Credit unions which may see an unprecedented number of new members moving from banks this month are being cautioned about what they offer them.
The rise in new members is expected as part of publicity surrounding Bank Transfer Day.
Two executives with the consultancies PayFusion and PolicyWorks urge credit unions to be careful about what they describe as free to the new members.
“Truth in Savings regulations state that advertisements cannot refer to or describe an account as 'free' – or even 'no cost' – if any maintenance or activity fee may be imposed on the account. Therefore, it’s extremely important for an FI to fully understand the fee structure behind its 'free' checking product when planning to advertise it as such,” wrote PayFusion CEO TJ Riha and PolicyWorks Vice President for Compliance Andrea Stritzke in a report titled “Use Caution When Wooing Angry Bank Customers.”
The pair warned, for example, that a checking account cannot be sold as free if any fee is imposed for not meeting a minimum balance requirement or if the member exceeds a specified number of transactions. It also cannot carry a monthly service fee or any fees tied to withdrawals or other transactions.
“Because credit unions are member-owned, consumers are likely to be attracted to the idea of belonging. For this reason, credit unions must remember to take a step back before crafting advertising, PR and communication campaigns to bring in the free-checking crowd,” the consultants wrote
“They must be sure to include messaging about the overall value – beyond affordable products – that a credit union can contribute to a prospective member’s financial future,” the pair wrote.