ALEXANDRIA, Va. NCUA is warning credit unions about advertising that anyone can join, without limitation, saying such an offer may be in violation of laws and regulations.
NCUA’s Office of Consumer Protection has begun conducting quality control reviews of federal credit unions that may be improperly using associations to sign up members without a common bond.
“Some overly aggressive marketing campaigns by federal credit unions to facilitate membership through associational groups are providing consumers with misleading information about single and multiple common bond membership requirements,” said NCUA Chairman Debbie Matz in a new Letter to CUs.
The regulatory warning comes as increasing numbers of credit unions are adopting broad fields of membership that blur the traditional common bond, with some enacting statewide community charters and others using minimal association dues to qualify for membership.
The NCUA letter comes a few months after state regulators in California warned credit unions about offering that “anyone can” join in their advertisements. The Department of Financial Institutions has awarded some of the broadest community charters in the country, with many of them encompassing millions of people. Many state charters in Washington are permitted to serve anyone who lives in the state.
NCUA said it is particularly concerned about advertising by federal credit unions stating their fields of membership are “open to anyone.” Several recent examples of such overly expansive advertising focus on becoming a credit union member by first joining a particular association.
“Mainstream financial publications have picked up on this message, as evidenced by recent articles listing federal credit unions perceived to have “open” membership,” said Matz. “This gives the false impression that there are no restrictions on joining a federal credit union—which is not the case.”
The letter reminds credit unions of common bond requirements in the Federal CU Act and NCUA rules; requirements for accuracy of advertising in NCUA rules; and consequences of failing to comply with these requirements.
NCUA has a variety of supervisory and administrative tools to enforce the law and rules. Depending on the degree of non-compliance, NCUA may initiate a supervisory contact, require a federal credit union to divest an associational group from its field of membership, and/or issue a Cease and Desist order.
