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Scams zero in on home equity lines

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MADISON, Wis. (12/29/10)--Identity thieves are having a field day with scams, particularly lucrative ones aimed at home equity lines of credit (HELOC). Others have stepped up their card scams, and phishing and vishing efforts to take advantage of consumers' good will and inattention to details during a busy holiday season. The HELOC scams are increasing, according to Brad Mundine, regional manager for CUMIS' credit union protection and risk management division. He wrote an advisory last month that said HELOC account losses from theft have "increased significantly" this year, with the insurer losing more than $4 million so far in 2010 ( Dec. 23). As a result of some HELOC thefts, lawsuits have cropped up, pitting consumers against their lenders, and lenders against their insurance companies over who pays when someone makes unauthorized charges. Credit unions are involved in at least two lawsuits related to thefts from HELOCs. Last week a lawsuit was filed by a member against a Burnsville, Minn.-based Affinity Plus FCU after he was told he would have to pay nearly $90,000 in unauthorized charges against his $200,000 HELOC account. The member, Mike Calcutt, found out about the theft during a conversation about interest payments on the loan in March. The thefts occurred after someone set up telephonic banking privileges on his account, then executed nine transfers of $10,000 each from his credit line to his savings account, and then instructed the credit union to wire the money to a drop account in Boston. Once there, the money disappeared. In a separate case, Citizens Financial Bank in Indiana refused to cover $26,500 in bogus charges on a couple's HELOC after money was wired to a bank in Austria, where the money disappeared. A third case, filed in Philadelphia, involves another credit union, SB1 FCU, which covered a member's $220,000 loss from a HELOC and sought to recover the loss from its insurers, who denied the claims. The Credit Union Information Security Professionals Association told the Star Tribune that of the 131 banks and credit unions participating in a 2008 webcast, 29 reported HELOC wire fraud incidents. HELOCS aren't the only scams circulating. During the holidays a number of credit card scams surfaced. Here's a roundup of the latest scams:
* In Panama City, Fla., Bay County Sheriff's investigators reported a string of credit card fraud claims from members/customers of local financial institutions, including Innovations FCU and Tyndall FCU. The fraudulent charges began Dec. 23. Investigators said hackers breached a Visa retailer's data base, stole account information and used the information to make replica credit cards for frauds generated in Australia, Canada and Italy (The Walton Sun, News Herald and Panhandle Parade Dec. 27). The holiday season is the busiest time of year for credit card use, and the easiest chance that thieves can use the stolen numbers without anyone noticing right away, police said. * Last weekend a teller at Auto Body CU, DeWitt, Mich., recognized a lottery scam and advised a woman not to wire the caller $3,000. The member left the credit union with her money still safe and secure, said WILX 10 (Dec. 27). * In Butte, Mont., members/customers of several banks and credit unions reported fraudulent activity on their accounts. So far investigators have not found a common denominator in the fraud. The credit unions involved were not named (Associated Press Newswires Dec. 13). * In Bellingham,Wash., Pacific Northwest CU warned that phony automated phone calls alerting recipients about debit card "problems" were reported across Whatcom County. The messages advise recipients to call a special phone number that leads to another recording that asks for account and personal identification numbers. Earlier in 2010, the county reported a rash of fraudulent text messages in January and July warning about credit union account "problems" (The Bellingham Herald Dec. 7).
These are just the incidents this month. Scams targeting members of credit unions as well as the general public, were reported in Oswego, N.Y.; Raleigh, N.C.; and Cheyenne, Wyo. The Federal Bureau of Investigation (FBI) also alerted media outlets that social networking sites and search engines were expected to be hit hard by cybercriminals, and that variations on phishing (e-mails), vishing (voice or phone calls) and smishing (text messaging to cell phones) would be making the rounds during the holidays. These typically target members/customers of credit unions and banks.

CUs may get bank competition for workplace banking

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CHICAGO (12/29/10)--Credit unions, which traditionally have maintained a stronghold on workplace financial services because of their close field-of-membership ties with employers, may see more competition from banks vying for that workplace banking slot. Banks will try this avenue because they "desperately need new customers," according to US Banker's upcoming January issue. They have fee pressure and a need for new revenue, and workplace banking has potential value, an executive at NCBS, a Sun Trust Banks Inc. consulting subsidiary, told the publication. Workplace banking refers to everything from offering free checking accounts to locating branches at the workplace to presenting seminars about financial planning, mortgagees or other financial topics, to having an onsite branch at the employer's location. If that sounds familiar to credit unions, it should. Credit unions cut their teeth on their field of membership bonds with employer-related groups, which became sponsors for many early credit unions. With the trend toward widening fields of membership to community bonds so they can grow, credit unions may find themselves in a banking sprawl on their traditional turf. In fact, credit unions are one of two big reasons why banks haven't been proactive in this area in the past, said the article. "Credit unions are the big one [barrier]: Having grown organically with many big employers, they often enjoy airtight relationships," it added. The second barrier is big banks' centralized management models. Small and mid-size banks will have more success at workplace banking, according to Steven Reider, president of Bancography, a bank consulting firm in Birmingham, Ala. However, KeyCorp has overcome that barrier by dedicating relationship managers at 21 of its districts. As a result, KeyCorp doubled its workplace banking, and boosted its health savings account business. Banks often market their perks to the employees of their commercial clients, but some have moved to marketing toward business clients where they don't do business. For example, in September, Dallas-based Comerica Bank started marketing workplace banking programs to businesses where it doesn't have commercial clients, said the article. Some banks are even putting branches into workplaces. U.S. Bancorp opened its first workplace branch with Procter & Gamble in Cincinnati about 12 years ago. Today, it has 45 such branches on site. Although this isn't a huge trend yet, the economic and regulatory factors may converge so that banks look more to this area to grow. And that growth could be at the expense of credit unions.

Meritrust to close three branches add shared branching

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WICHITA, Kan. (12/29/10)--Kansas' largest credit union is consolidating branches as it joins the CU Service Centers CO-OP Shared Branching Network, effective in spring 2011. Meritrust CU, based in Wichita, will consolidate three Wichita locations at NewMarket Square, Haysville and Andover within the next year, said Bob Corwin, president/CEO. The $700 million asset credit union also is considering consolidating two branches in Lawrence. The closed locations are underused, said Meritrust in a press release. In Wichita, members will have access to the branches of Credit Union of America, MidAmerican CU, First Choice CU and Cessna Employees CU, where they can make deposits, withdrawals, loan payments, transfers and statement inquiries. "The additional branch locations made available through the CO-OP Shared Branching Network combined with the surcharge-free ATM locations made available with the CO-OP ATM Network have increased member convenience and allowed the credit union to address branch locations that have been underutilized by consumers," said the press release. "In an effort to continue to be good stewards of our members' best interests, Meritrust will be consolidating a few branch locations within the next year," said Corwin. By partnering with the shared branching network, members can access more than 4,500 branches nationwide across 50 states, Puerto Rico, Guam and military bases in Japan, South Korea, Italy, Germany and the United Kingdom.

Gateway Metros retiring CEO put philosophy back in CU

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ST. LOUIS, Mo. (12/29/10)--David Barton, CEO of Gateway Metro FCU (GMFCU), St. Louis, will retire Monday after 35 years at the credit union, which accredits him with helping put the philosophy back into its operations.
* The credit union expanded its hours. It began opening at 7 a.m. on weekdays and added Saturday morning hours--"an immediate hit with members." * It stepped up its marketing efforts. "We made mortgage loans. Unfortunately none of our members knew about them. It was the same with many of our other services. Members were not aware of the benefits available to them." * It weathered a fundamental change in focus when Southwestern Bell/AT&T moved its headquarters to Texas. Thousands of members were transferred or downsized, including several members of the credit union's board. The credit union changed its name to Gateway Metro CU in 1995 and expanded its field of membership to area communities. * It became a leader in shared branching. Barton approached longtime friend Don Berra, CEO of First Community CU, about sharing offices and expenses. As a result, four credit unions began operating out of the shared branch. Today, it has one of the highest percentages of loan and deposit growth among all Gateway Metro Federal offices. The credit union now has 10 branches and is part of the Credit Union Shared Branch Network. * Through training, Barton convinced employees to take ownership of member problems and inquiries. The credit union emphasizes to employees "that they are empowered to make decisions and take a leadership role, even if they are not managers," Barton said. "To members, the employee they're talking to on the phone, or that teller who's handling their transaction at the branch, IS the credit union. More than 90% of our transactions are automated. So when a member interacts with our staff directly, the contact carries even more importance."
Larry Pixley, senior vice president, will succeed Barton in January as president/CEO. He was formerly president of St. Louis FCU when his credit union merged with Gateway Metro Federal in 1999. "We take time to train employees to see the whole picture of the credit union, not just their individual jobs," he said. The credit union dedicates two full days to training employees on all levels. "We have an informed, intelligent and caring board," said Barton, adding that "they have made history." The credit union was the first in the area to offer new services such as health savings accounts and a payday loan alternative that Barton estimates saves members more than $1 million a year in fees. The payday loan alternative is so successful that the Federal Deposit Insurance Corp. asked Barton to speak at a seminar for community banks about developing such a service. "None of this would have happened if our board members hadn't approved our initiatives," he said. Barton has seen changes in the economy and increased regulations that led Gateway Metro Federal to adopt new growth strategies two years ago. The biggest change is in the relationship between a credit union and its members, he said. When credit unions served employee groups, there was commitment on both sides--by the credit union and the member--but some of that has been lost as credit unions expanded into the community. He tries to bring the commitment full circle by rewarding members with multiple account relationships with the credit union. For example, if members commit to checking with direct deposit, they get advantages such as 6.02% annual percentage yield on checking accounts and other privileges. "Bigger is not better if members don't fully participate," he said. Total membership has fallen to 18,000 from 22,000 since the new strategy was implemented. However, checking account penetration rose to 50% from 33% . Loans grew substantially; assets grew despite membership loss. It also has taken measures to attract younger members through consolidating with small parish credit unions --such as Guadalupan CU, a small credit union in a Catholic elementary school in a less-than-prosperous neighborhood in North St. Louis County. It had financial issues and up to 10 credit unions passed on the merger, but Gateway Metro Federal saw an opportunity to serve a largely Hispanic membership and to provide elementary school children with financial education. "Most institutions wait until kids are out of college before they contact them. That's too late," said Barton. "High school is probably too late. We need to start educating them in elementary school so they can grow up to be responsible money managers." The credit union now has branches in three elementary schools and two high schools, the only such credit union branches in the state. The credit union translates materials into Spanish and has a Spanish-language website. Members of the Hispanic community have embraced the credit union as their financial institution--an example of how the credit union has spread its philosophy, "We are here to change members' lives."

NASCUS lauds Michigans retiring regulator

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ARLINGTON, Va. (12/29/10)--Longtime National Association of State Credit Union Supervisors (NASCUS) board member Roger Little is retiring from his state regulatory career Jan 1. Little, the deputy commissioner of credit unions for the Michigan Office of Financial and Insurance Regulation, has been a NASCUS board member for more than 12 years, and is a past chairman. “Roger has made significant contributions to NASCUS as an organization and to the state credit union system during this state regulatory career,” said Mary Martha Fortney, president/CEO of NASCUS. “On behalf of state regulators and NASCUS, we thank Roger for his service to NASCUS and commitment to state’s rights and the strength of the state credit union charter.” Little has served on the NASCUS board since 1999, and was chairman from 2003-2005. He was also active in the NASCUS Accreditation Program, serving on a number of accreditation review teams. Little has testified before committees in the U.S. House and Senate during his involvement with NASCUS, and has co-authored a NASCUS white paper. He began his career at the Michigan agency in 1984 as a credit union examiner. He later served as an examiner supervisor before assuming the role as deputy commissioner where he was responsible for the oversight of Michigan’s more than 200 state-chartered credit unions.

IDetroit NewsI Down economy lifts up CUs

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LANSING, Mich. (12/29/10)--With the restructuring of the auto industry, Michigan has felt the effects of the recession as directly as any state in the country. But Michigan residents have turned to credit unions in their time of need, says the Detroit News (Dec. 25). Michigan credit unions added more than 50,000 members in 2010, the second straight year it has surpassed that figure By comparison, that’s nearly three times the 17,000 members added in 2008, the article said. Michigan had 4.5 million credit union members as of the end of September, and 44% of the state’s residents do at least some of their banking at credit unions, the Michigan Credit Union League told the newspaper. Among the 10 most populous states, Michigan has the highest rate of credit union membership. Consumers have displayed a willingness to change financial institutions nationally as well., a website which encourages consumers to move their money out of larger financial institutions into community banks and credit unions, earlier this year estimated that two million consumers had transferred $5 billion from big banks to community financial institutions, like credit unions. A Zogby International poll in February indicated that 9% of U.S. adults had expressed disapproval of big banks by moving at least some of their accounts to community financial institutions such as credit unions.

CU System briefs (12/28/2010)

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* DAYTONA BEACH, Fla. (12/29/10)--Two men, one an employee of the Daytona Beach News-Journal, have been charged with grand theft of an automobile and burglary after allegedly stealing a credit union's ATM housed at the News-Journal building. Charged were Jamie Greene, 40, a 15-year employee of the newspaper's packaging department, and Nick Ordway, 31. Police said Greene left work at about 3 a.m. Monday and returned an hour later, covered a surveillance camera and cut the wires to the Space Coast CU ATM before unbolting it from the concrete floor. The thieves use a dolly to roll it to a News-Journal forklift, which carried the 685-pound ATM to a newspaper van, which was driven to a residence. A neighbor saw sparks coming from the rear of the vehicle and called police. The thieves were not able to break the ATM cash box, which contained $24,000 … * HARRISBURG, Pa. (12/29/10)--Philadelphia-based American Heritage FCU and CEO Bruce Foulke sponsored a meet and greet Wednesday for newly elected U.S. Rep. Mike Fitzpatrick, according to the Pennsylvania Credit Union Association (PCUA). About 20 credit union and community leaders attended (Life is a Highway Dec. 23). Fitzpatrick will be the sole Pennsylvania representative on the House Financial Services Committee, said PCUA. Foulke and PCUA President/CEO Jim McCormack led a question and answer discussion, which centered on the debit interchange amendment and the unintended consequences to consumers. Fitzpatrick was receptive to the comments and appreciated the information, PCUA said … * TULSA, Okla. (12/29/10)--Tulsa Teachers CU (TTCU) President/CEO Leslie W. Rector announced that he will retire on Sept. 30, after 26 years with the credit union, 15 of them as CEO. He joined TTCU in November 1985 as vice president of operations and was promoted to executive vice president in 1990. Rector became president in 1996. During his tenure, TTCU grew to $979 million in assets from $155 million. Last year the credit union announced record asset growth along with strong capital reserves of 13.8%, which was attributed to an aggressive branching program. It is constructing its 13th branch. He also instituted the credit union's $14.3 million bonus dividend and rewards program. Rector also served on the Oklahoma State Credit Union Board, the Oklahoma Credit Union League (now CUAOK) Board, the Oklahoma Credit Union Shared Service Centers Board, and the Oklahoma Credit Union PAC Board. In March he received CUAOK's Lifetime Achievement Award. Upon retirement, he plans to return to school to become a drug and alcohol counselor …