Compliance Online

As credit unions use multiple channels to promote their offerings, staying compliant is getting more complicated, says Jennifer Anderson-Kapke, compliance attorney at PolicyWorks, LLC, sister company to CUES Supplier member The Members Group, Des Moines.

Credit unions are talking about products and services in person at branches or on the phone, in ads, on social media, in brochures, plus on their websites, desktop and mobile versions. Among these channels, “there is some consistency that is being left off,” says Anderson-Kapke, in terms of disclosures. “There have been some differences in what is published in print vs. on a website.”

One example she points to is a website that said the financial institution offered “dividends” while a print piece used the term “interest.” This is “inaccurate and misleading,” she explains.

Another common example she sees is that APR is often listed as APY.

The errors could be a result of vendors or a marketing team that doesn’t understand the differences in the terms, she says.

To keep advertising and marketing channels consistent, she suggests creating a checklist and referencing it at the creation of every new ad or campaign. Ask:

• What product is being sold?
• What regulations apply?
• What market is it targeting?
• What exceptions are there?

It is extremely beneficial to work with an outside resource, she suggests, because the outsider won’t be as familiar with the materials and they’ll be able to provide a non-biased view. This will help with consistency and making sure you have all the proper disclosures.

Social Media

When it comes to marketing on social media, try to be as generic as possible, she suggests. “If you avoid trigger terms, you won’t have to have so many disclosures.”

Some common triggers are “0% interest for six months” (what is the interest after?), “no balance transfer,” or “no annual fees.” Each of these phrases would trigger a disclosure that is hard to fit in 140 characters.

In late 2013, the Federal Financial Institutions Examination Council released its final guidance on the applicability of consumer protection and compliance laws, regulations, and policies to activities conducted via social media. “I encourage all credit unions to review it with both the marketing and compliance teams,” says Anderson-Kapke.

Mobile Screens

While credit unions’ websites allow more room for disclosures, as the world becomes more and more mobile, you need to consider visibility. Are your disclosures visible and readable on a tiny smartphone screen? You need to structure your Web pages so required pieces, such as the NCUA logo, appear in a legible form, Anderson-Kapke says.

Risks

Not managing your marketing compliance opens your credit union to risk. Earlier this year, Bank of America was fined $727 million for deceptive credit card add-on marketing practices.

Another example: Outdoor retailer Cabela’s, or rather the bank that runs the store’s credit card, was fined $1 million for deceptive and unfair acts, including charging improper fees.

Anderson-Kapke recommends creating a risk management program with a policy to address situations with social media, telecommunications and working with outside vendors.

When working with outside vendors—whether it’s a telemarketing company, outsourced call center, direct mail company, or car dealer you have an indirect loan relationship with—make sure they are up to date with proper disclosures and compliance. And frequently review all the forms vendors are using and even look at what is on telemarketing screens. Are telemarketers prompted to use the correct language when discussing credit card offers, for example?

Consider credit union marketing through this lens, Anderson-Kapke suggests: “What can I do to make a marketing piece to not only draw members in, but how can I make it simple for them to understand, without misleading them or being deceptive in any way?”

In addition, the compliance team and marketing teams need to work together. “We need to talk. Marketers can’t be afraid of compliance,” she says. “Let’s find a way to make it work.”

In addition, to the compliance risk (and subsequent potential fines), credit unions face operational risk, Anderson-Kapke says. If you advertise to members that they are going to receive a certain rate and then on the back end that rate isn’t offered, you will have a lot of work to correct the mistake. Those mistakes can then lead to reputation risk, as your credit union could be seen as incompetent and, worse, deceptive.