Compliance Blog

Written by Jennifer Aguilar, Regulatory Compliance Counsel, NAFCU

In our compliance inbox, we often get asked about advertising requirements. The questions can range from whether a particular message is considered an advertisement to the specific content requirements for advertisements. If any of you have ever asked us an advertising question, you probably got some version of this somewhere in the response: "'Advertisement' is defined very broadly in [insert applicable regulation here] to cover any commercial message that promotes your [insert product or service here]." So, the basic point is that if your credit union puts out any message about a product or service, it's probably going to be an advertisement.

In addition to the rules in the applicable regulation, NCUA also has some general advertising rules. The basic point of these rules is that your ad must be accurate. But there is one unique thing about NCUA's advertising rules. The other regulations that govern advertisements, such as Truth in Savings and Regulation Z, do not require credit unions to always have a particular disclosure in an advertisement. The rules instead work around "trigger terms" – if a credit union states a particular terms in the advertisement, certain additional disclosures are required. The unique thing about NCUA's advertising rule is that it actually requires a disclosure to appear in all advertisements – the official advertising statement.

Section 740.5(a) states that "each insured credit union must include the official advertising statement . . . in all of its advertisements." In the long version, the official advertising statement reads: "This credit union is federally insured by the National Credit Union Administration." In the short version, the statement reads: "Federally insured by NCUA." Credit unions can also use a reproduction of the official sign as the advertising statement.  Here's where I'd normally put the spiel about how pretty much everything is an advertisement so you need to include the official statement on pretty much everything, but no need to bore you with that again. So, I'll just say that even when a message is considered an "advertisement," you may not actually need to include the official advertising statement thanks to some exceptions. Section 740.5(c) provides a rather long list of advertisements that do not have to include the official advertising statement.  Here are some of these exceptions:

• Credit union supplies such as envelopes, deposit slips or signature cards;
• Listings in directories;
• Advertisements that do not state the name of the insured credit union;
• Group advertisements of credit union services where names of insured and noninsured credit unions are listed; and
• Radio and television advertisements that are less than 15 seconds.

These can all come in handy from time to time, but, the most important exception, in my humble opinion, appears last on the list: advertisements that do not relate to member accounts. When you think about it, this is a very comprehensive exception. The rule provides a couple of examples of the types of advertisements this exception covers: advertisements for loans, safety deposit boxes, traveler's checks and credit disability insurance. Since these examples are not exhaustive, a number of other products and services can be covered under this exception.

As first glance, this seems a bit counterintuitive to NCUA's advertising rules. The whole point of defining "advertisement" broadly is to ensure all messages about all products and services are covered. Then, the rule goes and exempts this huge category of advertisements from the official advertising statement requirements. However, upon further review, this does actually make sense. See, the advertising statement is all about how your credit union is insured but only your accounts are insured. So, a member who is interested in a loan does not really care about your insured status since the loan is not insured. Likewise, safety deposit boxes aren't insured either, so there's no need to highlight in the advertisement that your credit union is insured. While, of course, credit unions may include the official advertising statement on advertisements that do not relate to member accounts (except for noninsured investment products), it is one thing you can take off your checklist for these types of advertisements.