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Javelin reports 10 trends shaping banking in 2010

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PLEASANTON, Calif. (1/13/10)--What's in store for financial institutions, including credit unions, for 2010? Javelin Strategy and Research outlines 10 trends that will shape banking, payments and security this year. Financial institutions will struggle to cope with a hobbled economy, wrenching regulatory changes, mounting fraud threats and limited innovation budgets during 2010, said the Pleasanton, Calif.-based research group. But opportunistic financial institutions that take steps now will be on the cutting edge of person-to-person payments, embrace innovations from alternative vendors, tighten security vulnerabilities and serve up real-time data that will be in increasing demand in an era of "always-on, anytime, anywhere" banking, Javelin says in an overview to its report. The 10 trends for 2010 are:
* Regulatory backlash will force banks to re-evaluate their business model. * Financial services software platforms open up for application development. * Prioritizing investments becomes more critical as hard times hinder innovation. * Person-to-person (P2P) payments will hit it big in 2010. * Merchants will demand increased power in the transaction market. * Cloud (Internet) apps will regenerate interest in federated identity (single sign on for multiple applications). * Real-time data becomes essential as always-on integration takes hold. * Encryption, tokenization (substituting random proxy numbers or tokens for senwsitive cardholder data during a transaction) and EMV (smart cards) will offer more security for card payments. * PIN integrity will be challenged in 2010 as fraudsters' sophistication increases. * The social Web is the new frontier for fraud.

CUs Malware hits online banking Googles online apps market

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MADISON, Wis. (1/13/10)--Credit unions sounded the alarm that suspicious applications downloaded from Google's Android Market for cellphones may have stolen users' online banking information. And the Credit Union Information Security Professionals Association (CUISPA) is alerting credit unions to a fraud attempt in the online banking arena. BayPort CU, a $1.1 billion credit union in Newport News, Va., and First Tech CU of Beaverton, Ore., issued warnings on Dec. 22 about a rogue Android application on Google's online market that promised members easy access to their online banking (Computerworld Jan. 12 and iPhone Central Jan. 11). "It is believed that fraudsters deployed fraudulent mobile banking applications to the Android Marketplace, using a phishing technique to attempt to gain access to mobile banking users' financial information," said BayPort's alert. The suspicious application creates mobile banking apps that members and other users can download to their phones but actually have the ability to steal information. Those who have added the apps should go to their mobile service provider to make ensure the suspicious apps are removed for good. BayPort said it notified Google, and Google removed the program plus 50 similar apps, all written by a single developer identified as "09Droid." However, security researchers have not confirmed whether the Android apps were actually malicious because before they could get copies of the suspicious apps, Google removed them from the market, according to ComputerWorld. The apps could just be someone using a shortcut app to make a quick buck, said the researchers. Google does not vet its Android applications that appear on its online store. Apple runs its App Store for the iPhone and has an approval process for mobile applications. Another kind of fraud in online banking--the Zeus or Zbot--was the topic of warning from CUISPA. The Zbot is a "particularly nasty malware that is bypassing top antivirus/Malware scanners and compromising member accounts," said CUISPA's alert. "Cases have been identified by dozens of credit unions, that we know of. One can assume it is far more widespread than we've currently seen," said Kelly Dowell, executive director at CUISPA. "The malware infects desktops the same way viruses do, but once infected it is very difficult to remove. Initial reports have come in from credit union members that logged into online banking and received a display page asking for additional authentication in the form of credit card information. The key here is the page was displayed after logging into their home banking accounts," said Dowell. "It's important to understand that if the user is seeing that page, the damage is done. The online banking credentials have been compromised and need to be changed immediately," Dowell explained. "The nasty thing about Zeus/Zbot is how it has been morphing or evolving," said Dowell, adding that it hides its presence on the member's machine. It is the same attack that is behind a recent flurry of automated clearinghouse (ACH) fraud. CUISPA has a full report available. Use the link and view the Alerts Forum. Registration for the alerts is free and required to review the report, Dowell said.

CUNA Mutual launches online risk assessment tool

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MADISON, Wis. (1/13/10)--CUNA Mutual Group has introduced a new online risk assessment program for its more than 4,600 credit union Plastic Card insurance policyholders. The tool is designed to assess Plastic Card program risks and indicate whether a credit union’s program is in a good, fair, or cautionary state of security. “A credit union’s operations could be severely impacted if its card portfolio or plastic card program were fraudulently attacked, especially if it resulted in uninsured losses,” said Becky Severson, CUNA Mutual risk manager. “That’s why we felt it was critical for CUNA Mutual to help credit unions identify their plastic card program vulnerabilities and recommend actions based on risk exposure and insurance considerations.” The Plastic Card Risk Assessment functionality contains 24 multiple-choice questions that can be completed in less than 20 minutes. The credit union receives recommendations based on their responses. This is the second online risk assessment module offered by CUNA Mutual’s Credit Union Protection division. It joins the Disaster Preparedness assessment tool launched in 2009. That program allows credit unions to review their vulnerabilities to disasters and take recommended action based on risks, loss controls and credit union best practices. More online risk assessment modules will be added and announced during 2010, said CUNA Mutual. For more information, use the link.

CBS Moneywatch Suze Orman Time to join a CU

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NEW YORK (1/13/10)--It’s time to say goodbye to banks and join a credit union, according to CBS, which touted credit union’s lower fees, better rates and the Credit Union National Association’s (CUNA) credit union locator. Also this week on CNN, financial guru Suze Orman encouraged consumers to obtain credit cards from credit unions. Steve Brobeck, executive director of the Consumer Federation of America, told CBS that “credit unions charge lower fees and loan rates than banks and pay higher savings yields.” The article said credit unions pay 0.3% more on share certificates than banks do on certificates of deposit. CBS noted CUNA’s Ratedex site, and compared credit card and savings rates at credit unions and banks. Credit unions can often return more on savings and charge less on loans because “the credit union channels any excess funds back to its members,” Mark Wolff, CUNA senior vice president of public relations, told CBS, which links consumers looking for a credit union to the locator tool on CUNA's site. Dupaco Community CU, Dubuque, Iowa; Boeing Employees CU, Seattle; Digital FCU, Marlborough, Md.; and other credit unions also received favorable mentions in the article. The MoneyWatch story opens by recounting the story of Dupaco members Steve and Angela Olson, a police officer and high school teacher, who quickly and successfully refinanced their home equity line through the CU and saved more than $300 a month after having no luck at area banks. "I wish we checked into a credit union a while ago," Steve Olson said. In other news, Orman told CNN’s Campbell Brown that she is upset because banks continue to reap profits while charging consumers high fees and interest rates. Orman advised consumers to find a good credit union credit card. “Federally chartered credit unions can’t charge you more than 18% [in interest],” Orman said. “Credit unions care about their members; banks care about their shareholders. Credit unions are going to take better care of you.”

Proposal to include Irish CUs in FSA regulation dropped

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BELFAST (1/13/10)--A proposal that would have brought credit unions in Northern Ireland under the regulation of the Financial Services Authority (FSA)--like those in Great Britain--has been dropped from the Financial Services Bill progressing through Parliament. According to the Belfast Telegraph (Jan. 12), that would--for now--dash credit unions' hopes of offering a wider range of services. The government had indicated in its Reforming Financial Markets white paper that it would bring the credit unions within FSA regulation. The Financial Services Bill was expected to implement this so credit unions could offer additional financial services such as accounts. A Treasury spokesman said the measure would not be introduced prior to the general election. A Department of Enterprise, Trade and Investment (DETI) spokeswoman added that the changes need several pieces of legislation to be approved by both Parliament and the Assembly. DETI and the Treasury concluded that the bill was not a suitable legislative vehicle for such changes. DETI and Treasury would be consulting on legislative changes before summer, she said. Credit unions intend to meet with Treasury ministers to try to amend the bill in the House of Commons, said a credit union representative.

CU leaders knighted by Queen Elizabeth II

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MADISON, Wis. (1/13/10)--British monarch Queen Elizabeth II has named two credit union leaders from Ireland and Barbados to her 2010 New Year’s Honors List, said the World Council of Credit Unions (WOCCU). Uel Adair, past president of the Irish League of Credit Unions (ILCU) was named to the Most Excellent Order of the British Empire. Lawrence Vernon Harcourt Lewis, a pioneer of the Barbados credit union movement, was named Knight Commander of St. Michael and St. George. Adair concluded his 10-year term on ILCU's board of directors in 2009, after serving the last two years as president. Under Adair's leadership, Irish credit unions increased services to members. Adair also helped Northern Ireland's credit unions fall in line with credit unions in Great Britain and the Republic of Ireland. Adair currently serves as a director for Waterside CU in Derry, Northern Ireland. Harcourt Lewis, a former government cabinet minister and public official, was knighted for his contributions to Barbados’ financial services industry. He was a founding member of the Bethel Circuit Cooperative CU Ltd. and instrumental in the formation of Public Workers Cooperative CU Ltd., now the Caribbean island nation's largest credit union. As president of the Barbados Cooperative Credit Union League, Harcourt Lewis supported the Caribbean Confederation of Credit Unions, a WOCCU member organization. Queen Elizabeth announced both honorees in her Dec. 30 New Year's proclamation.

Mid-Atlantic Corporate to hold town hall meetings

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MIDDLETOWN, Pa. (1/13/10)--Mid-Atlantic Corporate FCU will hold town hall meetings throughout the Mid-Atlantic region during January and February to discuss future plans for membership and capital. “With all that has gone on in the credit union industry in the past year, and with [the National Credit Union Administration’s] recent proposal for changes to regulation 704, we felt it was important to meet with our members to discuss Mid-Atlantic Corporate’s plan for 2010 and beyond,” said Jay R. Murray, Mid-Atlantic president/CEO (Life is a Highway Jan. 12). “These meetings will give us a great opportunity to talk face-to-face with our members to discuss how we can continue to serve their needs well into the future,” he added. Meetings will be held in the following cities:
* Jan. 13--Williamsport, Pa.; * Jan. 14--Wilkes-Barre, Pa.; * Jan. 20--Cherry Hill, N.J.; * Jan. 26--Harrisburg, Pa.; * Jan. 27--King of Prussia, Pa.; * Feb. 2--College Park, Md.; * Feb. 3--New Castle, Del.; * Feb. 9--Altoona, Pa.; * Feb. 10--Erie, Pa.; * Feb. 11--Monroeville, Pa.; and * Feb. 18--Clark, N.J.

Two men sentenced in widespread HELOC frauds

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NEWARK, N.J. (1/13/10)--Two men who admitted to participating in an international identity theft scam that targeted home equity lines of credit (HELOCs) at credit unions and banks in New Jersey and several other states were sentenced Monday in a Newark federal court to prison. Derrick Polk, 47, was arrested in 2008 with three others and charged with targeting homeowners with big HELOCs at financial institutions, including Citibank and JPMorgan Chase and credit unions in Basking Ridge, Bridgewater and Toms River, N.J. He was sentenced to five years and 10 months in prison (The Star-Ledger Jan. 11). Oludola Akinmola, 39, who also pleaded guilty, was sentenced to four years and three month in prison. Since he is an illegal immigrant from Nigeria, he could eventually face deportations, the newspaper said. The men used stolen personal data and technological tricks to fool employees at financial institutions into transferring funds to accounts in at least seven countries, the paper said. The plot involved at least 17 people nationally. Two others were arrested with Polk and Akinmola in 2008 for siphoning off at least $2.5 million from HELOCs. It was predicated on victims’ personal information including Social Security numbers, mothers’ maiden names and online passwords, authorities said, according to the paper. The two other suspects also pleaded guilty. Adekunle Adejuyigbe was sentenced to 46 months in prison; Oluwajide Ogunbiyi was sentenced to 15 months in prison. From early January to March 1, 2008, credit unions reported to CUNA Mutual Group 43 incidents of losses or fraud attempts totaling $8.8 million related to HELOCs (News Now March 25, 2008). In one case, according to court records, they transferred $675,000 from Affinity CU in Basking Ridge to a bank in Tokyo. In 2008, the National Credit Union Administration issued an alert that noted some of the scams involved a high level of sophistication, which enabled the fraudsters to bypass certain authentications controls (News Now Jan. 30, 2008). For example, in one case, the imposter had the ability to fool Caller ID software by making it appear that the call initiated from the account holder’s valid phone number. In other cases, imposters were knowledgeable of recent account activity--such as deposits or withdrawal amounts--and used the information to authenticate themselves as the account holder to the credit union representative.

CU System briefs (01/12/2010)

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* TRENTON, N.J. (1/13/10)--Ruben Rosado, 32, of Rahway, N.J., was sentenced to more than 27 years in prison for 11 violent robberies committed by the "Route 35 crew" against credit unions and banks along Route 35 in Middlesex and Union counties. The holdups netted $288,000. U.S. District Judge Joel A. Pisano in Trenton rendered the sentence for those robberies plus three other armed robberies in 2006 and 2007. Among those incidents were a home invasion in Allentown, Pa., where he bound and gagged a woman and put a gun to her child's head, and a holdup at a gift store, where he beat an elderly courier. Rosado, the gunman of the group, also assaulted employees at the banks. The Federal Bureau of Investigation considered the group so dangerous that it offered a $35,000 reward. The judge also ordered Rosado to pay $374,570 restitution to the victims and to serve five years of supervised release after leaving prison. He also was sentenced to seven years for use of a firearm during a violent crime. That sentence will run consecutively to the armed bank robbery sentence. Four other co-defendants have pleaded guilty and are awaiting sentencing (The Star-Ledger Jan. 11) ... * HARRISBURG, Pa. (1/13/10)--Pennsylvania credit unions met Monday in separate meetings with U.S. Rep. Jason Altmire (D-Pa.) at a breakfast in Pittsburgh and the staff of Sen. Robert P Casey Jr. (D-Pa.) at the senator's district office in Harrisburg, said the Pennsylvania Credit Union Association. Thirty-five credit union leaders and friends were updated by Altmire on health care initiative. He asked for input on credit union issues, including member business lending (MBL), interchange revenue and overdraft protection, and said he is a strong supporter of increased MBL for credit unions. He requested more information on the other issues. At a meeting with Casey staffers Richard Spiegelman, legislative director and chief counsel, and, via telephone, Will Hansen, financial services legislative aide, the discussion centered on the Consumer Financial Protection Agency, credit card regulations, overdraft protection, MBL, and interchange (Life is a Highway Jan. 12) ... * ST. GEORGE, Utah (1/13/10)--The U.S. Small Business Administration (SBA) honored SouthWest Community FCU, St. George, Utah, for its member service and diversity in lending programs for 2009 (Main Street Business Journal Jan. 12). The Utah District of the SBA presented the Blaine Andrus Memorial Award, named for a late Utah SBA office leader, for the credit union's commitment to Utah small businesses. SouthWest Community funded loans such as SBA Express, Patriot Express for veterans, ARC loans for economic recovery, SBA 504 loans for commercial real estate and SBA 7A loans for working capital. The credit union also increased the amount of dollars lent out in SBA products over the same period last year, said the credit union ... * TALLAHASSEE, Fla. (1/13/10)--Ray Cromer, founding chairman of the Credit Union 24 board of directors and a key driver behind the credit union-owned ATM and point-of-sale (POS) network, has retired from the board. Cromer also has retired from his position as president/CEO of Envision CU, Tallahassee Cromer, who was the inaugural chairman of the board in 1997, worked with the network for 25 years and with credit unions for 43 years. Bob Fischer, president/CEO of Grow Financial FCU, Tampa, Fla., since 1992, has been appointed to fill Cromer's remaining term on the Credit Union 24 board. Fisher also served on the network's inaugural board ... * FARMERS BRANCH, Texas (1/13/10)--Milt Durham, former Texas Credit Union League (TCUL) director and CUNA Mutual Group vice president, died Jan. 9, according to the league (LoneStar Leaguer Jan. 12). In 1953, Durham began organizing credit unions and served as treasurer of the Fort Worth credit union. From 1969 to 1974, he was president of Hereford Texas FCU and then of Sears Employees CU. He also served as a leader in the Fort Worth, Amarillo and Dallas chapters of credit unions. He served on the TCUL Services board in 1970-1971 and was elected to the league board for a two-year term beginning in 1973. Durham also was employed by CUNA Mutual Group during 1965-1969 and 1974-1994. When he retired from CUNA Mutual, he was vice president of the Southwest district office in Dallas. He then continued as a board member of Metroplex CU, Carrollton, and served as interim president. Funeral services are today at 10 a.m at First Baptist Church Hurst, in Hurst, Texas ...

Fund set up for shooting victim suspect faces life in prison

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HARRISBURG, Pa. (1/13/10)--Westmoreland Community FCU has established a fund to help with family expenses for a teller who was shot Friday during a robbery at the credit union. The man suspected of the shooting faces life in prison. The teller remains in stable condition at a local hospital, but is facing another surgery after being shot in the stomach, said the Pennsylvania Credit Union Association (PCUA). The credit union opened on Monday because employees wanted to show that they were not defeated by the robbers (Life is a Highway Jan. 12). A Crafton, Pa., man accused in the shooting, David Louis Mathis, faces life in prison for shooting and robbery. Lamont Laprade, of West Virginia, is being charged with armed bank robbery and conspiracy. They appeared in federal court in Pennsylvania Monday (Pittsburgh Tribune-Review Jan. 11). Robbers may have taken $10,000 during the robbery, the newspaper added. A gunman entered the credit union Friday and fired four shots--one of which hit a teller. He demanded that employees take him to the vault, but they were too nervous to do so. He managed to get cash from a teller window. Laprade was arrested Friday, and Mathis was arrested Saturday at a local mall. Westmoreland Community FCU, Greensburg, Pa., has $44 million in assets.