Discussion on NCUA’s Official Advertising Statement

The Compliance Team here at America's Credit Unions often gets asked questions about when to include the NCUA official advertising statement in its communications. This blog is going to go over when to include the statement, and when not to include it.

First, to set the stage, section 740.5(a) of NCUA's regulations requires the following:

"(a) Each insured credit union must include the official advertising statement, prescribed in paragraph (b) of this section, in all of its advertisements, including on its main internet page, except as provided in paragraph (c) of this section." (Emphasis added).

So, it has to be included in advertisements but what exactly qualifies as an "advertisement" under the rule? Section 740.1(b) defines an "advertisement" as the following:

"(b) Advertisement as used in this part means a commercial message, in any medium, that is designed to attract public attention or patronage to a product or business." (Emphasis added).

As you can see, the above definition is fairly broad. Because of this, credit unions must make a risk-based determination as to whether a particular message or communication qualifies as an advertisement under the regulation.

What must a credit union include if it determines that it has an advertisement on its hands? Section 740.5(b)(1) provides that:

"(b)

(1) The official advertising statement is in substance one of the following:

(i) This credit union is federally insured by the National Credit Union Administration;

(ii) Federally insured by NCUA;

(iii) Insured by NCUA; or

(iv) A reproduction of the official sign as described in § 740.4(b) may be used in lieu of the other statements included in this section. If the official sign is used as the official advertising statement, an insured credit union may alter the font size to ensure its legibility as provided in § 740.4(b)(2)." (Emphasis added).

In short, credit unions must include one of the approved options (above) of the official advertising statement, or a reproduction of the official sign, in any applicable advertisement.

Additionally, when including the official advertising statement, a credit union may alter the size and print of the statement as long as it remains clearly legible. The font size used may not be smaller than the smallest font size used elsewhere in the advertisement "intended to convey information to the consumer."

You may be wondering whether this truly means all advertisements need to include the official advertising statement. Well, section 740.5(c) does provide a list of advertisements that do not need to include the official advertising statement:

"(1) Credit union supplies such as stationery (except when used for circular letters), envelopes, deposit slips, checks, drafts, signature cards, account passbooks, and noninsurable certificates;

(2) Signs or plates in the credit union office or attached to the building or buildings in which the offices are located;

(3) Listings in directories;

(4) Advertisements not setting forth the name of the insured credit union;

(5) Display advertisements in credit union directories, provided the name of the credit union is listed on any page in the directory with a symbol or other descriptive matter indicating it is insured;

(6) Joint or group advertisements of credit union services where the names of federally insured credit unions and Non-federally insured credit unions are listed and form a part of such advertisement;

(7) Advertisements by radio which do not exceed thirty (30) seconds in time;

(8) Advertisements by television, other than display advertisements, which do not exceed thirty (30) seconds in time;

(9) Advertisements that because of their type or character would be impractical to include the official advertising statement, including but not limited to, promotional items such as calendars, matchbooks, pens, pencils, and key chains;

(10) Advertisements that contain a statement to the effect that the credit union is insured by the National Credit Union Administration, or that its accounts and shares or members are insured by the Administration to the maximum insurance amount for each member or shareholder;

(11) Advertisements that do not relate to member accounts, including but not limited to advertisements relating to loans by the credit union, safekeeping box business or services, traveler's checks on which the credit union is not primarily liable, and credit life or disability insurance."

As you can see, there are numerous exceptions that you'll want to be familiar with.

Questions? Please feel free to contact the Compliance Team at compliance@americascreditunions.org.