Compliance Blog

• Use of the Official NCUA Sign and Advertising Statement – Section 740.4(a) requires credit unions to display the official sign "on its Internet page, if any, where it accepts deposits or opens accounts." Section 707.5 requires a credit union's website to state "federally insured by NCUA," but this can be accomplished using the official sign. However, if a particular credit union page has information about investment-type products that are not insured, such as those offered through a CUSO, it could be problematic to include this information if it insinuates that uninsured products are insured.
• Accuracy of Advertising – Section 740.2 generally prohibits insured credit unions from any advertisement that is "inaccurate or deceptive in any particular, or which in any way misrepresents its services, contracts, or financial condition." There is no staff commentary and not much guidance as to what might be deceptive or a misrepresentation, but these kinds of considerations often involve judgement calls made from a consumer's perspective.
• Deposit Accounts and the TIS Advertising Rule – If website content promotes share accounts, section 707.8 prohibits such advertisements from being misleading or inaccurate. This includes limits on when an account can be described as "free" and a requirement to state the "annual percentage yield" if the ad states a rate of return (APY may be used after the unabbreviated term is used at least once). Where the APY is stated, additional disclosures are also triggered as applicable including:
  • A statement that the rate may change, if a variable rate account;
  • The period of time the APY will be offered for interest and dividend bearing term share accounts;
  • The minimum balance required to earn the advertised APY;
  • The minimum deposit required to open the account to hear the APY, if greater than the minimum balance;
  • A statement about fees; and
  • If a share term account, disclosures regarding the term of the account, early withdrawal penalties, and specific disclosures for noncompounding term share accounts with a stated maturity of over a year.

There are also specific disclosures triggered if a bonus is stated in an advertisement for an account and requirements if overdraft features are promoted. However, the staff commentary to the rule allows for some flexibility here to provide some disclosures a click away:

"9. Electronic advertising. If an electronic advertisement, such as an advertisement appearing on an internet Web site, displays a triggering term, such as a bonus or annual percentage yield, the advertisement must clearly refer the member to the location where the additional required information begins. For example, an advertisement that includes a bonus or annual percentage yield may be accompanied by a link that directly takes the member to the additional information.” (Emphasis added.) See, 12 C.F.R. Part 707, App. C, comment 707.8(a)-9.

• Regulation Z – Content that promotes a credit product will have Reg Z implications. Section 1026.16 applies to open-end credit products and section 1026.24 applies to closed-end credit products. Both of these rules contain "trigger terms" that, if used, require additional disclosures. Of course, these terms are not the same for open-end versus closed-end credit, or home-secured versus non-home-secured loans. For example, the rate or APR when used for open-end credit products NAFCU has articles for members on open-end credit ads and home secured ads which may help. But like the TIS rule, Reg Z does contain commentary about providing some disclosures a click away in an electronic format, here is an excerpt:

“Paragraph 16(c)(1)

[…]

2. Electronic advertisement. If an electronic advertisement (such as an advertisement appearing on an Internet Web site) contains the table or schedule permitted under §1026.16(c)(1), any statement of terms set forth in §1026.6 appearing anywhere else in the advertisement must clearly direct the consumer to the location where the table or schedule begins. For example, a term triggering additional disclosures may be accompanied by a link that directly takes the consumer to the additional information.” (Emphasis added.) See, 12 C.F.R. Part 1026, Supp. I, comments 1026.16(c)(1)-1 and -2.

For closed-end credit, there are more specific provisions in section 1026.24(e) and its commentary.

• Other Lending Implications - Section 701.31(d) requires the "equal housing lender" logo on real estate related advertising, or "any other method reasonably calculated to satisfy the notice requirement," although there is no guidance as to what this alternative may be. As a result, the logo is generally used. Also if the credit union accepts loan applications online, keep in mind that the same fair lending type considerations would be in play on web based applications as well.