Samantha: Hello, this is Samantha Shares.
This episode covers N C U A's proposed Accuracy of Advertising
and Notice of Insured Status.
The following is an audio version of that document.
This podcast is educational and is not legal advice.
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And now the proposal.
The N C U A Board, referred to as the Board, is issuing this
proposed rule to streamline its regulations governing advertising
and the notice of insured status.
This proposed rule would eliminate provisions concerning the
official advertising statement.
This action is undertaken to reduce regulatory complexity, and the intended
effect is to reduce the administrative burden and costs for federally insured
credit unions, referred to as F I C U s, and provide them with greater flexibility
in their advertising activities.
The proposed rule would not amend requirements related to
displaying the official sign.
The Board comprehensively revised and streamlined part seven forty
in a two thousand three final rule.
The primary purpose of the two thousand three revision was to modernize
the regulation for clarity, address the growing use of the internet for
member transactions, and clarify the use of trade names in advertising.
The N C U Aâs goal was to ensure members were adequately informed of their
federal share insurance coverage while imposing a minimal regulatory burden.
Over the subsequent years, the N C U A amended these regulations several times.
In the two thousand six final rule, the N C U A revised the official sign
to reflect statutory changes from the Federal Deposit Insurance Reform Act
of two thousand five, which included adding a statement that insured accounts
are backed by the full faith and credit of the United States Government.
A subsequent two thousand eight final rule provided credit unions with additional
flexibility by permitting the use of a shortened advertising statement,
Federally insured by N C U A, or the official sign itself in advertisements.
In a two thousand eleven final rule, the Board made the
advertising rules more stringent.
This amendment, among other changes, reduced the time exemption for radio
and television advertisements from thirty seconds to fifteen seconds.
It also introduced the requirement to include the official advertising statement
in annual reports and statements of condition, clarified that the statementâs
font size in print must be no smaller than the smallest font used for other
consumer information, and defined the term advertisement for the first time.
However, in a two thousand eighteen final rule, the N C U A reversed the two
thousand eleven change to the broadcast advertisement exemption to provide
regulatory relief and restore parity with regulations for banks insured by the
Federal Deposit Insurance Corporation.
The two thousand eighteen rule expanded the radio and television
exemption back to thirty seconds and introduced a shorter advertising
statement option, Insured by N C U A.
Most recently, a two thousand twenty final rule made technical
corrections to improve clarity.
Section two zero five, subsection a, of the Federal Credit Union Act
requires each federally insured credit union to display a sign relating to
the insurance of its share accounts.
The N C U A implements this requirement in part seven forty of its rules.
Part seven forty also requires that each federally insured credit union include
an official advertising statement related to share insurance in all advertisements.
This requirement originated from a historic statutory provision in section
one seven eight five, subsection a.
Before two thousand five, section one seven eight five, subsection a,
required every federally insured credit union to include a statement in all
advertisements reiterating that its member accounts are insured by the Board.
Section one seven eight five, subsection a, also provided that the Board
may exempt advertisements from this requirement if the advertisements do not
relate to member accounts or when it is impractical to include such a statement.
The two thousand five statutory amendment retained the requirement for federally
insured credit unions to post official signs but removed the requirement to
include official advertising statements.
The N C U A issued a final rule implementing changes associated with the
two thousand five statutory amendments in two thousand six, but did not remove
the portions of part seven forty that implemented the historical requirement to
include an official advertising statement.
Part seven forty currently includes both the requirements for an official
sign and advertising statement.
This proposed rule would amend two sections within part seven forty and
is intended to promote regulatory efficiency and reduce unnecessary burdens
on federally insured credit unions.
This proposed rule would remove section seven forty point five related to
the official advertising statement and revise section seven forty
point zero to remove references to the official advertising statement.
This action is intended to provide federally insured credit unions
with greater flexibility in their advertising activities while ensuring
that members continue to receive clear and accurate information
about their share insurance coverage through other required disclosures.
Section seven forty point five establishes the specific requirements
for the official advertising statement.
It mandates that federally insured credit unions include one of three
prescribed official statements or an alternative, namely, This credit
union is federally insured by the National Credit Union Administration,
Federally insured by N C U A, Insured by N C U A, or a reproduction of the
official sign, in all advertisements, unless specifically exempted.
The regulation requires the statement to be clearly legible and with a
font that is no smaller than the smallest font used for other consumer
information in the advertisement.
Section seven forty point five also details numerous exemptions, specifying
that the official statement is not required for certain items such as
stationery, checks, signs within a credit unionâs office, directory listings,
radio and television advertisements of thirty seconds or less, promotional
items where inclusion is impractical, and advertisements that do not relate
to member accounts, such as those for loans or safe deposit box services.
The Board is proposing to eliminate section seven forty point five because the
section imposes an unnecessary and undue compliance burden on federally insured
credit unions that is disproportionate to its limited public benefit.
The highly prescriptive nature of the rule, with its specific textual
requirements and complex list of exceptions for items ranging from
radio spots to promotional pens, forces federally insured credit
unions to dedicate administrative resources to compliance.
This approach is inflexible and poorly suited to the modern, fast paced
advertising landscape, particularly in the context of digital and social
media, where space is often limited and communication must be concise.
Furthermore, the Board believes the rule is largely unnecessary because
its core objective, ensuring members are aware of their federal insurance
coverage, is effectively achieved through other, more direct means.
The N C U A has long held it is important for consumers of advertisements to
know that the share accounts in the advertising federally insured credit union
are federally insured by the N C U A.
The Board has also stated that it believes the benefits to consumers
and federally insured credit unions, namely enhanced consumer confidence
and agency name recognition, outweigh the relatively minor burden associated
with requiring the inclusion of the official advertising statement.
However, the Board now believes these objectives are best met through other
provisions of part seven forty, and the advertising statement is unnecessary.
First, the requirements in section seven forty point four, which are not
being amended by this rule, mandate the display of the official N C U A sign in a
federally insured credit unionâs offices and on its website where members can
open share accounts and deposit funds.
This ensures that members receive prominent notice of their insured
status at the key points of transaction and interaction.
Second, the requirements in section seven forty point two mandate that
federally insured credit union advertising be accurate and truthful.
This provision ensures that, if a federally insured credit union
references its federal share insurance in advertisements, it does so accurately.
For example, if a federally insured credit union states it is N C U A insured in an
advertisement that includes noninsured products, the advertisement should be
clear that the product is not insured.
The additional requirement to include a specific statement in all advertisements
on share insurance is therefore redundant and does not materially enhance member
protection in a way that justifies the associated compliance costs.
This policy to remove the requirement for an official advertising statement
is also supported by the fact that the requirement in section seven forty
point five is not statutorily mandated.
As discussed above, the Federal Credit Union Act explicitly directs the
Board to issue regulations regarding the display of the official sign.
No provision in the Federal Credit Union Act compels the Board to create
or enforce a separate, distinct official advertising statement to
be included in all advertisements.
As the rule is not required by law and imposes an unnecessary burden,
its removal is a logical step to streamline the regulatory framework.
Federally insured credit unions may continue to include an advertising
statement, provided the inclusion is not inaccurate or deceptive,
but will not be required to include an advertising statement.
Finally, the proposed rule would also amend section seven
forty point zero, which outlines the scope of part seven forty.
Part seven forty currently references the official advertising statement.
With the removal of the substantive requirements in section seven forty
point five, retaining a scope section that references these rules would
be inaccurate and create confusion.
Therefore, the proposed rule would remove references in section seven forty
point zero to the advertising statement.
The Board solicits comments on all aspects of the proposed rule.
The Providing Accountability Through Transparency Act of two thousand twenty
three requires that a notice of proposed rulemaking include the internet address
of a summary of not more than one hundred words in length of a proposed
rule, in plain language, that shall be posted on the internet website
commonly known as regulations dot gov.
The Act, under its terms, applies to notices of proposed rulemaking and
does not expressly include other types of documents that the Board publishes
voluntarily for public comment.
The Board, however, has elected to address the Actâs requirement
in these types of documents in the interests of administrative
consistency and transparency.
The Board is issuing this proposed rule to streamline its
regulations governing advertising and the notice of insured status.
This proposed rule would eliminate provisions concerning the
official advertising statement.
This action is undertaken to reduce regulatory complexity and the
intended effect is to reduce the administrative burden and costs for
federally insured credit unions and provide them with greater flexibility
in their advertising activities.
The proposal and the required summary can be found at regulations dot gov.
Pursuant to Executive Order twelve eight six six, as amended, a
determination must be made whether a regulatory action is significant
and therefore subject to review by the Office of Management and Budget.
This proposed rule was drafted and reviewed in accordance with
applicable executive orders.
The Office of Management and Budget has determined that this proposed rule is
not a significant regulatory action.
This proposed rule will reduce the burden of including an official advertising
statement on all advertisements unless otherwise exempt and is consistent
with executive order principles.
Executive Order fourteen one nine two requires that any new incremental costs
associated with new regulations shall be offset by the elimination of existing
costs associated with prior regulations.
This proposed rule is expected to be a deregulatory action for
purposes of that executive order.
The Regulatory Flexibility Act generally requires an agency to conduct a regulatory
flexibility analysis unless the agency certifies that the rule will not have
a significant economic impact on a substantial number of small entities.
For purposes of this analysis, the N C U A considers small credit
unions to be those having under one hundred million dollars in assets.
The Board fully considered the potential economic impacts of the regulatory
amendments on small credit unions.
This rule is narrow in scope and purely deregulatory.
Further, federally insured credit unions may voluntarily continue to include
the official advertising statement in their advertisements and may choose
not to change their current practices.
Accordingly, the N C U A certifies the proposed rule would not have
a significant economic impact on a substantial number of small credit unions.
The Paperwork Reduction Act of nineteen ninety five generally provides that
an agency may not conduct or sponsor a collection of information unless it
displays a currently valid Office of Management and Budget control number.
The N C U A has determined that the changes described in this notice do not
create a new information collection or revise an existing information collection.
Executive Order thirteen one three two encourages certain agencies
to consider the impact of their actions on state and local interests.
The N C U A expects that any effect on states or on the distribution of power
and responsibilities among the various levels of government will be minor.
The proposed changes would remove an existing requirement on state chartered
credit unions and would not affect the division of responsibilities between the
N C U A and state regulatory authorities.
These changes relate to the N C U Aâs insurance of member accounts,
which is a distinct federal function.
The N C U A has determined that this proposed rule would
not affect family well being.
The proposed rule relates to federally insured credit union advertisements,
but the Board does not believe it will cause member confusion
regarding share insurance coverage.
Therefore, any effect on family well being is expected to be indirect.
For the reasons set forth in the preamble, the Board proposes to amend Title twelve
of the Code of Federal Regulations, part seven forty, to read as follows.
Part seven forty, Accuracy of Advertising and Notice of Insured Status.
The authority citation for part seven forty continues to read as follows.
Authority, twelve United States Code sections one seven six six,
one seven eight one, one seven eight five, and one seven eight nine.
Section seven forty point zero, Scope.
This part applies to all federally insured credit unions.
It prescribes the requirements for the official sign insured
credit unions must display.
It requires that all other kinds of advertisements be accurate.
It also establishes requirements for advertisements of excess insurance.
Section seven forty point five, removed.
This concludes the proposal.
If your credit union could use assistance with your exam, reach out to Mark Treichel
on LinkedIn or at Mark Treichel dot com.
This is Samantha Shares, and we thank you for listening.
2025-23854Accuracy of Advertisiâ¦Sources