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TJX settles with Visa Fifth Third Bank on breach

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BOSTON (12/3/07)--Discount retailer TJX Cos. may pay up to $40.9 million in a settlement with Visa Inc. and the company's credit card payments processing bank, Fifth Third Bancorp, in a lawsuit over the largest customer data breach in U.S. history. The agreement, announced Friday, doesn't resolve an unrelated lawsuit by Ameribank, SELCO Community CU, and several other small institutions plus the bank associations of Massachusetts, Connecticut and Maine. That lawsuit suffered a setback Thursday when a judge denied class status for plaintiffs in the case (Associated Press via Money Central/MSN.com Nov. 30). The Credit Union National Association (CUNA) is looking into how the settlement would affect damage claims in the other lawsuit, said CUNA General Counsel Eric Richard. The $40.9 million settlement would help resolve potential claims and other disputes by U.S. Visa issuers, such as credit unions and banks, over the costs of replacing members' and customers' credit and debit cards compromised in the breach. To take effect, the settlement must be approved by issuers of at least 80% of U.S. Visa cards by Dec. 19. By accepting the deal, they would agree to waive their right to sue TJX and Fifth Third, in exchange for payment of their breach-related costs by Dec. 27. Analysts said $40.9 million is likely higher than the costs incurred in replacing cards. A recent Gartner Inc. survey noted that credit card networks generally reimburse banks and credit unions for fraudulent purchases, leaving the financial institutions with the costs of replacing the cards and customer service expenses. As part of the agreement Visa would rescind part of the $880,000 in fines it levied against the companies for failing to meet Visa standards for safeguarding data. TJX and Visa said the rescinsion would increase the funds available for an alternate recovery program for the financial institutions. The agreement does not include other credit card associations such as MasterCard.

Ohio CUs CUNA offer tips for holiday shoppers

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DUBLIN, Ohio (12/3/07)--Ohio credit unions are reminding shoppers to spend their money wisely during the holidays and are offering tips on how to avoid debt. Although consumers are concerned about rising expenses, such as gas, spending will increase this year compared to last year, said Credit Union National Association (CUNA) Chief Economist Bill Hampel. “This time of year, we tend to lose weight in our back pocket,” said Paul Mercer, Ohio Credit Union League president. “While we do not want to downplay the importance of giving to our loved ones and those in need, we do want to make sure consumers are not spending irresponsibly and finding themselves racking up excessive debt.” About 76% of credit unions offer Christmas Club accounts, which allow members to set aside a specified amount from their paychecks throughout the year. When the holidays arrive, funds from the Christmas Club accounts are transferred into members’ checking or savings. Some suggestions that credit unions can offer their members during the holidays include:
* Make a list of gifts and dollar amounts; * Avoid using credit cards; pay for gifts with cash; * Shop early and compare prices; * Take advantage of sales and coupons; * Don’t shop for yourself; * Pay with a credit card instead of a debit card, because credit card charges can be disputed; * Prevent identity theft by not using debit cards for online shopping; and * Create a timeline for paying off holiday bills--such as by Valentine’s Day.

CU System briefs (11/30/2007)

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* WARWICK, R.I. (12/3/07)--The Credit Union Association of Rhode Island presented a $50,000 check to the Special Olympics Rhode Island at the association's annual fundraising golf tournament. In the past decade, it has raised more than $300,000 for charity. From left are: Association Chairman Paul Archambault, Wave FCU; Association Vice Chairman Cidalia Rocha, Columbus CU; Special Olympian athlete Michael Lucca (holding the check); Association President Daniel Egan Jr.; Special Olympics Rhode Island Executive Director Michael McGovern; and Association Social Responsibility Committee Chair David Dupere, Anchor FCU. (Photo provided by the Credit Union Association of Rhode Island) … * PHOENIX, Ariz. (12/3/07)--The Arizona Credit Union League and First CU co-hosted U.S. Rep. Jeff Flake (R-6) Thursday at the credit union's corporate office in Chandler, Ariz. Flake addressed the crowd and confirmed his support of credit unions and limiting the role of the government. He also spoke about earmarks, immigration and the 2008 presidential election. "He took the time to meet one-on-one with each member in attendance and he was well-received," said Scott Earl, president/CEO of the Arizona Credit Union System. Pictured here, from left, are First CU members Benny Goodman and Jose Carerra with Flake. First CU has $463 million in assets. (Photo provided by the Arizona Credit Union League) … * TUKWILA, Wash. (12/3/07)--Seven Federal Way, Wash., high school students are under investigation for allegedly agreeing to sell their debit cards and personal identification numbers to other students for $500 to $1,000, then reporting the cards stolen. The cards were given to two men who deposited counterfeit checks into the accounts and made withdrawals, with fraudulent transactions totaling almost $10,000, said police. The investigation began when a father reported his son agreed to sell his debit card issued by BECU (formerly known as Boeing Employees CU). John Snodgrass, security risk manager for BECU, said the ring isn't an isolated incident and that criminals have tried to recruit students for several years. People who turn over their debit cards and PINs are liable for charges that appear on their accounts, he said (The News Tribune Nov. 30) … * VINELAND, N.J. (12/3/07)--A man may have lost thousands of dollars in an e-mail scam that promised him 10% of the total on several checks totaling $500 each he received after answering a phony company's employment offer. The company claimed to be GrandQ Textiles Fabric. The victim, 47, was to keep the 10% and wire the balance to an address in North Carolina (The Daily Journal Nov. 22). He went to the Bay Atlantic FCU and cashed the checks, kept $450 and paid $189 to wire the funds. The checks were phony … * CHARLOTTE, N.C. (12/3/07)--Charlotte police and the Federal Bureau of Investigation are seeking help from the public in identifying and locating the "Bluetooth bandits" responsible for eight bank robberies, including two robberies of Piedmont Aviation FCU, Greensboro, N.C. The credit union was robbed on Aug. 18, 2006, and Aug. 10, 2007. In each robbery, the bandits were armed and well-organized. In two robberies, one suspect wore a Bluetooth wireless in his ear, which authorities suspect was used to communicate with the others during the robbery (US Fed News Nov. 13) … * MEMPHIS, Tenn. (12/3/07)--Hope Community CU, a financial arm of Enterprise Corp. of the Delta, Jackson, Miss., will open its second branch in Memphis, Tenn. in January. The building is one of 10 branches closed by the former Regions Bank last month when it combined with AmSouth Bank. Hope Community opened its first branch in Memphis 18 months ago(Commercial Appeal Nov. 29) … * WASHINGTON (12/3/07)--Dwight Johnston, vice president of economic and market research at Western Corporate FCU, is the newest member of the Credit Union Economics Group (CUEG), a working group of credit union officials dedicated to the financial well-being of the credit union movement. Johnston brings more than 30 years experience in the investment business to CUEG. At WesCorp, he serves as the economic forecaster and market observer, and oversees educational commitments. He previously served as managing principal for WesCorp Investment Services LLC, the broker/dealer subsidiary of WesCorp …

YES Summit offers live blog from Austin

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AUSTIN, TEXAS (12/03/07)—The 2007 Your Essential Strategies (YES) Summit opened Sunday, and anyone who’s not there can attend through the Credit Union National Association’s live conference blog. The summit focuses on serving 18- to 30-year-old credit union members. By transmitting conference events in real-time through the blog, CUNA staff is using one of the target market’s preferred techniques to explore its financial needs. “You should be here,” said Josh Jones, YES organizer and CUNA’s manager of young adult programs. “But if you can’t be with us, this is the next best thing. The 2007 YES Summit is the first credit union conference with full-blown, live blog commentary. We have two reporters working the agenda, so that if you’re following along at home, you’ll be able to read what people are saying within minutes.” Christopher Morris, web manager for CUNA Councils, and Philip Heckman, CUNA’s director of youth and young adult programs, are responsible for YES coverage. Heckman explained: “Christopher and I are approaching all the sessions as a tag team. Besides posting the main points that speakers make, we’re recording attendees’ insights and reactions. Our goal is to bring this gathering to the credit union world as it happens.” “Look for the typos that indicate freshness,” Morris added. In preparation for this week’s event, summit organizers and speakers posted entries to the blog. Subjects include:
* Board members under 30 with Justin Ho, board member (age 20), USC CU, Los Angeles; * Peer-to-peer direct lending using Facebook, with John Donovan, chief operating officer, Lending Club; and * Gen Y staff recruiting, with Bill Humbert, CEO, The Humbert Group.
CUNA staff emphasized that the live conference blog is not merely online note-taking. “Throughout the day, we’re constantly encouraging attendees to join in the discussion, adding their immediate impressions, questions, and disagreements,” Morris said. ”Their live comments to our posts reflect the essence of serving 18-to-30s--creating a fully engaged and immediate dialogue.”

Texas attorney general warns CU members of phishing scam

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FARMERS BRANCH, Texas (12/3/07)--The Texas Attorney General’s office is warning credit union members to be on guard against an old phishing scam that features a new twist. Fake e-mails that are worded to sound like warnings are being circulated to credit union members, the attorney general’s office said (KVUE.com Nov. 29). The phish perpetrators use the same information that credit unions have previously sent to members to educate them about scams, Gary Whitcomb, president of Public Employees CU, Austin, told the station. A key indicator that the messages are fake is the misuse of one word, Whitcomb said. The phishers refer to people who use credit unions as “customers” instead of as “members.” Credit unions would never use the term “customers,” Whitcomb added. Warnings on websites and in various newsletters are advising credit union members to identify and avoid phony e-mails.

Food banks shortages would be worse without CUs

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MADISON, Wis. (12/3/07)--Food banks nationwide are reporting a depletion in their supplies, but credit unions’ efforts to feed the hungry are helping stock food pantry shelves. The food banks are reporting critical shortages that are forcing them to ration supplies, distribute staples usually earmarked for disaster relief, and even close (The Wall Street Journal Nov. 30).
FirstLight FCU, El Paso, Texas, held a press conference to kick off the 2008 FirstLight FCU Sun Bowl Food Drive Nov. 22. The drive resulted in 55,000 pounds of food. (Photo provided by FirstLight FCU)
“In Maine, the need for food has increased as a result of economic conditions, rising cost of fuel and other increasing costs,” Jon Paradise, governmental and public affairs manager for the Maine Credit Union League told News Now. The league, which has shown a strong commitment to ending hunger over the years, just completed its sixth Annual Maine Credit Unions’ Ending Hunger Walking Tour. “The word from the food pantries was that more people are coming to them for assistance earlier than usual this year,” Paradise said. While on the tour, the league contributed $25,000 to purchase food and is continuing to raise money through the Maine Credit Unions’ Campaign for Ending Hunger. The Maine credit union campaign has raised more than $2.3 million in the state since 1990 to end hunger. Credit unions in other states are participating in similar activities and food drives:
* Michigan First CU, Lathrup Village, Mich., is collecting non-perishable food items for the non-profit Forgotten Harvest, based in Oak Park; * Service CU, Portsmouth, N.H., held a food drive in all 12 of its branch locations and donated more than 1,300 pounds of food to the New Hampshire Food Bank. It also donated $30,000; * Redwood CU, Santa Rosa, Calif., is collecting non perishable food items to be distributed through local non profits and food banks; * FirstLight FCU, El Paso, Texas, partnered with the West Texas Food Bank to bring in more than 55,000 pounds of food during a recent holiday parade; * Smart Financial CU, Houston, partnered with the University of Houston Athletic Department to donate 12,000 pounds of food to Houston’s Star of Hope Mission (LoneStar Leaguer Nov. 30); * Bellwether Community CU, Manchester, N.H., sponsored the Tons of Turkeys food drive with a local radio station. The drive broke a record with the collection of 32 and 1/2 tons of turkey donated.

Plaintiffs in TJX breach case denied class action status

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BOSTON (12/3/07)--Banks and financial associations suing TJX Cos. because of losses sustained from its huge data breach, which was revealed earlier this year, cannot pursue their claims as a class action, a federal judge ruled Thursday in Boston. Judge William G. Young’s decision in U.S. District Court to deny class certification will not end claims against TJX, which is the parent organization of stores that include TJ Maxx and Marshalls (The Boston Globe Nov. 30). However, the judge’s decision will make it more difficult for plaintiffs to proceed because they will have to pursue claims individually. Some may not believe it’s worth the expense, lawyers said. “We still are studying the court’s decision, but obviously this is not a positive development,” Eric Richard, executive vice president and general counsel for the Credit Union National Association, told News Now. “Based on an initial reading, the decision appears to leave the door open for some possibility that the court may grant class action certification at a future stage of the case. “We will continue to work closely with the law firm litigating the case to clarify this issue and protect the interests of credit unions to the maximum extent possible,” he continued. One suit was filed against TJX by the bankers’ associations for Massachusetts, Connecticut and Maine, and four banks. The other suit is a consolidated suit by AmeriFirst Bank against Fifth Third Bancorp, the parent company of TJX card processor Fifth Third Bank. AmeriFirst Bank is also one of the four banks in the TJX suit. The suits allege that TJX improperly retained nonpublic personal information on millions of its customers and failed to protect the data in a reasonable manner. As a result, an intrusion that went undetected for about 18 months compromised at least 47.5 million credit and debit card accounts. Estimates of compromised cards doubled to 94 million in October. Banks and credit unions had to reissue a massive number of payment cards at an estimated cost of $25 each, according to court documents (News Now July 25).

CU in Boulder shares award-winning mortgage strategy

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BOULDER, Colo. (12/03/07)--Boulder Valley CU is sharing its award-winning mortgage strategy, which focuses on five areas.
Kimberley Morris, vice president of mortgage lending for Boulder Valley CU, received the First Place Award in the CUNA Mutual Group and the CUNA Lending Council's 2007 Credit Union Excellence in Lending national competition for mortgage lending. (Photo provided by Boulder Valley CU)
It recently was awarded First Place in the 2007 Credit Union National Association (CUNA) Excellence in Lending competition for mortgage lending. The award was sponsored by CUNA Mutual Group and CUNA Lending Council. Boulder Valley CU’s entry said its mortgage strategy focused on home buyer education to conduct responsible lending to the underserved in the community, and to promote responsible borrowing and home ownership, said Kimberley Morris, vice president of mortgage lending for Boulder Valley CU. Boulder Valley’s mortgage strategy focused on five distinct areas:
* Development of an employee-assisted housing program--targeting Boulder Valley select employee groups; * Facilitation of down payment assistance programs; * Promotion of product offerings, such as 2/1 Buy Down Loans, and My Community Mortgage; * First-time home buyer educational workshops for select employee groups and the community; and * Website mortgage center development.