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Study Data breach costs continue to rise

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MADISON, Wis., and TRAVERSE CITY, Mich. (11/30/07)--The costs of failing to protect their customers' private data is on the rise for companies involved with data breaches, according to new research. But it isn't known how much these breaches have cost the nation's credit unions. Data breach incidents cost companies $197 per compromised customer in 2007, compared with $182 in 2006, according to Traverse City, Mich.-based Ponemon Institute. Data loss incidents involving more than 215 million individual records have occurred since January 2005. Ponemon's survey focuses on actual data breaches in 35 U.S. organizations, including financial services, retail, healthcare and software companies. The average per-incident costs in 2007 totaled $6.3 million, compared with $4.8 million in 2006, said the institute. Lost business accounted for roughly two-thirds of the average cost per incident. The cost of lost business rose by 30% to $4.1 million on average in 2007. Breaches by third-party organizations were reported by 40% of respondents--up 29% from 2006. This type of breach was also more costly--on average $231 per record compared with in-house breaches at $171 per record. It isn't known how much these company's breaches have cost the nation's credit unions. CUNA Mutual Group tracks plastic card fraud losses for claims submitted by its policyholders.. Of submitted credit union losses reported in 2006, 76.7% were due to counterfeits, 15.5% due to stolen cards, 5.3% to lost cards and 2.5% to "other," according to CUNA Mutual's Plastic Fraud Update. CUNA Mutual's figures "do not represent fraud losses for all credit unions or take into account other costs of data breaches that were highlighted in the [Ponemon Institute] study," Phil Tschudy, media relations manager at CUNA Mutual, told News Now. In the first three quarters of 2007, plastic card fraud losses incurred by CUNA Mutual's policyholders totaled between $56 million to $57 million, according to the Plastic Fraud Update. That figure is for debit, credit and ATM cards. Debit cards account for more than half of the losses. The 2007 total is significantly less than plastic card losses submitted for the same time nine months last year: $33 million for first-quarter 2006, $24 million in second quarter, and $22 million in third quarter. Third-quarter 2007 losses submitted by policyholders were slightly over $17 million, while second quarter losses were at $20 million, and first quarter losses at slightly more than $20 million. Losses for the first three quarters for 2006 totaled $98.7 million, although estimates of losses not submitted by credit unions could bring that figure to more than $100 million. That compares with $89 million in 2005, $57 million in 2004, $40 million 2003, and $39 million in 2002, according to the CUNA Mutual figures. In the data breach study, Ponemon Institute also noted that notification costs for breaches fell 40% to $15 per customer in 2007 from $25 in 2006. That suggests a more measured, less reactive breach response by companies, Ponemon said. After the breaches, the companies implemented six technology measures, ranked in order: expanded encryption; data loss prevention solutions; identity and access management solutions; endpoint security controls; security event management solutions; and perimeter controls. Ponemon noted that the easiest way for companies to avoid the costs associated with a data breach "would be to avoid a breach in the first place." Use the resource link for more information.

Filene Report What boards should do in mergers

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MADISON, Wis. (11/30/07)--Credit union boards of directors need to be proactively involved in a credit union merger or acquisition process, according to the Filene Research Institute. One-quarter of credit union boards reported proactive involvement during merger processes. The same number reported “minimal” engagement, says a study, “The Board’s Role in Credit Union Mergers,” by William A. Brown, PhD and associate professor at Texas A&M University. Two-thirds of board interviewed failed to incorporate merger and acquisition scenarios in their strategic planning, says the study. Regardless of how involved a credit union is, Brown said that its board must:
* Evaluate the potential of membership growth; * Discuss how the merger would affect growth; * Identify issues that could make or break the opportunity; * Be clear on members’ interests and solicit input from them; * Develop a succession plan for the CEO; and * Seek multiple potential partners and consider issues such as culture or synergies the two organizations would have.
Statistics suggest that it’s not a matter of whether a credit union is involved with a merger, but simply when, according to Filene.

CU System briefs (11/29/2007)

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* MADISON, Wis. (11/30/07)--Madison-based Summit CU and Great Wisconsin CU have announced plans to merge, with completion expected in January 2009, pending approval from members and regulators. Summit, with $730 million in assets and 64,000 members, will merge with Great Wisconsin, which has $398 million assets and serves 51,000 members. The new credit union will be named Summit CU and adopt Great Wisconsin's expanded charter. Andy Faust, Summit CEO, will lead the new credit union as CEO, and Great Wisconsin CEO Kim Sponem will become president. Employees were told that no material changes in employment are planned. The combined credit union will have more than $1 billion in assets and serve more than 110,000 members in 20 locations throughout the state, making it the largest credit union merger in Wisconsin history, they said … * HARRISBURG, Pa. (11/30/07)--U.S. Rep. Chris Carney (D-10) praised credit unions at Wednesday’s Susquehanna Valley Chapter of Credit Unions meeting in Williamsport. The congressman told the 50 people attending he’s a loyal credit union member. Carney added that he had no financial worries about himself or his family while performing military service in Afghanistan because he knew his credit union was taking care of his financial obligations. He pledged his continued support for credit unions and said he would protect them from bankers (Life Is A Highway Nov. 29). From left are: Pennsylvania Credit Union Association Director Bill Lavage, Carney, and Chapter President Joanne Cowden at the meeting. (Photo provided by the Pennsylvania Credit Union Association) … * BOULDER, Colo. (11/30/07)--Boulder Valley CU is the first financial institution in Boulder County to be awarded the Partners for a Clean Environment (PACE) certification. PACE is a voluntary, non-regulatory organization that reviews businesses for their eco-friendly practices. Boulder Valley CU is the first financial institution, bank or credit union in Boulder County to meet the requirements necessary for certification. In May 2007, the credit union began working with members to help them “Go Green” by offering discounts on loans to purchase fuel-efficient vehicles and install solar panels on their homes. Pictured are, from left: Amin Delegah, pollution prevention specialist with Boulder County, awarding Jason Bauer, vice president of marketing at Boulder Valley CU, with the certification. (Photo provided by Boulder Valley CU) … * KIMBERLY, Wis. (11/30/07)--In a program to help relieve the hardships on military families from the deployment of troops for active duty, Capital CU, a $286 million asset, Kimberly, Wis.-based credit union, has begun offering a reduced loan rate and payment program for active duty Army reservists and National Guard troops (The Post-Crescent Nov. 25) ...

30 under 30 crew named by Filene Research Institute

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MADISON, Wis. (11/30/07)--The Filene Research Institute has selected a team of young credit union professionals to serve in a new program to develop credit union products and services to young adults. The “30 under 30” group is a problem-solving team made up of credit union professionals under the age of 30. PSCU Financial Services provided underwriting and other support for the group. The project is part of a broader Filene program called CU Tomorrow, which works with state leagues, universities and other organizations to make credit unions more relevant-- as financial institutions and employers--to young adults. CU Tomorrow will publish open source business plans for credit unions to use to attract younger members and employees. The “30 under 30” group is made up of individuals employed full-time at a credit union. Its objective is to build financial recruiting programs to attract young adults. “Rather than cross our fingers and hope credit unions attract and retain generational talent, we are creating a place where talent can grow and ideas can flourish,” said Filene CEO Mark Meyer. “Each of these professionals is accountable for building products that will get peers through credit union doors.” Filene has researched the needs of young consumers and credit union responses to those needs, sponsoring COOL Solutions reports and working with organizations like brass/MEDIA. “The young adult demographic is critical to the continued viability of credit unions,” Meyer said. Program Coordinator Ben Rogers added: “Groups typically need a catalyst to conceive their best ideas and put them into action. The 30 under 30 participants understand the need for a youthful focus, because they’re the ones who get blank stares when they tell their friends they work at the credit union.” The inaugural group of 30 under 30 members are: Alex Alexander, Municipal Employees CU of Baltimore; Dustin Allen, Weber State FCU, Ogden, Utah; Megan Armstrong, Sunmark FCU, Schenectady, N.Y.; Avery Cashman, Service 1st FCU, Danville, Pa.; Julie Cosgrove, Affinity Plus FCU, St. Paul, Minn.; Christopher Danvers, Delta Community CU, Atlanta; Matt Davis, Members CU, Winston-Salem, N.C.; Mike Escudero, Seattle Metropolitan CU; Christina Gaglione, Affinity FCU, St. Paul, Minn.; Erin Hamilton, NASA FCU, Upper Marlboro, Md.; Kia Herd, Alliant CU, El Segundo, Calif.; Robin Hickey, Mon-Oc FCU, Toms River, N.J.; Melissa Troiano, DOT FCU, Poughkeepsie, N.Y.; Brandon Kelly, E FCU, Baton Rouge, La.; Dustin Limburg, Wright-Patt CU, Fairborn, Ohio; Tanya Magnus, First South CU, Bartlett, Tenn.; Brie McCarthy, Coors CU, Golden, Colo.; Brandi Melo, Rocky Mountain CU, Helena, Mont.; Brandon Michaels, San Francisco Fire CU; Katherine Miller, Navy FCU, Vienna Va.; Toni Montgomery, Americhoice FCU, Mechanicsburg, Pa.; Rachael Parrent, Vantage CU, Bridgeton, Mo.; Carma Parrish, Perfect Circle CU, Hagerstown, Ind.; Jansen Perdue, Hoosier Hills CU, Bedford, Ind.; Jeremy Presta, Park Side FCU, Whitefish, Mont.; Megan Primeau, US FCU, Burnsville, Minn.; Matthew Prosneski, Travis CU, Vacaville Calif.; Matthew Schewe, UW CU, Madison, Wis.; Amy Stanton, BestSource CU, Waterford, Mich.; and Chad Warneke, Oregonians FCU, Portland, Ore. Observers from several industry groups, including PSCU Financial Services, Credit Union Direct Lending, the California Credit Union League, Credit Union House and the Credit Union National Association also will participate.

Report CUs can do more to serve Latinos

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MADISON, Wis. (11/30/07)--Most financial institutions do no more than a marginal job of meeting the needs of Latinos, according to a study by the Filene Research Institute. The study, “Financial Services and Product Usage by Latinos in the U.S.,” by Barbara J. Robles of Arizona State University, indicates that “Latino families want to know more about and fully utilize financial products and services that seem out of reach or unaffordable.” Credit unions can help this largely untapped market by reducing the level of complexity of their offerings and understanding the fundamentals of being culturally appealing. They also can partner with local, community-based organizations that serve as advocates for Latinos, said George Hofheimer, Filene chief research officer. Robles’ study suggests that by focusing on education, Latinos will have a means to advance economically and socially. Immigration during the past seven years is at the highest for any seven-year period in U.S. history, according to data released Thursday by the Center for Immigration Studies in Washington, D.C. One of eight people in the U.S. is an immigrant, totaling 37.9 million (The New York Times Nov. 29). For more information, use the link.

8.3 million Americans were ID theft victims in 05

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WASHINGTON (11/30/07)--More than 8.3 million American adults were victims of identity theft in 2005, says a new report. That means credit unions must continue efforts in two areas: beefing up security efforts to protect members' data and educating members to guard their information and to recognize fraudulent attempts to collect the information. The number of victims accounts for 3.7% of all American adults, said the Federal Trade Commission (FTC), which released the data Wednesday. Thieves misused existing credit card accounts of about 3.2 million of victims, or 1.4% of all adults. They misused noncredit card accounts of 3.3 million victims or 1.5% of adults. And they opened new accounts or committed fraud using personal information of 1.8 million people--0.8% of adults. Costs of goods or services obtained with stolen information varied widely: in at least half the cases costs were $500 or under, but in 10% of cases, thieves looted more than $6,000 of goods and services. Victims' out-of-pocket expenses also varied widely: in more than half the incidents, victims incurred no out-of-pocket expenses. However, 10% of victims saw at least $1,200 in out-of-pocket costs due to ID theft. (The survey did not count losses to institutional victims, such as credit unions who paid for replacing the cards.) The median time spent by victims in resolving problems caused by the thefts was four hours. Ten percent of victims, however, spent at least 55 hours resolving their problems and half of them spent at least 130 hours doing so. Losses were three times greater in instances where the thieves opened new accounts (a median $1,350 in losses) than with existing accounts (less than $500). Of the victims, 37% reported problems such as harassment by debt collectors, denial of new credit, inability to use existing cards, denial of loans, experiencing utilities cut off, being subjected to a criminal investigation or civil suit; being arrested; and difficulties obtaining or accessing bank accounts. When thieves opened new accounts with the information, victims were more than twice as likely to have one or more of these problems, said FTC. Credit unions looking to beef up security measures or educate members about protecting their information have many resources to assist them. Use the resource links for more information.

African CUs to mark tomorrows World AIDS Day

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MADISON, Wis. (11/30/07)--Credit unions are marking World AIDS Day tomorrow, with several African savings and credit cooperatives (SACCOs or credit unions) working to show that leadership and education make a difference. Saturday will recognize 33.2 million people worldwide living with
In Capetown, South Africa, Sibanye Cape SACCO's HIV/AIDS project committee meets monthly to discuss sharing HIV/AIDS information with the community. (Photos provided by the World Council of Credit Unions)
HIV/AIDs with the theme "Stop Aids. Keep the Promise--Leadership," which challenges people to take the lead at every level to combat and overcome the disease, according to the World Council of Credit Unions (WOCCU). Some credit unions are leading the fight against the disease in their communities. "As trusted, member-owned organizations in their communities, credit unions are effective vehicles for raising awareness, sharing information and mitigating the spread of HIV/AIDS through prevention," said WOCCU President/CEO Pete Crear. In Kenya, Mwalimu SACCU, which serves secondary school teachers and is one of the country's largest SACCOs, launched an HIV/AIDS peer educator program in 2006, with support from the WOCCU/U.S. Agency for International Development's Cooperative Development Program, in partnership with JHPIEGO, an international health organization affiliated with The Johns Hopkins University. Today, 27 members have become certified peer leaders. Each leader trains five peer educators, who then continue the "cascade of information."
In Kenya, a new peer educator receives her certificate for completing the Mwalimu SACCO's Stop AIDs peer educator training program.
In South Africa during February 2006, Shameem Gaffoor, a Strathmore-WOCCU African Management Institute (SWAMI) graduate and loan officer for Sibanye Cape SACCO, formed an HIV/AIDS committee comprised of one board member and three SACCO staffers. The committee established relationships with other nonprofits in Cape Town to gather information for the SACCO's members. To recognize World AIDS Day, Sibanye Cape SACCO will provide free access to a testing facility for members and distribute brochures about the difference between HIV and AIDS. World AIDS Day has been observed annually on Dec. 1 since 1988.

Coach Award at CUNAs ELLy program presented

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MADISON, Wis. (11/30/07)--Susan Dixon, assistant vice president of training and development for Columbia CU in Vancouver, Wash., received the first “Coach Award” from the Credit Union National Association’s (CUNA) Experience Learning Live (ELLy) Training Awards program. Dixon received her award during the 2007 Experience Learning Live conference Nov. 4-7 in Las Vegas. The award honors credit union trainers who have significantly impacted a trainee’s career and life through education, mentoring and coaching. The ELLys are the only national awards presented to credit union trainers in professional staff development. First place awards and awards of merit for Training Professional of the Year were presented to:
* Lisa Schaefer, Universal 1 CU, Dayton, Ohio, first place; * Rose Halford, The Golden 1 CU, Sacramento, Calif., award of merit; and * Tina Hall and Justin Martin, Verity CU, Seattle, award of merit;
WOW! Awards, which recognize a credit union with the best overall training curriculum, were presented to:
* Missoula (Mont.) FCU, first place; * Educators CU, Racine, Wis., first place; * Teachers CU, Indianapolis, award of merit; and * Rogue FCU, Medford, Ore., award of merit;
Training Champion Awards, which single out senior management staff in a credit union that goes beyond the call of duty to develop training, were presented to:
* Terry Halleck, president/CEO, The Golden 1 CU, first place; and * Senior administration team, Family Trust FCU, Rock Hills, S.C., first place.
Chi Phi Delta X II Awards, which represent the best development of a credit union university using CUNA’s Center for Professional Development (CPD), were presented to:
* Training Department, A+ FCU, Austin, Texas, first place; and * Learning Center, Bethpage (N.Y.) FCU, award of merit.
ELearning Awards, presented to credit unions that use technology-based training to enhance credit union training programs, were presented to:
* Teachers CU, first place; and * The Golden 1 CU, award of merit.
Four CPD Energizer Awards were presented to:
* Liberty County Teachers FCU, Liberty, Texas, scholarship market; * Central Star CU, Wichita, Kan., small market; * Navy Army FCU, Corpus Christi, Texas, medium market; and * Navy FCU, Vienna, Va., major market.
CPD Energizer Awards are given to credit unions with innovative training programs that support CUNA’s CPD products and its mission of helping individuals reach their personal and professional potential.