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NYC CUs coalition to target underserved

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NEW YORK (1/16/08)--Three New York City credit unions joined other groups last week to discuss serving the underserved, according to the National Federation of Community Development Credit Unions.
From left: Rob Nemeroff, vice president of marketing, Melrose CU; Linda Levy, CEO, Lower East Side People’s FCU; New York State Rep. Jose Peralta; Pablo DeFilippi, associate director of membership development, National Federation of Community Development Credit Unions; John Lewis, general counsel, United Nations; Zoe Sullivan and Alexis Iwanisziw, Queens Community House; U.S. Rep. Joseph Crowley; Shan Rehman, Chhaya CDC; Ralph Pagan, vice president of marketing and business development, Municipal CU; Melva Miller, Office of the Queens Borough President; and Shams Tarek, Office of New York State Sen. John Sabini. (Photo provided by the National Federation of Community Development Credit Unions)
The three credit unions, some of the largest in New York City, are: United Nations FCU, Municipal CU and Melrose CU. The three joined the largest community development credit union (CDCU) in the city, the Lower East Side People’s FCU, for a roundtable meeting to discuss plans to expand credit union service to underserved communities in Jackson Heights and Corona, Queens. The special meeting, organized by the federation and the Queens Community House, brought together credit unions, local community-based nonprofits, and several New York policymakers. Zoe Sullivan of the Queens Community House highlighted the “incredible need for more transparent and affordable alternatives to the banks and check cashiers who are so common in these [low-income] communities.” “CDCUs provide an effective and proven mechanism for underserved communities to gain control over their financial resources,” Sullivan said. “This results in the direct empowerment and improvement of their communities.” U.S. Rep. Joseph Crowley (D-N.Y.) who attended and expressed his support for the new collaboration. “It is by building assets that families and communities become economically self-sustaining. And having access to affordable and equitable financial products and services is a critical component toward achieving this goal,” Crowley said. New York State Sen. John Sabine, who represents Jackson Heights and Corona, also supports these efforts. “Community-based credit unions give people from all walks of life access to the American dream in a financially secure and responsible way,” he said.

Washington league proposes data breach bill

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FEDERAL WAY, Wash. (1/16/08)--A new league-backed bill in the Washington State legislature would make costs associated with data breaches--such as the massive TJX Cos. breach--a responsibility of the merchant. According to Washington Credit Union League President/CEO John Annaloro, "the league supports SB 6425 because the massive monetary costs associated with data insecurity continue to be a plague on the card payment system, costing the state's financial institutions millions of dollars each year." The league wrote the bill, which is sponsored by Rep. Brendan Williams (D-22) in the House and Sen. Rosa Franklin (D-29) in the Senate. The bill was "dropped" or introduced in the opening days of the 2008 state legislative session, said the league. The bill requires merchants accepting plastic to reimburse card-issuing financial institutions for the costs associated with care reissuance after a data breach. The bill also would deter financial fraud and identity theft in three ways:
* By requiring businesses accepting plastic cards to encrypt or dispose of sensitive consumer data promptly; * By making businesses that store sensitive consumer data and fail to meet basic security standards responsible for the costs of consumer notification and card replacement; and * By establishing a safe harbor for businesses that meet basic security standards.
According to Stacy Augustine, league senior vice president and general counsel, SB 6425 represents good public policy because it provides a powerful financial incentive for data custodians to take the steps necessary to prevent security breaches. It also encourages all financial institutions to take steps to quickly reissue compromised cards and monitor accounts to avoid fraud and identity theft, she said. The hard cost of reissuing a plastic card is estimated at about $20. However, the cost of reissuance, customer care and maintenance, including soft costs, is estimated at $00 to $180 per account. "What the bill does not do is prohibit businesses from retaining encrypted information or certain unencrypted elements needed for on-going marketing," said Augustine. "The league feels that this data-breach-reimbursement legislation proposes reasonable information security standards and needed encouragement to financial institutions to take extraordinary measures to protect consumers from identity theft and fraud." If enacted, SB 6425 would be the second state data bill in the nation to make its way into law. Similar bills were introduced in Minnesota, Massachusetts, Texas and California in 2007. The Minnesota bill was enacted. The Massachusetts and Texas bills ran out of time during their legislative sessions. The California bill was vetoed by Gov. Arnold Schwarzenegger. Washington has enacted several consumer protection laws during the past five years. In 2007, it enacted a "credit freeze" bill to enable consumers to block access to new lines of credit for any reason. The league supported that bill also.

CUNA experts offer advice in media

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MADISON, Wis. (1/16/08)--Experts from the Credit Union National Association (CUNA) were recently quoted in U.S. and international media about the importance of credit unions. Most everyone is eligible for a credit union membership, said Pat Keefe, CUNA vice president of communications and media outreach in an article about choosing a credit union. Eligibility requirements differ at each credit union, based on community, employer and association, he told Columbus Business First (Jan. 11). When choosing a credit union, potential members should check with their employers because credit unions affiliated with a specific industry or employer will understand the needs of a company or its employees, Keefe told the newspaper. The credit union also will look at those needs when members apply for loans or credit, he said. CUNA statistics were quoted in an article on repairing a busted budget (Poughkeepsie Journal Jan. 14). Credit unions help their members save by offering opportunities such as Christmas Club accounts. According to CUNA, three-quarters of the nation’s 8,300 credit unions have accounts that allow members to automatically deduct money from their paychecks and set it aside for holiday spending. In an article about best banking moves to make in 2008, Susan Tiffany, CUNA director of personal finance information for adults, advises that developing good checking and savings habits will help money management challenges fall into place. Tiffany was quoted prominently in a Jan. 10 Bankrate article that was recently picked up by Yahoo Finance in Canada.

CU System briefs (01/15/2008)

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* MIAMI, Fla. (1/16/08)--The Southernmost Chapter of the Florida Credit Union League established The Guy Hood College Scholarship bearing the name of FCUL President/CEO Guy Hood, left. The scholarship will be awarded each year to a student in the National Academy Foundation's Academy of Finance program in Miami Dade County Public Schools. "The chapter board felt that the best way for us to show Guy our appreciation for his years of service to credit unions was to encourage a young person to consider a career in credit unions through a scholarship given in Guy's name," said Michael Raley, chapter president, right, shown presenting the Certificate of Appreciation announcing the scholarship to Hood. Hood, who will retire in January 2009, has been league president/CEO for 20 years. (Photo provided by the Florida Credit Union League) … * SCHENECTADY, N.Y. (1/16/08)--Sunmark FCU and New York State Assemblyman George Amedore (R-C-Rotterdam) announced Monday a joint financial education initiative in Schenectady County. "It is extremely important that people have the tools they need to successfully manage their finances, and I applaud the efforts of Sunmark FCU to assist Schenectady County residents," said Amedore. Sunmark is working with the Schnectady Municipal Housing Authority (SMHA) to provide financial education to low- and moderate-income families who are SMHA tenants … * HARRISBURG, Pa. (1/16/08)--Mid-Atlantic Corporate FCU has announced a realignment of its senior management. Jay Murray, who will become president/CEO in August, has been appointed president/chief operating officer. Edward Fox will retain the CEO title until his retirement July 31 (Life is a Highway Jan. 15). All current vice presidents were promoted to senior vice presidents (SVP). SVPs include: James E. Burns, chief financial officer; Bob T. Frank, information systems; Lori A. Gall, administration; Janice A. Goodling, human resources; Drew J. Kishbaugh, payment services; Rodney A. May, member services; Leigh E. Philibosian, marketing; Brad C. Stewart, chief investment officer; and Jeffrey M. Stoner, product strategy …

Court dismisses loss-liability case vs. CMG

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SAN FRANCISCO (1/16/08)--The U.S. District Court for the Northern District of California, ruling it lacked jurisdiction over loss-liability claims, last week dismissed a lawsuit brought by 13 credit unions against CUNA Mutual Group (CMG). The federal court said the case should be brought before state court. CMG verified this development, but cannot provide any additional information at this time because the matter is still under litigation, Rick Uhlmann, CMG senior manager of media relations, told News Now. The credit unions claimed the bond should have covered the $4 million in losses they said they sustained when San Francisco-based LoriMac, the mortgage company that the credit unions used to issue home loans, filed for bankruptcy last year. The credit unions contend that LoriMac misappropriated the credit unions loan funds, making the credit union insurer--CMG--liable for fraud coverage on their bonds. LoriMac provided the people and the facilities for a company that provides mortgage origination services to small banks, savings and loans, and credit unions. In return for its services, LoriMac received fees from the originating institutions and serviced the loans created. LoriMac did not warehouse or close the loans for its own account or its own name (EDGAROnline). The 13 credit unions are:
* Cessna Employees CU, Wichita, Kan.; * Advantage Plus FCU, Pocatello, Idaho; * East Idaho CU, Idaho Falls, Idaho; * Health Services CU, Dubuque, Iowa; * Idaho Falls Teacher CU, Idaho Falls, Idaho; * Les Bois FCU, Garden City, Idaho; * Clearwater CU, Lewiston, Idaho; * Scenic Falls FCU, Idaho Falls, Idaho; * Simcoe CU, Heyburn, Idaho; * St. Alphonsus Medical CU, Boise, Idaho; * Pocatello Railroad FCU, Pocatello, Idaho; * Racom Community CU, Dyersville, Iowa; and * Transit Employees FCU, Washington, D.C.

Three CUs warn of new phish scams

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MADISON, Wis. (1/16/08)--Three credit unions--in Tennessee, Washington and Florida--reported in the past week attempts to get members to divulge their financial information through e-mails and phone calls. In Chattanooga, Tenn., Tennessee Valley FCU told WDEF News 12 (Jan. 11) that a member reported a message left on her answering machine, saying: "Dear Tennessee Valley FCU member: We are calling to inform you that your online (banking) service has expired." The message leaves a web address and requires the member to renew personal information to continue getting service. In Richland, Wash., phone calls from an automated machine claimed to be from Gesa CU and instructed recipients to call a 509 area code number to leave credit card information, police said ( Jan. 12). At least two people fell victim to the scam. In Tampa, Fla., bogus e-mails with the subject line, "Regularly scheduled account maintenance," claimed to be from Suncoast Schools FCU. They informed recipients the credit union was providing greater protection against fraudulent attacks and told them to use a link. The link was to a bogus site, which tried to obtain personal information (News-Press Jan. 12). The credit unions warned consumers they never collect such information over the phone and through e-mails.

HELOC thefts grow--6.5 million 18 CUs

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MADISON, Wis. (1/16/08)--CUNA Mutual Group is warning credit unions that a sophisticated fraud scheme involving home equity line of credit loans (HELOCs) is spreading. So far, 18 credit unions have reported losses or fraud attempts totaling more than $6.5 million. More losses are expected, said Gary Pate, CUNA Mutual director of insurance compliance and risk management. The scheme results in a large number of high-dollar funds transfer losses involving HELOCs. Perpetrators target members who have been granted large lines of credit via the HELOCs, said Pate. The perpetrator sends a fax or e-mail requesting the credit union process a funds/wire transfer. Usually, the transfer requests are received at credit unions with call centers, he said. The requests frequently are for amounts exceeding $100,000 and are sent to different banks in the U.S., China and Japan. Often, wires are sent to accounts with the word "Title" or "Construction" in the account name, said Pate. Fraud has successfully occurred in credit unions that have strong security procedures, said CUNA Mutual. In some cases, staff followed their credit union's written procedures to include call-backs to a member's secure telephone number. However, fraudsters apparently have arranged, presumably with telephone providers, to forward the calls to their phones and confound credit unions' call-back procedures, the insurer said. "What's making these scams even more insidious is that the credit union's caller ID indicates the call is going to the member's number of record," Pate said. "In addition, the fraudsters have detailed member information, which is enabling them to answer additional challenge questions from credit union staff." CUNA Mutual is assisting the Federal Bureau of Investigation and Secret Service in the investigation. On Jan. 3, it also sent policyholder credit unions a risk alert advising them of their responsibilities and offering these loss-prevention recommendations:
* Establish a password system for members prior to accepting funds transfer requests by telephone, fax or e-mail. Also have a written agreement with the member for the use of these passwords. Credit unions are allowed to pass liability to the member for any negligent use of their funds transfer password. * If there is any doubt as to the authenticity of the funds transfer request, credit unions are reminded they do not have to perform a wire transfer. * Beware of large dollar requests for wire transfers that draw against a HELOC, particularly HELOCs that have large available balances and little previous activity. * Limit the amount of wire transfer that can be completed by a call center employee. The wire transfer request should be approved by a manager. * Record conversations during the call-back and compare it to previously recorded conversations. * Listen to the caller. Does he or she have an accent that is inconsistent with your membership? * Perform an additional verification to the member's work and/or cell phone number. * If the credit union has the information, send an e-mail to the member at home or at work.
CUNA Mutual encouraged policyholders with a loss to contact its Credit Union Protection Response Center at 1-800-637-2676.