COLCHESTER, Vt. (7/19/12)--The Association of Vermont Credit Unions (AVCU) is encouraging the state credit union regulator to re-evaluate its interpretation of the word "banking" after the regulator ordered a state-chartered credit union to "cease and desist" from using the words "bank," "banking," and similar words in its marketing, communications, and advertising.
The situation came to light when Montpelier-basedVermont State Employees CU filed an appeal Monday with the state's Department of Financial Regulation (DFR) over DFR's June 18 notice of the cease-and-desist order. It ordered the credit union to stop using "bank," "banking," "banking cooperative," and similar words in its materials. (See "Vermont CU says it's targeted in bank battle" in Wednesday's News Now.)
"Most people would agree that the term 'banking,' and variations thereof, is a common and widespread nomenclature used by most everyone to describe the generic handling of their financial matters with some type of provider of financial services," said Joe Bergeron, AVCU president, in a statement.
Although the matter is currently between the credit union and the regulator, "we support the right of any credit union to use the term," he told News Now, "just like consumers use it and the media use it." He noted the real question should be, "Is the credit union really deceiving people into thinking it is a bank?" he said, adding it isn't.
"Consumers use the term to describe what they're doing, not particular to any type of service provider," Bergeron said in a statement later e-mailed to News Now. "They commonly say, 'I do my banking at' at ABC bank, XYZ credit union, or whatever other provider they so choose. In fact, the media itself accepts and fosters such use in hundreds of articles we all see throughout the year on advising consumers on 'where to do their banking,' or where to 'get the best deal on banking,'" he added.
"The intent of the Vermont law is to prevent persons and entities who are clearly not regulated financial institutions of any sort, from deceiving consumers into believing they are something they are not by masquerading as some form of bank," he said.
"VSECU, and every other Vermont credit union to our knowledge, is proud to be a cooperative credit union and has never tried to convince consumers it is something other than a cooperative credit union. Everyone understands that use of the word 'banking' is in reference to a consumer's action, not the form of the entity," he added.
"Restricting credit unions from using the same word their members use in reference to their credit union transactions won't prevent consumers and the media from still using such words, he said, adding, "It does, however, serve to disadvantage Vermont's local cooperative state-chartered credit unions compared to federal credit unions and all other financial service providers."
"We encourage [DFR] to re-evaluate its interpretation to correctly recognize the public's generic use of a term denoting a commonplace activity, while supporting the regulator's efforts to insure that consumers are not misled by any entity into believing it is something that it's not."
DFR regulates both state-chartered banks and credit unions.
Out of curiosity, News Now checked to see who else, besides financial institutions, uses a form of the word "bank" in their marketing. It found references to food banks, blood banks, data banks, time banks, flower banks, river banks, eye banks, left and right banks, outer banks, and health record banks, not to mention retailer Christopher and Banks, supermodel Tyra Banks, writer Russell Banks, and actress Elizabeth Banks.