Credit unions are trusted with their members’ finances, and that’s a big responsibility. The messages they send out shape how members perceive and interact with the institution, so it's important to keep communication compliant. A small miscommunication – or a misstep in fair lending laws and policies – can lead to confusion, frustration, and financial harm for its members. It can also put the credit union at risk for legal trouble, reputational damage, and hefty fines. The right tools and strategies can prevent common pitfalls, protect credit unions from costly mistakes, and strengthen trust with their members.
The Cost of Communication Errors
Misleading marketing practices at Utah credit unions led to $2.25 million for three broker-dealers in 2018. Violations included failing to follow networking regulations, inadequate oversight of broker activities, and confusing member communications. More recently, Navy Federal Credit Union faced a $95 million enforcement action last year for improper overdraft fee practices, requiring an $80.7 million refund to affected members and a $15 million penalty.
These cases show how unclear policies and miscommunication can lead to financial and legal challenges.
Common Communication Pitfalls That Erode Trust
Confusing or misleading language: In the Utah case, broker-dealers used misleading marketing that made it unclear whether investments were offered by the credit union or a third party. This confusion can lead members to misunderstand the risks of investment products versus federally insured credit union accounts. Credit unions must clearly differentiate their services and use plain language to prevent misunderstandings.
Delayed or inconsistent responses: Members expect prompt and reliable answers. Slow or conflicting information can create frustration and erode trust. Standardized response templates and real-time messaging can improve consistency and efficiency.
Compliance failures in fee practices: Navy Federal told customers overdraft fees would be based on their "current" balance at the end of the day, but instead, it used the "available" balance, which changed as transactions processed. Customers were then charged overdraft fees even when they had enough money at the time of purchase. They were also charged unexpected fees due to undisclosed cutoff times for processing payments from services like PayPal and Cash App. Understanding and following compliance laws can help credit unions avoid costly fines and maintain member trust.
How Small Teams Can Keep Communications Compliant
Many credit unions run lean teams without dedicated compliance staff, making it harder to catch communication risks before they become costly mistakes. HarmCheck acts as an extra set of eyes, flagging unclear or non-compliant language in real-time to prevent fines, legal issues, and member confusion — without adding extra work. For small teams, AI-driven compliance is not just helpful — it’s essential.
The Power of Real-Time Feedback
Effective compliance technology helps organizations manage communication risks before they escalate. Real-time monitoring is a proactive approach that allows corrections to be made before messages are sent, preventing costly mistakes while ensuring regulatory adherence that protects an organization’s reputation and its bottom line.
At the end of the day, trust is everything. With HarmCheck, credit unions can ensure clear, professional, and compliant interactions — safeguarding both members and the institution itself.
Amanda Nurse is the editorial and operations coordinator at Alphy.
HarmCheck by Alphy is an AI communication compliance solution that detects and flags language that is harmful, unlawful, and unethical in digital communication. Alphy was founded to reduce the risk of litigation from harmful and discriminatory communication while helping employees communicate more effectively. For more information: www.harmcheck.ai