If your advertisement states a rate, is it acceptable to state the abbreviation APY without spelling out annual percentage yield?

The correct choice is that it is not acceptable to use the abbreviation APY without first spelling out "annual percentage yield." This requirement is grounded in regulatory compliance standards established by the Truth in Lending Act (TILA) and implemented through the disclosures mandated by the Consumer Financial Protection Bureau (CFPB).

When an abbreviation such as APY is used in financial advertisements, it must be preceded by its full form to ensure clarity and transparency for consumers. The purpose of this requirement is to eliminate potential confusion, ensuring that consumers fully understand the terms being presented to them. By spelling out "annual percentage yield," a lender provides clear information, helping consumers make informed decisions about their financial options.

Clarity in advertisements aligns with the principles of fair lending practices, which prioritize consumer understanding. Therefore, omitting the full term before using its abbreviation would not comply with these standards.