Earlier this month, PenFed announced its “acquisition of the award winning, independent marketing services agency WHITE64.” Unsurprisingly, the price of the deal was “undisclosed.”
You may not have heard of them before, but you are definitely familiar with their work. WHITE64 has been doing PenFed’s marketing and advertising since 2014 and is the brains behind the “great rates for everyone” ad campaign that directly contradicts the very reason credit unions exist, but I digress.
It’s a sweet deal for the folks at PenFed. By getting in the television advertising business profits will immediately increase at least 20 percent. And since federal credit unions are not required to pay federal income taxes, WHITE64 will likely no longer have to pay them, either. PenFed will basically be taking money out of one pocket and putting it in another, all the while not paying one dime in federal income taxes.
Not too shabby!
Why PenFed, a credit union whose customer base is literally built into its own name, would need to market their products and services to the masses in the first place no one seems to know. PenFed was established in 1983 by the War Department to cater to the military and officers specifically. One would assume all they would need to market themselves is some flyers and maybe a phone number, seeing as their clientele are supposed to be members of the military and veteran.
The answer, unfortunately, is that PenFed has blown the doors off the definition of “common bond.” As the Wall Street Journal pointed out, PenFed’s executive team’s operating philosophy is “No Speed Limit” in an effort to expand their customer base, and they aren’t going to let laws get in their way! Their acquisition of White64 is just the latest, most egregious effort to actively and aggressively grow exponentially.
While arguably the most offensive, PenFed is far from the only offender. Many large credit unions are using tens of millions of dollars they save from not paying federal income taxes on their own marketing tactics.
From shelling out millions to sponsor professional sports teams to coughing up thousands to have their name bolstered on expo centers.
And you know who gets the short end of the stick? Hard working, average, every day, credit union members and American taxpayers.
It’s time for Congress to start reevaluating if the tax exemption of large credit unions is being used for the right reasons and at the benefit of consumers.