Align Marketing and Compliance

Four simple questions can help CUs avoid common online marketing compliance missteps.

August 2, 2012

Of the many communication and advertising media available to credit unions, websites are a favorite. They’re fairly inexpensive to maintain, quick to edit, and simple to navigate thanks to advancements in content management software.

But unlike lower-profile media such as member newsletters or statement stuffers, websites and social media campaigns are quite public. With this type of open media, an innocent oversight or simple ignorance of the rules may be broadcast to any number of people watching for mistakes—not the least of whom are examiners.

But credit unions can avoid some common online compliance missteps by asking four simple questions.

1. Is it really for members only?

Many credit unions produce newsletters, communicating only with their members to ease the compliance burden. Laden with “trigger terms,” newsletters rarely include the disclosures required by the law.

Marketers often believe—mistakenly—they can distribute the material without the disclosures because “it’s only going to members.”

However, many of these “member-only” newsletters live a second, very public life once added to a credit union’s web archive. At that point, this once-exclusive communication is out there for the world to see—and scrutinize for compliance.

Once a news¬letter becomes available to the public, Truth in Savings (NCUA Rules and Regulations Section 707.8) (pdf) kicks in. Advertising an annual percentage yield (APY), for example, triggers additional disclosure requirements, including the need to state the minimum balance required to earn the APY.

If this describes your credit union’s communications, don’t panic. There are three ways to resolve this issue:

  1. Add the necessary disclosures to your online newsletters. Not many credit unions will go this route—doing so could take a great deal of time depending on the size of the newsletter archive.
  2. Remove the archived newsletters from your website to avoid being cited by an examiner.
  3. Move the archived newsletters to a members-only portion of the site.

2. How free is ‘free?’

One of the many victims of the Durbin Amendment’s debit interchange cap, free checking is becoming a key differentiator for many credit unions seeking to compete with the big banks.

Hoping to appeal to frustrated bank customers, credit unions are shouting the availability of “free checking” from the digital rooftops (a.k.a. websites, blogs, and social networks).

But Truth in Savings provides that advertisements can’t refer to or describe an account as “free” if any maintenance or activity fee may be imposed on the account. (Be careful with the thesaurus—the same applies to the phrase “no cost.”)

Therefore, a credit union’s marketing team must fully understand the fee structure behind the institution’s “free checking” product before advertising it as such.

This isn’t to say your credit union shouldn’t spread the word online about free checking—it’s a valuable product for consumers. Just conduct a thorough review of the product and digest Appendix C of the regulation. It explains when credit unions can and can’t use “free” to describe an account.

3. Is it over $10?

The giveaway is a common marketing promotion. This is particularly effective online because, given the right strategy, a giveaway message can spread like wildfire.

It’s also effective at encouraging consumers to do something they otherwise wouldn’t do without the incentive.

Credit unions, however, are governed by specific rules about giveaways NCUA considers a “bonus.” This is defined as a premium, gift, award, or other consideration worth more than $10 (whether in the form of cash, credit, merchandise, or any equivalent) given or offered to a member in exchange for opening, maintaining, or renewing an account, or increasing an account balance.

A large list of disclosures must accompany the communication of a giveaway. What’s more, once a credit union discloses the terms and conditions for the bonus, it must provide additional disclosures about the account for which the bonus is being provided.

That’s a lot of pixels to devote to one promotion.

4. Does it pull the trigger?

Back to those trigger terms. There’s a whole litany of words and phrases that will trigger warning bells for any examiner looking through a credit union’s website or social communication. Among them are “no closing costs,” “0% APR,” and “no balance transfer fee.”

And don’t forget about online videos. If a video’s subject matter requires disclosures, marketers often simply add a link to a blog post below the embedded video.

But what they rarely consider is that online videos often live on YouTube, where it’s available for public viewing but doesn’t include the mandated disclosure information.

Help is available

These are just some examples of mistakes well-intentioned marketers may make that could have drastic consequences.

Already strapped for time, these credit union professionals simply can’t keep up with the ever-changing regulations governing their every communication. Yet, they have no choice.

Help from regulatory compliance professionals like those at PolicyWorks [] is an ideal solution. We not only know the regulations and how to apply them, we work only with credit unions. This gives us a complete understanding of the unique resource challenges credit unions face.

That said, we also see that creativity isn’t a resource that’s lacking in today’s credit union industry. With the right blend of originality and due diligence, marketers can—and do—strike a balance, creating campaigns that can pass exams and win new members all at the same time.

KYLE WOODMANSEE is a compliance specialist for PolicyWorks.