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Croatian CU collapse Plea entered CEOs sentencing today

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CLEVELAND (11/26/12)--Another man has pleaded guilty for his role in a massive loan fraud scheme that led to the collapse of Eastlake, Ohio-based St. Paul Croatian FCU. Meanwhile the credit union's former CEO is scheduled to be sentenced today for his involvement in what became one of the largest credit union failures in history.

Marko Nikoli, 33, pleaded guilty in a U.S. District Court in Cleveland last week to two counts of bank fraud and one count of money laundering, which stem from a purchase of a $60,000 Mercedez Benz  (News-Herald.com Nov. 20). Nikoli was one of at least 19 defendants arrested in the case. Many of them were paid to apply for the fraudulent loans. His sentencing is scheduled for March 18.

Nikoli is nephew of the alleged ringleader in the scam, Koljo Nikolovski of Eastlake and Skopje, Macedonia.  Nikolovski is serving 18 years in prison for the fraud, which involved more than 1,000 fraudulent loans for more than $70 million to roughly 300 accountholders at the credit union (News Now Nov. 8).

The credit union's CEO, Anthony Raguz, also has pleaded guilty--to six counts of bank fraud, money laundering and bank bribery. He allegedly admitted issuing the loans and accepting more than $500,000 in bribes, kickbacks and gifts from the borrowers. His sentencing hearing, originally set for last Tuesday was rescheduled for today.

The National Credit Union Administration placed the credit union into conservatorship on April 23, 2010, and liquidated it a week later after determining the credit union was insolvent.  The failure cost the National Credit Union Share Insurance Fund about $170 million. NCUA has filed a number of lawsuits against the parties involved in the loan scam to try to recoup some of the losses.

Fake government disaster relief checks circulating in N E

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WASHINGTON (11/26/12)--Forged and fake Federal Disaster Assistance checks are being circulated at area credit unions and banks in the Northeast, according to Agility Recovery, a CUNA Strategic Services provider that works with credit unions and others on disaster recovery and business continuity.

Agility Recovery said it was informed by its partners at the Federal Emergency Management Agency (FEMA) and the U.S. Small Business Administration (SBA) that several checks had been passed at the financial institutions.

The Northeast and East Coast were hit hard by Hurricane Sandy on Oct. 29 and 30, and states in that area have been dealing with extensive damages to homes and businesses.

The legitimate disaster assistance checks have the words "United States Treasury" in large Old English Text letters on the top left half of the check, with a smaller Treasury seal underneath the word "States."  It also has the Statue of Liberty along the left border, facing off to the left side of the check.

The U.S. Department of Treasury checks associated with FEMA assistance will have "Disaster Assistance" identified on the lower left of the check and above the words "FEMA WASH."

Across the center of the check is financial account numbers and the Kansas City, Mo. account number, above the "Pay to the order of" designation and the name and address of the check recipient.

The right side of the legitimate check has the check number, more financial institution checking account numbers, the numerical amount of the check and a signature block in the lower right corner. The financial institution's routing number is displayed along the bottom. For more information about the checks, use the link.

The Federal Trade Commission (FTC) has also warned consumers to beware of scams that prey on disaster victims needing assistance and on generous Americans hoping to contribute to the recovery. Use the FTC  link for more information about the variety of scams.

TMG Analyze cost-benefits before implementing EMV

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DES MOINES, Iowa (11/26/12)--Credit unions should perform their own cost-benefit analysis before implementing the Europay MasterCard Visa (EMV) card standard, a new white paper from The Members Group (TMG) recommends.

The paper, titled "The EMV Roadmap: Designing Your Financial Institution's Plan," describes how major card networks have announced their initial plans for EMV migration, each outlining how merchant and issuer integration will impact liability for fraudulent transactions. Some analysts speculate, however, the target dates outlined in these plans are likely to slip as networks become more aware of challenges facing merchants and their processors.

In designing their road map for migration, credit unions should first look at their average annual fraud losses, the paper said. Delaying the migration to EMV could increase fraud losses as a result of two situations: First, domestic card fraud is on the rise and predicted to continue as global EMV dominance drives fraudsters to the U.S.; and second, non-EMV cards will not meet the networks' standards for liability, thus shifting the responsibility for fraud to the credit union.

Next credit unions should compare anticipated fraud losses with the investment required by an upgrade to EMV, the paper advised. Given the cost-benefit analysis, does the migration to EMV cards make sound business sense? Be cognizant, however, that the answer to this question may change as EMV becomes more prevalent or as cardholders demand EMV cards, TMG warned.

Transaction volume is another consideration. EMV, many believe, is key to maintaining top-of wallet positioning, especially among certain cardholders. As card issuers field an increasing number of complaints about the ineffectiveness of magnetic-stripe cards overseas, the pressure to satisfy these cardholders grows, said the paper.

Improving acceptance internationally could also increase interchange income, TMG added.

The paper recommends that credit unions segment their card portfolios to determine which sections are best positioned for EMV. Large numbers of cardholders may travel more frequently than others. Keep in mind that not only Europe has migrated; Canada and Mexico are EMV-ready now.

To download the whitepaper, use the link.

Computer virus in small biz snags Minnesota members

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LAKE NEBAGAMON, Minn. (11/26/12)--A computer virus that targets small businesses by capturing card information before it is encrypted has been linked to a business in Lake Nebagamon, Minn., and has affected some nearby credit union members.

More than two dozen cases of credit and debit card fraud were linked to Ole's Country Market, a gas and grocery store in the community (Duluth News-Tribune Nov. 21). Members of credit unions are among the victims.

A member of nearby Superior (Wis.) Choice CU (SCCU) discovered an incidence of identity theft when she went online to access her credit union account.

SCCU member Amanda Majetick of Lake Nebagamon found two charges from North Carolina and one from England on her statement during a two-day period last week--each totaling a few hundred dollars, she told the newspaper. 

Majetick immediately called the $210 million asset SCCU, which canceled her card and reimbursed her for the stolen funds, the paper said.

Wis league responds to banks misstatements

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PEWAUKEE, Wis. (11/26/12)--Brett Thompson, president/CEO of the Wisconsin Credit Union League, has issued a statement about what the league terms as the Wisconsin Bankers Association's (WBA) most recent misstatements about credit unions, made after regulators announced Wisconsin credit unions' strong third-quarter financial position.

"Credit unions are not only fulfilling their mission of serving all their members regardless of income, but they're doing it despite tremendous disadvantages," Thompson said. "You'd never know that listening to the WBA."

He said banks don't say that Wisconsin credit unions:

  • Saved Wisconsin consumers $201 million in 2011. Credit union depositors saved more than $128 million on loans, earned more than $36.6 million on savings products and paid $36.5 million less in fees than if they had used for-profit banks. WBA called this a "subsidy." Consumers call it real, significant savings, he said.
  • Earned seven top honors in seven years for helping members and communities. These accolades stem from credit unions' REAL Solutions initiative, which helps consumers save and build wealth and assists 3,000 local causes and organizations each year. WBA calls this "lost funds." Credit unions call it investing in Wisconsin, Thompson said.
  • Increased business lending without any taxpayer bailout. This is in contrast to banks that took taxpayer funds and reduced help for small businesses when they needed help the most, said the league. Since the start of the recession, Wisconsin credit unions increased their business lending by 55% while Wisconsin banks shrank theirs by 2%. WBA called this success by credit unions as "abandoning their mission." Credit unions say it's doing what's right, regardless of profit, the league added.
"Credit unions do all this in spite of far greater regulation than banks, an arbitrary cap on business lending that applies only to credit unions, and the inability to raise capital by issuing stock, which only banks can do," Thompson said.

"What's more, credit unions pay all the same taxes banks pay except corporate tax, which more than 80 Wisconsin banks don't pay either," Thompson said. "Except credit unions have that single tax exemption because consumers, not shareholders, benefit from credit unions' earnings.

"Banks just don't like the fact that by making consumers more financially successful, credit unions have become more successful," Thompson added. In 2012, Wisconsin credit unions saw the largest increase in checking accounts in more than a decade, at 6.6%, surpassing the national growth rate, he said.

Filene examines what workers want in 2012

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MADISON, Wis. (11/26/12)--Credit union values can be a powerful recruiting tool, because most employees--young and old--desire to work in a place that mirrors their values, according to a new report from the Filene Research Institute.

The brief is published as part of a partnership between the Filene Research Institute and Net Impact, a group dedicated to solving problems through the workplace. Net Impact set out to investigate how people view "impact jobs," or jobs that provide the opportunity to make a social or environmental impact.

Its survey looked at a statistically significant national sample of 1,726 university students about to enter the work force and currently employed four-year college graduates from three generations: Millennials (between the ages of 21 and 32), Generation X (between 33 and 48), and Baby Boomers (between 49 and 65).

The study found:

  • "Impact jobs" are satisfying. Slightly more than half of professionals (55%) said they are currently in a job where they can make a social or environmental impact on the world. These satisfaction levels were reinforced when digging into the ways people feel connected to impact through their jobs, too. For example, 45% of employees who say they worked directly on a product or service that makes a positive social impact report being very satisfied with their jobs.
  • College students care. Responding to the statement, "Having a job where I can make an impact on causes or issues that are important to me," 72% of college students said it was either essential or very important. That's 13 percentage points more than Millennials and 23 more than Gen Xers.
  • Impact expectations are high. A majority of students (65%) expect to make a positive social or environmental difference in the world at some point through their work. Credit unions that offer students direct ways to make a difference through their job will have a recruiting advantage, the report said.
  • Women care more than men about impact jobs. Women are much more likely than men to say making a difference is important to them. As a result, organizations that invest in impact jobs likely will have more success in recruiting women. Sixty percent of employed women say that working for a company that prioritizes social and environmental responsibility is very important to them, compared with 38% of men.
"Not every credit union is positioned to take advantage of these trends," the report concluded. "For some, the idea of a credit union movement is a memory, not a motivation. And that's just fine. But credit unions that see their differentiator as doing good by members every day should take these findings to heart and use social responsibility to attract conscientious employees. They will then become conscientious leaders."

Leftover turkey just begins CUs holiday charity

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MADISON, Wis. (11/26/12)--Credit unions have packed away the Thanksgiving leftovers, but their holiday charity efforts are just beginning.

Last week News Now noted a number of credit unions' food drives, just in time for the big turkey dinner. Credit unions give to their communities all year, but during the winter holiday season they go an extra mile to support members of their community who are low-income, have problems such as job loss, or are in need.

Among the credit unions supporting Toys for Tots this year is Saginaw, Mich.-based Catholic FCU (CFCU).  The credit union donated nine Little Tykes Cozy Coupe cars to the cause.  Showing off the cars are, from left: Jeff Jarvis, coordinator of Bay County Toys for Tots, and Bethany Dutcher, vice president of marketing at CFCU. (Photo provided by Catholic FCU)
Some of the credit unions are trying new things this year. For Westbury, N.Y.-based NEFCU, one begins today.  It is launching its "A Season of Giving Charity Donations Contest," which will take place on Facebook with a special application. "Likes" of the page can nominate and vote for their chosen charity. Eligible charities must meet certain community-based goals, NEFCU said in a press release. The organization with the most votes will receive $2,500 donated by the credit union.  Second place will receive $1,500, and third place will receive $1,000. Nominations are due by 5 p.m. ET on Dec. 9. Voting will end at 5 p.m.

"There are so many deserving charities doing great work here on Long Island. Who better to decide the winner of this contest than the Long Islanders who support and benefit from their services," said Valerie Garguilo, vice president of marketing and community relations for NEFCU.

Another new program: One month ago, the University of  Iowa Community CU (UICCU), Cedar Falls, Iowa, offered staff the opportunity to give to their favorite charities for the holiday. Employees provided the name and address of their charity of choice and the credit union donated $100 to the organization in that staffer's name. The results: 135 charities in the area received nearly $22,000 from the UICCU program (Iowa City Press-Citizen Nov. 18).

UICCU President/CEO Jeff Disterhoft told local media, "It's a neat thing because ultimately it's a small way of saying thank you to all of our employees. At the same time, it's a chance to support the charities that our employees are most passionate about."

Of the 250 UICCU employees at its nine East Iowa branches, nearly 220 selected a charity. The Ronald McDonald House Charities of Eastern Iowa and the Iowa Children's Museum were two of the most popular charities. UICCU "is a great example of a local group, a local company who really is responsible to the community, who really values being a part of this community and contributes to the community."

Other charity efforts:

  • Woodbury, Minn.-based Postal CU of Minnesota (PCU) has collected 368 coats at its branches throughout the year for the October Salvation Army Coats for Kids Drive. PCU Community Foundation collected $1,500 in Casual for a Cause and other fund raising efforts, and that effort will make 100 more coats for children in need. Thanks to members, staff, and the community, more than 450 children in the Twin Cities metro area will receive new or gently used coats this winter.
  • Tinker FCU in Oklahoma City, Okla., joined forces with Operation Homefront, Oklahoma/Arkansas on Veterans Day to distribute 600 blankets to military families in need. Operation Homefront provides emergency financial and other assistance to families of U.S. service members and wounded warriors. It received the blankets through donations but had no location to store and distribute the blankets.  TFCU offered its metropolitan building as a place to store the blankets and allow military families to pick them up on Veterans Day.
  • Toys for Tots, a project of the U.S. Marine Corps, will get a lot of help from credit unions around the country.  For example, Service CU, Portsmouth, N.H., just launched its first corporate initiative with Toys for Tots. The credit union collects toys and the Marines will pick up the toys and distribute them through local service agencies in New Hampshire.
  • Catholic FCU in Saginaw, Mich., has donated nine Little Tykes Cozy Coupe cars to Toys for Tots.
  • In Sacramento, Calif., The Golden 1 CU will join the campaign to collect toys for the 2012 Sacramento Sheriff's Toy Project. Until Dec. 5, members and nonmembers can drop off a new, unwrapped toy at Golden 1 branches.
  • United Financial CU in Saginaw, Mich., is collecting donations and "Wish List" items until Dec. 14 at its six locations to benefit the CAN Council and CASA of Saginaw County (Michigan Monitor Nov. 19). Both groups assist children who have been removed from their homes because of abuse or neglect.
Not all the credit union goodwill is about helping the down and out. Sometimes it's just about prompting a smile or making the holidays even better. For example, Belvoir FCU, Woodbridge, Va., will help members and non-members record video holiday eGreetings. Beginning Friday, it will offer hours on Fridays and Saturdays through Dec. 15 at its Woodbridge and Fort Belvoir branches. It will film the senders' holiday message and send the video to them so they can e-mail it to friends, family and loved ones they can't be with during the holidays.

Survey Fraud security compliance top payments issues

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NOTTINGHAM, U.K. (11/26/12)--The growth of new payment channels is the biggest challenge facing the payment industry, according to an annual survey conducted by global payments software provider Compass Plus. Also, fraud, security and compliance were seen as key issues.

Seventy percent of respondents, including financial institutions, mobile operators, payment processors and other industry professionals, were surveyed at an international payment, security and identification event.

The survey indicated 30% of respondents cite the variety of payment channels available as the primary challenge facing the payments industry today--an increase of 8% when compared with the survey results for 2011.

Other key issues included:

  • The growth of near field communication (NFC) and contactless technology (21%);
  • The need for simple user authentication (18%), and
  • The rise of non-traditional payment providers (17%).
In contrast, those surveyed broadly agreed on the speed of mobile banking adoption. Most (59%) said mobile will account for a 10% to 30% share of banking within two to three years.

Fraud, security and compliance were forecast as the top three industry issues for 2013. Internet banking hacking remains the biggest fraud threat at 27% versus 29% last year. Customer-not-present fraud is the second at 26%. Card skimming is perceived as the fastest growing threat with an increase of 7% year-over-year. Customer confusion ranked as the fourth biggest issue for 2013.

NFC represents the biggest opportunity for payment providers in 2013, according to 62% of respondents. Last year, recipients were polarized on the speed of NFC uptake. This year saw a growing consensus among respondents (67%), expecting NFC to reach mass adoption in one to three years.

"The industry still remains in a period of turbulence with technology-led disruption at its core," said Maria Nottingham, Compass Plus chief marketing officer. "Marrying innovation and speed with security and compliance is paramount for financial institutions to create an environment where they can launch new payment services quickly and cost effectively while ensuring they meet industry standards."

For the full results of the study, use the link.

CU System briefs (11/21/2012)

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  • TALLAHASSEE, Fla.(11/26/12)--First Commerce CU (FCCU) presented a $10,155 check to the Capital Region YMCA Nov. 14 in support of youth development and healthy living . FCCU and Seminole IMG Sports Marketing also provided Florida State University (FSU) fans with a chance to win behind-the-scenes access to the Seminole football program for a day.  "This promotion was all part of a plan to raise awareness and encourage the community to financially support the very important work of the YMCA," said FCCU CEO Cecilia Homison.  Winners of the exclusive pass were Susie Bryant and Frank Dennard. They will experience a "day in the life of an FSU football player" with a private facility tour, lunch in the athletic cafeteria, attendance at a live practice, photo opportunities, pre-game access and game tickets to last Saturday's FSU v. University of Florida football game. From left are: Ken Franklin, CEO of YMCA; Homison; and Hugh Tomlinson and Aaron Boyette, YMCA board members. (Photo provided by the League of Southeastern Credit Unions) …
  • RALEIGH, N.C. (11/26/12)--SECU Foundation, the charitable group of Raleigh, N.C.-based State Employees' CU, was named the recipient of the inaugural 2012 Corporate Philanthropy Award by the North Carolina Museum of History in Raleigh on Nov. 13. The award recognizes individuals and organizations for outstanding contributions to the preservation, study or understanding of North Carolina history, and honors exceptional commitment, service and support to history museums and related sites.  SECU Foundation serves as the primary education sponsor for the museum's exhibits, Mysteries of the Lost Colony and A New World: England's First View of America from London's British Museum.  The foundation's sponsorship allowed all state students, teachers and chaperones to attend the exhibit free. It also provided a $500,000 grant to help build the museum's new SECU Education Center in 2010. Pictured from left are: Lyl MacLean Clinard, Museum of History Foundation chair; McKinley Wooten, SECU Board chair; and Ken Howard, museum director.  (Photo provided by SECU Foundation) …
  • VINELAND, N.J. (11/26/12)--The Board of Directors at Bay Atlantic FCU in Vineland, N.J., have promoted Gail Marino to CEO/president, according to the New Jersey Credit Union League (The Daily Exchange Nov. 21). She has served the credit union for more than 24 years, starting as a teller. Most recently she was vice president of business development. Marino succeeds CEO/President Carol Muessig, who will retire in January. In her previous position, Marino was instrumental in expanding the credit union's field of membership and establishing a new branch. She also initiated BAFCU's youth programs. Marino currently is the president of the Southern Chapter of the league and is a member of league's Shared Branching Marketing Committee …