The Words NCUA Won’t Let You Say

September 9, 2013 at 6:53 am 1 comment

I’m so glad that the worst of the financial crisis is behind us.  Now NCUA can get back to some really important oversight:  making sure common bond credit unions don’t inadvertently use advertising puffery to lure consumers into their branches.

The late comedian George Carlin told us the seven dirty words you couldn’t say on televisions and NCUA has now told us at least some of the phrases that may get credit union marketers in trouble.  In a Letter to Credit Unions worthy of a George Carlin comedy routine, NCUA warns credit unions against overly broad advertising campaigns with ” language to the effect that “anyone can join” or “membership is open to everyone” — without any qualifying language.

The NCUA warns that such overly broad language “may” violate federal law and goes on to provide a quick primer on credit union membership requirements for common bond credit unions.

Here is the thing: There are many smaller media markets where a large portion of the population can join a multiple common bond credit union.  In those situations, are credit unions acting illegally or reaching out to as many members as possible in what they think is the most effective way?

A second thrust of the letter warns that NCUA’s Office of Consumer Protection has begun conducting quality control reviews of federal credit unions that may be improperly using associations to sign up members without a common bond.

This second threat is the most troubling to me.  Does this mean that examiners are going to start examining how active a member is in a given Association in order to qualify for that Association’s membership?  So long as a member meets whatever requirements are necessary to belong to an association, what right or capability does NCUA have to decide whether a member really should be considered fully vested in any group that offers credit union membership?

Don’t get me wrong.  The law is the law and if credit unions are opening up membership to non-qualified individuals they should be penalized.  But when NCUA starts critiquing advertising language that is meant to convey that credit unions aren’t secret societies of erstwhile unionists but financial institutions open to large segments of the American public, then I really have to wonder what great danger it thinks it is preventing and whether it sees any limit to its oversight over credit union activity.

Entry filed under: General, Regulatory. Tags: , , .

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1 Comment Add your own

  • 1. Gregg Stockdale  |  September 17, 2013 at 1:34 pm

    Fryzel want’s us to “go for it’ and move membership to 200 Million. Matz is paranoid that “anyone can join” is somehow a violation. My CU serves our entire county. We have (until later this week) “Anyone can join” painted on our front window. Matz seems to forget that those that take action to join, have to go through a membership process once they decide to move forward… We don’t say anyone can join HERE… and if someone ever comes to us outside our membership, we gladly refer them on to the cu that can serve them. Mr. Fryzel’s outcome can’t be achieved if Ms. Matz puts the breaks on anything that might increase membership awareness nationwide. Perhaps if her attention to this level of detail was a bit better in the past, we wouldn’t have had the WesCorp debacle. Instead of halting the “anyone can join” marketing, we should promote a nationwide – “anyone can join” and then point potential members to cu’s that have the appropriate FOM. I like Mr. Fryzel’s proposal better than Ms. Matz.


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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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