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Compliance and lead generation cards

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Lead generation is a perennial concern for regulators and compliance officials.

The problem is, the allure of new business often leads advisors (and marketing companies) to use hype and fear to attract prospects instead of using legitimate information.

To protect consumers, the Maine Bureau of Insurance recently published a bulletin with guidance on the proper use of lead cards.

The bulletin makes several key points that apply to all advisors, not just those in Maine:

- First, advisors should remember that lead cards are a form of advertising and thus must never include untrue, deceptive, or misleading information. 

- Second, mailers must always disclose they are an insurance solicitation and that an agent or insurer will be following up.

- Third, the use tactics involving fear, threat, or undue pressure is forbidden in lead generation mailers, especially those promoting Medicare supplemental policies.

- Fourth, even though an advisor or agency purchases lead cards from a third-party marketing firm, the former entities are still responsible for making sure the cards comply with the law.

In addition to those general principles, the Maine Insurance Bureau cautioned advisors to avoid specific practices such as:

- Using words or logos that suggest the offering comes from a government agency.

- Suggesting that the sole purpose of the card is to offer free information, a brochure, or a free benefits review.

- Falsely suggesting that only specially selected persons are getting the card.

- Masking the true identity of the card sender by including only a generic addressee such as “National Response Center,” “Regional Reply Office,” or a Post Office box.

As with all things compliance, the National Ethics Association urges advisors to know what’s required, review business practices frequently in light of those requirements, and operate well within the boundaries of the law.