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Breaches expose flaws in data privacy laws

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BOSTON (4/1/08)--Credit unions backing state privacy and data breach bills might want to check the bills they're supporting for loopholes such as one exposed in Massachusetts' new data privacy law when grocer chain Hannaford Bros. disclosed a sophisticated first-of-its-kind data breach. The Massachusetts statute, like many other similar statutes, requires companies to notify state officials and residents when they lose control of records that could lead to the theft of personal information such as a person's name and credit card number. State officials say the law applied in the case of the Hannaford breach, according to the Boston Globe (March 30). Even though it disclosed the breach, Hannaford says it was not required to make such a disclosure, even after it learned the information from the cards was sent overseas. Hannaford's General Counsel Emily D. Dickinson wrote in a letter to Massachusetts Attorney General Martha Coakley and the state Office of Consumer Affairs and Business Regulation that the loss of card numbers alone does not amount to loss of personal information, as defined by Massachusetts law. She added that Hannaford's notice to regulators was a form of voluntary cooperation. The company did not believe that notice of the breach was required. Thirty nine states have laws requiring some form of disclosure following a breach. Most say the companies involved must file reports when they lose card data with customers' names and other personal details. They don't address what happens when a company experiences the loss of just numbers, without the customers' names, as happened in the Hannaford breach. Most laws include names and data because together they constitute potential identity theft, said Chris Hoofnagle, a specialist in privacy law at the University of California. Hoofnagle told the Globe that losing only numbers is considered less threatening because there's less chance of abuse and because card issuers often forgive many fraudulent charges. Hannaford revealed on March 17 that 300 stores in its system were compromised by a first-of-its-kind data breach that illicitly placed software on the stores' servers and lifted credit and card numbers and expiration dates of 4.2 million customers. The breach was discovered on Feb. 27. It disclosed the details in stages, through a press release, a statement on its website, and the letter to the Massachusetts regulators.

Bill Sterner chairman of CU Association of Colorado dies

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ARVADA, Colo. (4/1/08)—Bill Sterner, president/CEO of Elevations CU in Boulder, Colo., died Monday following a heart attack on Friday. Sterner, 66, was board chairman of the Credit Union Association of Colorado (CUAC) and of Credit Union Strategic Partners, the service corporation for CUAC. He was attending CUAC’s annual Legislative Forum at the State Capitol in Denver when he was stricken. He had been CEO of Elevations CU since 2000 after joining the credit union as vice president of marketing in 1997. Under his leadership, Elevations grew from $340 million to more than $790 million in assets, with more than 75,000 members. During his 46-year career, Sterner held management positions with the Credit Union National Association, the California Credit Union League, the Kansas Credit Union Association, and the World Council of Credit Unions. John Dill, president/CEO of CUAC, said Sterner “embodies the credit union philosophy of ‘People Helping People’ in his chairmanship of CUAC, his service to our entire credit union movement in Colorado, and the national stature he brought to our state association.” He noted that “all of us at the association are saddened by his loss and will miss his friendship and leadership.” Doug Ferraro, president/CEO of Bellco CU and vice chairman of the CUAC Board, has been named acting CUAC chairman for the remainder of Sterner’s term. Sterner also served on the board of directors of SunCorp CU and the Credit Union Service Network. Elevations CU has named an acting CEO. The credit union’s board will meet Thursday to appoint an interim CEO.

White papers focus on branch design and salesservice

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MADISON, Wis. (4/1/08)--Atypical approaches to designing a credit union branch and strategies for building a sales and service culture are the topics of two new white papers from the CUNA Councils. “Rethinking Branch Design: Strategies for Non-Traditional Approaches to Branch Design and Operations” from the CUNA Operations, Sales, and Service Council offers a look into how and why credit unions are developing experimental approaches to designing their “right” branch. The paper identifies trends and marketplace pressures that lead to new approaches. It also explores why credit unions have created non-traditional designs--to improve member relations, to create a service culture, to improve operating efficiency, or to meet other strategic objectives--and offers case studies and photos. “Building a Sales and Service Culture,” sponsored by the CUNA Marketing and Business Development Council, identifies different approaches and considerations to implementing a sales and service environment. The paper addresses staffing, incentive plans, operations support, technology, and measuring success. It also offers advice from six credit unions on their approaches.

CU System briefs (03/31/2008)

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* NORTHVILLE TOWNSHIP, Mich. (4/1/08)--Eight lawmakers and 70 credit union people turned out for a legislative breakfast hosted by the Mid-Michigan chapter of credit unions, according to the Michigan Credit Union League (Michigan Monitor March 31). Attending were State Sens. Roger Kahn (R-Saginaw Township) and Tony Stamas (R-Midland) and state Reps. Terry Brown (D-Pigeon), Bill Caul (R-Mt. Pleasant), Ken Horn (shown here) (R-Frankenmuth), Jeff Mayes (D-Bay City), John Moolenaar (R-Midland), and Tim Moore (R-Farwell). Stamas told the group he appreciated "your activism, legislatively and in the community" and "your commitment to financial literacy, which is something we need to do more of." Rep. Caul, a long-time supporter of credit unions and regular participant in the league's Financial Literacy Legislative Challenge, noted, "My family and I have been members of Isabella Community CU for over 40 years. I know firsthand what you do--thank you for being responsible lenders and friends to your local community." (Photo provided by the Michigan Credit Union League) … * KANSAS CITY, Mo. (4/1/08)--Mazuma CU President Rob Givens met recently with U.S. Rep. Emanuel Cleaver (D-District 5) in Kansas City during the congressional recess, according to the Missouri Credit Union Association (Legislative Updates March 28). He also met with Cleaver's legislative staff, including his new Chief of Staff Leslie Woolley, based in Washington, D.C., at a reception and luncheon sponsored by the Kansas City Chamber of Commerce. Givens said he emphasized the importance of the Credit Union Regulatory Improvements Act (CURIA) and encouraged Cleaver's support. Cleaver is one of two Missouri congressmen serving on the House Financial Services Committee, which recently held a hearing on credit union regulatory relief … * MINNEAPOLIS (4/1/08)--Twin City Co-ops FCU, Minnesota's fifth-largest credit union, has changed its name to Spire FCU. The name was chosen because it means the top point or summit of something. "We chose a name that speaks to where we are going, not where we have been," said President/CEO John Gisler. "We wanted a name that was strong, had meaning behind it and did not narrowly define us geographically." Spire FCU has more than $574.8 million in assets … * KOKOMO, Ind. (4/1/08)--Transmission Builders FCU has changed its name to Financial Builders FCU, effective today. The change reflects the credit union's community charter and county-wide open membership eligibility. According to Judy Drinkard, Financial Builders vice president of marketing, a new ad campaign next week will focus "on reminding members and potential members that Financial Builders wants to be a financial partner, through thick and thin, and at every stage of life." Financial Builders FCU has more than $66.8 million in assets … * VINELAND, N.J. (4/1/08)--John E. Lisi, treasurer of Bay Atlantic FCU, died recently, according to the New Jersey Credit Union League (The Weekly Exchange March 28). He was 64. Lisi began volunteering with BAFCU in March 1975 as a member of its supervisory committee. He joined the board in 1976 and served as treasurer for several terms. He was employed for 37 years at Kimble Glass Co. More recently, he was a teacher and tax preparer for H&R Block. He is survived by his wife, Ellen; three children; and four grandchildren …

Vermont CUs have busy day with state officials

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MONTPELIER, Vt. (4/1/08)--More than 20 credit union employees and volunteers “hiked” into the Vermont statehouse in Montpelier Tuesday, drawing the attention of dozens of legislators and three prominent leaders of Vermont state government.
More than 20 credit union employees and volunteers “hiked” into the Vermont statehouse in Montpelier Tuesday, drawing the attention of dozens of legislators and three prominent leaders of Vermont state government. (Photo provided by the Credit Union Association of Vermont)
Although the legislators appreciation reception drew the most attention, a private, closed-door meeting of credit union leaders were addressed, in succession, by Republican Gov. Jim Douglas, Democratic Senate President Pro Tempore Peter Shumlin, and Democratic Speaker of the House Gaye Symington (Newslines Express March 28). The day began with testimony by Credit Union Association of Vermont President Joe Bergeron in the Vermont Senate Finance Committee. Bergeron provided the committee with information on the state of Vermont’s credit unions and touched on the costs that credit unions must bear as a result of the Hannaford card breach, the Maine-based grocery chain data breach announced March 17. He also provided testimony on two bills that the association was asked to testify on in the House Commerce Committee: H. 563 seeks to modernize a part of the Uniform Commercial Code, and H. 458 relate to digital corporate transactions. Bergeron also spoke before the House Commerce Committee, regarding the Hannaford breach. “Bottom line … no matter how [the Hannaford breach] is being handled, it’s unpleasant and unacceptable for consumers, and very costly for card-issuing institutions,” Bergeron said. “In all cases, cardholders are protected if fraudulent activity does occur, if they inform their financial institution … but it’s a huge inconvenience, creates distrust in cardholders’ minds, and costs all of us money directly or indirectly.”

Youth Week just around the corner

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MADISON, Wis. (4/1/08)--National Credit Union Youth Week is soon approaching, and credit unions who haven’t already registered for the National Youth Saving Challenge can do so on the Credit Union National Association (CUNA) website. This year’s Youth Week, with the theme of “Got Green? Grow it at Your Credit Union,” will take place April 20-26. “Each year National Credit Union Youth Week gives the movement the opportunity to get young members excited about saving money to reach personal financial goals,” said Phil Heckman, CUNA director of youth programs. “It's the perfect opportunity to kick start the next generation's savings habit.” Credit unions also can sign up for the National Youth Saving Challenge, which is an opportunity for credit unions to invite youth to open new accounts and deposit money. CUNA also will award 10 credit unions $100 each for their youth. Four hundred credit unions have registered, and the credit unions said they expect to see about 74,000 youth deposit $7.4 million during the event. “If kids and teenagers at participating credit unions can break last year's Saving Challenge record of $10 million during the week--well, that wouldn't hurt our argument that credit unions are different, would it?” Heckman added. Credit unions also can sign up for e-News, which will be sent throughout April. The messages provide tips for celebrating Youth Week and setting goals for the saving challenge, and share suggestions from credit unions. Some credit unions, such as Hawaii Community FCU, Kealakekua, have added Youth Week information to their home pages. 1st Financial FCU, St. Charles, Mo., is celebrating Youth Week with coloring and essay contests for youth club members 12 years and younger. The coloring contest winner will receive a $50 savings bond. The essay winner will receive a hand-held game system and have the essay published in the youth club newsletter (CourierNet March 19). Electro Savings CU, St. Louis, is partnering with the Maryland Heights Department of Parks and Recreation during Youth Week to encourage recycling. The credit union will add one cent to youth’s accounts for every two plastic grocery bags brought in. Postal Federal Community CU, Springfield, Mo., also is donating $1 for each youth deposit made during the week to Ozark Greenways, a nonprofit organization that works to preserve the Ozark Mountains. Youth Week promotional materials, such as posters, statement stuffers, clothing and drive-up envelopes, are available. For more information or to register, use the link.

Minnesota network hosts international visitors

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ST. PAUL, Minn. (4/1/08)--The Minnesota Credit Union Network (MnCUN) hosted participants of the International Visitor Leadership Program (IVLP) Thursday as part of the group’s three-week visit to the U.S.
International Visitor Leadership Program participants from Bosnia, Costa Rica, South Africa, Taiwan, Tanzania, Turkey and Zimbabwe met with the Minnesota Credit Union Network Thursday. (Photo provided by the Minnesota Credit Union Network)
Seven international professionals visited the Minnesota MnCUN in St. Paul to discuss the difference between cooperative financial institutions and for-profit financial institutions in the U.S. and to learn about credit unions’ involvement in their communities. IVLP participants were from Bosnia, Costa Rica, South Africa, Taiwan, Tanzania, Turkey and Zimbabwe. This is the third year MnCUN has participated in an IVLP visit. MnCUN staff provided an overview of the network, the history of the credit union movement, core characteristics of credit unions, and the main operational and philosophical ways credit unions differ from banks. Hiway FCU President Jeff Schwalen also spoke to the group about how credit unions are involved in their communities. He shared various ways the St. Paul-based, $705.2 million asset credit union serves the underserved areas in its field of membership. In particular, Schwalen discussed how the credit union has focused on reaching out to the Hmong community to earn their trust. “The unique thing about our credit union is that we are locally owned and chartered,” he said. “As a result, we are able to personalize our service and modify our services so that they meet the unique characteristics of our members.” Mark D. Cummins, MnCUN president/CEO, said: “I was impressed by their inquisitive nature and their desire to learn about credit unions. It was a privilege to hear about the financial institutions in their home countries and to aid in their understanding of the credit union movement in the U.S.”

National Financial Literacy Month begins today

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MADISON, Wis. (4/1/08)--April Fool's Day may start out National Financial Literacy Month but financial literacy is no joke. The national average financial literacy skills score for 12th graders in 305 high schools nationwide was 52.4%, with only 6.9% of students receiving a "C" grade or better, according to a 2006 survey by the national Jump$tart Coalition for Personal Financial Education These aren't the latest statistics. The results of the coalition's 2008 Survey of Personal Financial Literacy Among High School Students--conducted this past fall and winter--will be released at a press conference on April 9 as part of National Financial Literacy Month. As governors and legislatures polish their proclamations and resolutions, credit unions and other organizations already are working on the front lines to improve financial literacy skills. According to the Credit Union National Association's (CUNA) Financial Literacy Task Force, nearly 80% of credit unions with assets of $10 million or more offer financial education to adults or youth, while more than half provide financial education to both. Credit unions with $50 million or more in assets are more likely to offer financial literacy programs than they were in 2005. Credit unions in several states are working for state laws requiring a financial literacy component in state schools. For example, the North Carolina General Assembly has required personal financial literacy be provided all public high school students beginning next fall for 10th graders' civics and economics curriculum. In many states, credit unions are an integral part of the education programs in local schools, either providing materials for the curriculum through the National Endowment for Financial Education or training the teachers. Elsewhere, credit unions are partnering with lawmakers to hone financial skills of students of all ages. The Michigan Credit Union League's Sixth Annual Financial Literacy Legislative Challenge partners Michigan lawmakers with credit unions and schools to co-present the curriculum (Michigan Monitor March 31). Credit unions also will highlight financial literacy during National Credit Union Youth Week April 20-26. See "Youth Week just around the corner" in News Now's System News section. Meanwhile, credit unions will see a number of proclamations to raise awareness. California Gov. Arnold Schwarzenegger proclaimed April as "Financial Aid and Literacy Month" last week. North Carolina Gov. Michael Easley proclaimed the month as "Financial Literacy for Youth Month." Washington State Gov. Chris Gregoire also proclaimed the month "Financial Literacy Month."

Second teen arrested in Virginia interstate CU shootings

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CROZET, Va. (4/1/08)--A second teenager was arrested Friday in the police search for shooters who fired gunshots at passing cars on Interstate 64 between Waynesboro and Charlottesville, Va., and into a credit union while it was closed Thursday morning. Authorities arrested the 16-year-old teen whose name was not released, after storming a central Virginia farm (The Knoxville News Sentinel March 29). Earlier, another man, Slade A. Woodson, 19, of Afton, Va., was arrested, announced Virginia State Police Friday. He was charged with shooting at a residence in Waynesboro and at the DuPont Community CU, Waynesboro (News Now March 31). Because investigators said the shooters slightly injured two drivers, Woodson and the other teen were charged with two felony counts of malicious wounding, one count of attempted malicious wounding, two counts of the use of a firearm in felony, and five counts of a malicious shooting at an occupied vehicle. The credit union in Waynesboro, reported the vandalism at its Lucy Lane office Thursday morning. "During the night, while the office was closed, random shots were fired at the building and a vehicle on the premises," Jackie L. Cason, vice president of human resources, told News Now Friday. The incident was discovered Thursday morning when the credit union opened for business. Because it occurred overnight and not during business hours, DCCU conducted "business as usual" on Thursday. "No credit union employees or members were involved or affected by this event," Cason said. She said at least four bullets struck the building, a sign and an unoccupied van in the parking lot. One went through an exterior window into an office, she told News Now.

Arizona Antigua CU leagues sign partnership pact

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PHOENIX (4/1/08)--The Arizona Credit Union System (ACUS) signed a partnership agreement this week with the Antigua & Barbuda Cooperative Credit Union League to help the Caribbean island nation better serve its affiliated credit unions.
Elis Southwell (left), president, Antigua & Barbuda Cooperative Credit Union League, and Scott Earl, president/CEO, Arizona Credit Union System, sign an international partnership between the two organizations.
Delegates from the Antigua & Barbuda Cooperative Credit Union League visit the $1.108 billion asset Arizona State CU, Phoenix, one of the state’s largest credit unions. (Photos provided by World Council of Credit Unions)
The partnership agreement was arranged through the World Council of Credit Unions (WOCCU) International Partnership program. Representatives from ACUS visited Antigua in June as the first step toward the agreement. Last week, ACUS hosted a delegation of five representatives from the Antigua league. Ellis Southwell, president of the Antigua League, and Scott Earl, president/CEO of ACUS, signed the agreement during the visit. “Credit unions, no matter where they are, are not that different,” Earl said. “The bottom line is that it is all about the member. Our goal is to work with the Antigua & Barbuda Credit Union League to institutionalize the organization and allow it to serve its member credit unions more efficiently.” The partnership will focus on strengthening the Antigua league through the development of new revenue streams and new products and services to be offered to its affiliated credit unions. Currently, the league relies on its volunteer board of directors, its volunteer supervisory committee and a dues-based structure to operate and serve affiliates. The league said it also would like to incorporate more training programs--especially for compliance issues--into its member service program. “The Antigua league is a small league with potential, and we believe that this partnership with the ACUS will help us unleash the possibilities and help us to develop ourselves so that we can assist our affiliates,” Southwell said.