Removing Barriers Blog

Summary of NCUA's Proposed Advertising Rule
Posted September 29,2017 by CUNA Advocacy

During the NCUA Board Meeting on September 28, the Board unanimously approved to move forward with a proposed rule to amend Part 740 of the Federal Credit Union Act (FCUA) regarding accuracy of advertising. The proposed rule would expand a current exemption for the advertising statement requirement for television and radio advertisements, as well as eliminate the requirement to include the official advertising statement on published statements of condition.  Public comments will be accepted for 60 days following notice in the Federal Register, with an approximate deadline near the Thanksgiving holiday. 

ADVERTISING RULE REVISIONS
NCUA proposed to revise the advertising rule to provide regulatory relief and put credit unions on an equal playing field with banks regarding social media and modern communications. The advertising rule requires federally-insured credit unions to use NCUA’s “official advertising statement,” which can be satisfied in one of three current forms: an official long-form statement: “This credit union is federally insured by the National Credit Union Administration,” a shorter version: “Federally insured by the NCUA,” or an official sign displayed in advertisements.

The proposed rule would provide for a new, fourth category of permissible statement containing, “Insured by NCUA.”

FDIC AND BANK REGULATORY PARITY
Whereas credit unions must include the official advertising statement in radio and television ads exceeding 15 seconds in duration, banking institutions are not required to include the similar-FDIC statement unless such ad exceeds 30 seconds, rendering the NCUA rule for credit unions more restrictive than that which is applied to banks. Federally-insured credit unions are also required to include the advertising statement on statements of condition that must be published, while banks are exempt. The proposed rule seeks to rectify these regulatory inequalities, and provide advertising parity among banks and credit unions.

MODERN COMMUNICATIONS
Presently, NCUA’s advertising rule applies to conventional channels such as print media, radio, and television advertisements, with an exception for radio and television ads shorter than 15 seconds. NCUA is seeking comments regarding whether the regulation should address modern communication platforms, including but not limited to social media, mobile banking, SMS messaging, chats, tweets, and feeds. Commentary should include specific recommendations that account for both consumer information as well as digital and legal constraints.