SAMPLE REPORT Web Site Compliance Assessment Credit Union Date

Transcription

1 SAMPLE REPORT Web Site Compliance Assessment Credit Union Date Our Web site compliance assessment provides a consumer compliance assessment of the credit union s Web site, covering policies, disclosures, advertisements and notices appearing on the Web site. The scope of our assessment consists of the items and pages the credit union includes on the Web site. For example, should the Web site require a disclosure, we assess whether the Web site contains the disclosure and if so, whether the language used complies with the language required by the regulation. It is the credit union s responsibility to verify that all items and language appearing on the Web site, and assessed by RSM McGladrey, does not conflict with the credit union s actual policies, procedures, and disclosures. RSM McGladrey can only assess the information actually provided to us by the credit union or made available on the Web site. We cover the consumer protection laws and regulations pertaining to the Web site that examiners are responsible for examining. These regulatory requirements include the following: Truth in Lending (Regulation Z) Open-end trigger terms and related disclosures Closed-end trigger terms and related disclosures Credit card application requirements Home equity line of credit advertising provisions Lending rate disclosure Misleading terminology requirements Truth in Savings (NCUA Rules and Regulation Part 707) Permissible savings/share rates Misleading terminology requirements Advertising trigger terms and related disclosures Certificate account disclosure requirements Paying a bonus and related disclosures Equal Credit Opportunity Act (Regulation B) Separate maintenance income application disclosure Prohibited bases lending requirements Home Mortgage Disclosure Act (Regulation C) Monitoring information application disclosures

2 NCUA Insurance Disclosure Requirements Pages promoting share-type accounts contain disclosures Equal Housing Lender Logo Disclosure Pages promoting real estate lending products Non-deposit Investment Product Requirements Advertising disclosure requirements NCUA Letter to Credit Unions No. 150 Consumer Leasing Act (Regulation M) Advertising trigger terms and related disclosures Electronic Funds Transfer Act (Regulation E) Initial disclosure requirements on Web site Funds Availability Act (Regulation CC) Hold notice disclosure provisions on Web site Children s Online Privacy Protection Act Post a notice of your information collection practices if the Web site has pages that are directed to children Third Party Link Disclaimer Our written assessment includes our compliance findings and recommendations for correcting these findings. Our findings will reference specific sections of the regulations and also include the citation for the requirement. Findings and Recommendations 1. The initial top-level page of the website contains the required NCUA insurance disclosure but the disclosure is not clearly legible. Section of NCUA Rules and Regulations requires that all advertisements promoting share accounts must contain the statement This credit union is federally insured by the National Credit Union Administration, or in the alternative, the short title Federally insured by NCUA and a reproduction of the official sign may be used. Another option is to include 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 of $100,000 for each member or shareholder. Section also requires that the disclosure must be clearly legible. The credit union should consider making NCUA insurance disclosure clearly legible on every page that promotes share accounts. 2004, RSM McGladrey, Inc. Page 2

3 2. Subsequent web site pages, such as the share draft products page and the rates and fees pages, promote accounts but do not contain the NCUA insurance disclosure. The credit union should consider including the NCUA insurance disclosure on every page that promotes sharetype accounts. 3. The credit union should verify that all advertisements for open-end loans, including the rates pages, have additional disclosures if applicable. Section of Regulation Z requires that all open-end loan advertisements, that include trigger terms, also state additional disclosures. One trigger term requiring further disclosures is the APR (this is present on the rates pages). If a promotion for an open-end loan includes the APR, the following disclosures are required: (1) Any minimum, fixed, transaction, activity or similar charge that could be imposed. In other words, any fee considered a finance charge. (2) Any periodic rate that may be applied expressed as an annual percentage rate. If the plan provides for a variable periodic rate, that fact must be disclosed. In disclosing the annual percentage rate in an advertisement for a variable-rate plan, the credit union may use an insert showing the current rate; may give the rate as of a specified recent date; or may disclose an estimated rate. Your credit union could also disclose that the annual percentage rate may vary or a similar statement. (3) Any membership or participation fee that could be imposed. The credit union only needs to include these disclosures if applicable. Consequently, if there are no fees considered finance charges associated with the account and no membership/participation fees, then the credit union will not be required to include these disclosures. We are unable to determine if these fees are associated with your open-end loans, and therefore the credit union will need to determine if they exist and if so, include them on the website pages that contain open-end loan trigger terms. This finding applies to any page promoting open-end loans while stating the APR. 4. The rates and fees pages do not properly describe dividend rates as required by Truth in Savings. Section 707.8(b) of NCUA Rules and Regulations states that if an advertisement states a rate of return, it shall state the rate as an "annual percentage yield," using that term. (The abbreviation "APY" may be used provided the term "annual percentage yield" is stated at least once in the advertisement.) The advertisement shall not state any other rate, except that the "dividend rate," using that term, may be stated in conjunction with, but not more conspicuously than, the annual percentage yield to which it relates. Consequently, the credit union should consider using the heading of APY and Dividend Rate for share accounts. 2004, RSM McGladrey, Inc. Page 3

4 5. The rate and fee pages do not comply with the advertising disclosure requirements of Truth in Savings. The rates page includes the APY of various share accounts. Section 707.8(c) of NCUA Rules and Regulations states that anytime an annual percentage yield is disclosed in an advertisement, the advertisement must include the following information: (1) For variable-rate accounts, a statement that the rate may change after the account is opened. (2) Time annual percentage yield is offered (example - a statement that the annual percentage yield is accurate as of a specified date) (3) Minimum balance to earn the advertised annual percentage yield. (4) Minimum opening deposit (required if it is greater than the minimum balance necessary to earn the advertised annual percentage yield.) (5) A statement that fees could reduce the earnings on the account (if applicable) (6) Features of term share accounts. For term share accounts: (i) The term of the account. (ii) A statement that a penalty will or may be imposed for early withdrawal. It appears that the rates and fees pages are missing the items in bold above. The credit union should consider adding these to the rate and fee pages. 6. The mortgage loan page contains payment terms for closed end loan but is not complying with Regulation Z advertising disclosure requirements. Stating a payment term such as 60 months triggers additional disclosures. The following disclosures are required for each type of closed end loan: The terms of repayment. You may include a unit-cost example such as, 48 monthly payments of $27.83 per $1,000 borrowed. See the Commentary to Regulation Z, 12 CFR (c)(2) for more information. The Annual Percentage Rate If the Annual Percentage Rate may increase after consummation of the loan, that fact shall also be stated. The credit union should include the disclosures above for all closed end loan advertisements that include the period of repayment. 7. The credit union has links to third party web sites. We recommend that the credit union follow NCUA Letter to Credit Union 02-FCU-04. When providing links to third-party web sites, credit unions are strongly encouraged to include a clearly written, conspicuous disclaimer that addresses the following: The member is leaving the credit union s web site; The member is linking to an alternate web site not operated by the credit union; 2004, RSM McGladrey, Inc. Page 4

5 The credit union is not responsible for the content of the alternate web site; The credit union does not represent either the third party or the member if the two enter into a transaction; and Privacy and security policies may differ from those practiced by the credit union. The credit union should include the above disclosure in a location that would allow members to view it before accessing the 3 rd party sites. 2004, RSM McGladrey, Inc. Page 5