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Debit card use wanes due to security fears: TSYS report

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COLUMBUS, Ga. (10/21/14)--Consumer fears about security are leading to a drop in debit-card use, according to a new report from TSYS.

Despite the drop, debit cards remain the most popular form of payment, according to the study. Forty-three percent of respondents preferred debit as their overall payment type, while 35% indicated their preferred payment type was credit. There are roughly 51 million debit cards and 15 million credit cards issued by credit unions.

Those percentages represent a decrease in respondents who preferred debit from TSYS' 2013 study, in which 49% indicated they preferred debit.

"Consumers, concerned about the security of their cards and payments, are both demanding and accepting of market changes," the study said. "Consumers have a heightened awareness of security, due to both the media and their own experiences. We found that consumers are interested in tools such as transaction authorization controls, instantly viewable transactions and text message alerts to help them protect their accounts."

Consumers are interested in new card security features, but are familiar with some features more than others, according to the study. About 48% of respondents said they have heard of chip cards, and 14% indicated that they have already received a card with a chip.

Tokenization is also gaining interest as a fraud- and risk-protection tool. The Credit Union National Association fully backs advancements in card data security technology, but until these take hold nationwide, CUNA's leaders say, credit unions and other financial institutions will still be at risk to suffer significant losses as a result of data breaches.
 
Meanwhile, only 47% of businesses expect to have their payment terminals updated with EMV chip technology by the end of next year, according to the Payments Security Task Force.
 
Although industry participants understand tokenization and how it will help to reduce payment risk, not as many consumers are familiar with the technology. Only 8% of respondents indicated they had heard of tokenization, and 16% said they would be willing to take the steps necessary to request a token.
 
The report also explored consumer sentiment toward mobile payments. "Fraud prevention and risk reduction tools are the most important features to consumers when they consider incorporating mobile into their payments process," the report said. "When asked about the use of smartphones in conducting different types of payment transactions, we saw that consumers were very interested in taking part in protecting their accounts by using mobile tools to monitor and track payments."
 
Use of rewards or offers continues to be the biggest controllable factor of influence on which card a consumer uses to pay. However, even with rewards, some consumers chose to use debit cards to closely manage their daily spend or budget, while other consumers use multiple cards and can be more easily influenced to change.

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Calif. CUs meet with CFPB advisor on HMDA proposal, more

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SAN DIEGO, Calif. (10/21/14)--In a meeting with roughly 15 credit union leaders here, Jennifer Stockett of the Consumer Financial Protection Bureau (CFPB) said her agency might need to look more deeply into its Home Mortgage Disclosure Act (HMDA) proposal for a full understanding of the potential impact on small creditors.

The proposed rule is intended to improve information reported about the residential mortgage market by requiring more data fields in the reports. The Credit Union National Association and state credit union associations are concerned the plan would increase the burden on some credit unions and has asked for an exemption for credit unions and other community financial institutions.

Stockett, the CFPB's senior advisor for the office of financial institutions and business liaison, met with the credit union leaders at $1.8 billion-asset California Coast CU, San Diego. She requested the meeting as a follow-up to a successful initial meeting with the California and Nevada Credit Union Leagues in Washington, D.C., in September during the leagues' annual Hike the Hill event.

At the California meeting, the CFPB's senior advisor spoke about where the CFPB needs feedback from credit unions.

Specifically, Stockett said the bureau is looking for credit union comment on the following proposals:
  • Qualified mortgages, particularly in the areas of small creditor and rural definitions, disadvantages for self-employed borrowers and potential risks for credit unions offering nonqualified mortgages;

  • The Truth in Lending Act-Real Estate Settlement Procedures Act combined disclosures rule, particularly about whether third-party vendors will be ready for the Aug. 1, 2015, implementation date; and

  • HMDA, particularly the potential impact on small creditors, which Stockett said the bureau might need to delve more deeply into.
Credit unions still have time to comment on the HMDA proposal through PowerComment, which was created by the California and Nevada Credit Union Leagues, in partnership with the Credit Union National Association.

Use the resource link below to access PowerComment.

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Will shoppers avoid data-breached retailers this holiday season?

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AUSTIN, Texas (10/21/14)--Nervous over recent data breaches that have compromised tens of millions of pieces of personal and personal payment data in recent months, a poll has found that nearly half of credit and debit card users will be leery to shop this holiday season at those stores where attacks have occurred.

About 45% of respondents to the CreditCards.com survey, released Sunday, said they would either definitely or probably avoid one of their go-to stores when holiday shopping if that store was recently hacked.

Broken down, 16% said they definitely would not shop at a store that had been breached, and 29% said they would probably not shop there.  

Only one in eight respondents said they are actually more likely to shop with cards this year. The study, which randomly selected 865 U.S. consumers, was conducted in early October by Princeton Survey Research Associates International for the Austin, Texas-based CreditCards.com .

Consumers first react to a data breach with fear, but then they may become numb, David Just, professor of applied economics management and director of graduate studies at Cornell University in Ithaca, N.Y., told CreditCards.com . "I'm guessing a lot of people have the initial emotional reaction of, 'Wow, I don't want to shop there anymore if they're going to be that loose with the data.'"

The question then becomes, what does it take for a consumer to return?

That may hinge on what other options are available, according to Jeff Foresman, information security compliance lead at Rook Security in Indianapolis ( CreditCards.com ).

For retailers such as Target, where customers have other options for shopping, it may lead to the long-term loss of that consumer, Foresman said. However, if a building contractor has a business account with a retailer such as Home Depot, for example, he or she may not look somewhere else.

The Credit Union National Association continues to press national lawmakers to pass legislation that would require merchants to meet the same strict payment data security standards imposed upon financial institutions. Credit unions nationwide saw 4.6 million of their cards compromised as a result of the Target breach, leading to about $30.6 million in breach-related costs.

CUNA also is collecting information on the financial and operational impact the Home Depot breach has had on credit unions. Completed surveys from credit unions affected by that breach are due Friday.

For more information on the comprehensive campaign CUNA has put together to fight for tougher regulations on data security for merchants, visit StopTheDataBreaches.com.

Additional findings from the CreditCards.com survey include:
  • The wealthiest cardholding households are the least likely to stop patronizing recently breached stores, with only 31% of those in households earning $75,000 or more annually saying they would either definitely or probably shop elsewhere during the forthcoming shopping season;
     
  • Respondents with high levels of education are also less likely to spurn recently hacked stores, with 33% of college graduates citing they would either probably or definitely not shop at such stores, compared with 55% of those with a high school education or less; and
     
  • Forty-eight percent of cardholders said they are more likely to pay for purchases in cash this year, though that number falls the higher the income level of the household.

CEO invites members to 'Ask Charlotte'

CU System
ALEXANDRIA, Va. (10/21/14)--Back in the day, when a CEO wanted to get in touch with members, he or she had to step out into the lobby. While the lobby remains a great way to reach a certain segment of members, other segments are easier to find online.

Charlotte Cash, president/CEO of CommonWealth One FCU, Alexandria, Va., with $323 million in assets, is trying engage the latter segment with a series of quarterly videos on subjects of financial interest to members that will be featured on YouTube.

"When CommonWealth One was significantly smaller, former CEO Kathryn Coleman would sometimes meet with individual members to resolve various issues," she added. "Today, because the credit union has grown exponentially, I achieve that same effect by addressing topics of financial benefit to members through a quarterly video I record that's available on our website, cofcu.org."

Also, there's an "Ask Charlotte" link on CommonWealth One's homepage through which members can send her an email on any subject of concern.

"The emails come directly to me, and I read each and every one," she said. "Open communication is the best way to improve our service, and I welcome hearing from our members to help resolve their concerns."

And, she added, many of those comments are compliments on CommonWealth One's member service.

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New league award honors Commitment to Cooperation

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MARLBOROUGH, Mass. (10/21/14)--The Massachusetts, New Hampshire and Rhode Island credit union leagues have launched Commitment to Cooperation, a program to honor leaders who have dedicated significant years of service to their credit unions.
 
"We believe it is important to recognize these longtime leaders for their contributions to the system, as well as show our up-and-coming leaders what is possible with cooperation," leagues President/CEO Paul Gentile said in announcing the program (Daily CU Scan Oct. 15).
 
"At the annual convention and annually in our publications, we will publish the names of individuals as they achieve credit union service milestones," Gentile added. "We will also profile many of these leaders throughout the year in our various publications."
 
The program includes the collection and cataloguing of the names of individuals who have reached milestones in service.  To accomplish this, the league is asking member credit unions to send the names of individuals who have been volunteers or employees for more than 20 years. To facilitate this process, the .league has set up a website where that data can be entered.
 
To access the website, use the resource link.

Fiserv renews $250K benefactor commitment to Filene

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MADISON, Wis. (10/21/14)--Fiserv Inc. has once again pledged to donate $250,000 to Filene Research Institute, based out of Madison, Wis., to help fund research and innovation efforts in the credit union industry.

As part of Filene's Chairman's Roundtable Benefactor program, Fiserv's commitment will assist Filene in conducting research that will help credit unions understand issues and form solutions to address many of the challenges facing the industry today, according to Mark Meyer, president/CEO of Filene, a consumer finance "think and do tank."

Fiserv first committed to the roundtable, membership of which costs organizations $250,000 and a three-year commitment, in 2006.

"Filene Research Institute provides powerful research and resources to the credit union industry that advance and strengthen the overall movement, and position credit unions to make a positive impact on the lives of their members," said Barb Lowman, vice president of credit union solutions for Fiserv. "Fiserv shares Filene's passion and mission to empower credit unions to 'Think. Do. Change.'"

Fiserv, based out of the Milwaukee area, is a financial services technology solutions firm.

As an example of how this type of funding will be used, Fiserv most recently supported a multiyear research program coordinated by Filene that led to a series of publications that offer analyses of financial behavior and financial capability across four demographics, including young adults, pre-retirees, women and Hispanics.

The research program was overseen by Annamaria Lusardi, professor and academic director at George Washington University's Global Financial Literacy Excellence Center.

$15K for cancer research raised by CU's Bras Across the River

CU System
JACKSON, Miss. (10/21/14)--Singing River FCU's fourth annual Bras Across the River event, which raised funds for breast cancer research, exceeded its fundraising goal by bringing in more than $15,000 and nearly 4,500 bras to decorate the Louisiana Highway 613 bridge over the Escatawpa River Oct. 11.
 
More than 4,500 bras--some brightly decorated--were donated to Singing River FCU's fourth annual Bras Across the Bridge fundraiser, which brought in more than $15,000 for breast cancer research. (Singing River FCU Photo)
The $196 million-asset credit union also welcomed more than 700 walkers--also a record--for the event produced in cooperation with the Jackson County Sheriff's Department and the Jackson County Board of Supervisors.

"We're actually getting more walkers and fewer bras," Trudi Mullins, Singing River FCU vice president of communications, told News Now . "Everybody wants to come out to support this cause."
 
While many of the bras hung from the 1.2-mile bridge, other brightly decorated ones were displayed at the nearby registration tents.
 
Singing River FCU pledged $1 for every bra donated and $5 for every new checking account opened at the credit union during September and October.
 
For the leader of the Moss Point, Miss.-based credit union, it's a personal mission.
 
"We have a 25-year cancer survivor here on our staff," President/CEO Jimmy Smith told WLOX-TV 13 (Oct. 11).  "My mother was diagnosed with breast cancer several years ago, as well. Most of us, to some degree, have been impacted by this terrible disease."

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CU System briefs (10/21/14)

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  • ST. PAUL, Minn. (10/21/14)-- The Minnesota Credit Union Foundation awarded $7,500 financial education grants to three credit unions for this fall . Grantees are: Anoka Hennepin CU, Coon Rapids, with $143 million in assets, for its free youth checking account that includes a rewards program for participation in financial education seminars; Cook (Minn.) Area CU, with $28  million in assets, for expanding financial education in northern Minnesota by establishing a student-run credit union at a K-12 school in Virginia, Minn.; and Wakota FCU, South St. Paul, with $22 million in assets, for promoting wellness through food, fitness and finance ...
  • MADISON, Wis. (10/21/14)-- The spirit of International Credit Union (ICU) Day can be celebrated throughout the year with specialized promotional items from the Credit Union National Association , now at available at a discounted price . Suggestions included Halloween and other upcoming holidays to share tote bags, key tags, Post-It notes, pens and bags of chocolate-covered espresso beans ...
  • DENVER (10/21/14)-- U.S. District Judge John Kane ordered more than $1 million in fines to be paid by a Colorado man who ran a fake credit union in Colorado and the Virgin Islands . Stanley McDuffie --also known as Stan Roberson, Stan Roberson-Battle and Stanley B. Battle--must pay the U.S. Securities and Exchange Commission more than $532,000 and a civil penalty of the same amount ( The Denver Post Oct. 17). McDuffie allegedly raised the funds from investors who purchased certificates of deposit (CDs) from Her Majesty's CU , which was not insured or chartered by the Colorado Division of Financial Services nor the National Credit Union Administration. Kane ruled the CDs were unregistered and fraudulent securities and that McDuffie wrongly profited from their sale. McDuffie had pleaded not guilty to charges of obtaining money by false pretenses, conspiracy, embezzlement by fiduciaries and violating the territory's anti-racketeering statute in a court in Virgin Islands ( News Now July 17, 2013) ...

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