VSECU Ponders Switch to Federal Charter in ‘Bank’ Ad Dispute
The $600 million Vermont State Employees Credit Union, which is embroiled in a legal challenge over the use of the term “banking” in its advertising, appealed Friday for member and public support for its cause, warning an unfavorable outcome could lead to a switch to a federal charter.
In a message posted Thursday on its website describing the latest developments in what it calls a “battle with banks,” Steven D. Post, president/CEO of the Montpelier credit union, called on members to write, email and phone the Department of Financial Regulation to halt a planned cease and desist order.
- UPDATE, Oct. 8, 2012, Vermont Credit Union, Regulator Settle 'B' Word Dispute
State regulators, joined by the Vermont Bankers Association in defending the proposed ban, contend VSECU and others in the state are violating state law on the language of bank CEOs. According to a spokeswoman for the VBA, VSECU abuses the practice more than others.
In its online notice, email blasts and a planned op-ed to appear in state papers, VSECU urges its 50,000 members to phone and write the DFR, asking the agency to reverse the cease and desist order on the grounds that the terms “bank” and “banking” are commonly used and that such a policy would cause needless confusion.
Even the agency itself “is using the same commonly understood word ‘banking’ on their own website,” wrote Post.
“We have worked hard over the years to educate consumers about the difference between a bank and a credit union,” Post added. “We have never called ourselves a bank nor have we ever tried to fool members or consumers into thinking we are a bank.”
“Recent press articles have revealed that complaints have come from the Vermont Bankers Association in which they say that our advertising is ‘over the top,” said Post. “We have yet to see evidence from the DFR Commissioner that consumers have complained or are confused.”
In his Q&A message, Post explained that his credit union “is simply trying to raise awareness and help Vermonters understand that VSECU and other credit unions offer a unique kind of banking experience. Our advertising is designed to highlight how different we are, not how similar we are to banks.”
“VSECU is a Vermont institution, owned, controlled and regulated by Vermonters and we want to remain state-chartered. That said, an adverse ruling on this action would force us to reconsider all of our options,” wrote Post.
Post’s statement suggests that VSECU might have to switch to a federal charter if it loses its appeal to DFR, which is planning a late August hearing on the cease and desist intent order.
Post noted that its competitors, North Country, NEFCU, Vermont Federal and Heritage Family are not subject to any Vermont ruling that comes from this enforcement action and can therefore continue using the words ‘bank’ and ‘banking’ without penalty.
“What will happen if DFR is successful in preventing use of these terms?” asked Post. “This kind of enforcement by a state regulator would be very unfortunate for Vermonters and set a very bad precedent in Vermont.”