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Now Credit Unions Can't Use the 'B' Word?

Now Credit Unions Can't Use the 'B' Word?

Vermont credit union must stop using the word “bank” in marketing—or else!

Perhaps living in a highly charged political world where missteps and misunderstandings seem to ignite a debate on nearly any topic, but now credit unions can’t use the word “bank” or “banking” as part of its vernacular?

Vermont news station, WCAX recently reported that Vermont State Employees’ Credit Union ($600 million, Montpelier, VT) received a cease and desist letter from the Department of Financial Regulation (DFR) insisting the credit union halt usage of the words “bank” or “banking” in its advertisements.

While VSECU’s message is no different or “over the top” than any other credit union, the DFR insists that the use of “banking”, “to bank” and “not for profit banking cooperative” misleads the public into believing that the credit union is a bank. Do consumers actually want to go to a bank when they are considering a credit union and does the DFR believe that the average consumer is confused about the difference between a bank and a credit union?

Jessica Jackson, VP/Corporate Communications at South Carolina Federal Credit Union ($1.3 billion, Charleston, SC) wondered how credit unions could actually communicate a message about finances without using the “B” word.

“You don't hear the term ‘credit unioning’ being used,” she says. “We’re not opposed to using the word ‘bank’ as a verb and actually do use it in our member communications. Banking is what our members do so we refer to it as such.”

 Jackson’s credit union recently pursued trade marking the term, “Every Day is Bank Transfer Day” and thus far the credit union has not reported that members have become confused about whether they are parking deposits at a bank or a credit union.

However the attack on VSECU is not a new issue. CEO Steven D. Post explains in an open letter to the membership that the DFR, “expressed concern with some of our advertising in 2007 when we first developed a marketing campaign that differentiated VSECU from banks and the ‘Why bank when you can VSECU’ campaign.”

In a July 30, 2012 notification, Post thanked members for continued support surrounding the issue and said, “At this time a pre-hearing conference has been scheduled for late August with VSECU and representatives of the DFR. The purpose of this meeting is to gather information in preparation for a formal hearing to be scheduled at a later date.”

Can The “B” Word Be Avoided?

In a sensitive environment where consumer business is at a premium, banks and credit unions are doing whatever is necessary to remain a distinguished entity in the market. Following the Bank of America debit card debacle and news about how some multi-nationals are hiding fees, credit unions have become a more popular option to a cash and credit strapped America.

Even if the DFR got its wish and the word “bank” is banished from credit union vocabulary is it possible to completely communicate a message, while at the same time allowing for the freedom for credit unions (and banks) to fully express the difference between the two financial entities?

For example, fee weary consumers are turning to credit unions as a way to save more money and take control over their finances. In Associated Credit Union’s ($1.2 billion, Atlanta, GA) “Frugalicious” ad campaign consumers are asked, “What’s it called when you transfer all your banking to one place? Frugalicious!” The campaign drew both consumer and industry attention, but would it have had the same legs if another word was used other than “bank?”

Last summer, Seattle Metropolitan Credit Union ($544.3 million, Seattle, WA) ran a co-op campaign that posed the question, “What if…you banked at a co-op?” The credit union also hosts a micro-site dedicated toward identifying the “Seven Principles” that differentiate credit unions from banks. Should it have read, “What if…you ‘credit union’ed’ at a co-op?”

What about all those credit unions promoting online or mobile banking? Should they stop being able to use “banking” in their promotional materials too? Perhaps Charlotte Metro Credit Union’s ($250 million, Charlotte, NC) 2010 mobile banking commercial should have been called, “mobile credit union’ing.”

Community Comments Address The Issue

Many consumers are seeing through what may appear to be an overreaction on the DFR’s part. Trailing the article posted on WCAX include:

“Since the ‘Banks’ are so worried about the banking competition from the Credit Unions, why don't they start their own Credit Unions as separate business entities. And if credit unions can't use the work ‘bank’, then the banks should be forbidden from using the word ‘Credit’ in their advertising. So how about Credit Suisse....They offer banking but have Credit as a main name driver in their business. And think of all the children that now have to relinquish the live saving carefully dropped away in their Piggy Banks.”

Another reader said,

“Hooray for credit unions! Banks have been bleeding the public for years. You would think that the ‘banks’ would want good media. Save the credit unions!”

Although mainly pro-credit union, some people still demand the credit unions pay certain taxes—an ongoing battle that has raged for years. “Volunteer to pay income taxes on your profits, and feel free to use the name! Totally ridiculous that credit union's don't pay income taxes.”

Should credit unions be banned from using the word, “bank” in certain or all contexts for advertising or promotional purposes or do you believe that the banking world has overstepped its boundaries? Find a credit union and see how they approach the “B” word.

By Gina Ragusa
Published August 3, 2012
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