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NPR report highlights merchant failures on data breaches

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WASHINGTON (11/26/14)--Merchant data security breaches--their effects on consumers and the reactions of retailers--were highlighted on a recent segment of NPR's "All Things Considered."
 
Reporter Aarti Shahani followed a security expert who was able to point out how easily a hacker could infiltrate a retailer's point-of-sale network. EMC's Davi Ottenheimer noted a card reader--similar to ones he had at home--connected to a tablet left unattended in a high-end retail store. At another large retailer, no one noticed that he was paying more attention to a computer plugged into the network than to the merchandise.
 
"A lot of times, a lazy approach to security is just to make information difficult to get," Symantec security expert Orla Cox told NPR. "Just because you're not talking about it isn't actually making you any more protected."
 
The incentives are small for retailers to take on more responsibility. They want to keep information technology budgets down, and they don't have to pay, even if they are at fault. Financial institutions pick up the bill, Shahani said.
 
The Credit Union National Association, NPR noted, "is asking lawmakers to intervene, so that retailers are held to stricter security and disclosure rules."
 
CUNA worked with NPR, providing statistics on the costs of the data breaches--costs that credit unions and banks pick up. The text version of the segment links readers to CUNA's Stop the Data Breaches fact sheet.
 
Chris Leggett, president/CEO of $989 million-asset LGE Community CU, Marietta, Ga., told NPR that the issuers are bearing the brunt of the expenses. "It sure would be nice if the merchants would be willing to share in the cost of cleaning it up due to their lax security," he said.

Media outlets widely share CUNA-CFA holiday spending outlook

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WASHINGTON (11/26/14)--The holiday shopping survey conducted by the Credit Union National Association, in collaboration with the Consumer Federation of America (CFA), was picked up broadly in the national media Tuesday after a Monday press conference where the results were announced.

Stephen Brobeck, right, of the Consumer Federation of America and Mike Schenk of the Credit Union National Association deliver the 2014 outlook for holiday spending. (Cronkite News Photo)
CBS Money Watch featured the comments of Mike Schenk, CUNA vice president of economics and statistics, and Stephen Brobeck, CFA executive director, along with the survey results, which found that 87% of shoppers plan to spend either the same or less than they did last year this holiday season.

The 15th annual holiday spending survey also found that only 10% plan to spend more--compared with 13% last year--and that, overall, holiday spending will climb 3% to 3.5% (News Now Nov. 25).

Spending will rise modestly, but the survey found many consumers have "significant concerns about their personal finances," said Schenk in CBS Money Watch (Nov. 24).

Survey results also were picked up in the Detroit Free Press, Cronkite News, American Banker and by local news affiliates. CNBC, ABC Radio and Voice of America attended the press conference Monday, and several interviewed both Schenk and Brobeck individually.

Because of concerns over finances and weak income gains, "we expect the increase in holiday spending this season to be modest," Schenk told Cronkite News (Nov. 24).  

Added Brobeck: "During the great recession, some consumers were thrashing around financially, but quite a large number were sinking. The rising economic tide has not raised all boats equally."

In a piece from NBC affiliate KGNS-TV 8, Brobeck was quoted during the press conference as saying: "Somewhat shockingly, nearly half of Americans say that they don't have extra funds to cover a $1,000  unexpected expense. These Americans in particular need to limit spending despite expectations that are encouraged by massive and relentless holiday marketing."

The survey found that nearly twice as many of those with low incomes (37%) than those with high incomes (19%) said they would spend less money this year.

Overall, 33% said they would spend less this year, compared with 32% in last year's survey who said they would spend less than in the previous year. In 2008, 55% said they would spend less.

Skimming remains biggest threat, says ATMIA global survey

CU System
LONDON and SIOUX FALLS, S.D. (11/26/14)--Increased attacks from a wider range of skimming devices, including increasingly smaller devices, continue to plague the ATM industry, according to the ATM Industry Association Global Fraud Survey.
 
Roughly 43% of respondents cited digital skimming as the predominant technique for skimming, up from 38% in 2013. Criminals have opted to develop smaller, more sophisticated electronic skimming devices.

For physical attacks, more than 50% of respondents reported the most common criminal devices were hammers and crow bars to pry open the ATM, followed closely by gas and explosive attacks.
 
Also, ATM fraud is increasing around the world, but at a slower rate than last year, according to the survey.
 
About 45% of respondents said criminal attacks are increasing, with 12.61% saying attacks were up sharply and 32.77% saying they rose moderately. The 45% figure is down from the 2013 survey where 52.1% said criminal attacks on ATMs were increasing. The rate of increase is back down to the 2012 level of 45%. About 17% said attacks are decreasing, similar to last year's figure.

About 11% respondents said the cost of fraud to ATM businesses had increased sharply. Another 59% said the cost had increased moderately. In 2013, about 16% said the cost of fraud had increased sharply and 44% said the cost was increasing moderately.
 
At the same time this year, about 25% said they were investing much more on ATM security technology than they were six months ago. Roughly 36% said they were investing a little more than six months ago. In 2013, those figures were 14.6% and 38% respectively.
 
Through-the wall ATMs (48%) were the locations most targeted by criminals, followed by those inside stores (43%) and inside a financial institution vestibule or inside a mall (both with 16%).
 
The number of respondents who see ATM security solutions as "very effective" has risen to 52.7% in 2014 from 39% in 2013.

National Herring awards distributed for model member service efforts

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MADISON, Wis. (11/26/14)--There is a name for credit unions that materially improve members' lives, and that name is a Louise Herring Philosophy-in-Action Member Service Award winner, conferred by the Credit Union National Association.
 
The Herring Award honors credit unions for practical applications of the credit union philosophy within the credit union that benefit its members. These may include:
  • Member programs for groups that are often economically challenged;
     
  • Internal programs or services that help to differentiate the credit union from other financial services providers;
     
  • Programs that do an extraordinary job of encouraging thrift and provide a source of unbiased money management and consumer information, which would be difficult or impossible to obtain elsewhere; and
     
  • Evidence of an exceptional degree of service to members.
As an Ohio delegate to the 1934 national credit union conference, Herring was an original signer of CUNA's constitution. She believed credit unions should work to better people's lives because credit unions were more than just financial institutions.
 
The awards, which are given in several asset sizes, were selected among the winning entries at a league level.
 
Listed by asset size, the credit unions recognized include:
 
Less than $50 million in assets:
  • First place: City Co FCU, Pittsburgh, with $21 million in assets;
  • Second place: Trenton NJ Police FCU, Hamilton, N.J., with $24 million in assets; and
  • Honorable mention: Cove FCU, Edgewood, Ky., with $46 million in assets.
$50 million to $250 million in assets:
  • First place: Carolina Postal CU, Charlotte, N.C., with $86 million in assets;
  • Second place: Jersey Shore FCU, Northfield, N.J., with $125 million in assets; and
  • Honorable mention: Henrico FCU, Richmond, Va., with $203 million in assets.
$250 million to $1 billion in assets:
  • First place: Michigan First CU, Lathrup Village, Mich., with $695 million in assets;
  • Second place: Freedom First FCU, Roanoke, Va., with $331 million in assets; and
  • Honorable mention: FAA CU, Oklahoma City, with $563 million in assets.
More than $1 billion in assets:
  • First place: Hanscom FCU, Hanscom AFB, Mass., with $1.08 billion in assets;
  • Second place: Pen Air FCU, Pensacola, Fla., with $1.24 billion in assets; and
  • Honorable mention: TruMark Financial CU, Trevose, Pa., with $1.5 billion in assets.

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Lending Council paper explores member business growth

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MADISON, Wis. (11/26/14)--A new white paper from the CUNA Lending Council explores how credit unions can differentiate themselves in the business lending space.

"Advanced Member Business Lending: Finding Success in the Commercial Lending Space" examines:
  • A brief history of credit unions and commercial lending;
  • Deciding to start a business loan program;
  • Entering the market;
  • Translating indirect lending experience to commercial lending;
  • Keys to success;
  • Focusing on a particular niche; and
  • Partnerships and their role.
For credit unions entering the business lending market or increasing their portfolio, the paper offered these recommendations:
  • Call on other credit unions. "Credit unions are well-known for brainstorming together, for helping each other," said Phil Purcell, vice president of commercial lending for $1 billion-asset Hanscom FCU, Hanscom AFB, Mass. Take advantage of that friendly atmosphere, if you're able, Purcell advised. "I think any credit union considering starting a business lending program would benefit from talking with credit unions that are already doing it;"
  • Do the rest of your homework. Specifically, "spend a great deal of time on an in-depth business case, and spend a great deal of time on an in-depth projection," suggests Ralph Cumbee, senior vice president and chief lending officer/chief information officer of Yakima, Wash.-based Solarity CU, with $530 million in assets. In other words, he said, "First decide what you want to be, then decide what it is going to take to get you there. And then see if your market will support a level of that that will actually have an ROI at the end of the day;"
  • Hire the right people. Troy Casper, director of business services at $257 million-asset MidMinnesota FCU, Baxter, Minn. with $257 million in assets, suggests "the first person you hire, which would be the manager of that department, should have at least seven years of experience, and preferably 10 years of experience." Minimum requirements from the National Credit Union Administration are at least two years of direct experience in business lending, whether it is staff, a credit union service organization, a contractor or some other third party, the paper noted;
  • Additional hiring. Although individual credit unions are sure to differ in this area, Solarity CU is doing its best to avoid hiring people from the "big banks" to staff its business lending department. "My saying is, if you hire a commercial lender from one of the big banks, you've got to send two semis to pick up all of the accumulated baggage they've acquired over the years," Cumbee said. Also, "if I hired someone from the big banks, they would come in and just worry about the next deal," he adds. "I don't think they would be as relationship-focused as we'd want them to be;" and
  • Get your staff up to speed. As important as specific hires are for credit unions that want to succeed in the business lending space, it's just as vital that those credit unions train existing staff in regard to this area. After all, frontline employees and those in other departments can be key sources of referrals.

World Council to U.N.: CUs part of sustainable development

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WASHINGTON (11/26/14)--At separate events this month in New York and Washington, D.C., sponsored by the United Nations (U.N.), the World Council of Credit Unions promoted financial inclusion as a sustainable development goal (SDG).

Click to view larger imagePeter Graves, World Council senior vice president of technical services, promoted financial inclusion as a U.N. Sustainable Development Goal at separate events in New York and Washington, D.C., sponsored by the United Nations this month. (World Council of Credit Unions Photo)
The U.N. is undertaking a process to develop a set of SDGs, which will be used to target international development assistance during the post-millennium development goal period of 2015-2030.

At both events, Peter Graves, World Council's senior vice president of technical services, referenced credit union development in high-income countries, including the United States, Canada, Ireland and Australia, to provide examples of how credit unions help generate greater income growth and job creation across a broader spectrum of the population than in societies without them.

He explained how income growth and job creation has led to decreased poverty, reduced malnutrition, better health and education outcomes, and greater gender equality--all universal goals to incorporate in the SDGs.

 The U.N.'s Sustainable Development Goals will steer the global agenda on social, economic and environmental development over the next 15 years.

"By providing low-cost access to savings and credit, credit unions can help solve at least five to six of the most intractable global issues we see today," said Graves. "Through our experience, we know that providing people the means to save, financial literacy and expanded loan products, has impact across all aspects of an individual's and family's life, including income, education, food and health."

More than 57,000 credit unions currently exist in 103 countries, providing over 208 million people with access to savings accounts and a variety of loan products to help improve their lives.

"Credit unions are all about financial inclusion for all citizens, including the underserved, unserved and the most vulnerable," said Brian Branch, World Council president/CEO. "Credit unions not only provide competition that applies downward pressure on other financial institutions, but they also contribute to financial market innovation due to close relationships with their members. In response to their members, credit unions have introduced new services and products that the wider financial community has quickly adopted."

The U.N. will continue this consultative process with a wide variety of external stakeholders through next year. The General Assembly will adopt the SDGs in September 2015.

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CUNA offices closed Thanksgiving, Friday; no News Now

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WASHINGTON and MADISON, Wis. (11/26/14)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association will be closed Thursday and Friday, in observance of the Thanksgiving holiday. There will be no regular issues of News Now those days.

The staff of News Now wishes its readers a happy Thanksgiving and will be back on Monday morning.

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CU System brief (11/26/14)

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  • KILLEEN, Texas (11/26/14)--It was a red carpet evening in Killeen, Texas, for young account holders of Texas Partners FCU's Be Smart checking program. The $139 million-asset credit union rented a theater Nov. 20 for an exclusive pre-release showing of "Mockingjay - Part 1," the third film in "The Hunger Games" series. The guests, age 16 to 18, walked down a red carpet with paparazzi snapping photos along the way. "We chatted about our scholarship program and our refer-a-friend program," Vice President of Marketing Shelley Carlson told News Now. The event also gave Texas Partners the chance to thank its members and get to know them better, Carlson added. Giveaways included VIP name tags, lanyards, cell phone wallets and a chance to win a Kindle Fire HD7. She said the credit union promoted the event on Twitter, with tweets showing on the big screen before the movie began, and posted the red carpet photos on its Facebook page. The Nov. 21 Killeen Daily Herald included the credit union's special evening for its young members and their guests in its front-page coverage of the movie's opening (Texas Partners FCU Photo)...

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