Truth in Savings Advertising Requirements Impacting Social Media

Transcription

1 Truth in Savings Advertising Requirements Impacting Social Media John Zasada Principal

2 Credit Union Compliance Practice Review advertisements, websites and social media for compliance before CU release Ongoing Regulatory Compliance Assistance Service Fair lending testing Targeted compliance testing 2

3 Agenda Context Risks TIS Requirements UDAAP Managing TIS advertising on social media Social media compliance management best practices 3

4 What is Social Media? Interactive online Facebook, Twitter, LinkedIn, etc. Greater connection Not 4

5 Social Media Purpose can be different than other forms of advertising Increase risk Product disclosures and advertisements More work 5

6 Context Top regulatory compliance risk? Not TIS advertising on social media BUT 6

7 What to Comply With? Truth-In-Lending Act (Regulation Z) Truth-In-Savings Act (Part 707 of NCUA Rules and Regulations) Non-Deposit Investment Guidelines NCUA Privacy Regulation USA Patriot Act Equal Credit Opportunity Act (Regulation B) Home Mortgage Disclosure Act (Regulation C) Reserve Requirements (Regulation D) Expedited Funds Availability Act (Regulation CC) Real Estate Settlement Practices Act (Regulation X) Fair Credit Reporting Act Fair Housing Act Electronic Funds Transfer Act (Regulation E) Overdraft Protection Requirements UDAAP 7

8 What is an TIS Advertisement? A commercial message, appearing in any medium, that promotes directly or indirectly the availability or terms of, or a deposit in, a new account Provisions covering misleading/inaccurate statements and using term free apply to existing accounts as well Interpret broadly Examples 8

9 Not TIS Advertisements Telephone conversations initiated by a member about an account In person discussion Particular transaction in a current account Required disclosures Initial agreement 9

10 Misleading or Inaccurate Social media content must not be misleading or inaccurate Think UDAAP Inaccurate can mean out-of-date Monitor 10

11 Misleading or Inaccurate? 2% APR HELOCs available! Visit our website for more information! 11

12 Misleading or Inaccurate? Our courtesy pay program is the same as a loan! 12

13 Misleading or Inaccurate? We will honor your checks no matter what! 13

14 Misleading or Inaccurate? It s easy you can maintain your negative balance indefinitely! 14

15 Misleading or Inaccurate? Our overdraft service is designed to simply prevent all bounced checks! 15

16 Free Cannot use term free or no cost or fees waived if maintenance or activity fees are possible Examples Minimum balance fee Fee for excessive transactions Monthly transaction and service fee Fee for deposit/withdraw/transfer 16

17 Can still be Free Maintenance or activity fees are not: Balance inquiry fees Dormant account fees ATM fees Preauthorized transfer fees Stop payment fees Check printing fees 17

18 Violation? Free Checking as long as you keep a minimum balance of $200! 18

19 Violation? We offer free checking accounts As long as you maintain a minimum balance of $500 each month 19

20 Solution: We offer low-cost checking accounts (as long as you maintain a minimum balance of $500 each month) 20

21 Violation? Free withdrawals 21

22 Violation? Free for the first year 22

23 Violation? Free share accounts for those over 65 years old 23

24 TIS Rate Disclosure Truth in Savings permits the abbreviation "APY" as long as the term "annual percentage yield" is stated at least once in the advertisement Dividend rate 24

25 Violation? Regular Shares 1.01% APY 25

26 Solution: Regular Shares 1.01% APY APY = Annual Percentage Yield 26

27 Violation? Share Accounts 4% APR 27

28 Solution Share Accounts 4% Annual Percentage Yield 28

29 Violation? 6% Dividend Rate on Share Certificate Accounts 29

30 Solution 6% Annual Percentage Yield on Share Certificate Accounts 30

31 APY is a Trigger Term 4.75% Annual Percentage Yield 3% APY 31

32 Trigger Term? High rates of return 32

33 Trigger Term? 2% over your current rate 33

34 Trigger Term? 5 year share certificates click here 34

35 Trigger Term? Ask us about our great bonus rates for share draft accounts! 35

36 TIS Triggered Terms APY triggers: Variable rate information Time offered Minimum balance to earn the advertised annual percentage yield. Minimum opening deposit A statement that fees could reduce the earnings on the account For term share accounts: The term of the account. A statement that a penalty will or may be imposed for early withdrawal. 36

37 Problem: Share Certificates 3.25% APY APY = Annual Percentage Yield 37

38 Solution: Share Certificates 3.25% APY Minimum Balance to Open & Earn APY - $5,000 Minimum Term 18 Months Penalty for Early Withdrawal This Rate Accurate as of 03/01/14 APY = Annual Percentage Yield 38

39 Bonus as Trigger Term Gift or award worth more than $10 Bonus triggers: "annual percentage yield" time requirements minimum balance required to obtain the bonus minimum balance required to open the account when the bonus will be provided 39

40 TIS Links Revisited The Commentary to 12 CFR states you can use a link to more detailed disclosures but the link must clearly refer to the location 40

41 Problem: 3.50% APY Certificate Click here 41

42 Solution: 3.50% APY Certificate Click here for Truth in Savings Disclosures 42

43 UDAAP Subjective Complying with other regulations not enough Use those unfamiliar with the product or service Focus on complaints 3 rd parties 43

44 UDAAP Violation? ATM transactions free No foreign ATM fees Read the fine print 44

45 Action Steps Risks Fees Compensation Organization and accessibility of information Policy Test Ask the unfamiliar Rewards programs Scrub 45

46 Social Media Compliance Approaches Wait and see Clean past exam New world CFPB Unfair, Deceptive or Abusive Acts or Practices 46

47 What s the big deal? Closer scrutiny Advertising is indicative of overall compliance An examiner can look at your social media advertisements and in a few minutes get a good idea of how firm a grasp you have on regulatory compliance 47

48 Compliance Integration Elevation of business line over the compliance function Get compliance involved Compliance over the long haul Risk/reward 48

49 Identify and Train Who can post? What can they post? Train on compliance requirements 49

50 Social Media Guidance FFIEC Guidance Policy and procedures Applicable regulations UDAAP 50

51 Social Media Compliance Program Everyone is different Depends how you use social media More aggressive social media program/campaign require more intensive compliance involvement Hard for any credit union not to be impacted by social media 51

52 Social Media Compliance Program Components: Policy and procedures 3 rd parties Training Oversight Testing Senior management/board involvement 52

53 Social Media Compliance Areas Besides TIS, UDAAP Fair lending TIL RESPA NCUA Insurance Nondeposit investment products BSA Privacy 53

54 Records Retention Incorporate into your overall records retention schedule TIS Also Regulations B, Z, 54