Member FDIC for a Radio Ad (Video & Transcript)

In this Compliance Clip (video), Adam answers a question regarding whether Member FDIC must be included in a Radio ad. As you will see, the answer to this is quite complex and Adam breaks the answer down in simple, easy-to-understand, layman’s terms.

A transcript of this video is as follows:

“Today’s topic is going to discuss including Member FDIC on a radio advertisement. I received a question recently that said this, it said if we create a radio ad for an event that we are sponsoring and putting on and the radio ad is only about the event but it does state that we are sponsoring the event do we need to mention that we are a member of FDIC, or list member FDIC? This is a question I actually get quite a bit - questions relating to the FDIC Membership rules, which of course is where we are going to find our answer in, the FDIC membership rules which is part 328.3 of the FDIC rules.  

No there are several things we have to look at it within these rules to answer our question as to whether or not we need to include member FDIC on this radio ad that is for an event that a bank is sponsoring.  Of course, credit unions that are watching this compliance clip realize that these rules don’t apply to them since they are covered by the NCUA rather than FDIC insurance, but this is video is for banks that are watching this Compliance Clip.  Now FDIC part 328.3 has several different parts that we have to look at for our answer. The first part is part of 328 3(a) which defines an advertisement. So we have to look at the definition of an advertisement.  

An advertisement under this rule is defined as a commercial message in any medium - so that includes radio ads - that is designed to attract public attention or patronage to a product or business.  This means our question becomes: is an ad that is designed for an event that the bank is sponsoring, is that an ad that is designed to attract public attention? Well, I would say that the point of a sponsorship - especially since a financial institution (this bank) is including their name of the ad - the point of a sponsorship is to draw attention to the financial.  So I would say that we passed this first test and this is, in fact, an advertisement by the definition under FDIC rules part 328.3(a).  

Now, the next thing we need to look at under this section is 328.3(c) - part c.  This portion of the rule states that the official advertising statement is required if the advertisement does one of two things.   The first thing it would do is to either is to promote deposit products and services or the second thing you could do is to promote nonspecific banking products and services offered by the financial institution.   Now it doesn't appear to meet number one because it's not promoting specific products or services by just using the name as a sponsor of an event that the ad is about. However, we will look at number two: is it promoting nonspecific banking products and services offered by the bank?  Now we're not really clear on this, so what we can do is look to another part of these rules.  

Part 323.3(d)(5) explains that an advertisement not containing the name of the bank does not require the official advertising statement.  In other words, if the bank name was not included in that ad, we would not need to list Member FDIC. So the way we have to look at this is to take the conservative approach and to say that since the bank name is in there, we do need to include member FDIC.  See how that works? Its not absolutely clear, but that is definately the conservative approach is to list member FDIC whenever the name of the bank is included in an advertisement, whether its radio or anything else.  

Now, for this radio, there's one caveat here that we can take a look at it and that's under Part 328.3(d)(8) because D(8) states that advertisements by radio which do not exceed 30 seconds in time do not require the official advertising statement.  So the person who asked me this, my question to them was: how long is the ad? That was my first question because I knew we had to get through all of this, but my question was how long is the ad? They said that it is 30 seconds exactly. What that means is that the ad does not exceed 30 seconds, as it would have to be 31 seconds to require Member FDIC.   But since it is 30 seconds or less, part 328.3(d)(8) provides an exception that says that this advertisement - this radio ad that includes the name of the financial institution - does not require member FDIC.

The bottom line is for this specific question, Member FDIC does not need to be included in that radio ad since it is 30 seconds. As you can see, compliance rules can sometimes be quite complex and that's why marketing people sometimes get frustrated with compliance people because, unfortunately, they don't realize how complex the actual rule is.  The bottom line here is, if in doubt you probably want to include member FDIC in a questionable ad as it's easiest way to ensure compliance.”