CUNA Comment Letter

NCUA’s Proposed Rule on Advertising and Notice of Insured Status

November 25, 2002

Ms. Becky Baker
Secretary of the Board
National Credit Union Administration
1775 Duke Street
Alexandria, Virginia 22314-3428

RE: NCUA’s Proposed Rule on Advertising and Notice of Insured Status (Part 740)

Dear Ms. Baker:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on NCUA’s proposed rule on the accuracy of advertising and notice of insured status. The proposed rule will amend the requirements regarding advertising practices and the official sign and statement of the credit union’s insured status. The purpose of the rule is to address the growing use of the Internet and the use of trade names. CUNA represents more than 90 percent of our nation’s 10,000 state and federal credit unions.

Summary of CUNA’s Position

CUNA supports the provisions of the rule with regard to the use of trade names, which will incorporate several interpretations that have been issued by NCUA’s Office of General Counsel. These provisions will clarify that the use of trade, or second names, of the credit union is permitted, except that they may not be used in legal documents, such as consumer disclosures, contracts, titles, liens, stocks, or other documents that set out legal responsibilities and obligations.

However, we believe that the proposed rule does not provide enough flexibility with regard to displaying the official insurance sign or advertising statements on a credit union’s website. Additional flexibility is necessary to take into account the unique features of the Internet.

Displaying a sign on the Internet is different from displaying a sign at a teller’s window. A teller window is a relatively large area that allows for the official sign to be displayed clearly and legibly in the format as required under the proposed rule. However, an Internet website page is limited in size to that of a typical monitor screen. Displaying the sign as currently depicted and in a font that is viewable on such a screen would result in a graphic that would cover a disproportionate amount of the space on the screen. For example, the official sign available on NCUA’s website that credit unions may use on their website is illegible because the writing on the sign is too small and remains illegible even when enlarged.

We also believe that the requirement to present the official sign with a blue background and white letters may diminish its readability. Using such a color scheme with a small font could create a halo affect, which would distort the verbiage of the sign.

For these reasons, we recommend that NCUA permit credit unions to alter the official sign as needed in order to ensure the readability of the sign. For example, instead of requiring credit unions to display the entire sentence “National Credit Union Administration, a U.S. Government Agency-- on one line, NCUA should permit credit unions to divide this sentence into two lines. We also request that NCUA permit credit unions to change the font size of the words on the sign in order to make it legible without changing the size of the logo itself. We further recommend that credit unions be permitted to change the color of the sign as necessary to ensure that it is in focus and free of distortions when it is displayed on an Internet webpage.

NCUA has also proposed that credit unions display the official advertising statement on all subsequent webpages, beyond the home page, in which a member may transfer or deposit funds or open an account. We believe this requirement is unnecessary for webpages that cannot be accessed directly by entering a uniform resource locator (URL) address if the home page already displays this statement. Members often cannot access subsequent webpages without viewing the homepage first. As long as the advertising statement is on the home page, we believe that members will receive adequate notice that their funds are federally insured.

Thank you for the opportunity to comment on NCUA’s proposed rule on the accuracy of advertising and notice of insured status. If Board members or agency staff have questions about our comments, please give Associate General Counsel Mary Dunn or me a call at 202-638-5777.

Sincerely,

Jeffrey Bloch
Assistant General Counsel