Every credit union advertises. And, every credit union faces the same question: what disclosures are required on my advertisement? Often, there are internal discussion and meetings (fights, perhaps?) at the credit union–most likely involving those responsible for marketing and those responsible for compliance.
How can credit unions understand and manage the compliance risks related to their advertising? I've been fortunate to work with credit unions throughout the country–first as the lead compliance attorney at NAFCU and now in private practice. Based on this experience (I've spent a good deal of time “in the weeds” of the overlapping regulations), below are my seven advertising compliance tips for credit unions.
1. Set Up a Formal Review Process. If your credit union does not already have one, establish a formal review process for all credit union advertisements. This review process helps ensure the appropriate individuals are aware of the advertising campaign and have provided the necessary approvals. The number one way to prevent claims of unfair, deceptive or abusive marketing is to make sure each ad is properly reviewed.
2. Create Internal Checklists. To help assist the formal review process, I recommend that credit unions utilize checklists to ensure advertisements contain the necessary disclosures. The hardest part of advertising compliance is the fact that the required disclosures depend on the underlying content of the advertisement. A checklist can help the credit union determine whether a trigger term is used and, if so, what additional disclosures must be included.
3. Analyze Ads Product-by-Product. Unfortunately, the disclosure requirements vary from product to product. For example, the required disclosures for a home equity line of credit ad differ from the required disclosures for a closed-end home equity loan. When evaluating your advertisements, be sure to keep in mind which product is being promoted and which rules apply. If you are using checklists, having them set up by product (rather than by regulation) is a great idea.
4. Ask Where the Advertisement Will Be Used. An advertisement in a credit union's branch may be compliant while the same ad used on a billboard may be missing disclosures (or have unreadable disclosures). A quick aside for billboard ads: if you have to be vandalizing the billboard to read the disclosures; they probably are not prominent enough. While a credit union may want to get as much bang for its buck for a marketing campaign, it must be aware that the regulatory requirements vary depending on where the advertisement is used.
5. Utilize the One-Click Rule. Related to Tip 4, when credit unions are advertising online–including on their own websites and via social media–they have flexibility, in certain situations, when providing the required disclosures. When allowed (blame the regulators, not me), credit unions can include a link that takes consumers directlyto the additional disclosures. I've found that creating specific landing pages for these advertisements helps credit unions simultaneously track impact and satisfy the one-click rule.
6. Beware the Universal Disclosure. I'm sure many of you have seen the Franken disclosure. This amalgamation of a disclosure is used as a catch all for as many advertisements as possible and evolves over time due to input from compliance staff, examiners and legal counsel. Whenever I see one of these universal disclosures, I get worried as the truly important information is surrounded by inapplicable disclosures that are likely to confuse your members (and your marketing and compliance teams). By utilizing the tips above, you'll be able to refrain from using universal disclosures by reviewing the ad by content, by product and by ad location to determine the required disclosures.
7. Do Not Assume Others Got It Right! Finally, be careful when using your competitors' advertisements as your primary compliance guide. Most credit union employees have either used or heard the phrase: “But theydon't have that disclosure, why do we need it?” By following the tips above, you'll understand which disclosures are required and also realize your competition's advertisements may not be 100% compliant.
As a final comment, I'll simply note that credit union advertising has never been more visible. This is both good and bad. Credit unions have the ability to reach members (and future members) on Facebook, Pandora, YouTube, their own website and in many more places. However, the flip side is credit union advertisements can be viewed by regulators, attorneys, banking groups and any other interested party just as easily. The tips above will help your credit union manage compliance risk and market your products and services confidently.
Steve Van Beek is an attorney and counselor at Howard & Howard Attorneys in Royal Oak, Mich.CONTACT: 248-723-0521 or [email protected].
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