LIABILITY PROTECTION - DISCLAIMERS AND WORDS / PHRASES NOT TO USE
We hate them, but we have to use them. If a Credit Union fails to use the correct disclaimers in advertising it can face significant and unintended consequences. Here are some examples, but we recommend review by competent legal counsel as needed:
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Standard All
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“Terms and Conditions Subject to Change Without Notice.”
Failure to include this condition may prohibit the Credit Union from changing the offered terms.
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Standard Credit
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“Subject to Credit Approval.”
Failure to include this condition could mean everyone get the loan.
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Standard Risk Based Pricing
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“Rate may vary based on individual creditworthiness.”
Failure to include this condition could require the Credit Union to offer the published rate to all applicants.
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If Discount is Offered
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“Rates reflect .25% reduction for qualifying checking account.”
Draft per your particular offer.
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Credit Card Offer to Students
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“A guarantor may be necessary if you are under age 21 and your annual income is less than $________.
This is per the limitations under the CARD Act restrictions on credit cards to persons under 21.
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Insurance and Warranty Coverages:
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Insurance and warranty products are not products of the Credit Union; and are not obligations of or guaranteed by the Credit Union. Insurance or warranties may be purchased from an agent or an insurance company of the Member’s choice; and Credit Union makes no representations as to the services of any provider.
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CUSO Disclaimers
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ABC Insurance Services is a wholly-owned subsidiary of ABC Credit Union. Insurance products are not deposits of ABC Credit Union and are not protected by the NCUA. They are not an obligation of or guaranteed by ABC Credit Union and may be subject to risk. Any insurance required as a condition of an extension of credit by ABC Credit Union need not be purchased from ABC Credit Union and may be purchased from an agent or an insurance company of the Member’s choice. Business conducted with ABC Insurance Services is separate and distinct from any business conducted with ABC Credit Union. License no. 0D91054. (License Number Issued by State).
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UDAAP Considerations:
Remember, technical compliance with the various applicable laws and regs is not sufficient if the ad is otherwise misleading in any way.
Examples:
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“Free Checking” Under TISA there may be certain fees that can be charged without affecting whether the Credit Union can call the account free; however there may be conditions that you need to insure are adequately disclosed.
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If this only applies to member who receive e-statements you need to add the condition:
*Free Checking conditioned on election and continued receipt of receive e-statements
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“Special Low APR” 2.8% APR Car Loan Rate for up to 60-months.
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If conditions apply to receipt of this low rate:
*Rate offered for 2010 and later models with less than 15,000 miles. Rate and Term are best rates offered. A higher APR or shorter term may apply if applicant does not qualify. Contact the Credit Union to inquire about rates and terms.
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“Best Banking Services in Town.”
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What is your basis for this statement? Do you have a basis documented in your UDAAP assessment that allows you to support your claim? For example: “Best Banking Services in Town as determined by the readers of the Atlanta Journal Constitution.”
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Words to Avoid:
There are certain words to avoid per potential consequences of use:
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Partner
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Using the word partner or any version of the word can have awful consequences. Under the Uniform Partnership Act and general common law – if you hold yourself out to the world as being another’s “partner” the world has a right to believe you. Thus, if there is a claim or liability of the partnership – the claiming person can seek recovery from any partner of the partnership. Thus, if you held yourself our as being partners with a car warranty company; and for whatever reason the member is unable to get that company to pay a warranty claim – they can seek payment from you – the “partner of the warranty company.”
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Unsecured or Signature
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See Page 34.
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Guaranty
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The law also applies a certain meaning to the word “guaranty.” You will want to be sure to stay away from saying things such as “we guaranty the best service in town” versus “best service in town.” The one word “guaranty” puts an incredible subjective burden on the Credit Union that it is likely never going to be able to meet in all instances.
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Bank
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It is illegal to call yourself a “bank.” It is a federal crime; and is also a felony in most states. You can call yourself only what you are – a “Credit Union.”
You do provide “banking” services. Thus, you can say things such as “best banking services in town.”
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