June 28, 2012
Marketers may have more fun than any other credit union professionals, as they’re given creative license to promote new programs and services that excite members. While thinking out of the box is rewarded and encouraged, the results of that work cannot cross any lines when it comes to compliance.
Mary Sroufe, director of compliance for the Northwest Credit Union Association (NWCUA), will lead an interactive discussion of compliance with members attending the Summer Marketers’ Networking Council meeting in Federal Way July 12.
Sroufe is known as an encyclopedia on all things compliance, but her sense of humor turns a seemingly dry topic into something outright fun to learn. In a Q and A with Anthem, Sroufe set the stage for the next council meeting, where members are invited to bring samples of their marketing for compliance analysis.
Anthem: Your department is “all things compliance” for the Northwest Credit Union Association. What are some of the areas where you help keep credit unions on their toes?
Sroufe: Well, there are a ton and a half (not literally, but it’s close) of regulations governing every aspect of credit union operations, from marketing to get the members in the door to what to do when it’s time to say goodbye to a member—either because that member has acted badly, or because of more tragic circumstances. A typical day finds my department handling about 15-20 questions from our member credit unions on everything from real estate appraisals to garnishment, from the interaction of tribal law with state law to what to do if a member was murdered by his payable-on-death beneficiary.
Anthem: As complex as it all seems, who knew marketing would come under the regulators’ magnifying glass to the extent it does? Where would you say credit unions—and credit union marketers—are most likely to get into trouble with compliance?
Sroufe: Marketing is actually one of the big areas of compliance concern, because it is so important not to mislead our members! Advertisers in any industry have to comply with the truth in advertising rules, which can get pretty esoteric, especially around food and drug advertising. But, that aside, marketers have such power to draw members in, to create an impression of the credit union and its products. Because of that power, and because everyone knows that a member is about 1000 times more likely to read an ad than a disclosure, its super important that the ad reflect not only the credit union’s brand, but an accurate picture of the product and the credit union’s commitment to doing things right.
As for where credit unions get in trouble with compliance, it’s hard to say. If you can think up an issue, I bet I can tell you a story about a credit union that had the problem, and I’ve only been doing this for seven years. This year, I would say that credit unions are likely to see increased scrutiny on their fair lending compliance, so probably many will get dinged in that area.
Anthem: What could happen to a credit union if its marketing was out of compliance?
Sroufe: If a credit union is out of compliance with its marketing, it could face any number of consequences—depending on what exactly the credit union was out of compliance with. If there’s a fair lending problem, the credit union could be subject to a class action lending discrimination lawsuit. That’s about the worst consequence I can think of, but there are also possible penalties ranging from a slap on the wrist to large fines. It all depends on what the credit union did wrong.
Anthem: Ah, come on! It’s just a discount we’re offering our members, for goodness sake. Why is there so much scrutiny over how we market that?
Sroufe: It’s just a discount? True, but here’s the thing. In order for it to be fair, everyone has to have the same chance at it, and the same chance of understanding it. Plus, the credit union has to be accurate about when the discount applies and when it does not. Many of the rules for marketing are sort of common sense-based. They at least are all created to address a particular need in the marketplace. Truth in advertising came about because marketers were making all kinds of claims about their products that were not true. Truth in Savings because members didn’t have all the information they needed to make an informed choice. Truth in Lending also came about to help members choose, and to be sure members understood—or at least had the opportunity to understand—the transaction they were entering into. Fair Housing Act and Equal Credit Opportunity Act came about to stop discriminatory lending practices. All our regulations have a purpose. Some of them go about achieving that purpose in a way that is a bit annoying, but they all have a good reason for having been enacted in the first place.
Anthem: You’ve invited us all to bring examples of our own marketing to the council meeting on July 12. What if one of us brings something that didn’t pass the compliance test? Are we in trouble?
Sroufe: If the marketing piece that you bring doesn’t pass “the compliance test,” you aren’t in trouble! You’ll have to live down the shame at the meeting, of course, but you aren’t in trouble. I have found that compliance rules sink in better for everyone if we get a chance to test them on real-world situations. I’ll have some sample ads mocked up, but my advertising skills are nowhere near as awesome as all of yours!
For marketers who’d rather “live down the shame” of sharing a non-compliant marketing piece at council than face down a regulator when it’s too late, the council meeting could be the ticket. The event is scheduled from 10 a.m. to 2 p.m. at the NWCUA’s training center in Federal Way. Online registration is available.
Questions or Concerns? Contact Matt Halvorson, Anthem Editor: firstname.lastname@example.org.