WEBVTT

NOTE
This file was generated by Descript 

00:00:00.469 --> 00:00:02.390
Samantha: Hello, this is Samantha Shares.

00:00:02.980 --> 00:00:07.280
This episode covers N C U A's
proposed Accuracy of Advertising

00:00:07.280 --> 00:00:09.029
and Notice of Insured Status.

00:00:09.671 --> 00:00:12.271
The following is an audio
version of that document.

00:00:12.811 --> 00:00:16.031
This podcast is educational
and is not legal advice.

00:00:16.491 --> 00:00:20.471
We are sponsored by Credit Union
Exam Solutions Incorporated, whose

00:00:20.471 --> 00:00:23.551
team has over two hundred and
forty years of National Credit

00:00:23.551 --> 00:00:25.431
Union Administration experience.

00:00:25.961 --> 00:00:29.551
We assist our clients with N C
U A so they save time and money.

00:00:29.941 --> 00:00:34.011
If you are worried about a recent,
upcoming, or in process N C U A

00:00:34.011 --> 00:00:38.321
examination, reach out to learn how they
can assist at Mark Treichel dot com.

00:00:38.811 --> 00:00:43.171
Also check out our other podcast called
With Flying Colors where we provide tips

00:00:43.171 --> 00:00:45.761
on how to achieve success with N C U A.

00:00:46.471 --> 00:00:47.621
And now the proposal.

00:00:48.357 --> 00:00:51.927
The N C U A Board, referred to
as the Board, is issuing this

00:00:51.927 --> 00:00:55.697
proposed rule to streamline its
regulations governing advertising

00:00:55.727 --> 00:00:57.427
and the notice of insured status.

00:00:58.127 --> 00:01:00.937
This proposed rule would eliminate
provisions concerning the

00:01:00.937 --> 00:01:02.567
official advertising statement.

00:01:03.217 --> 00:01:07.597
This action is undertaken to reduce
regulatory complexity, and the intended

00:01:07.597 --> 00:01:11.737
effect is to reduce the administrative
burden and costs for federally insured

00:01:11.737 --> 00:01:16.997
credit unions, referred to as F I C U s,
and provide them with greater flexibility

00:01:16.997 --> 00:01:18.717
in their advertising activities.

00:01:19.067 --> 00:01:21.917
The proposed rule would not
amend requirements related to

00:01:21.917 --> 00:01:23.467
displaying the official sign.

00:01:24.205 --> 00:01:27.855
The Board comprehensively revised
and streamlined part seven forty

00:01:27.855 --> 00:01:29.585
in a two thousand three final rule.

00:01:30.205 --> 00:01:33.535
The primary purpose of the two thousand
three revision was to modernize

00:01:33.535 --> 00:01:37.265
the regulation for clarity, address
the growing use of the internet for

00:01:37.265 --> 00:01:41.615
member transactions, and clarify the
use of trade names in advertising.

00:01:42.285 --> 00:01:46.305
The N C U A’s goal was to ensure members
were adequately informed of their

00:01:46.305 --> 00:01:50.705
federal share insurance coverage while
imposing a minimal regulatory burden.

00:01:51.521 --> 00:01:56.041
Over the subsequent years, the N C U A
amended these regulations several times.

00:01:56.611 --> 00:02:00.621
In the two thousand six final rule,
the N C U A revised the official sign

00:02:00.621 --> 00:02:04.831
to reflect statutory changes from the
Federal Deposit Insurance Reform Act

00:02:04.831 --> 00:02:08.841
of two thousand five, which included
adding a statement that insured accounts

00:02:08.841 --> 00:02:12.341
are backed by the full faith and
credit of the United States Government.

00:02:13.069 --> 00:02:17.119
A subsequent two thousand eight final rule
provided credit unions with additional

00:02:17.119 --> 00:02:21.149
flexibility by permitting the use of
a shortened advertising statement,

00:02:21.479 --> 00:02:26.039
Federally insured by N C U A, or the
official sign itself in advertisements.

00:02:26.629 --> 00:02:29.369
In a two thousand eleven
final rule, the Board made the

00:02:29.369 --> 00:02:31.199
advertising rules more stringent.

00:02:31.889 --> 00:02:35.889
This amendment, among other changes,
reduced the time exemption for radio

00:02:35.889 --> 00:02:39.649
and television advertisements from
thirty seconds to fifteen seconds.

00:02:39.989 --> 00:02:43.999
It also introduced the requirement to
include the official advertising statement

00:02:43.999 --> 00:02:48.069
in annual reports and statements of
condition, clarified that the statement’s

00:02:48.069 --> 00:02:52.269
font size in print must be no smaller
than the smallest font used for other

00:02:52.269 --> 00:02:56.469
consumer information, and defined the
term advertisement for the first time.

00:02:57.266 --> 00:03:01.576
However, in a two thousand eighteen
final rule, the N C U A reversed the two

00:03:01.576 --> 00:03:05.466
thousand eleven change to the broadcast
advertisement exemption to provide

00:03:05.466 --> 00:03:09.736
regulatory relief and restore parity
with regulations for banks insured by the

00:03:09.736 --> 00:03:11.976
Federal Deposit Insurance Corporation.

00:03:12.616 --> 00:03:15.566
The two thousand eighteen rule
expanded the radio and television

00:03:15.566 --> 00:03:19.376
exemption back to thirty seconds
and introduced a shorter advertising

00:03:19.376 --> 00:03:22.286
statement option, Insured by N C U A.

00:03:22.546 --> 00:03:25.586
Most recently, a two thousand
twenty final rule made technical

00:03:25.586 --> 00:03:27.416
corrections to improve clarity.

00:03:28.104 --> 00:03:32.044
Section two zero five, subsection
a, of the Federal Credit Union Act

00:03:32.044 --> 00:03:36.174
requires each federally insured credit
union to display a sign relating to

00:03:36.174 --> 00:03:37.884
the insurance of its share accounts.

00:03:38.484 --> 00:03:42.544
The N C U A implements this requirement
in part seven forty of its rules.

00:03:43.044 --> 00:03:47.644
Part seven forty also requires that each
federally insured credit union include

00:03:47.644 --> 00:03:52.114
an official advertising statement related
to share insurance in all advertisements.

00:03:52.864 --> 00:03:56.874
This requirement originated from a
historic statutory provision in section

00:03:56.874 --> 00:03:58.994
one seven eight five, subsection a.

00:03:59.524 --> 00:04:03.594
Before two thousand five, section
one seven eight five, subsection a,

00:04:03.684 --> 00:04:07.674
required every federally insured credit
union to include a statement in all

00:04:07.704 --> 00:04:11.374
advertisements reiterating that its
member accounts are insured by the Board.

00:04:11.844 --> 00:04:15.954
Section one seven eight five, subsection
a, also provided that the Board

00:04:15.954 --> 00:04:19.994
may exempt advertisements from this
requirement if the advertisements do not

00:04:19.994 --> 00:04:24.264
relate to member accounts or when it is
impractical to include such a statement.

00:04:25.046 --> 00:04:28.876
The two thousand five statutory amendment
retained the requirement for federally

00:04:28.876 --> 00:04:33.296
insured credit unions to post official
signs but removed the requirement to

00:04:33.296 --> 00:04:35.536
include official advertising statements.

00:04:36.156 --> 00:04:40.276
The N C U A issued a final rule
implementing changes associated with the

00:04:40.276 --> 00:04:44.476
two thousand five statutory amendments
in two thousand six, but did not remove

00:04:44.476 --> 00:04:48.716
the portions of part seven forty that
implemented the historical requirement to

00:04:48.716 --> 00:04:51.106
include an official advertising statement.

00:04:51.606 --> 00:04:55.286
Part seven forty currently includes
both the requirements for an official

00:04:55.286 --> 00:04:57.166
sign and advertising statement.

00:04:57.937 --> 00:05:01.827
This proposed rule would amend two
sections within part seven forty and

00:05:01.827 --> 00:05:06.377
is intended to promote regulatory
efficiency and reduce unnecessary burdens

00:05:06.377 --> 00:05:08.417
on federally insured credit unions.

00:05:09.017 --> 00:05:12.837
This proposed rule would remove section
seven forty point five related to

00:05:12.837 --> 00:05:16.497
the official advertising statement
and revise section seven forty

00:05:16.497 --> 00:05:20.407
point zero to remove references to
the official advertising statement.

00:05:20.937 --> 00:05:24.557
This action is intended to provide
federally insured credit unions

00:05:24.587 --> 00:05:28.557
with greater flexibility in their
advertising activities while ensuring

00:05:28.557 --> 00:05:31.917
that members continue to receive
clear and accurate information

00:05:31.947 --> 00:05:35.557
about their share insurance coverage
through other required disclosures.

00:05:36.243 --> 00:05:40.043
Section seven forty point five
establishes the specific requirements

00:05:40.043 --> 00:05:41.953
for the official advertising statement.

00:05:42.553 --> 00:05:46.183
It mandates that federally insured
credit unions include one of three

00:05:46.183 --> 00:05:50.053
prescribed official statements or
an alternative, namely, This credit

00:05:50.053 --> 00:05:53.833
union is federally insured by the
National Credit Union Administration,

00:05:54.163 --> 00:05:59.033
Federally insured by N C U A, Insured
by N C U A, or a reproduction of the

00:05:59.033 --> 00:06:03.103
official sign, in all advertisements,
unless specifically exempted.

00:06:03.533 --> 00:06:07.183
The regulation requires the statement
to be clearly legible and with a

00:06:07.183 --> 00:06:10.923
font that is no smaller than the
smallest font used for other consumer

00:06:10.923 --> 00:06:12.643
information in the advertisement.

00:06:13.233 --> 00:06:18.003
Section seven forty point five also
details numerous exemptions, specifying

00:06:18.003 --> 00:06:21.323
that the official statement is not
required for certain items such as

00:06:21.323 --> 00:06:25.833
stationery, checks, signs within a credit
union’s office, directory listings,

00:06:25.923 --> 00:06:30.003
radio and television advertisements
of thirty seconds or less, promotional

00:06:30.033 --> 00:06:34.203
items where inclusion is impractical,
and advertisements that do not relate

00:06:34.203 --> 00:06:38.683
to member accounts, such as those for
loans or safe deposit box services.

00:06:39.418 --> 00:06:43.528
The Board is proposing to eliminate
section seven forty point five because the

00:06:43.528 --> 00:06:48.298
section imposes an unnecessary and undue
compliance burden on federally insured

00:06:48.298 --> 00:06:51.958
credit unions that is disproportionate
to its limited public benefit.

00:06:52.528 --> 00:06:56.078
The highly prescriptive nature of
the rule, with its specific textual

00:06:56.078 --> 00:06:59.828
requirements and complex list of
exceptions for items ranging from

00:06:59.828 --> 00:07:03.938
radio spots to promotional pens,
forces federally insured credit

00:07:03.938 --> 00:07:07.258
unions to dedicate administrative
resources to compliance.

00:07:07.578 --> 00:07:11.718
This approach is inflexible and poorly
suited to the modern, fast paced

00:07:11.758 --> 00:07:15.888
advertising landscape, particularly
in the context of digital and social

00:07:15.888 --> 00:07:20.108
media, where space is often limited
and communication must be concise.

00:07:20.902 --> 00:07:24.632
Furthermore, the Board believes the
rule is largely unnecessary because

00:07:24.632 --> 00:07:28.402
its core objective, ensuring members
are aware of their federal insurance

00:07:28.402 --> 00:07:32.282
coverage, is effectively achieved
through other, more direct means.

00:07:32.822 --> 00:07:37.092
The N C U A has long held it is important
for consumers of advertisements to

00:07:37.092 --> 00:07:41.002
know that the share accounts in the
advertising federally insured credit union

00:07:41.212 --> 00:07:43.412
are federally insured by the N C U A.

00:07:43.912 --> 00:07:47.312
The Board has also stated that it
believes the benefits to consumers

00:07:47.312 --> 00:07:51.642
and federally insured credit unions,
namely enhanced consumer confidence

00:07:51.672 --> 00:07:56.292
and agency name recognition, outweigh
the relatively minor burden associated

00:07:56.292 --> 00:07:59.772
with requiring the inclusion of
the official advertising statement.

00:08:00.623 --> 00:08:04.263
However, the Board now believes these
objectives are best met through other

00:08:04.263 --> 00:08:08.803
provisions of part seven forty, and the
advertising statement is unnecessary.

00:08:09.373 --> 00:08:13.023
First, the requirements in section
seven forty point four, which are not

00:08:13.023 --> 00:08:17.703
being amended by this rule, mandate the
display of the official N C U A sign in a

00:08:17.703 --> 00:08:22.043
federally insured credit union’s offices
and on its website where members can

00:08:22.043 --> 00:08:24.193
open share accounts and deposit funds.

00:08:24.883 --> 00:08:28.193
This ensures that members receive
prominent notice of their insured

00:08:28.193 --> 00:08:31.343
status at the key points of
transaction and interaction.

00:08:31.633 --> 00:08:35.443
Second, the requirements in section
seven forty point two mandate that

00:08:35.443 --> 00:08:39.263
federally insured credit union
advertising be accurate and truthful.

00:08:39.893 --> 00:08:43.243
This provision ensures that, if
a federally insured credit union

00:08:43.243 --> 00:08:47.993
references its federal share insurance
in advertisements, it does so accurately.

00:08:48.593 --> 00:08:53.673
For example, if a federally insured credit
union states it is N C U A insured in an

00:08:53.673 --> 00:08:57.543
advertisement that includes noninsured
products, the advertisement should be

00:08:57.543 --> 00:08:59.643
clear that the product is not insured.

00:09:00.093 --> 00:09:04.223
The additional requirement to include a
specific statement in all advertisements

00:09:04.223 --> 00:09:08.573
on share insurance is therefore redundant
and does not materially enhance member

00:09:08.573 --> 00:09:12.403
protection in a way that justifies
the associated compliance costs.

00:09:13.124 --> 00:09:17.024
This policy to remove the requirement
for an official advertising statement

00:09:17.104 --> 00:09:20.694
is also supported by the fact that
the requirement in section seven forty

00:09:20.694 --> 00:09:23.184
point five is not statutorily mandated.

00:09:23.754 --> 00:09:27.714
As discussed above, the Federal Credit
Union Act explicitly directs the

00:09:27.714 --> 00:09:31.384
Board to issue regulations regarding
the display of the official sign.

00:09:31.974 --> 00:09:35.804
No provision in the Federal Credit
Union Act compels the Board to create

00:09:35.874 --> 00:09:39.624
or enforce a separate, distinct
official advertising statement to

00:09:39.624 --> 00:09:41.644
be included in all advertisements.

00:09:42.114 --> 00:09:46.344
As the rule is not required by law
and imposes an unnecessary burden,

00:09:46.644 --> 00:09:50.664
its removal is a logical step to
streamline the regulatory framework.

00:09:51.174 --> 00:09:54.834
Federally insured credit unions may
continue to include an advertising

00:09:54.834 --> 00:09:58.704
statement, provided the inclusion
is not inaccurate or deceptive,

00:09:59.144 --> 00:10:02.254
but will not be required to
include an advertising statement.

00:10:03.064 --> 00:10:06.214
Finally, the proposed rule
would also amend section seven

00:10:06.214 --> 00:10:09.904
forty point zero, which outlines
the scope of part seven forty.

00:10:10.444 --> 00:10:14.184
Part seven forty currently references
the official advertising statement.

00:10:14.754 --> 00:10:18.224
With the removal of the substantive
requirements in section seven forty

00:10:18.224 --> 00:10:22.164
point five, retaining a scope section
that references these rules would

00:10:22.164 --> 00:10:24.144
be inaccurate and create confusion.

00:10:24.784 --> 00:10:28.684
Therefore, the proposed rule would
remove references in section seven forty

00:10:28.684 --> 00:10:30.874
point zero to the advertising statement.

00:10:31.664 --> 00:10:35.254
The Board solicits comments on
all aspects of the proposed rule.

00:10:36.018 --> 00:10:39.218
The Providing Accountability Through
Transparency Act of two thousand twenty

00:10:39.218 --> 00:10:43.278
three requires that a notice of proposed
rulemaking include the internet address

00:10:43.278 --> 00:10:46.788
of a summary of not more than one
hundred words in length of a proposed

00:10:46.788 --> 00:10:50.598
rule, in plain language, that shall
be posted on the internet website

00:10:50.598 --> 00:10:52.998
commonly known as regulations dot gov.

00:10:53.538 --> 00:10:57.698
The Act, under its terms, applies to
notices of proposed rulemaking and

00:10:57.698 --> 00:11:01.678
does not expressly include other types
of documents that the Board publishes

00:11:01.678 --> 00:11:03.418
voluntarily for public comment.

00:11:03.938 --> 00:11:07.338
The Board, however, has elected
to address the Act’s requirement

00:11:07.368 --> 00:11:10.338
in these types of documents in
the interests of administrative

00:11:10.338 --> 00:11:12.158
consistency and transparency.

00:11:12.936 --> 00:11:15.866
The Board is issuing this
proposed rule to streamline its

00:11:15.866 --> 00:11:19.636
regulations governing advertising
and the notice of insured status.

00:11:20.266 --> 00:11:23.066
This proposed rule would eliminate
provisions concerning the

00:11:23.066 --> 00:11:24.686
official advertising statement.

00:11:25.286 --> 00:11:29.056
This action is undertaken to reduce
regulatory complexity and the

00:11:29.056 --> 00:11:32.706
intended effect is to reduce the
administrative burden and costs for

00:11:32.706 --> 00:11:36.776
federally insured credit unions and
provide them with greater flexibility

00:11:36.776 --> 00:11:38.576
in their advertising activities.

00:11:39.076 --> 00:11:43.186
The proposal and the required summary
can be found at regulations dot gov.

00:11:43.946 --> 00:11:47.836
Pursuant to Executive Order twelve
eight six six, as amended, a

00:11:47.836 --> 00:11:51.606
determination must be made whether
a regulatory action is significant

00:11:51.886 --> 00:11:55.326
and therefore subject to review by
the Office of Management and Budget.

00:11:56.036 --> 00:11:59.076
This proposed rule was drafted
and reviewed in accordance with

00:11:59.076 --> 00:12:00.736
applicable executive orders.

00:12:01.366 --> 00:12:05.176
The Office of Management and Budget has
determined that this proposed rule is

00:12:05.176 --> 00:12:07.386
not a significant regulatory action.

00:12:07.696 --> 00:12:11.806
This proposed rule will reduce the burden
of including an official advertising

00:12:11.806 --> 00:12:16.276
statement on all advertisements unless
otherwise exempt and is consistent

00:12:16.276 --> 00:12:18.096
with executive order principles.

00:12:18.792 --> 00:12:23.302
Executive Order fourteen one nine two
requires that any new incremental costs

00:12:23.302 --> 00:12:27.632
associated with new regulations shall
be offset by the elimination of existing

00:12:27.632 --> 00:12:30.212
costs associated with prior regulations.

00:12:30.762 --> 00:12:34.242
This proposed rule is expected
to be a deregulatory action for

00:12:34.242 --> 00:12:36.192
purposes of that executive order.

00:12:36.926 --> 00:12:41.716
The Regulatory Flexibility Act generally
requires an agency to conduct a regulatory

00:12:41.716 --> 00:12:46.056
flexibility analysis unless the agency
certifies that the rule will not have

00:12:46.056 --> 00:12:50.176
a significant economic impact on a
substantial number of small entities.

00:12:50.696 --> 00:12:54.596
For purposes of this analysis,
the N C U A considers small credit

00:12:54.596 --> 00:12:58.146
unions to be those having under one
hundred million dollars in assets.

00:12:58.706 --> 00:13:02.696
The Board fully considered the potential
economic impacts of the regulatory

00:13:02.696 --> 00:13:04.696
amendments on small credit unions.

00:13:05.206 --> 00:13:08.326
This rule is narrow in scope
and purely deregulatory.

00:13:08.826 --> 00:13:13.016
Further, federally insured credit unions
may voluntarily continue to include

00:13:13.016 --> 00:13:16.656
the official advertising statement in
their advertisements and may choose

00:13:16.656 --> 00:13:18.606
not to change their current practices.

00:13:19.056 --> 00:13:22.736
Accordingly, the N C U A certifies
the proposed rule would not have

00:13:22.736 --> 00:13:27.316
a significant economic impact on a
substantial number of small credit unions.

00:13:28.033 --> 00:13:31.723
The Paperwork Reduction Act of nineteen
ninety five generally provides that

00:13:31.723 --> 00:13:36.013
an agency may not conduct or sponsor
a collection of information unless it

00:13:36.013 --> 00:13:39.923
displays a currently valid Office of
Management and Budget control number.

00:13:40.443 --> 00:13:44.473
The N C U A has determined that the
changes described in this notice do not

00:13:44.473 --> 00:13:49.153
create a new information collection or
revise an existing information collection.

00:13:49.871 --> 00:13:53.631
Executive Order thirteen one three
two encourages certain agencies

00:13:53.631 --> 00:13:57.241
to consider the impact of their
actions on state and local interests.

00:13:57.851 --> 00:14:02.321
The N C U A expects that any effect on
states or on the distribution of power

00:14:02.321 --> 00:14:06.061
and responsibilities among the various
levels of government will be minor.

00:14:06.671 --> 00:14:10.481
The proposed changes would remove an
existing requirement on state chartered

00:14:10.481 --> 00:14:14.651
credit unions and would not affect the
division of responsibilities between the

00:14:14.651 --> 00:14:17.491
N C U A and state regulatory authorities.

00:14:17.881 --> 00:14:21.871
These changes relate to the N C U
A’s insurance of member accounts,

00:14:21.981 --> 00:14:23.861
which is a distinct federal function.

00:14:24.608 --> 00:14:27.608
The N C U A has determined
that this proposed rule would

00:14:27.608 --> 00:14:29.208
not affect family well being.

00:14:29.748 --> 00:14:33.798
The proposed rule relates to federally
insured credit union advertisements,

00:14:34.108 --> 00:14:36.978
but the Board does not believe
it will cause member confusion

00:14:36.978 --> 00:14:38.888
regarding share insurance coverage.

00:14:39.428 --> 00:14:43.468
Therefore, any effect on family well
being is expected to be indirect.

00:14:44.211 --> 00:14:48.841
For the reasons set forth in the preamble,
the Board proposes to amend Title twelve

00:14:48.841 --> 00:14:53.071
of the Code of Federal Regulations,
part seven forty, to read as follows.

00:14:53.822 --> 00:14:58.252
Part seven forty, Accuracy of
Advertising and Notice of Insured Status.

00:14:58.872 --> 00:15:02.852
The authority citation for part seven
forty continues to read as follows.

00:15:03.322 --> 00:15:07.272
Authority, twelve United States
Code sections one seven six six,

00:15:07.472 --> 00:15:11.552
one seven eight one, one seven eight
five, and one seven eight nine.

00:15:12.249 --> 00:15:14.519
Section seven forty point zero, Scope.

00:15:15.209 --> 00:15:18.419
This part applies to all
federally insured credit unions.

00:15:18.829 --> 00:15:21.819
It prescribes the requirements
for the official sign insured

00:15:21.819 --> 00:15:23.439
credit unions must display.

00:15:24.009 --> 00:15:27.249
It requires that all other kinds
of advertisements be accurate.

00:15:27.799 --> 00:15:31.839
It also establishes requirements for
advertisements of excess insurance.

00:15:32.473 --> 00:15:34.933
Section seven forty point five, removed.

00:15:35.661 --> 00:15:37.221
This concludes the proposal.

00:15:37.731 --> 00:15:42.391
If your credit union could use assistance
with your exam, reach out to Mark Treichel

00:15:42.391 --> 00:15:44.421
on LinkedIn or at Mark Treichel dot com.

00:15:45.081 --> 00:15:47.801
This is Samantha Shares, and
we thank you for listening.

00:15:48.371 --> 00:15:52.761
2025-23854Accuracy of Advertisi…Sources