Compliance Blog

Written by Jennifer Aguilar, Senior Regulatory Compliance Counsel, NAFCU

As credit unions continue to find different ways to reach new members, their use of social media continues to increase. The NAFCU compliance team occasionally gets questions on the requirements for using social media to advertise products and services. Today’s post is a roundup of the key issues related to advertising on social media.

As a research starting point, credit unions may find it helpful to review the FFIEC’s social media guidance. For purposes of the guidance, “social media” is “a form of interactive online communication in which users can generate and share content through text, images, audio, and/or video.” This includes platforms such as Facebook, Twitter, Yelp, YouTube and LinkedIn. The guidance was written in 2013 and the FFIEC understood that new technologies could develop in the future, so it pointed out that credit unions may need to assess these new technologies and determine whether they fit within the definition of social media. If a credit union determines that the platform it uses is considered “social media,” then the considerations in the guidance, and those discussed below, will apply. Credit unions may also want to research state law for any additional requirements relating to social media.

NCUA’s Official Advertising Statement

One of the common questions the compliance team gets is whether the official advertising statement required under section 740.5 can be provided one-click away for social media advertisements. Unfortunately, the answer is no. While other advertising rules clearly allow certain disclosures to be provided one-click away, the NCUA’s rule does not. NCUA recently considered comments on how to make the official advertising statement more social media friendly but ultimately decided against amendments to the rule. The official advertising statement must be displayed in social media advertisements in the same manner as for any other advertisement. Given the character constraints of many social media platforms, many credit unions opt to use the “Insured by NCUA” version of the official advertising statement. However, don’t forget about the many exceptions that might apply.

One-Click Away for Truth in Savings and Regulation Z

Both Truth in Savings and Regulation Z permit credit unions to provide many required disclosures one-click away rather than in the actual advertisement. When using the one-click away option, it is important to remember that it generally only applies to disclosures required when a trigger term is stated in an advertisement. For example, if an advertisement for a credit card states the APR, the additional disclosures may be provided one-click away. However, the one-click away rule does not apply to certain other required disclosures, such as the promotional rate disclosures for open-end credit. The one-click away option can be a vital tool for social media advertising but using it correctly is key. The rules can be found in comment 9 to section 707.8(a) (accounts); section 1026.16(c) and its commentary (open-end credit); and section 1026.24(e) and its commentary (closed-end credit).

Terms of Use

Each social media platform may also have contractual rules credit unions may need to follow, often called terms of use. These terms of use can set specific requirements for or limitations on the activities credit unions may conduct on a particular social media platform. For example, if a credit union is running a contest using Facebook, Facebook has rules and requirements for doing so. As a result, it is important to also review the terms of use for each platform the credit union uses to determine whether any additional rules exist.

Policies

In accordance with the FFIEC’s guidance, many credit unions that actively use social media have policies in place governing its use. The guidance suggests the policy should explain how the credit union will use social media, including any impermissible uses, and outline the compliance requirements for social media. Some credit unions have expanded their social media policies to also cover members who post messages on the credit union’s social media profile or internet page. Depending on the policy, members who fail to comply may be barred from using the credit union’s social media and may also be subject to the credit union’s limitation of services policy. Policies may also include procedures to monitor use and remove any offensive or otherwise noncompliant posts. Monitoring use can also be a way to mitigate any reputation risks associated with social media.