&
compliance
MARKETING
guide
Third Edition, revised BY THOMAS C. LEDUC
Product #28866
With respect to the content of this publication, neither the Credit Union National Association, Inc. (CUNA) nor any of its affiliates or its or their respective employees make any express or implied warranty or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, commercial product, service, process, provider, vendor, or trade name/mark that is disclosed. References to any specific commercial product, service, process, provider, vendor, or trade name/mark in this publication also do not necessarily constitute or imply that such product or provider is endorsed, recommended, or warranted by CUNA. The views and opinions of the author expressed herein do not necessarily state or reflect those of CUNA and such reference shall not be used for advertising or produce endorsement purposes. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is not, however, intended to be an exhaustive treatment of all issues and questions that may arise. It is sold with the understanding that the publisher, Credit Union National Association, Inc. is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Written by Thomas C. Leduc Third edition by PolicyWorks Copyright © 2012 Credit Union National Association, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical photocopying, recording, or otherwise, without the prior written permission of the copyright owner. Printed in the United States of America 10 9 8 7 6 5 4 3 2 1
CONTENTS Acknowledgments ......................................................................................................... vii About the Authors ......................................................................................................... viii Introduction — You Can Mix Marketing and Compliance ...................... ix PART ONE — Two Basic NCUA Advertising Regulations ................. 1 Your Ad Must Be Accurate! NCUA Rules and Regulations, Part 740 ......................................................................... 1 What Sign? ................................................................................................................... 2 Must You Use an Official Statement? ...................................................................... 3 Any Exceptions? ............................................................................................................ 3 When Is a Web Page an Ad? ...................................................................................... 4 Sample Ad #1 — Disclosing the Official Sign ........................................................ 6 Compliance Checklist — Disclosing the Official Sign ......................................... 8 Your Ad May Not Discriminate! NCUA’s Rules and Regulations, Section 701.31 ............................................................ 9 Which Rules Apply if You’re a Federal Credit Union? ......................................... 9 What if You’re a State-Chartered Credit Union? .................................................. 10 How Do You Show “Affirmative Intention”? .......................................................... 11 701.31 in Cyberspace! .................................................................................................. 11 Sample Ad #2 — Disclosing the Equal Housing Lender Logo ........................... 12 Compliance Checklist — Disclosing the Equal Housing Lender Logo ............ 14
PART TWO — Share Account Products................................................... 15 To Tell the Truth in Savings NCUA’s Rules and Regulations, Section 707.8 ............................................................... 15 Again, Accuracy! ........................................................................................................... 15 It’s Not Free if There’s a Fee ........................................................................................ 15 What’s in an APY?—Annual Percentage Yield....................................................... 16
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Compliance & Marketing Guide
When Is an Ad Not an Ad? ........................................................................................ 17 Dos and Don’ts of Broadcast or Electronic Media................................................ 17 Truth-in-Savings for Signs—for Sure! ...................................................................... 19 And Let’s Not Forget Newsletters............................................................................. 19 Yes, TIS Applies to the Internet ................................................................................ 20 Sample Ad #3 — Term Share/Certificate Account ............................................... 24 Compliance Checklist — Term Share/Certificate Account................................ 26 Sample Ad #4 — Share Draft/Checking Account ................................................. 30 Compliance Checklist — Share Draft/Checking Account.................................. 32 Share Draft/Checking Account with Promotion of Overdraft Services ................................................................................................... 35 Compliance Checklist—Share Draft/Checking Account Promotion ............... 36 Sample Ad #5 — Money Market Account.............................................................. 40 Compliance Checklist — Money Market Account............................................... 42 Sample Ad #6 — Coverdell Education Savings Account (ESA)......................... 46 Compliance Checklist — Coverdell Education Savings Account (ESA) ......... 48
PART THREE — Consumer and Real Estate-Related Loan Products .................................................................................... 51 When Truth in Lending Applies Ad Requirements under Regulation Z ............................................................................. 51 Regulation Z Flies in Cyberspace .............................................................................. 52 Open-End Versus Closed-Credit .............................................................................. 52 “Trigger Terms?”— Not to Panic! ............................................................................. 53 How to Advertise Open-End Credit Regulation Z Requirements, Section 226.16................................................................... 53 Any Specific Trigger Terms? ...................................................................................... 53 Disclosures for Trigger Terms ................................................................................... 55 How It Works at WXYZ Credit Union ................................................................... 55 Credit Cards and “Z”.................................................................................................... 56 Promotional Rates for Credit Cards ......................................................................... 56 HELOC Ads — Covering the Basics Two Styles of Disclosure ...................................................................................................... 57 HELOC Promotional Rates and Payments ............................................................. 58 Promotional Payments ................................................................................................ 58 iv
Part One: Two Basic NCUA Advertising Regulations Contents
Beware Balloon Payments .......................................................................................... 59 Other Potential Pitfalls ................................................................................................ 59 Early Disclosures — A Question of Timing ........................................................... 59 Sample Ad #7 — Line of Credit................................................................................. 62 Compliance Checklist — Line of Credit ................................................................. 64 Sample Ad #8 — Credit Card .................................................................................... 66 Compliance Checklist — Credit Card ..................................................................... 70 Sample Ad #9 — Home Equity Line of Credit (HELOC) ................................... 74 Compliance Checklist — Home Equity Line of Credit........................................ 76 How to Advertise Closed-End Credit Regulation Z, Section 226.24 ............................................................................................. 79 Choose Your Terms Carefully.................................................................................... 79 Watch for These Triggers ............................................................................................ 79 APR Versus APY ........................................................................................................... 80 Closed-end Home-secured Loans ........................................................................... 80 Sample Ad #10 — Auto Loan .................................................................................... 84 Compliance Checklist — Closed-End Loan ........................................................... 86 Sample Ad #11 — Home Improvement Loan........................................................ 88 Compliance Checklist — Closed-End Loan ........................................................... 90 Sample Ad #12 — Mortgage Loan ............................................................................ 92 Compliance Checklist — Mortgage Loan ............................................................... 94
PART FOUR — Consumer Leasing ....................................................... 95 Getting It Just Right—Just in Case! The Consumer Leasing Act and Regulation M .............................................................. 95 Make It “Clear and Conspicuous” ............................................................................. 95 Triggers — Regulation M Style.................................................................................. 95 What’s a Rule without Exceptions?........................................................................... 96 Lease Rates — Caveat Emptor! ........................................................................... 97 Sample Ad #13 — Lease .............................................................................................. 98 Compliance Checklist—Lease ................................................................................. 100
PART FIVE — Various and Sundry Issues .......................................... 103 Tips on Privacy Disclosures ........................................................................................ 103 Deposit Tickets Must Comply!...................................................................................103 v
Compliance & Marketing Guide
The Best of Brochures ...................................................................................................104 Prescreening ....................................................................................................................102 Sample Ad #14 — Firm Offer of Credit (Prescreening) ...................................108 Compliance Checklist — Firm Offer of Credit ...................................................111 Do NOT Call! ...............................................................................................................113 A Word of Caution ....................................................................................................114 Hungry? How About Some CAN-SPAM? .............................................................114 Don’t Fax Junk ...............................................................................................................116 Of Promotions and Giveaways ...................................................................................116 A Word about State Laws .............................................................................................117 The Penalties of Noncompliance ...............................................................................117 APPENDIX A The Compliance Buff ’s Annotated Reference — Checklists with Citations .........................................................................119 Checklist #1 — NCUA’s Rules and Regulations, Part 740— Advertising Compliance Checklist ........................................................................ 119 Checklist #2 — NCUA’s Rules and Regulations, Section 701.31— Nondiscrimination Requirements Advertising Compliance Checklist (Federal Credit Unions)............................................................................................ 121 Checklist #3 — NCUA’s Rules and Regulations, Part 707— Truth-in-Savings Advertising Compliance Checklist ....................................... 122 Checklist #4 — Truth-in-Lending (Regulation Z) Advertising Compliance Checklist ............................................................................................... 127 Checklist #5 — Consumer Leasing (Regulation M) Advertising Compliance Checklist ............................................................................................... 132 Checklist #6 — FTC Prescreen Opt-Out Notice Advertising .............................. 134 APPENDIX B Glossary ..................................................................................137 APPENDIX C Resources................................................................................141 INDEX .............................................................................................................. 153
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