The Fair Trade Commission warned Citibank and Shinsei Bank on Friday over misleading newspaper advertisements for time deposits in Australian and New Zealand dollars, FTC officials said.
The two banks' ads could have lead consumers to believe that annual interest of more than 350,000 yen was guaranteed on a principal of 10 million yen if there were no changes in foreign exchange rates, the officials said.
In reality, the interest paid if exchange rates remained flat over a year would be far less -- a third or a quarter of the figure printed in the ads -- because the banks deduct charges for foreign exchange transactions, they said.
Although the ads referred to the charges and the risk of depositors getting back less than the principal, the reference was difficult to see.
Such advertisements might violate the law that aims to prevent misleading representation, the FTC said.
Citibank ran the ads about 60 times between December 2002 and March this year, and Shinsei Bank about 30 times between May 2003 and January. Both stopped running the ads following the launch of an FTC investigation, the officials said.