[Federal Register Volume 75, Number 250 (Thursday, December 30, 2010)]
[Proposed Rules]
[Pages 82323-82325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-32127]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 740

RIN 3133-AD83


Accuracy of Advertising and Notice of Insured Status

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed rule with request for comments.

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SUMMARY: The NCUA Board proposes to revise certain provisions of NCUA's 
official advertising statement rule. Specifically, insured credit 
unions will be required to include the statement in all radio and 
television advertisements, annual reports, and statements of condition 
required to be published by law. The NCUA Board also proposes to define 
the term ``advertisement'' and clarify size requirements for the 
official advertising statement in print materials.

DATES: Comments must be received on or before February 28, 2011.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.

[[Page 82324]]

    <bullet> NCUA Web Site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the 
instructions for submitting comments.
    <bullet> E-mail: Address to <a href="/cdn-cgi/l/email-protection#99ebfcfefaf6f4f4fcf7edead9f7faecf8b7fef6ef"><span class="__cf_email__" data-cfemail="bac8dfddd9d5d7d7dfd4cec9fad4d9cfdb94ddd5cc">[email protected]</span></a>. Include ``[Your 
name] Comments on Proposed Rule 740, Accuracy of Advertising and Notice 
of Insured Status'' in the e-mail subject line.
    <bullet> Fax: (703) 518-6319. Use the subject line described above 
for e-mail.
    <bullet> Mail: Address to Mary Rupp, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428.
    <bullet> Hand Delivery/Courier: Same as mail address.
    Public Inspection: All public comments are available on the 
agency's Web site at http://www.ncua.gov/RegulationsOpinionsLaws/comments as submitted, except as may not be possible for technical 
reasons. Public comments will not be edited to remove any identifying 
or contact information. Paper copies of comments may be inspected in 
NCUA's law library at 1775 Duke Street, Alexandria, Virginia 22314, by 
appointment weekdays between 9 a.m. and 3 p.m. To make an appointment, 
call (703) 518-6546 or send an e-mail to <a href="/cdn-cgi/l/email-protection#eea1a9ada38f8782ae808d9b8fc0898198"><span class="__cf_email__" data-cfemail="94dbd3d7d9f5fdf8d4faf7e1f5baf3fbe2">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Frank Kressman, Senior Staff Attorney, 
Office of General Counsel, at the above address or telephone (703) 518-
6540.

SUPPLEMENTARY INFORMATION: Section 740.5 of NCUA's regulations requires 
each insured credit union to include NCUA's official advertising 
statement in all of its advertisements, including on its main internet 
page. 12 CFR 740.5(a). The official advertising statement is in 
substance as follows: ``This credit union is federally insured by the 
National Credit Union Administration.'' Insured credit unions, at their 
option, may use the short title ``Federally insured by NCUA'' or a 
reproduction of NCUA's official sign, as depicted in Sec.  740.4(b), as 
the official advertising statement. 12 CFR 740.4(b); 12 CFR 740.5(b).
    The official advertising statement must be in a size and print that 
is clearly legible. 12 CFR 740.5(b). If the official sign is used as 
the official advertising statement, an insured credit union may alter 
the font size to ensure its legibility as provided in Sec.  
740.4(b)(2). 12 CFR 740.4(b)(2); 12 CFR 740.5(b).
    A number of advertisements in the current rule, however, need not 
include the official advertising statement.\1\ Among those currently 
exempted advertisements are radio and television advertisements that do 
not exceed 30 seconds in time. The NCUA Board proposes to rescind these 
exemptions. NCUA believes that it is important for consumers of these 
kinds of advertisements to know that the share accounts in the 
advertising credit union are federally insured by NCUA. The NCUA Board 
believes that the benefits of this action to consumers and credit 
unions, namely, enhanced consumer confidence and NCUA name recognition, 
will far outweigh the minor inconvenience associated with requiring the 
inclusion of the official advertising statement in this context. The 
NCUA Board intends for this proposal also to apply to television 
display advertisements.
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    \1\ Exempted advertisements in the current rule include: (1) 
Statements of condition and reports of condition of an insured 
credit union which are required to be published by state or federal 
law or regulation; (2) Credit union supplies such as stationery 
(except when used for circular letters), envelopes, deposit slips, 
checks, drafts, signature cards, account passbooks, and noninsurable 
certificates; (3) Signs or plates in the credit union office or 
attached to the building or buildings in which the offices are 
located; (4) Listings in directories; (5) Advertisements not setting 
forth the name of the insured credit union; (6) Display 
advertisements in credit union directories, provided the name of the 
credit union is listed on any page in the directory with a symbol or 
other descriptive matter indicating it is insured; (7) Joint or 
group advertisements of credit union services where the names of 
insured credit unions and noninsured credit unions are listed and 
form a part of such advertisement; (8) Advertisements by radio that 
do not exceed thirty (30) seconds in time; (9) Advertisements by 
television, other than display advertisements, that do not exceed 
thirty (30) seconds in time; (10) Advertisements that because of 
their type or character would be impractical to include the official 
advertising statement, including but not limited to, promotional 
items such as calendars, matchbooks, pens, pencils, and key chains; 
(11) Advertisements that contain a statement to the effect that the 
credit union is insured by the National Credit Union Administration, 
or that its accounts and shares or members are insured by the 
Administration to the maximum insurance amount for each member or 
shareholder; (12) Advertisements that do not relate to member 
accounts, including but not limited to advertisements relating to 
loans by the credit union, safekeeping box business or services, 
traveler's checks on which the credit union is not primarily liable, 
and credit life or disability insurance. 12 CFR Sec.  740.5(c).
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    With respect to print advertisements, the NCUA Board proposes to 
clarify the requirement that the official advertising statement must be 
in a size and print that is clearly legible. 12 CFR 740.5(b). NCUA's 
regulations do not dictate a specific font size be used for the 
official advertising statement, and NCUA continues to believe this 
makes sense considering advertisements can range from small magazine 
advertisements to very large billboard advertisements. The NCUA Board 
requires, however, that in any particular advertisement, in addition to 
legibility, the font size for the official advertising statement may be 
no smaller than the smallest font size used in other portions of the 
advertisement intended to convey information to the consumer.
    Also, the NCUA Board believes that an insured credit union's annual 
report and other statements of condition required to be published by 
law are significant and a form of advertisement and must include the 
official advertising statement in a prominent position. Accordingly, 
the NCUA Board proposes to amend Sec.  740.5 in this regard.
    In summary, the proposal rescinds three exemptions from the general 
rule requiring the use of the official advertising statement. Those 
three include radio and television advertisements that do not exceed 30 
seconds in time and annual reports and other statements of condition 
required to be published by law. All other exemptions in Sec.  740.5(c) 
remain in place. Finally, the current rule does not define the term 
``advertisement.'' The NCUA Board proposes to clarify the rule by 
proposing such a definition. The proposed definition is consistent with 
that used by the Federal Deposit Insurance Corporation in its official 
advertising statement rule. 12 CFR part 328.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact any proposed regulation may 
have on a substantial number of small credit unions (those under $10 
million in assets). The proposed amendments enhance consumer confidence 
and do not impose a significant burden on credit unions. Accordingly, 
the NCUA has determined and certifies that the proposed rule, if 
adopted, will not have a significant economic impact on a substantial 
number of small credit unions within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601-612.

Paperwork Reduction Act

    The proposed rule does not contain a ``collection of information'' 
within the meaning of section 3502(3) of the Paperwork Reduction Act of 
1995 (44 U.S.C. 3502(3)) and would not increase paperwork requirements 
under the Paperwork Reduction Act of 1995 or regulations of the Office 
of Management and Budget.

[[Page 82325]]

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. In 
adherence to fundamental federalism principles, NCUA, an independent 
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies 
with the executive order. The proposed rule would not have substantial 
direct effect on the states, on the connection between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. NCUA has 
determined that this proposed rule does not constitute a policy that 
has federalism implications for purposes of the executive order.

The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this proposed rule would not affect family 
well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 
2681 (1998).

Agency Regulatory Goal

    NCUA's goal is to promulgate clear and understandable regulations 
that impose minimal regulatory burden. We request your comments on 
whether the proposed amendments are understandable and minimally 
intrusive if implemented as proposed.

List of Subjects in 12 CFR Part 740

    Advertisements, Credit unions, Signs and symbols.

    By the National Credit Union Administration Board on December 
16, 2010.
Mary F. Rupp,
Secretary of the Board.

    For the reasons discussed above, the NCUA Board proposes to amend 
12 CFR part 740 as follows:

 PART 740--ACCURACY OF ADVERTISING AND NOTICE OF INSURED STATUS

    1. The authority citation for part 740 continues to read as 
follows:

    Authority:  12 U.S.C. 1766, 1781, 1785, and 1789.

    2. Revise Section 740.1 by redesignating paragraphs (b) and (c) as 
paragraphs (c) and (d) and by adding a new paragraph (b) to read as 
follows:


Sec.  740.1  Definitions.

* * * * *
    (b) Advertisement as used in this part means a commercial message, 
in any medium, that is designed to attract public attention or 
patronage to a product or business.
* * * * *
    3. Amend Sec.  740.5 by revising paragraph (a) to read as follows:


Sec.  740.5  Requirements for the official advertising statement.

    (a) Each insured credit union must include the official advertising 
statement, prescribed in paragraph (b) of this section, in all of its 
advertisements including, but not limited to, annual reports, 
statements of condition required to be published by law, radio and 
television advertisements, and on its main Internet page, except as 
provided in paragraph (c) of this section.
* * * * *
    4. Amend Sec.  740.5 by:
    a. Revising the third sentence of paragraph (b);
    b. Removing and paragraphs (c)(1), (c)(8) and (c)(9); and
    c. Redesignating paragraphs (c)(2), (c)(3), (c)(4), (c)(5), (c)(6), 
(c)(7), (c)(10), (c)(11), and (c)(12), as paragraphs (c)(1) through 
(c)(9) respectively.
    The revised text reads as follows:


Sec.  740.5  Requirements for the official advertising statement.

    (b) * * * The official advertising statement must be in a size and 
print that is clearly legible and may be no smaller than the smallest 
font size used in other portions of the advertisement intended to 
convey information to the consumer. * * *
* * * * *
[FR Doc. 2010-32127 Filed 12-29-10; 8:45 am]
BILLING CODE 7535-01-P


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