Accuracy of Advertising and Notice of Insured Status, 17910-17913 [2018-08557]

Download as PDF 17910 Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations in total assets but less than $20 billion in total assets, or is otherwise designated as a tier II credit union by NCUA. Tier III credit union means a covered credit union that has $20 billion or more in total assets, or is otherwise designated as a tier III credit union by NCUA. ■ 3. Amend § 702.504 as follows: ■ a. Revise paragraph (a)(1). ■ b. In paragraph (a)(2) introductory text, add the words ‘‘for tier III credit unions,’’ before the words ‘‘prior to the submission of the capital plan’’. ■ c. Remove paragraph (b)(4). ■ d. Redesignate paragraphs (b)(5) and (b)(6) as paragraphs (b)(4) and (b)(5). The revision reads as follows: § 702.504 Capital planning. (a) * * * (1) A covered credit union must develop and maintain a capital plan. Tier I and tier II credit unions must complete this plan and their capital policy by December 31 each year, but are not required to submit this plan to the NCUA. For tier I and tier II credit unions, the plan must be based on the credit union’s financial data from either of the two calendar quarters preceding the quarter in which the plan is approved by the credit union’s board of directors (or a designated committee of the board). A tier III credit union must submit this plan and its capital policy to NCUA by May 31 each year, or such later date as directed by NCUA. For tier III credit unions, the plan must be based on the credit union’s financial data as of December 31 of the preceding calendar year, or such other date as directed by NCUA. * * * * * ■ 4. Amend § 702.505 as follows: ■ a. Revise paragraph (a). ■ b. Add to the introductory text of paragraph (d) the words ‘‘tier III’’ before the words ‘‘credit union’s capital plan’’. ■ c. In paragraph (e), remove the word ‘‘covered’’ and add in its place the words ‘‘tier III’’. The revision reads as follows: sradovich on DSK3GMQ082PROD with RULES § 702.505 NCUA action on capital plans. (a) Timing. (1) Tier I & tier II credit unions. NCUA will address any deficiencies in the capital plans submitted by tier I and tier II credit unions through the supervisory process. (2) Tier III credit unions. NCUA will notify tier III credit unions of the acceptance or rejection of their capital plans by August 31 of the year in which their plan is submitted. * * * * * ■ 5. Section 702.506 is revised to read as follows: VerDate Sep<11>2014 16:26 Apr 24, 2018 Jkt 244001 § 702.506 testing. Annual supervisory stress (a) General requirements. Only tier II and tier III credit unions are required to conduct supervisory stress tests. The supervisory stress tests consist of a baseline scenario, and stress scenarios, which NCUA will provide by February 28 of each year. The tests will be based on the credit union’s financial data as of December 31 of the preceding calendar year, or such other date as directed by NCUA. The tests will take into account all relevant exposures and activities of the credit union to evaluate its ability to absorb losses in specified scenarios over a planning horizon. (b) Credit union-run supervisory stress tests—(1) General. All supervisory stress tests must be conducted according to NCUA’s instructions. (2) Tier III credit unions. When conducting its stress test, a tier III credit union must apply the minimum stress test capital ratio to all time periods in the planning horizon. The minimum stress test capital ratio is 5 percent. (3) NCUA tests. NCUA reserves the right to conduct the tests described in this section on any covered credit union at any time. Where both NCUA and a covered credit union have conducted the tests, the results of NCUA’s tests will determine whether the covered credit union has met the requirements of this subpart. (c) Potential impact on capital. In conducting stress tests under this subpart, the credit union, or the NCUA if it elects to conduct the stress test under paragraph (b)(3) of this section, will estimate the following for each scenario during each quarter of the planning horizon: (1) Losses, pre-provision net revenues, loan and lease loss provisions, and net income; and (2) The potential impact on the stress test capital ratio, incorporating the effects of any capital action over the planning horizon and maintenance of an allowance for loan losses appropriate for credit exposures throughout the horizon. The credit union, or the NCUA if it elects to conduct the stress test under paragraph (b)(3) of this section, will conduct the stress tests without assuming any risk mitigation actions on the part of the credit union, except those existing and identified as part of the credit union’s balance sheet, or offbalance sheet positions, such as derivative positions, on the date of the stress test. (d) Information collection. Upon request, the credit union must provide NCUA with any relevant qualitative or quantitative information requested by PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 NCUA pertinent to the stress tests under this subpart. (e) Stress test results. A credit union required to conduct stress tests under this section must incorporate the results of its tests in its capital plan. A credit union required to conduct stress tests must submit its stress test results to NCUA by May 31 of each year. (f) Supervisory actions. (1) If a credit union-run stress test shows a tier III credit union does not have the ability to maintain a stress test capital ratio of 5 percent or more under expected and stressed conditions in each quarter of the planning horizon, the credit union must incorporate, into its capital plan, a stress test capital enhancement plan that shows how it will meet that target. (2) If an NCUA-run stress test shows that a tier III credit union does not have the ability to maintain a stress test capital ratio of 5 percent or more under expected and stressed conditions in each quarter of the planning horizon, the credit union must provide NCUA, by November 30 of the calendar year in which NCUA conducted the tests, a stress test capital enhancement plan showing how it will meet that target. (3) A tier III credit union operating without an NCUA approved stress test capital enhancement plan required under this section may be subject to supervisory actions. (g) Consultation on proposed action. Before taking any action under this section against a federally insured, statechartered credit union, NCUA will consult and work cooperatively with the appropriate State official. [FR Doc. 2018–08558 Filed 4–24–18; 8:45 am] BILLING CODE 7535–01–P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 740 RIN 3133–AE78 Accuracy of Advertising and Notice of Insured Status National Credit Union Administration (NCUA). ACTION: Final rule. AGENCY: The NCUA Board (Board) is revising provisions of the NCUA’s advertising rule to provide regulatory relief to federally insured credit unions (FICUs). The advertising rule requires FICUs to use the NCUA’s official advertisement statement when advertising, and it currently permits three versions of that statement. Under this final rule, the Board is allowing FICUs the option of using a fourth SUMMARY: E:\FR\FM\25APR1.SGM 25APR1 Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations version: ‘‘Insured by NCUA.’’ To provide additional regulatory relief, the Board is: Expanding a current exemption from the advertising statement requirement regarding radio and television advertisements; and eliminating the requirement to include the official advertising statement on statements of condition required to be published by law. DATES: This final rule becomes effective May 25, 2018. FOR FURTHER INFORMATION CONTACT: Marvin Shaw, Staff Attorney, Office of General Counsel, telephone (703) 518– 6553. SUPPLEMENTARY INFORMATION: I. Background The Federal Credit Union Act (Act) requires each FICU to display NCUA’s ‘‘official sign’’ regarding National Credit Union Share Insurance Fund insurance of the FICU’s share accounts. The sign includes language that the coverage is backed by the full faith and credit of the United States Government.1 Part 740 of the NCUA’s regulations implements this statutory requirement and includes requirements relating to the NCUA’s official advertising statement, each as discussed in more detail below.2 sradovich on DSK3GMQ082PROD with RULES A. Part 740 Requirements Part 740 prohibits any FICU from using advertising 3 or making any representation which is inaccurate or deceptive or which misrepresents its services, contracts, financial condition, or the Truth in Savings requirements. It also prescribes requirements for both the NCUA’s official advertisement statement that FICUs must make when advertising and the NCUA’s official sign that FICUs must display. Currently, there are two versions of the NCUA’s official advertising statement: (1) The longer version, which reads ‘‘This credit union is federally insured by the National Credit Union Administration’’; and (2) the shorter version, which reads ‘‘Federally insured by NCUA.’’ In accordance with part 740, a FICU may, as a third option, display the official sign in advertisements in lieu of making the official advertising statement. With certain exemptions discussed below, a FICU must use the official advertising statement in all of its advertisements, although it is at the FICU’s discretion to choose among the three options noted. 1 12 U.S.C. 1785. CFR part 740. 3 This includes print, electronic and broadcast media, displays, signs, and stationary and other promotional material. 2 12 VerDate Sep<11>2014 16:26 Apr 24, 2018 Jkt 244001 Section 740.5(c) of the NCUA’s regulations enumerates several kinds of advertisements that, for practical reasons, are exempted from the general rule requiring the use of the official advertising statement.4 With respect to these exempted advertisements, the Board is focusing on the exemptions relating to radio and television advertisements of a certain duration.5 B. Regulatory History For many years, the NCUA’s advertising and official sign regulations were essentially the same as those of the Federal Deposit Insurance Corporation (FDIC).6 In 2011, however, the Board amended part 740 by making the NCUA’s advertising rules more stringent than FDIC’s rules. Specifically, in 2011, while banks needed only to include the FDIC’s official advertising statement in radio and television advertisements that exceeded 30 seconds, the NCUA’s regulatory amendments required FICUs to include the NCUA’s official advertising statement in all radio and television advertisements except those that were less than 15 seconds.7 This 4 The following advertisements need not include the official advertising statement under the current rule: (1) Credit union supplies such as stationery (except when used for circular letters), envelopes, deposit slips, checks, drafts, signature cards, account passbooks, and noninsurable certificates; (2) Signs or plates in the credit union office or attached to the building or buildings in which the offices are located; (3) Listings in directories; (4) Advertisements not setting forth the name of the insured credit union; (5) 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; (6) 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; (7) Advertisements by radio that are less than fifteen (15) seconds in time; (8) Advertisements by television, other than display advertisements, that are less than fifteen (15) seconds in time; (9) 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; (10) 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; (11) 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. 5 12 CFR 740.5(c)(7) and (8). 6 12 CFR part 328. 7 76 FR 30521 (May 26, 2011). Prior to the 2011 amendments, the FDIC and the NCUA expressed the 30 second time frame in the same manner. Specifically, both agencies applied the exemption to radio and television advertisements that do not ‘‘exceed’’ thirty seconds. With the 2011 amendments, the NCUA lowered the exemption PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 17911 additional requirement, which the Board now believes is unnecessary, affected more FICU advertisements and disrupted the parity between bank and FICU regulatory burden. According to some FICUs, the 2011 amendments made it more difficult for FICUs to produce effective advertisements. The NCUA’s 2011 amendments also required FICUs to include the advertising statement on statements of condition required to be published by law, a requirement not imposed on banks. C. October 2017 Proposal On October 4, 2017 (2017 NPRM),8 the Board published a proposal to: (1) expand the radio and television advertisements exemption from 15 seconds to 30 seconds; and (2) eliminate the requirement to include the official advertising statement on statements of condition required to be published by law. This proposal effectively reversed the 2011 amendments and returned parity between banks and FICUs in this context. To provide additional regulatory relief, the Board also proposed to permit FICUs to use a fourth version of the official advertising statement, namely ‘‘Insured by NCUA.’’ The Board believes that these changes will provide FICUs with more flexibility without diminishing the purpose of part 740. In the 2017 NPRM, the Board sought comment on the proposed amendments and specifically requested comment about whether part 740 should be modified to address advertising on social media and mobile banking. II. Summary of Comments on 2017 NPRM The NCUA received 36 comments from federal and state credit unions, trade associations, credit union leagues, credit union employees, and an individual. These commenters generally supported the proposed rule, although a few commenters opposed discreet aspects of the proposal. In supporting the proposal, several commenters called the changes modest yet important. A few commenters emphasized that part 740’s primary goal is to inform the public about share insurance. Commenters stated that the proposed rule would: (1) Provide regulatory relief duration from 30 seconds to 15 seconds and changed the do not ‘‘exceed’’ language to advertisements that are ‘‘less than’’ the stated duration, both of which the Board now believes disadvantage FICUs compared to banks. For technical clarification, the purpose of this final rule and the 2017 proposal is to eliminate the unnecessary disadvantages imposed by the 2011 amendments. 8 82 FR 46173 (Oct. 4, 2017). E:\FR\FM\25APR1.SGM 25APR1 17912 Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations and flexibility, particularly allowing more efficient communications to members and potential members; (2) provide parity with banks regulated and insured by the FDIC; (3) allow credit unions to highlight more of their products and services; (4) decrease costs and obstacles; and (5) reduce burden and streamline advertising disclosures. Several commenters noted that the cumulative effect of the ‘‘myriad federal and state regulations’’ require credit unions to allocate significant resources to legal and compliance departments. They favored the proposal, even though they stated that the existing requirements are not overly burdensome. Each proposed amendment and the corresponding public comments recommending alternatives or modifications are discussed in more detail below. III. Final Rule sradovich on DSK3GMQ082PROD with RULES A. Adding a Fourth Alternative Version of the Official Advertising Statement As noted, part 740 currently provides three options for the NCUA’s official advertising statement: (1) ‘‘This credit union is federally insured by the National Credit Union Administration’’; (2) ‘‘Federally insured by NCUA’’; and (3) the official sign may be displayed in advertisements in lieu of the advertising statement. Virtually all commenters supported the proposal to add an additional version of the official advertising statement. Commenters expressed appreciation for this proposed alternative, stating that it provides regulatory relief. One commenter noted that the proposed version consists of 13 characters as opposed to 22 or 71 characters. Commenters stated that the change is especially meaningful for new social media platforms because it enhances flexibility while still conveying the important message regarding federal share insurance. They further posited that providing a shorter alternative makes advertising more cost effective because print and electronic advertising prices are often based on length and duration. One commenter recommended allowing an even shorter ten character message—‘‘NCUA Insured’’ or twelve character message ‘‘Member NCUSIF.’’ This commenter stated that this would provide parity with the FDIC advertising statement—‘‘Member FDIC,’’ thus enhancing flexibility. The Board agrees the proposed alternative will add flexibility without any adverse effect on potential members. However, it does not believe VerDate Sep<11>2014 16:26 Apr 24, 2018 Jkt 244001 it necessary to adopt the suggested ‘‘NCUA Insured’’ or ‘‘Member NCUSIF.’’ Therefore, the Board adopts this aspect of the proposal as proposed. B. Expand Exemption for Radio and Television Advertisements As noted above, the current advertising rule exempts from the requirements of part 740 radio and television advertisements that are less than 15 seconds in duration. In the 2017 NPRM, the Board proposed to expand the radio and television advertisements exemption from 15 seconds to 30 seconds. Virtually all commenters supported this aspect of the proposal. The commenters supported the Board’s goal of restoring parity between FICUs and banks and noted this change would enhance a FICU’s ability to communicate to members. The commenters stated that the previous reduction of the exemption in 2011 from 30 seconds to 15 seconds was unnecessary and increased regulatory burden. The Board agrees and adopts this aspect of the proposal as proposed. C. Eliminate Requirement Regarding Statements of Condition The 2011 amendments, for the first time, required FICUs to include the advertising statement on statements of condition required to be published by law. In the 2017 NPRM, the Board proposed to relieve FICUs of this burden. Of the commenters who addressed this aspect of the proposal, all agreed with it. They stated that the requirement is unnecessary and that relief from it restores parity with banks. The Board agrees with the commenters and adopts this aspect of the proposal as proposed. D. Social Media, Mobile Banking, and Other Digital Communication Current part 740 focuses primarily on traditional forms of advertising such as print, radio, and television. In the 2017 NPRM, the Board requested comment on whether to modify the regulations to more precisely address advertising on social media, mobile banking, text messaging, and other digital communication platforms, such as Twitter and Instagram. The Board requested specific recommendations that would balance the goal of informing the public regarding federal share insurance coverage with the practical constraints inherent in social media advertising. Twelve commenters addressed this topic, noting that digital media typically are designed as extremely short forms of communication. Several commenters PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 favored making no changes to part 740, stating that the proposal to permit the fourth version of the official advertising statement was sufficient to accommodate new forms of advertising. Other commenters recommended adding new exemptions to part 740 for various forms of digital advertisements provided the official advertising statement appears elsewhere in the FICU’s advertisement. Others recommended modifying certain provisions of part 740 short of adding new exemptions. For example, one commenter recommended that, for textbased messaging, the regulations should allow the official advertising statement to be expressed by a hashtag for Twitter, e.g., ‘‘#NCUAInsured’’ or ‘‘InsNCUA.’’ Another commenter suggested allowing the use of an emoji that would indicate insured status that could be included in tweets or text messages. The Board has determined that, given the rapidly changing technological landscape, it is appropriate to delay taking action to amend part 740 regarding social media at this time. The Board believes that part 740 provides a sufficient framework to inform potential and current credit union members regarding federal share insurance coverage for advertisements made in traditional ways and on social media. Additionally, the NCUA’s Office of General Counsel is authorized to provide guidance to any FICU with questions regarding part 740 in the context of advertising on social media. Regulatory Procedures Regulatory Flexibility Act The Regulatory Flexibility Act requires the NCUA to prepare an analysis to describe any significant economic impact a regulation may have on a substantial number of small entities.9 For purposes of this analysis, the NCUA considers small credit unions to be those having under $100 million in assets. The amendments provide regulatory relief without any costs to FICUs. Accordingly, the NCUA has determined and certifies that the final rule 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 Paperwork Reduction Act of 1995 (‘‘PRA’’) applies to rulemakings in which an agency by rule creates a new paperwork burden on regulated entities or modifies an existing burden.10 For 95 U.S.C. 603(a). U.S.C. 3507(d); 5 CFR part 1320. 10 44 E:\FR\FM\25APR1.SGM 25APR1 Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations purposes of the PRA, a paperwork burden may take the form of either a reporting or a recordkeeping requirement, both referred to as information collections. This rule does not constitute a ‘‘collection of information’’ within the meaning of section 3502(3) and would not increase paperwork requirements under the PRA or regulations of the Office of Management and Budget (OMB). By the National Credit Union Administration Board on April 19, 2018. Gerard S. Poliquin, Secretary of the Board. DEPARTMENT OF ENERGY For the reasons discussed above, the NCUA Board amends 12 CFR part 740 as follows: 18 CFR Part 40 PART 740—ACCURACY OF ADVERTISING AND NOTICE OF INSURED STATUS 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, the NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. The rule will 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. The NCUA has determined that this rule does not constitute a policy with federalism implications for purposes of the executive order. Small Business Regulatory Enforcement Fairness Act The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121) (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where the NCUA issues a final rule as defined in Section 551 of the Administrative Procedure Act. The NCUA does not believe this final rule is a ‘‘major rule’’ within the meaning of the relevant sections of SBREFA. As required by SBREFA, the NCUA has filed the appropriate documentation with OMB for review. sradovich on DSK3GMQ082PROD with RULES The Treasury and General Government Appropriations Act of 1999— Assessment of Federal Regulations and Policies on Families The NCUA has determined that this rule will not affect family well-being within the meaning of Section 654 of the Treasury and General Government Appropriations Act, 1999.11 List of Subjects in 12 CFR Part 740 Advertisements, Credit unions, Share insurance, Signs and symbols. 11 Public Law 105–277, 112 Stat. 2681 (1998). VerDate Sep<11>2014 16:26 Apr 24, 2018 Jkt 244001 17913 1. The authority citation for part 740 continues to read as follows: ■ Authority: 12 U.S.C. 1766, 1781, 1785, and 1789. Federal Energy Regulatory Commission [Docket No. RM17–11–000; Order No. 843] Revised Critical Infrastructure Protection Reliability Standard CIP– 003–7—Cyber Security—Security Management Controls Federal Energy Regulatory Commission. ACTION: Final rule. AGENCY: The Federal Energy Regulatory Commission (Commission) ■ 2. Amend § 740.5 by revising approves Critical Infrastructure paragraphs (a), (b), (c)(7) and (c)(8) to Protection (CIP) Reliability Standard read as follows: CIP–003–7 (Cyber Security—Security Management Controls), submitted by the § 740.5 Requirements for the official North American Electric Reliability advertising statement. Corporation (NERC). Reliability (a) Each insured credit union must Standard CIP–003–7 clarifies the include the official advertising obligations pertaining to electronic statement, prescribed in paragraph (b) of access control for low impact BES Cyber this section, in all of its advertisements, Systems; requires mandatory security including on its main internet page, controls for transient electronic devices except as provided in paragraph (c) of (e.g., thumb drives, laptop computers, and other portable devices frequently this section. connected to and disconnected from (b)(1) The official advertising systems) used at low impact BES Cyber statement is in substance one of the Systems; and requires responsible following: entities to have a policy for declaring (i) This credit union is federally and responding to CIP Exceptional insured by the National Credit Union Circumstances related to low impact Administration; BES Cyber Systems. In addition, the Commission directs NERC to develop (ii) Federally insured by NCUA; modifications to the CIP Reliability (iii) Insured by NCUA; or Standards to mitigate the risk of (iv) A reproduction of the official sign malicious code that could result from as described in § 740.4(b) may be used third-party transient electronic devices. in lieu of the other statements included DATES: This rule will become effective in this section. If the official sign is used June 25, 2018. as the official advertising statement, an FOR FURTHER INFORMATION CONTACT: insured credit union may alter the font Matthew Dale (Technical Information), size to ensure its legibility as provided Office of Electric Reliability, Federal in § 740.4(b)(2). Energy Regulatory Commission, 888 First Street NE, Washington, DC (2) The official advertising statement 20426, (202) 502–6826, must be in a size and print that is clearly matthew.dale@ferc.gov legible and may be no smaller than the smallest font size used in other portions Kevin Ryan (Legal Information), Office of the General Counsel, Federal of the advertisement intended to convey Energy Regulatory Commission, 888 information to the consumer. First Street NE, Washington, DC (c) * * * 20426, (202) 502–6840 kevin.ryan@ (7) Advertisements by radio which do ferc.gov not exceed thirty (30) seconds in time; SUPPLEMENTARY INFORMATION: Before Commissioners: Kevin J. McIntyre, (8) Advertisements by television, Chairman; Cheryl A. LaFleur, Neil other than display advertisements, Chatterjee, Robert F. Powelson, and which do not exceed thirty (30) seconds Richard Glick. in time; 1. Pursuant to section 215 of the * * * * * Federal Power Act (FPA),1 the SUMMARY: [FR Doc. 2018–08557 Filed 4–24–18; 8:45 am] BILLING CODE 7535–01–P PO 00000 Frm 00013 Fmt 4700 1 16 Sfmt 4700 E:\FR\FM\25APR1.SGM U.S.C. 824o (2012). 25APR1

Agencies

National Credit Union Administration

[Federal Register Volume 83, Number 80 (Wednesday, April 25, 2018)]
[Rules and Regulations]
[Pages 17910-17913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08557]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 740

RIN 3133-AE78


Accuracy of Advertising and Notice of Insured Status

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: The NCUA Board (Board) is revising provisions of the NCUA's 
advertising rule to provide regulatory relief to federally insured 
credit unions (FICUs). The advertising rule requires FICUs to use the 
NCUA's official advertisement statement when advertising, and it 
currently permits three versions of that statement. Under this final 
rule, the Board is allowing FICUs the option of using a fourth

[[Page 17911]]

version: ``Insured by NCUA.'' To provide additional regulatory relief, 
the Board is: Expanding a current exemption from the advertising 
statement requirement regarding radio and television advertisements; 
and eliminating the requirement to include the official advertising 
statement on statements of condition required to be published by law.

DATES: This final rule becomes effective May 25, 2018.

FOR FURTHER INFORMATION CONTACT: Marvin Shaw, Staff Attorney, Office of 
General Counsel, telephone (703) 518-6553.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Federal Credit Union Act (Act) requires each FICU to display 
NCUA's ``official sign'' regarding National Credit Union Share 
Insurance Fund insurance of the FICU's share accounts. The sign 
includes language that the coverage is backed by the full faith and 
credit of the United States Government.\1\ Part 740 of the NCUA's 
regulations implements this statutory requirement and includes 
requirements relating to the NCUA's official advertising statement, 
each as discussed in more detail below.\2\
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    \1\ 12 U.S.C. 1785.
    \2\ 12 CFR part 740.
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A. Part 740 Requirements

    Part 740 prohibits any FICU from using advertising \3\ or making 
any representation which is inaccurate or deceptive or which 
misrepresents its services, contracts, financial condition, or the 
Truth in Savings requirements. It also prescribes requirements for both 
the NCUA's official advertisement statement that FICUs must make when 
advertising and the NCUA's official sign that FICUs must display.
---------------------------------------------------------------------------

    \3\ This includes print, electronic and broadcast media, 
displays, signs, and stationary and other promotional material.
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    Currently, there are two versions of the NCUA's official 
advertising statement: (1) The longer version, which reads ``This 
credit union is federally insured by the National Credit Union 
Administration''; and (2) the shorter version, which reads ``Federally 
insured by NCUA.'' In accordance with part 740, a FICU may, as a third 
option, display the official sign in advertisements in lieu of making 
the official advertising statement. With certain exemptions discussed 
below, a FICU must use the official advertising statement in all of its 
advertisements, although it is at the FICU's discretion to choose among 
the three options noted.
    Section 740.5(c) of the NCUA's regulations enumerates several kinds 
of advertisements that, for practical reasons, are exempted from the 
general rule requiring the use of the official advertising 
statement.\4\ With respect to these exempted advertisements, the Board 
is focusing on the exemptions relating to radio and television 
advertisements of a certain duration.\5\
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    \4\ The following advertisements need not include the official 
advertising statement under the current rule: (1) Credit union 
supplies such as stationery (except when used for circular letters), 
envelopes, deposit slips, checks, drafts, signature cards, account 
passbooks, and noninsurable certificates; (2) Signs or plates in the 
credit union office or attached to the building or buildings in 
which the offices are located; (3) Listings in directories; (4) 
Advertisements not setting forth the name of the insured credit 
union; (5) 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; (6) 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; (7) 
Advertisements by radio that are less than fifteen (15) seconds in 
time; (8) Advertisements by television, other than display 
advertisements, that are less than fifteen (15) seconds in time; (9) 
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; (10) 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; (11) 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.
    \5\ 12 CFR 740.5(c)(7) and (8).
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B. Regulatory History

    For many years, the NCUA's advertising and official sign 
regulations were essentially the same as those of the Federal Deposit 
Insurance Corporation (FDIC).\6\ In 2011, however, the Board amended 
part 740 by making the NCUA's advertising rules more stringent than 
FDIC's rules. Specifically, in 2011, while banks needed only to include 
the FDIC's official advertising statement in radio and television 
advertisements that exceeded 30 seconds, the NCUA's regulatory 
amendments required FICUs to include the NCUA's official advertising 
statement in all radio and television advertisements except those that 
were less than 15 seconds.\7\ This additional requirement, which the 
Board now believes is unnecessary, affected more FICU advertisements 
and disrupted the parity between bank and FICU regulatory burden. 
According to some FICUs, the 2011 amendments made it more difficult for 
FICUs to produce effective advertisements.
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    \6\ 12 CFR part 328.
    \7\ 76 FR 30521 (May 26, 2011). Prior to the 2011 amendments, 
the FDIC and the NCUA expressed the 30 second time frame in the same 
manner. Specifically, both agencies applied the exemption to radio 
and television advertisements that do not ``exceed'' thirty seconds. 
With the 2011 amendments, the NCUA lowered the exemption duration 
from 30 seconds to 15 seconds and changed the do not ``exceed'' 
language to advertisements that are ``less than'' the stated 
duration, both of which the Board now believes disadvantage FICUs 
compared to banks. For technical clarification, the purpose of this 
final rule and the 2017 proposal is to eliminate the unnecessary 
disadvantages imposed by the 2011 amendments.
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    The NCUA's 2011 amendments also required FICUs to include the 
advertising statement on statements of condition required to be 
published by law, a requirement not imposed on banks.

C. October 2017 Proposal

    On October 4, 2017 (2017 NPRM),\8\ the Board published a proposal 
to: (1) expand the radio and television advertisements exemption from 
15 seconds to 30 seconds; and (2) eliminate the requirement to include 
the official advertising statement on statements of condition required 
to be published by law. This proposal effectively reversed the 2011 
amendments and returned parity between banks and FICUs in this context. 
To provide additional regulatory relief, the Board also proposed to 
permit FICUs to use a fourth version of the official advertising 
statement, namely ``Insured by NCUA.'' The Board believes that these 
changes will provide FICUs with more flexibility without diminishing 
the purpose of part 740. In the 2017 NPRM, the Board sought comment on 
the proposed amendments and specifically requested comment about 
whether part 740 should be modified to address advertising on social 
media and mobile banking.
---------------------------------------------------------------------------

    \8\ 82 FR 46173 (Oct. 4, 2017).
---------------------------------------------------------------------------

II. Summary of Comments on 2017 NPRM

    The NCUA received 36 comments from federal and state credit unions, 
trade associations, credit union leagues, credit union employees, and 
an individual. These commenters generally supported the proposed rule, 
although a few commenters opposed discreet aspects of the proposal.
    In supporting the proposal, several commenters called the changes 
modest yet important. A few commenters emphasized that part 740's 
primary goal is to inform the public about share insurance.
    Commenters stated that the proposed rule would: (1) Provide 
regulatory relief

[[Page 17912]]

and flexibility, particularly allowing more efficient communications to 
members and potential members; (2) provide parity with banks regulated 
and insured by the FDIC; (3) allow credit unions to highlight more of 
their products and services; (4) decrease costs and obstacles; and (5) 
reduce burden and streamline advertising disclosures. Several 
commenters noted that the cumulative effect of the ``myriad federal and 
state regulations'' require credit unions to allocate significant 
resources to legal and compliance departments. They favored the 
proposal, even though they stated that the existing requirements are 
not overly burdensome.
    Each proposed amendment and the corresponding public comments 
recommending alternatives or modifications are discussed in more detail 
below.

III. Final Rule

A. Adding a Fourth Alternative Version of the Official Advertising 
Statement

    As noted, part 740 currently provides three options for the NCUA's 
official advertising statement: (1) ``This credit union is federally 
insured by the National Credit Union Administration''; (2) ``Federally 
insured by NCUA''; and (3) the official sign may be displayed in 
advertisements in lieu of the advertising statement.
    Virtually all commenters supported the proposal to add an 
additional version of the official advertising statement. Commenters 
expressed appreciation for this proposed alternative, stating that it 
provides regulatory relief. One commenter noted that the proposed 
version consists of 13 characters as opposed to 22 or 71 characters. 
Commenters stated that the change is especially meaningful for new 
social media platforms because it enhances flexibility while still 
conveying the important message regarding federal share insurance. They 
further posited that providing a shorter alternative makes advertising 
more cost effective because print and electronic advertising prices are 
often based on length and duration.
    One commenter recommended allowing an even shorter ten character 
message--``NCUA Insured'' or twelve character message ``Member 
NCUSIF.'' This commenter stated that this would provide parity with the 
FDIC advertising statement--``Member FDIC,'' thus enhancing 
flexibility.
    The Board agrees the proposed alternative will add flexibility 
without any adverse effect on potential members. However, it does not 
believe it necessary to adopt the suggested ``NCUA Insured'' or 
``Member NCUSIF.'' Therefore, the Board adopts this aspect of the 
proposal as proposed.

B. Expand Exemption for Radio and Television Advertisements

    As noted above, the current advertising rule exempts from the 
requirements of part 740 radio and television advertisements that are 
less than 15 seconds in duration. In the 2017 NPRM, the Board proposed 
to expand the radio and television advertisements exemption from 15 
seconds to 30 seconds. Virtually all commenters supported this aspect 
of the proposal. The commenters supported the Board's goal of restoring 
parity between FICUs and banks and noted this change would enhance a 
FICU's ability to communicate to members. The commenters stated that 
the previous reduction of the exemption in 2011 from 30 seconds to 15 
seconds was unnecessary and increased regulatory burden.
    The Board agrees and adopts this aspect of the proposal as 
proposed.

C. Eliminate Requirement Regarding Statements of Condition

    The 2011 amendments, for the first time, required FICUs to include 
the advertising statement on statements of condition required to be 
published by law. In the 2017 NPRM, the Board proposed to relieve FICUs 
of this burden. Of the commenters who addressed this aspect of the 
proposal, all agreed with it. They stated that the requirement is 
unnecessary and that relief from it restores parity with banks.
    The Board agrees with the commenters and adopts this aspect of the 
proposal as proposed.

D. Social Media, Mobile Banking, and Other Digital Communication

    Current part 740 focuses primarily on traditional forms of 
advertising such as print, radio, and television. In the 2017 NPRM, the 
Board requested comment on whether to modify the regulations to more 
precisely address advertising on social media, mobile banking, text 
messaging, and other digital communication platforms, such as Twitter 
and Instagram. The Board requested specific recommendations that would 
balance the goal of informing the public regarding federal share 
insurance coverage with the practical constraints inherent in social 
media advertising.
    Twelve commenters addressed this topic, noting that digital media 
typically are designed as extremely short forms of communication. 
Several commenters favored making no changes to part 740, stating that 
the proposal to permit the fourth version of the official advertising 
statement was sufficient to accommodate new forms of advertising. Other 
commenters recommended adding new exemptions to part 740 for various 
forms of digital advertisements provided the official advertising 
statement appears elsewhere in the FICU's advertisement. Others 
recommended modifying certain provisions of part 740 short of adding 
new exemptions. For example, one commenter recommended that, for text-
based messaging, the regulations should allow the official advertising 
statement to be expressed by a hashtag for Twitter, e.g., 
``#NCUAInsured'' or ``InsNCUA.'' Another commenter suggested allowing 
the use of an emoji that would indicate insured status that could be 
included in tweets or text messages.
    The Board has determined that, given the rapidly changing 
technological landscape, it is appropriate to delay taking action to 
amend part 740 regarding social media at this time. The Board believes 
that part 740 provides a sufficient framework to inform potential and 
current credit union members regarding federal share insurance coverage 
for advertisements made in traditional ways and on social media. 
Additionally, the NCUA's Office of General Counsel is authorized to 
provide guidance to any FICU with questions regarding part 740 in the 
context of advertising on social media.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires the NCUA to prepare an 
analysis to describe any significant economic impact a regulation may 
have on a substantial number of small entities.\9\ For purposes of this 
analysis, the NCUA considers small credit unions to be those having 
under $100 million in assets. The amendments provide regulatory relief 
without any costs to FICUs. Accordingly, the NCUA has determined and 
certifies that the final rule 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.
---------------------------------------------------------------------------

    \9\ 5 U.S.C. 603(a).
---------------------------------------------------------------------------

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (``PRA'') applies to 
rulemakings in which an agency by rule creates a new paperwork burden 
on regulated entities or modifies an existing burden.\10\ For

[[Page 17913]]

purposes of the PRA, a paperwork burden may take the form of either a 
reporting or a recordkeeping requirement, both referred to as 
information collections. This rule does not constitute a ``collection 
of information'' within the meaning of section 3502(3) and would not 
increase paperwork requirements under the PRA or regulations of the 
Office of Management and Budget (OMB).
---------------------------------------------------------------------------

    \10\ 44 U.S.C. 3507(d); 5 CFR part 1320.
---------------------------------------------------------------------------

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, the NCUA, an 
independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the executive order. The rule will 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. The NCUA has 
determined that this rule does not constitute a policy with federalism 
implications for purposes of the executive order.

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Pub. L. 104-121) (SBREFA) provides generally for congressional review 
of agency rules. A reporting requirement is triggered in instances 
where the NCUA issues a final rule as defined in Section 551 of the 
Administrative Procedure Act. The NCUA does not believe this final rule 
is a ``major rule'' within the meaning of the relevant sections of 
SBREFA. As required by SBREFA, the NCUA has filed the appropriate 
documentation with OMB for review.

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

    The NCUA has determined that this rule will not affect family well-
being within the meaning of Section 654 of the Treasury and General 
Government Appropriations Act, 1999.\11\
---------------------------------------------------------------------------

    \11\ Public Law 105-277, 112 Stat. 2681 (1998).
---------------------------------------------------------------------------

List of Subjects in 12 CFR Part 740

    Advertisements, Credit unions, Share insurance, Signs and symbols.

    By the National Credit Union Administration Board on April 19, 
2018.
Gerard S. Poliquin,
Secretary of the Board.

    For the reasons discussed above, the NCUA Board amends 12 CFR part 
740 as follows:

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

0
1. The authority citation for part 740 continues to read as follows:

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

0
2. Amend Sec.  740.5 by revising paragraphs (a), (b), (c)(7) and (c)(8) 
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 on its main internet page, except as provided 
in paragraph (c) of this section.
    (b)(1) The official advertising statement is in substance one of 
the following:
    (i) This credit union is federally insured by the National Credit 
Union Administration;
    (ii) Federally insured by NCUA;
    (iii) Insured by NCUA; or
    (iv) A reproduction of the official sign as described in Sec.  
740.4(b) may be used in lieu of the other statements included in this 
section. 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).
    (2) 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.
    (c) * * *
    (7) Advertisements by radio which do not exceed thirty (30) seconds 
in time;
    (8) Advertisements by television, other than display 
advertisements, which do not exceed thirty (30) seconds in time;

* * * * *
[FR Doc. 2018-08557 Filed 4-24-18; 8:45 am]
 BILLING CODE 7535-01-P

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