Compliance Blog

Everyone’s heard the phrase video killed the radio star. However, not many people have heard the phrase television killed TISA additional terms requirements for account advertisements. If your credit union is looking to drum up business or expand, you might be looking at advertising credit union services, such as share accounts. As you probably know, NCUA’s Truth in Savings Regulation, Section 707.8 provides requirements for advertising accounts.  

Section 707.8(c) and (d) require additional terms to be disclosed if an advertisement mentions annual percentage yield and/or that a bonus is offered. However, Section 707.8(e)(1) provides a partial exemption from the additional terms requirements if the advertisement was made through the following media:

1.       Broadcast or electronic media (e.g. television or radio, but not internet);

2.       Outdoor media, (e.g. billboards); or

3.       Telephone response machines.

Under Section 707.8(e)(1), an advertisement in one of the above medias:

“Need not contain the information in paragraphs (c)(1), (c)(2), (c)(4), (c)(5), (c)(6)(ii), (d)(4) and (d)(5) of this section.”

That is, if the advertisement states the APY, the following additional disclosures need not be stated:

1) Variable rates (707.8(c)(1));

2) Time annual percentage yield offered (707.8(c)(2));

3) Minimum opening deposit (707.8(c)(4));

4) Effect of fees (707.8(c)(5)); and

5) Early withdrawal penalties (707.8(c)(6)(ii)).

If the advertisement states a bonus, the advertisement is not required to have the following additional disclosures:

1) The minimum balance required to open the account (707.8(d)(4)); and

2) When the bonus will be provided (707.8(d)(5)).

However, if an advertisement states the annual percentage yield, the following additional disclosures are still required to be stated in the advertisement under Section 707.8, regardless of the exemption from other additional disclosures:

1) The minimum balance required to obtain the advertised annual percentage yield (707.8(c)(3));

2) For term share accounts:

a. The term of the account (707.8(c)(6)(i)), and

b. A statement that dividend payouts are required, if applicable(707.8(c)(6)(iii)).

If an advertisement states a bonus, the following additional disclosures are still required to be stated in the advertisement under Section 707.8:

1) The annual percentage yield, using that term (707.8(d)(1));

2) The time requirement to obtain the bonus (707.8(d)(2)); and

3) The minimum balance required to obtain the bonus (707.8(d)(3)).

Section 707.8 does not require the credit union to provide a telephone number for the exemption. A credit union may also want to note that if this is a radio or television advertisement that does not exceed 30 seconds, then under NCUA Regulation, Section 740.5, the advertisement does not need to include the NCUA official advertising statement.

For a more in depth discussion on advertising, NAFCU members can review NAFCU’s Advertising Guide.