NCUA's proposal on Accuracy of Advertising and Notice of Insured Status
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
