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Mich. couple file more suits on ATM fee disclosures

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DETROIT (4/25/11)--A Michigan couple--who drive around looking for ATMs without proper fee-notification signs and then file class action lawsuits against financial institutions without the signs--filed four more lawsuits over ATM disclosures last week in Michigan. The latest batch are all against credit unions. The couple, Nancy Kinder and Ray Harrison of Fowlerville, Mich., claim in the lawsuits that nondisclosure of fees charged for transactions at ATMs violates Regulation E, the Electronics Funds Transfer Act, which has required institutions to post a notice in a prominent place on the ATM about fees. Court records indicate they travel the state by car and photograph ATMs without legal signage. They have sued 36 credit unions and bank in two years, according to Associated Press Newswires (April 22). Similar suits have been filed by others in other states as well. Kinder is involved in at least 11 cases the past two years, filed on her behalf by an attorney from Chevy Chase, Md., Geoffrey Bestor. The most recent cases--filed on April 18 in the U.S. District Court for the Eastern District of Michigan (Detroit)--are against:
* Lenco CU, Adrian, Mich., with $51 million assets; * Michigan Schools and Government CU, Clinton Township, with more than $1.04 billion assets; * Jackson (Mich.) Community FCU, $29 million assets; and * Northwood CU, Royal Oak, $20 million assets.
Other suits she has filed against credit unions include: ELGA CU, based in Burton, Mich., with $260 million assets, filed on April 16, 2010, and Sunrise Family CU, based in Bay City, Mich., with $90 million in assets, filed July 8, 2009. The case against Sunrise Family was closed on Oct. 21, 2010. Court records said the case "is dismissed with prejudice and without costs, sanctions or attorneys' fees awarded in favor or against either party." Kinder also has filed against these banks:
* United Bancorp Inc., filed Feb. 3, 2011; * Paramount Bank, filed June 29, 2010; * Bestbank, filed June 29, 2010 and closed Feb. 1, 2011; * Dearborn Federal Savings Bank, filed June 29; and * Community State Bankcorp, filed June 29, 2010, and closed Dec. 23, 2010.
The American Bankers Association told the Associated Press that the lawsuits are frivolous. In January, CUNA Mutual Group warned its policyholders of a "significant" spike in lawsuits against credit unions related to ATM fee disclosures. Twelve suits were filed between mid-December and the January (News Now Jan. 14). At that time, the insurance company said many credit unions sued erroneously believed that a fee notice sign was not necessary since the fee was disclosed on the terminal screen of the ATM. Some suits were prompted when institutions changed their fees but not their signs. Reg E requires credit unions to post a sign--in a prominent, conspicuous location on and at every ATM they own or operate--stating that a fee will or may apply. It does not require the actual fee to be placed on the sign. It also requires disclosing the fee on the terminal screen or paper notice before the consumer is committed to paying the fee. The fee should also appear on the transaction receipt. CUNA Mutual warned credit unions to develop and write procedures for inspecting their ATMs regularly to ensure the signs are intact, and to photograph the ATM at the time of inspection, maintain an inspection log for all ATMs and have management review the log. The log should include the location inspected, date, status of the sign (missing or present), action taken (replaced the sign) and initials of the employee performing the inspection. Also keep a supply of signs or stickers to replace missing ones, and periodically test the ATM with a non-credit-union-issued ATM network card or debit card to confirm the fee appears on the screen.

Two indicted for skimming four CUs affected

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FAYETTEVILLE, N.C. (4/25/11)--Two Russian immigrants were indicted Tuesday on charges of using skimming devices at three ATMs in Fayetteville, N.C., to steal data from debit and credit cards used at the machines. More than 60 people were affected. Four credit unions are among the seven financial institutions that lost funds. Sergei Fowler Marchant, 23, and Nikolay Andreyevich Volosov, 25, were indicted in a federal court in Fayetteville on charges of conspiracy to commit bank fraud and aggravated identity theft (Fayette Observer via April 22). Skimmers are electronic devices that record information stored on the magnetic stripe of a credit or debit card. The two men also are accused of installing camera to capture personal identification numbers. They allegedly used the stolen data to create counterfeit credit and debit cards, which were then used to make withdrawals from financial institutions in the area. The crimes occurred between May 1, 2009, and July 31, 2009. Among the credit unions affected: Fort Bragg, FCU, Pentagon FCU, State Employees' CU, and FAA CU. Also targeted were Bank of America, JP Morgan Chase and Wachovia banks. Marchant and Volosov are each charged with six counts of card theft with a scanning device, financial card forgery and identity theft, as well as three counts each of financial card fraud and two counts of misdemeanor financial card fraud, said the newspaper.

TCUF ready to assist wildfire victims

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FARMERS BRANCH, Texas (4/25/11)--The Texas Credit Union Foundation reminded the state's credit unions Friday that it stands "ready to assist" credit union employees affected by Texas wildfires during a drought. A massive wildfire was burning 70 miles west of Fort Worth on Wednesday, said USA Today (April 21). The blaze is one of several fires that have charred about one million acres across the state in the past two weeks. More than 340 people, including a federal team, the Texas Army National Guard and local personnel fought that blaze, which burned about 150,000 acres and destroyed 50 homes, said the newspaper. The foundation said it has two phases of grants available for credit union employees (LoneStar Leaguer April 22).
* Phase One Emergency Grants are provided to credit union employees to assist with immediate disaster relief needs such as out-of-pocket expenses from an evacuation. The intent of the $500 grants is to help stabilize employees' situation grants so they can return to work. * Phase Two Disaster Relief Grants assist credit union employees with significant needs after other forms of relief have been exhausted. Amounts granted are dependent of the amount of funds but usually are $1,000-$3,000. TCUF said the grants are implemented after Phase One Grants are distributed. The foundation will issue a call to the CEOs of affected credit unions for these grants.

Firm affirms CUNA Mutuals strength elevates outlook

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MADISON, Wis. (4/25/11)--Financial ratings agency A.M. Best has affirmed CUNA Mutual Group’s “A” (Excellent) financial strength rating and returned the company’s outlook to stable. The “A” rating applies to the principal companies of CUNA Mutual Group--CUNA Mutual Insurance Society, a life and health insurer, and CUMIS Insurance Society, Inc., a property and casualty subsidiary. The rating is the third highest rating of the 16 categories of ratings A.M. Best issues. “During these difficult economic times, CUNA Mutual has worked hard to keep premiums down, deliver greater value to credit unions and their members through our products and services, and still grow our company's financial strength,” said Jeff Post, president/CEO of CUNA Mutual. He said that “A.M. Best acknowledges our strong performance in affirming our rating and upgrading our outlook to stable.” The rating and improved outlook reflects CUNA Mutual’s solid capitalization and consistently positive operating gains, said A.M. Best, citing CUNA Mutual’s improvement in the overall quality of its balance sheet. A.M. Best also affirmed the “A-“ (Excellent) financial strength ratings of Producers Agriculture Insurance Company and Producers Lloyds Insurance Company (ProAg) with a stable outlook. A.M. Best cited ProAg’s historical operating profitability and strong agency relations in affirming these ratings. The financial strength rating of MEMBERS Life, a dormant downstream life company that is not core to CUNA Mutual’s operations, was affirmed at B++ (Good) with a stable outlook.

CUNAs Hampel analyzes inflation pressures for IFox BusinessI

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WASHINGTON (4/25/11)--Rising gas prices is a short-term phenomenon that is not enough to derail the economy, Credit Union National Association (CUNA) Chief Economist Bill Hampel told Fox Business during an interview Friday afternoon. In a segment entitled "Is inflation a real threat to economic recovery," Hampel provided an analysis of the inflationary pressures Gas prices are increasing to as high as $5.50 and $6 in Florida last week. "These work like an extra tax [on Americans]. Fortunately, gas is a small portion of all the prices we pay. It's the only one we see in big letters," he said, adding there is a psychological impact that may lead households to believe inflation is rising. "That's the portion of the household budget that is draining away. It's nasty, but not enough to derail the economy," Hampel said. That expectation of inflation just around the corner is "another hurdle to work through" and it "will slow the economy this year, but not enough to derail us back in a double dip recession," Hampel added. "Consumers are smarter than we think. The short-term inflations expectation by households is through the roof, but their long-term inflation expectations are not." Will the economy slow down? There are a lot of negative reports, but "the economy in the past six months has been building momentum," he said. "The employment situation is picking up. Consumers haven't been spending, but they have a lot of pent-up demand for cars and other durables, and businesses have a pent-up demand for capital goods." He noted households are paying down debt. He also noted the job market is picking up steam. After a loss of nine million jobs the past one and a half years, the nation has picked up another 1.5 million jobs. Hampel also addressed when the economy could be sustainable again without government stimulus. The Federal Reserve's policy making board that sets the fed target funds rate--the Federal Open Market Committee--will meet Tuesday and Wednesday. "I don't think the Fed is going to raise rates," he said. For that to happen, he added, the nation would need for the unemployment rate to go down toward 7.5%, and inflation would have to rise and stay for an extended time. He does not expect a rate increase before fourth quarter 2011 or first quarter 2012, he told Fox Business.

Union leaders to pull funds from five banks look to CUs

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ORLANDO, Fla. (4/25/11)--Labor leaders in Central Florida said Thursday they will pull their money out of five banks that support what they call "union-busting" legislation. Instead, they will move their money to community banks and credit unions. They also said they're advising thousands of union members to make the switch as well. Unions representing police, firefighters, teachers and white-collar and blue-collar workers announced at a news conference they will pull funds from Bank of America, PNC, Regions Bank, SunTrust and Wachovia (Orlando Sentinel April 22). Each bank is represented on the Florida Chamber of Commerce, which is advocating a measure moving through the state legislature that would prohibit state and local governments from collecting union dues through payroll deduction. Those involved in the news conference lead the International Association of Fire Fighters; the Fraternal Order of Police; the American Federation of State, County and Municipal Employees; Service Employees International Union and the AFL-CIO.

Filene report Will social media really help CUs grow

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MADISON, Wis. (4/25/11)--Organizations that aren’t on Twitter, Facebook or YouTube are at risk of becoming culturally obsolete, but do social media help organizations grow? The Filene Research Institute has released a report that looks for answers to that question from a credit union perspective. “The State of Social Media in Credit Unions: Opportunities and Challenges” is the front end of a yearlong study from Filene. The research, conducted for Filene by Crescendo Consulting Group LLC, examines the extent of social media usage among credit unions, highlights characteristics of credit unions currently using social media, and looks at practices that drive social media success. In the first report, respondents offer self-assessments or their success with social media. A second report, due out in early 2012, will use measurable changes--such as asset growth, increase share of wallet, increased membership—to measure social media success. Some of the highlights from the first report:
* Social media success comes with experience. Credit unions with more than two years of experience are most likely to report success (57%); those that have three months or less are least likely (17%). * There’s no substitute for time. Credit unions that spend more than eight hours per week on social media and those with more than 10 employees in the marketing department are by far the most likely to report successful programs. * Success with social media reflects other product and service and branding activity. Credit unions with updated logo or brand image campaigns reported increased social media success. Those launching five or more new products had similar results. * Successful social media campaigns are purposeful. Credit unions that say their social media goals align with the credit union’s strategic goals report the highest levels of success in their social media programs.
The report provides information from the baseline survey, conducted in late 2010, including a summary of the findings and their management implications. The study includes data from 187 credit unions of diverse sizes and membership compositions across the U.S. and Canada.

Oregon Senate passes updated CU Act

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SALEM, Ore. (4/25/11)--The Oregon Senate on Wednesday overwhelmingly approved an update to the Oregon Credit Union Act, making several changes to the state charter. While most are viewed as “housekeeping” measures, they seek to clarify and streamline some governance processes, according the Northwest Credit Union Association, which represents credit unions in Washington and Oregon. Among the elements of SB 177, which passed by a 27-1 vote, are amended requirements for meetings of board of directors, which will permit greater scheduling flexibility. The legislation exempts standard mortgage loans to directors or senior managers from the requirement for board approval, and adds safeguards for loans to directors and senior managers. SB 177 also increases the limit for loans to and investments in credit union service organizations to 5% of assets from 2% of assets. The legislation clarifies member voting rights for mergers and outlines procedures for members to communicate on a credit union merger. SB 177 had “such strong bi-partisan support,” in the Senate, said Pam Leavitt, Oregon state legislative director for association. “We will be working very hard to get this bill scheduled in a House Committee as soon as possible,” she added. Working under strict legislative guidelines, the bill must be scheduled for a hearing and work session before the end of May.

CU System briefs (04/22/2011)

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* BURLINGTON, Vt. (4/25/11)--About 35 credit union leaders gathered in the Vermont Statehouse Wednesday to discuss the credit union legislative agenda and meet with many of the state’s 180 elected officials. Participants listened to Senate President John Campbell (D), Speaker of the House Shap Smith (D), and Chair of the House Commerce Committee Bill Botzow (D). Attendees also heard about both state and national issues from Department of Banking, Insurance, Securities and Health Care Administration Deputy Commissioner Tom Candon; Association of Vermont Credit Unions (AVCU) President Joe Bergeron; and AVCU lead lobbyist Adam Necrason. The meetings were followed by AVCU’s annual Legislator Appreciation Reception where credit union leaders had the opportunity to meet individually with many state legislators … * COMPTON, Calif. (4/25/11)--Mid-Cities Financial CU met with the
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Los Angeles Small Business Administration (SBA) District Office and Advantage Certified Development Corporation (CDC) to discuss partnering on small business loans to help stimulate the local economy. Mid-Cities Financial CU was recently approved by the SBA District Office to offer SBA 7a loans for small business and 504 collateralized business loans. From left: Maricela Jauregui, Mid-Cities Financial CU branch manager; Bessie Griffin, community development manager; Melia Keller, president/CEO; Henry Perez, loan manager; Euhoe Park, SBA Los Angeles district office lead lender relations specialist; and Farooq Ahmad and David Ezaki, Advantage CDC business development officers (Photo provided by Mid-Cities Financial CU … * MADISON, Wis. (4/25/11)--The Worldwide Foundation for Credit Unions has teamed with the State Bank of Cross Plains, Wis., a local community bank, to raise funds for the Busia Compassionate Care Center, a Kenyan orphanage housing 67 orphans age three to 21, many of whom are HIV-positive. The orphanage is supported by the World Council of Credit Unions (WOCCU) and its Global Women's Leadership Network. The foundation entered a page on the bank's Champions for Charity website. The charity page receiving the most votes wins $1,000. To vote, enter the site and find the page with Pepi Dougherty (assistant to WOCCU chief operations officer and executive vice president Brian Branch) featured as a champion for the worldwide foundation. The foundation hopes to build a new orphanage with running water, a new school and a vocational trade center to help the children prepare for the future. The website will run through May 18 … * BANGOR, Maine (4/25/11)--Donovan W. Steen Jr., 20, of Bangor, Maine, was sentenced Thursday to eight years in prison, with all but three and a half years suspended, for robbing a credit union and stealing more than $4,000 in jewelry and computer equipment from his family. Steen pleaded guilty on March 24 to robbing the Bangor branch of Penobscot County FCU on Jan. 18 and taking the jewelry, which was recovered. Steen's mother called the police after the jewelry theft and he was arrested Jan. 19. After he completes the prison term, Steen must also serve three years' probation and pay $1,150 in restitution to the credit union (Bangor Daily News April 21 and Jan. 19) …

NACHA warns fraudulent e-mails continue

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WASHINGTON (4/25/11)--NACHA--The Electronic Payments Association said Friday that it has been receiving reports that individuals and companies continue to receive fraudulent e-mails that appear to be sent from NACHA. NACHA said the content of the e-mails varies, but they mistakenly appear to be transmitted from e-mail addresses associated with the NACHA domain ( Some bear the name of fictitious NACHA employees, departments, or both. "NACHA itself does not process nor touch the ACH (automated clearinghouse) transactions that flow to and from organizations and financial institutions. NACHA does not send communications to persons or organizations about individual ACH transactions that they originate or receive,” the group advised in a release. The warning noted that phishing e-mails, such as these, frequently carry attachments or links to Web pages that host malicious code and software, which should not be opened or visited. NACHA asked that fraudulent e-mails claiming to be from NACHA be sent to