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Website Compliance Issues

We'll let you in on a little secret about website compliance—one that may make your job a little easier. Ready? The secret is . . . there is no secret. That's right. For the most part (we'll discuss exceptions), website compliance is just “regular” compliance, taken into an online environment.

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Currently, most regulations do not make specific mention of compliance requirements for websites, but a recent final rule now allows credit unions to use their websites to meet disclosure delivery compliance requirements in Regulation Z. Please note, though, the regulation must be followed, whether your member is visiting your lobby or your website. Therefore, it becomes a matter of understanding, adapting, and complying with existing regulations in an e-commerce environment.

In general, regulatory agencies view websites as advertisements; however, the more interactive your credit union website is, the more your credit union should be concerned with the disclosure requirements of the regulations, as well as the requirements of the Electronic Signatures in Global and National Commerce Act (E-Sign).

Use of Logos 

Section 740.4 of the National Credit Union Administration's (NCUA) Rules and Regulations sets forth the advertising requirements federally insured credit unions must follow for the NCUA share insurance logo. Technically, although the logo is not required on web pages relating specifically and only to the making of loans by the credit union or loan services, it is recommended that it appears on every page of your website.

The same is true regarding the use of the Equal Housing Lender logo. NCUA Rules and Regulations §701.31 requires federal credit unions to display the Equal Housing Lender logo whenever they engage, directly or indirectly, in any form of advertising of real estate-related loans. State-licensed credit unions are subject to similar requirements under the Fair Housing Act and California Health & Safety Code§35830, and may use the Equal Housing Lender logo. Again, it is recommended you add the logo to every page.

Privacy

Although it is not yet required by regulation, it is prudent to have a link to your credit union's privacy policy on every page of your website. With scrutiny being given to privacy policies these days, it can't hurt to emphasize your credit union's commitment to protecting your members' privacy.

Truth in Savings

NCUA Rules and Regulations Part707 contains the requirements of the Truth in Savings Act. The advertising rules are found in §707.8. Some of the important website compliance issues to remember include:

  • Use of the term “CD” or “certificate of deposit” when describing a share certificate is specifically prohibited by the regulation (§707.2(a) Appendix C).
  • Use the term “annual percentage yield” when stating a dividend rate for a deposit account. The abbreviation “APY” can be used as long as the term “annual percentage yield” is used elsewhere in the ad (§707.8(b)).
  • Calculate the APY carefully.

Truth in Lending (Reg Z)

12 C.F.R. implements the Truth in Lending Act. §226.16 of the regulation covers advertising rules for open-end credit, and Section §226.24 covers closed-end credit.

One of the important website compliance issues to remember is that disclosure of certain terms, such as the APR, triggers the requirement for specified additional disclosures in the advertisement. Both the Truth in Savings and the Truth in Lending Acts provide a framework for the electronic delivery of required disclosures.

This article was reprinted with permission from Credit Union Digest, the publication of the California and Nevada Credit Union Leagues.

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