By Stephanie Bailey
Today we are going to attack a beast! A compliance beast, that is. Since many credit unions do not have a compliance department or a third-party compliance company to rely on for help, those who do the advertising for the credit union must also try to keep up with compliance requirements for advertising. We’d like to help you conquer this beast.
I’m sure you’ve wondered why compliance is such an important topic for marketers. Sometimes it feels like someone out there is trying to make our lives more difficult, doesn’t it? It’s not true. Although keeping up with the latest regulations can be complicated, it is worthwhile. The best motivation for your compliance efforts is a desire to help keep your credit union safe and sound so that you can continue to serve your members.
Here are a few tips to help you stay in compliance when advertising.
TIP 1 – Let’s Be Honest
Many say that honesty is the best policy, and that is so true in the credit union world. If you say that the product that you are advertising is free, it must be exactly that. Part 740 of the Truth in Savings (TIS) Act states that “an advertisement shall not be misleading or inaccurate and shall not misrepresent a credit union’s account contract.” Exactly what does this mean? Simply that you cannot advertise something and hide the guidelines. It’s that simple: be honest with your audience.
For example, many credit union professionals do not realize that “free” is a huge trigger term in the world of compliance. It is not a word to be taken lightly or thrown around without thought. The TIS Act requires that if you advertise a deposit account as “free” or “no cost,” it must be that… it cannot have any maintenance or activity fees. If there are fees, your ad is not truthful and does not comply with the TIS Act.
TIP 2 – Deposit Accounts and NCUA
Credit unions are required to inform their audience that they are federally insured by the National Credit Union Administration (NCUA) whenever advertising a deposit account. That’s a given, right? You simply have to slap the NCUA logo on the advertisement and you are good to go. Unfortunately that is not completely accurate; in order to remain in compliance you must have the correct statement.
Option 1 – Complete Statement: “This credit union is federally insured by the National Credit Union Administration”
Option 2 – Short Title: “Federally insured by NCUA”
Option 3 – Reproduction of Official Sign (short statement and NCUA logo combo): Add the NCUA logo and use the statement “Federally Insured by NCUA.” Keep in mind that the short statement font size must be clearly legible and cannot be smaller than the smallest font size used in other portions of the ad.
As long as you use one of the 3 options listed above, you will be within Compliance guidelines.
TIP 3 – Mortgages and EHL
Whenever your credit union advertises a mortgage product, there are a lot of compliance issues to remember. As a result, you may shy away from this kind of ad. Since mortgages can be a great source of income, don’t let compliance hold you back. Even the most basic ad requires disclosures. This may sound scary, but it is easy. You must do two things:
- Tell your audience that you do not discriminate by displaying the Equal Housing Lender (EHL) logo or using the EHL statement.
Statement: We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.
- Display your credit union’s NMLS (Nationwide Mortgage Licensing System) number which tells your audience that you are authorized to conduct mortgage business in their state.
TIP 4 – Trigger Terms
This is a tough topic because different products have different “Trigger Terms.”Just know that if you use a Trigger Term, you have additional disclosures to add.
Triggers for deposit accounts
- Rate
- APY
- Free or No Cost
- Bonus
- Term Share account
- Overdraft services
Triggers for Open-end Loans, Credit Cards & HELOCs
- APR
- the finance charge
- the periodic rate
- a statement of when the finance charges begin to accrue, including the grace period of “free ride” period, if any
- the method of determining the balance on which a finance charge may be imposed
- the method of determining the finance charge, including a description of how any finance charge, other than the periodic rate, will be determined
- any other charges aside from the finance charge that may be imposed as part of the plan
Triggers for Closed-end Loans
- the amount or percentage of any down payment
- the number of payments or period of repayment
- the amount of any payment
- the amount of any finance charge
Tip 5 – Giving gifts
Credit unions love to give their members gifts for opening accounts. Who can blame them? It makes members happy. Remember, however, that you must disclose certain information if you are offering a gift at account opening.
For gifts over $10, you must include the following disclosures in your ad:
- Annual Percentage Yield and the date it was implemented
- Time requirements to obtain the bonus – beginning date to the end date
- Minimum balance required to obtain the bonus
- Minimum balance required to open the account, if it is greater than the bonus
- When the bonus will be provided
- Any other requirements to obtain the bonus such as specific products or transactions.
Tip 6 – Review and review again!
We all get overconfident at times. We think that if we were the ones to create an ad, then it’s sure to be correct. Wrong… after reviewing something so many times, your eyes tend to read what may or may not be there. Create a team that is knowledgeable about compliance and marketing and have them review your ad for compliance concerns, misspellings, and a general understanding of the ad. If someone finds an error, don’t take the criticism personally. Instead, be grateful. Everyone makes mistakes and it is easier for someone else to catch it.
Hopefully these tips will be good ammunition as you attack the compliance beast. Here are a few more resources to help you in the fight:
- The credit union philosophy of “People Helping People” also applies in the compliance world. Virginia Credit Union League serves as a conduit for compliance information and is available to answer questions on day-to-day credit union operational issues. Learn more at http://www.vacul.org/compliance/index.php.
- League Listservs are forums where credit union professionals can ask questions from other credit union employees. They are ideal for best practices sharing. Don’t be afraid to ask about compliance. It’s part of our business; what better way to gain knowledge than to ask your peers?
- CUNA offers a great guide that includes examples and checklists for a small fee. The Compliance & Marketing Guide, now in its 3rd edition, could really help your credit union stay in compliance. More details can be found here: http://cuna.org/products-services/detail.php?sku=28867K.
Stephanie Bailey is Marketing Coordinator for 1st Advantage Federal Credit Union in Hampton Roads, VA. 1st Advantage has a community charter to serve the Virginia Peninsula and is part of the Hampton Roads chapter of VACUL.