CUNA Regulatory Comment Call

September 25, 2002

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

(Not a Major Rule)


Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at and to Assistant General Counsel Jeffrey Bloch at; or mail them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6732, if you would like a copy of the rule.


NCUA’s policy is to review all of its rules periodically to update, clarify, and simplify existing rules and eliminate redundant and unnecessary provisions. This proposed rule was issued in response to this policy.

NCUA issued this rule for two reasons. The first is to address the growing use of the Internet. Currently, over 40 percent of credit unions have a website and almost half of these offer members the ability to perform transactions. This number will only increase as general use of the Internet continues to grow. The second reason for amending the current advertising rules is to incorporate several interpretations that have been issued in the past by NCUA’s Office of General Counsel that address the use of trade, or second names.


Internet Usage

With regard to the Internet, credit unions must use the official advertising statement on the home page, which is the statement that the credit union is federally insured by NCUA. Credit unions must also display the official sign stating that funds are insured by NCUA up to $100,000 on any page of the website in which the member may transfer or deposit funds, which NCUA believes is analogous to a teller window or station at a credit union office. The rule also subjects electronic advertisements to the current requirements regarding accuracy in advertising.

NCUA recognizes that credit unions use the Internet to offer services to current members, as well as to invite new members to join. For this reason, NCUA believes that the rules with regard to advertisements in other media, such as television, radio, and newspapers, should also apply to advertisements on the Internet.

These changes with regard to the Internet are intended to address NCUA’s concern that members receive clear and adequate notice about the availability of federal share insurance when they use the Internet to engage in transactions. NCUA does not believe these changes will add significant regulatory burden, based on indications that most credit unions operating Internet websites are already displaying the official sign and advertising statement in the appropriate manner.

Trade Names

NCUA’s Office of General Counsel has issued several opinions permitting credit unions to use trade, or second names. The rule clarifies that the use of such trade names of the credit union is permitted, except that they may not be used in legal documents. These documents include consumer disclosures, contracts, titles, liens, stocks, or other documents that set out legal responsibilities and obligations.

Credit unions must also ensure that its staff advises new members that accounts opened or deposits made in branches or facilities with different names are not separately insured. The credit union must also ensure that it does not violate the rights of other parties when using a trade name.


Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •