A Government Accountability Office (GAO) report found that credit unions have largely complied with the Federal Deposit Insurance Act, but it said certain rules regarding disclosure should be clarified.
The Federal Deposit Insurance Act requires privately insured credit unions to disclose to consumers that they do not have federal deposit insurance. The Fixing America’s Surface Transportation Act includes a provision for GAO to review private deposit insurers and privately insured credit unions’ compliance with disclosures. The Consumer Financial Protection Bureau (CFPB) has implemented regulations on these requirements.
Privately insured credit unions largely complied with the CFPB requirements to disclose that they do not have federal deposit insurance. For instance, 45 of the 47 credit unions GAO visited displayed required disclosures at teller windows, and 99 of the 102 websites GAO reviewed included the disclosure on their main Internet page, as required.
Seven of the 17 credit unions with drive-through windows that GAO visited, however, did not have disclosure signs at these windows. Printed materials, such as brochures and flyers, GAO reviewed from eight of 36 credit unions also did not include disclosures. The regulations require all advertising to include a disclosure, but do not define what constitutes advertising.
In some cases, disclosure signs or text size were too small to be easily read, or were not placed conspicuously. CFPB’s regulations on disclosures for privately insured credit unions do not specify signage dimensions or font size. Without clear disclosure requirements, state credit union supervisors and credit unions may not be consistent in how they interpret disclosure requirements and some consumers may not be informed that their deposits are not federally insured.
GAO recommends that CFPB issue guidance for privately insured credit unions to clarify whether drive-through windows require disclosure, describe what constitutes clear and conspicuous disclosure, including minimum signage dimensions and font size, and explain and provide examples of which communications are advertising. CFPB agreed with these recommendations.