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Dykstra calls for data security action at assembly hearing

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SACRAMENTO, Calif. (2/19/14)--Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues, urged legislators to take action to reduce consumer credit data breaches in testimony during Tuesday's special joint informational hearing of the California Assembly Judiciary and Banking and Finance Committees on personal data.
Citing Credit Union National Association statistics, Dykstra noted the Target credit card data breach has cost the nation's credit unions more than $30 million before fraud costs were taken into account. Also, 4.6 million cards were reissued by credit unions at an average cost of $5.68 per affected card.
California's credit unions have been swarmed by consumer calls about their personal data, requiring the non-profit, member-owned organizations to absorb millions in additional costs, she said.
Dykstra urged the panel to incentivize retailers and third parties they contract with to better protect consumer data with tougher laws.

She referred to stricter laws in other states that shift the liability and levy penalties onto retailers responsible for data breaches--noting there are 46 states with disparate laws enacted to reduce data breaches. Nevada, Washington and Minnesota are among the states that have stricter laws than California.
"Where California has stopped, some other states have kept going to address the inequities and lack of responsibility that currently exists in the system," she noted. "Retailers have no real security standards, no financial responsibility when a breach occurs and no mandate to notify the public and hinder the financial institutions' ability to inform the consumer where the breach occurred. Unfortunately, both state and federal law as it exists today, allows merchants to abandon that responsibility, leaving consumers exposed."
Co-chaired by Assemblymen Roger Dickinson (D-Sacramento) and Robert Wieckowski (D-Fremont), the special joint committee information hearing focused on ways to prevent future personal data breaches. In addition to Dykstra, representatives from the banking industry, consumer groups, retailers, and credit card industries also testified.

On the federal level, the Credit Union National Association has urged the U.S. Congress to take a broad look at how consumer data is secured and the improvements that are necessary to prevent future breaches.

In a statement submitted for a Senate hearing, CUNA President/CEO Bill Cheney wrote, "Data breaches occur, in part, because merchants are not required to adhere to the same statutory data security standards that credit unions and other financial institutions must follow, and merchants are rarely held accountable for the costs others incur as a result of the breaches.

"All participants in the payment process have a shared responsibility to protect consumer data, but the law and the incentive structure today allows merchants to abdicate that responsibility, making consumers vulnerable."

CU System briefs (02/19/2014)

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  • FARMERS BRANCH, Texas (2/19/14)-- Oklahoma Gov. Mary Fallin (R) will be a guest speaker at the Oklahoma Governmental Affairs Conference . Fallin, who was elected governor in 2010, will join attendees during the legislative prep session at the Capitol ( Leaguer Feb. 18). The one-day GAC, which includes a breakfast with legislators, will be held at the Credit Union House of Oklahoma in Oklahoma City March 11 ...
  • BOSTON (2/19/14)-- Credit unions' tax status and student loans were among the topics discussed by U.S. Sen. Elizabeth Warren (D-Mass.) and Massachusetts Credit Union League President Paul Gentile during his visit to her Boston office Friday ( Daily CU Scan Feb. 18). They also discussed data breaches, member business loans and supplemental capital.  "The senator is clearly very well-acquainted with our issues, and we had a very productive meeting," Gentile said (Photo provided by Massachusetts Credit Union League) ...
  • FARMERS BRANCH, Texas (2/19/14)--Two Texarkana, Ark., credit unions announced their merger agreement. On Feb. 6, the members of Miller County Teachers FCU, $3.3 million in assets, voted in favor of the merger with $105 million-asset Mil-Way FCU ( Leaguer Feb. 18). Mil-Way FCU will have about 1,400 members after the merger. Rena Kirvin, CEO of Miller County Teachers FCU, will retire ...
  • SAN ANTONIO (2/19/14)-- The National Association of Credit Union Chairmen is accepting scholarship applications to attend its leadership development seminar June 29-July 1 in Baltimore. The Norma Benson Memorial Scholarship will go to a chairman from a credit union with less than $25 million in assets. Benson was an avid supporter of NACUC, also known as the Chairmen's Group, and past chairwoman of $393 million-asset Matanuska Valley FCU, Palmer, Alaska ...

Small CU crushes BofA at breach notification, says reporter

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NEW YORK (2/19/14)--Credit unions' commitment to member service was driven home by a phone call from a CEO to a member after the discovery of the Target data security breach.
The member happened to be a reporter for a financial trade publication and a customer of Bank of America. What he encountered was a personal and "ultimately more comforting" message than what he received from the bank.
In a first-person account Tuesday, American Banker reporter Andy Peters detailed what made the interaction with Atlanta-based BOND Community FCU so special. Ruth Artis, CEO of the $40 million-asset credit union, called him directly. She informed him that his debit card had been compromised in the Target data breach, and a replacement card would arrive in a couple of weeks.
Compare that to the automated voice mail left behind by Bank of America's card services subsidiary, after which Peters tried to follow up with the customer service line. The agent would only share that the card had been affected by fraud at an "undisclosed retailer" and did not give a time frame of when the fraud occurred.
The large bank lost an opportunity to gain a consumer's confidence, according to Shirley Inscoe, a senior analyst at Aite Group.
Poor communication about fraud hurts a financial institution's business, she said, adding that consumers will put replacement cards in the back of their wallets or even stop using them completely.
And Artis' personal phone calls to the credit union's members?
"I can't imagine that anything else would rank above that," Inscoe told Peters. "That has to be the ultimate in customer service."

Half of couples don't share financial info, TransUnion finds

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FARMERS BRANCH, Texas (2/19/14)--About a quarter of Americans polled don't discuss personal finances with their significant other, "because it's none of their business," according a recent survey by TransUnion.
Another 7.8% said they don't think couples should discuss personal finances until after they are married, reported the Cornerstone Credit Union Foundation, the public charity of the Cornerstone Credit Union League, which serves credit unions in Texas, Oklahoma and Arkansas ( Leaguer Feb. 17)
Another 45% of married Americans surveyed said they do not know their partner's credit score.
"Mind your own business," is not a good financial strategy for couples, said Courtney Moran, executive director of the foundation.

"Of course couples should have frank and honest conversations about personal finance before--not after--they marry. When you get married, how your partner manages debt, assets and credit impacts you as a couple. If one person in the marriage is credit challenged, for example, it could impact the couple's ability to obtain joint credit. If one person is a saver and the other is a spender, it could lead to conflict in the marriage."
Before marriage, Moran encourages couples to:
  • Talk about assets, as well as debts;
  • Discuss savings and spending habits;
  • Be honest and open about credit histories;
  • Know each others' short and long-term financial goals; and
  • Share thoughts on how the finances should be handled after marriage--with joint or separate accounts.
"Being honest and upfront about personal finances before you walk down the aisle will help to ensure a more harmonious union," Moran added.

LSCU report shows success of consolidation

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TALLAHASSEE, Fla. (2/19/14)--The League of Southeastern Credit Unions (LSCU) released its annual self-assessment, which shows what the league did for its member credit unions regarding governmental affairs, education, cooperative initiatives and communications.
"What you see more than anything is that consolidating the Alabama and Florida Leagues has been a success," said LSCU President/CEO Patrick La Pine ( eSignal Feb. 17). The league returned a 10% dues rebate worth $310,000--the first in its history. Its service corporation, LEVERAGE, shared more than $100,000 in patronage dividends to Alabama and Mississippi credit unions.
The league ended 2013 with an 84% affiliation rate and 11 new member credit unions.
"Our two states and the movement are stronger because we work cooperatively together," La Pine said.
Other highlights from 2013:
  • Generated more than 120,000 unique contacts to Congress for the "Don't Tax My Credit Union" campaign;
  • Created the Alabama Credit Union Association and Florida Credit Union Association brands to raise state identity for advocacy efforts;
  • Drafted 19 comment call letters on federal regulatory proposals on behalf of credit unions;
  • Offered 103 webinars, training 837 people on compliance, lending and operations;
  • Partnered with the National Credit Union Administration for a small credit union boot camp in Birmingham, Ala., that drew more than 100 attendees from five states;
  • Presented CU Philosophy in Action Workshop highlighting cooperative principles of credit unions;
  • Raised more than $500,000 for Children's Miracle Network Hospitals through Alabama and Florida credit unions;
  • Introduced eSignal Daily to better inform credit unions of timely industry news; and
  • Added auditing, compliance and human resources services to its LEVERAGE offerings.

Cupid's bow busy with Valentine's Day card use

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RANCHO CUCAMONGA, Calif. (2/19/14)--Cupid must have been helping credit union members choose chocolate and "Cake Boss" during Valentine's Day shopping. Analysis of debit and credit transactions by card-holding credit union members showed a 19% increase across 16 types of merchants compared with last year.
According to CO-OP Financial Services Total Revelation's report, this year members spent more money on restaurants; cable, satellite and other pay television services; and groceries than they did in 2013.
Stan Hollen, CO-OP Financial Services President/CEO, said, "Valentine's Day this year happened to fall on the Friday before the three-day President's Day weekend, which perhaps fueled additional spending on what is normally a busy day for merchants."
CO-OP Total Revelation's analysis also found:
  • Restaurants saw a 20% percent increase in dollars spent compared with 2013;
  • Cable, satellite and other pay television services rose by 28%.
  • Grocery stores experienced the most sales in 2014 with 3 million separate transactions and $135 million in spend--a 17% increase year over year; and
  • Individual number of cash withdrawals increased by 18%.

Ore. legislative lunch sweetens relationships with lawmakers

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BEAVERTON, Ore. (2/19/14)--Oregon credit union advocates were easy to identify at the State Capitol Thursday. They wore bright yellow scarves and extended greetings with specially designed cookies featuring a silhouette of Oregon and birthday wishes to the state. During a very busy day in a short legislative session, Oregon credit unions were noticed, their stories were shared, and their message was heard.
Click to view larger image Pam Leavitt, the Northwest Credit Union Association's policy adviser for Oregon advocacy, sports one of the bright yellow scarves that Oregon credit union advocates wore in Salem Thursday.
More than 50 representatives from Oregon credit unions attended Legislative Lunch at the Capitol, where they heard from Pam Leavitt, the Northwest Credit Union Association's policy adviser for Oregon advocacy; several state legislators, including Sen. Ted Ferrioli (R-Creswell); and Patrick Allen, the director of the Department of Consumer and Business Services.
Most of the day was spent meeting with legislators and their aides in Capitol offices or in hallways outside the House and Senate chambers. For only the second time in the state's history, the Oregon Legislature is meeting for a short, 35-day session in 2014.
During longer sessions in odd-numbered years, the NWCUA sponsors a full Credit Union Day at the Capitol, including a financial reality fair and other special events. This year's tight schedule means not only that many of the most contentious bills may not be addressed, but also lawmakers will be more difficult to contact.
So when a weary Senate President Peter Courtney (D-Salem) stepped onto an elevator between legislative meetings, a cookie and kind words he received from Southern Oregon credit union advocates were an important contact, Leavitt said. 
"The goal isn't necessarily to meet with legislators," Leavitt said, "but just to say hello. We want them to know that we are in the Capitol today, and that credit union advocates will stay engaged every year in the legislative process."
Click to view larger image Representatives from Rogue CU, Medford, and Pacific Crest FCU, Klamath Falls, met with state Sen. Doug Whitsett (R-28), left. (Photos provided by Northwest Credit Union Association)
NWCUA President/CEO Troy Stang joined Mike Tierney, online banking manager at Unitus Community CU, Portland, for a visit to Barbara Smith Warner (D-Portland), the new state representative from Northeast Portland. "My dad once said, 'Open an account at a credit union and never close it,'" Smith Warner told them.
Representatives from Rogue CU, Medford--including Laura Chadick, mortgage delivery manager; Bruce Hearnsberger, senior relationship manger; and Andrew Staley, financial adviser--joined Kathie Philp, president/CEO of Pacific Crest FCU, Klamath Falls, for afternoon meetings with Sens. Herman Baertschiger Jr. (R-Grants Pass) and Doug Whitsett (R-Klamath Falls).
Rachel Pross, the director of compliance and legislative affairs at Northwest Community CU, Springfield, and Jim McCarthy, president/CEO of Trailhead CU, Portland, delivered cookies and shared the credit union message with Reps. Val Hoyle (D-West Eugene/Junction City) and Paul Holvey (D-Eugene) and Sen. Chris Edwards (D-Eugene).
The advocates' efforts--and the cookies--appeared to have made an impression. During the afternoon Leavitt received a text message from House Speaker Tina Kotek (D-Portland) that read: "Thanks for the cookie."