a legal ad looks like versus an illegal one.

Legal: The Car Dealer Who Follows the Rules

A dealership runs a TV spot: "Finance your new sedan for $350/month with $2,000 down." When you walk in, they offer exactly that,$350/month with $2,000 down,to every qualified buyer. They've offered these terms to hundreds of customers over the past year. This ad complies with 15 USC 1662(b) because the terms are customary.

Illegal: The Personal Loan Company That Doesn't

An online lender advertises: "Borrow $10,000 with zero down payment. Apply now!" You apply. They say you qualify for $4,000 and require a $300 origination fee upfront. When you complain, they claim the $10,000 offer is only for "select borrowers." That's a violation. They advertised a term they don't routinely provide.

Illegal: The Payday Lender's Fine Print Trap

A payday lender posts signs: "$500 cash today,no credit check, no down payment." You go in. They say the $500 loan requires a $50 processing fee paid upfront. That's a down payment by another name. If they don't charge that fee to every borrower, the ad violates 15 USC 1662(b).

What Counts as "Usual and Customary"

Courts and regulators look at patterns. A lender doesn't have to offer the advertised terms to 100% of applicants, but they must offer them to a substantial majority. If your business model is $1,000 loans with 30-day repayment, you can advertise that. If you only offer those terms to 10% of borrowers, you can't.

Down payments follow the same logic. Mortgage lenders almost always require down payments. That's customary. Credit card companies almost never require down payments. If a credit card issuer suddenly advertises "0% down" as a special feature, that's misleading because it's already standard practice.

What to Do If a Lender Violates 15 USC 1662(b)

You applied based on an ad. The lender offered different terms. Now what?

Step 1: Document Everything

Save the advertisement. Screenshot the website, record the radio spot, photograph the mailer. Then document what the lender actually offered you. Get it in writing if possible. Email yourself a summary while it's fresh.

Step 2: Complain to the Lender

Start with a phone call or email to the lender's compliance department. Reference 15 USC 1662(b) by name. Say: "Your ad promised [specific terms]. You offered [different terms]. That violates federal law." Many lenders will fix the problem immediately to avoid regulatory scrutiny.

Step 3: File a Complaint with the FTC

The Federal Trade Commission enforces Truth in Lending Act advertising rules. File a complaint at reportfraud.ftc.gov. Include your documentation. The FTC won't sue on your behalf, but enough complaints trigger investigations.

Step 4: Report to the CFPB

The Consumer Financial Protection Bureau also handles lending complaints. Submit yours at consumerfinance.gov/complaint. The CFPB forwards complaints to lenders and tracks patterns of abuse.

Step 5: Consider a Private Lawsuit

The Truth in Lending Act allows private lawsuits for violations. You can sue for actual damages plus statutory damages (up to $5,000 for individual cases, more for class actions). You can also recover attorney's fees if you win. If the lender's false advertising caused you financial harm,like taking on a worse loan than advertised,talk to a consumer rights attorney. Many offer free consultations.

How This Law Connects to Other Protections

15 USC 1662(b) is one piece of a larger consumer credit framework. If a lender violates this section, they're often breaking other rules too.

Regulation Z (Truth in Lending Disclosures)

Regulation Z, which implements the Truth in Lending Act, requires lenders to disclose the annual percentage rate (APR), finance charges, and payment terms in writing. If a lender advertises one rate and charges another, they violate both 15 USC 1662(b) and Regulation Z.

State Consumer Protection Laws

Most states have their own laws banning false advertising. Violating 15 USC 1662(b) often means violating state law too. State attorneys general can sue lenders for deceptive practices. You may have additional remedies under state law.

Fair Debt Collection Practices Act (FDCPA)

If you took out a bad loan based on false advertising and the debt went to collections, the collector must still follow FDCPA rules. They can't lie about what you owe or harass you. If you're facing collection on a predatory loan, consider whether bankruptcy might eliminate the debt.

When to Walk Away from a Lender

If a lender advertises one thing and offers another, that's a red flag. Even if you need money urgently, protect yourself. Ask these questions before you sign:

• Are these the terms you advertised? If no, why not? If they blame your credit score or income, ask why the ad didn't mention those requirements.
• Do you charge origination fees, processing fees, or application fees? If yes, and the ad said "no down payment," you're being misled.
• How many borrowers actually get the advertised terms? A legitimate lender will answer. A shady one will dodge.
• Can I see your state lending license? Unlicensed lenders often ignore federal law too.

If the answers don't satisfy you, leave. Predatory lenders count on desperation. Don't give them the satisfaction.

What About Bankruptcy?

If you already took on debt based on false advertising and you're drowning, bankruptcy might help. Chapter 7 wipes out most unsecured debts, including personal loans and credit cards. Chapter 13 lets you repay what you can afford over three to five years.

Before you decide, check if you qualify for bankruptcy relief. Many people fear bankruptcy more than they should. It's a legal tool, not a moral failure. If a lender tricked you into bad debt, using bankruptcy to escape it is a rational choice.

How Lenders Get Around the Law (and Why You Should Still Report Them)

Some lenders think they're clever. They advertise "up to $10,000" or "as low as $100/month." Technically, those phrases comply with 15 USC 1662(b) because they don't promise specific terms. But if the lender never actually offers $10,000 or $100/month to anyone, that's still deceptive.

The FTC looks at the overall impression the ad creates. If a reasonable person would believe they'll get the advertised terms, and the lender rarely delivers, that's a violation. Report it anyway. Regulators connect the dots.

The Bigger Picture: Why This Law Matters

15 USC 1662(b) isn't just about one bad ad. It's about market integrity. When lenders lie, you can't comparison shop. You waste time applying for loans you won't get. You accept worse terms because you think they're the best available. The law forces lenders to compete honestly.

That matters most when you're vulnerable. If you need money fast,medical bills, car repair, overdue rent,you're more likely to overlook red flags. The law gives you a tool to fight back even when you're not at your strongest.

Take Action When Lenders Break the Rules

If a lender advertised terms they didn't deliver, you have power. Document the violation. Report it to the FTC and CFPB. If the false advertising cost you money, talk to a lawyer about suing. And if you're buried in debt from predatory loans, explore bankruptcy options before the situation gets worse.

The law is on your side. Use it.