Compliance Blog

The NAFCU Compliance Team has received several questions in recent weeks regarding whether a federally-insured credit union (FICU) can include the “official advertising statement” regarding share insurance in the footer on its website. For those unfamiliar with this issue, let’s review what this means:

Section 740.5 of the NCUA’s Rules and Regulations imposes requirements regarding the “official advertising statement.” Section 740.5(b) provides the following examples for the content of the advertising statement:      

(i) This credit union is federally insured by the National Credit Union Administration;

(ii) Federally insured by NCUA;

(iii) Insured by NCUA; or

(iv) A reproduction of the official sign as described in § 740.4(b) may be used in lieu of the other statements included in this section. If the official sign is used as the official advertising statement, an insured credit union may alter the font size to ensure its legibility as provided in § 740.4(b)(2).

Section 740.5(a) requires the official advertising statement to be included on the FICU’s website homepage, as well as all of its advertisements. The term “advertisement” is defined broadly in section 740.1(b) to mean “a commercial message, in any medium, that is designed to attract public attention or patronage to a product or business” (emphasis added). Thus, NCUA’s Rules and Regulations require an FICU to include a statement about share insurance on the FICU’s main webpage as well as any other commercial message designed to attract public attention to a product.

Despite the fact that section 740.5 only mentions the FICU’s “main internet page,” other pages on the FICU’s website which are designed to attract “patronage to a product” would be advertisements – thus, the statement may be required on multiple pages of the FICU’s website. For that reason, some FICUs have decided to include the official advertising statement in the footer of their website, so that the statement is included on all pages of their website and all pages that would conceivably be an advertisement would be covered.

However, FICUs are not required to include the official advertising statement on every page of their website. Despite the language in section 740.5(a) which says the official advertising statement should be included in all of the FICU’s advertisements, section 740.5(c) carves out a number of exceptions to that requirement, listing advertisements that “need not” include the official advertising statement. Section 740.5(c) includes a number of medium-based exceptions, such as exempting advertisements on stationary or certain promotional items, or television and radio advertisements that are less than 30 seconds long.

When it comes to websites, however, the most important exception is likely section 740.5(c)(11), which exempts: “[a]dvertisements that do not relate to member accounts…” The term “account” is defined in section 740.1(a) to mean “share, share certificate or share draft accounts…” Thus, section 740.5(c)(11) limits the requirement to include the official advertising statement to just those advertisements which relate to share accounts. This makes sense when you consider that the official advertising statement discusses share insurance, which only applies to share accounts. Advertisements for other types of products or services – such as loans or safe deposit services – are not required to include the official advertisement. Notably, advertisements relating to loans – including auto loans, mortgages, and more – are covered by section 740.5(c)(11) and are not required to include the official advertising statement.

So, does that mean that FICUs should avoid including the advertising statement on webpages that advertise loans or any other product that is not a share account? Not exactly. Section 740.5(c) merely says that an FICU “need not” include the official advertising statement in advertisements for loans or other non-deposit products. That language is not a prohibition on including the official advertising statement in such advertisements and implies that including the advertising statement would also be permissible (albeit unnecessary). Whether to include the official advertising statement on all webpages – including those that advertise loans and other non-deposit products – will be a business decision for each FICU to make.

Some FICUs could be concerned that including the official advertising statement on pages that advertise uninsured products, such as loans, could be misleading and therefore might warrant excluding the advertising statement from those pages. As discussed above, section 740.5(c) would allow the FICU to exclude the official advertising statement from those advertisement but would not require its exclusion. We recently spoke to NCUA about this issue and received an informal non-binding opinion that section 740.5 does not prohibit inclusion of the official advertising statement on any particular webpage. The non-binding opinion also noted that use of the advertising sign (the NCUA logo is already required for webpages through which deposits are accepted or accounts are opened, discussed in section 740.4) could potentially help address those concerns, as the advertising sign notes that the insurance applies to “savings” specifically, which could help avoid any confusion about whether insurance applies to other types of products or services. Finally, NCUA did note that certain products or services may require a disclaimer that they are not federally-insured. While the opinion did not list specific products or services that would need a disclaimer, one example that springs to mind are uninsured investment products – NCUA has previously stated that FICUs which advertise or market those products must inform members that those products are not federally insured.