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Study Big banks more apt to require arbitration in disputes

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WASHINGTON (12/3/12)--Big banks are forcing consumers to use arbitration in account disputes instead of taking a dispute to court, according to a new report by Washington, D.C.-based Pew Charitable Trusts. Credit unions surveyed did not do this.

The report, "Banking on Arbitration: Big Banks, Consumers, and Checking Account Dispute Resolution," examined the 100 largest financial institutions' resolution clauses-- including 92 checking account agreements for 85 banks and seven credit unions.

The study focused only on what was disclosed in the agreements, not additional rules and procedures required by private arbitration agreements. It also surveyed 603 consumers about their attitudes toward mandatory arbitration in checking accounts.

Of the 92 large financial institutions studied,  64% restricted dispute resolutions and 43% contained mandatory binding arbitration clauses. The percentage increases to 47% when considering only banks. None of the large credit unions studied include an arbitration clause in their account agreements, the report said.

The banks also banned class-action lawsuits, required waiving rights to a jury trial, restricted damages and shortened statutes of limitations on consumers' actions in potential disputes.

Of the checking account holders surveyed, more than two thirds said they should have a choice between taking a dispute to arbitration or to court, and 94% said that if arbitration is required, they should have a say-so on who arbitrates the dispute.  However, most consumers also said arbitration can protect against frivolous lawsuits.

"A checking account is the most widely used financial product in the U.S., and many bank customers become bound by a mandatory arbitration agreement when they open their account," said Susan Weinstock, Pew's project director. "We found that most consumers were not aware that their right to go to court is often limited if they have a dispute with their bank."

Of consumers surveyed, 57% did not know or could not remember whether their agreements included mandatory arbitration.

Other findings:

  • The larger the financial institution, the more likely an account agreement will require mandatory binding arbitration. Over half of the 50 largest financial institutions surveyed have such clauses, while 30% of the next 50 institutions contain the clauses.
  • Seventy-five percent of banks with arbitration clauses also include a ban on class action lawsuits.
  • More than half of the account agreements contained clauses where consumers waived the rights to a jury trial.
  • Roughly two-thirds of the agreements do not require the arbitrator to have a law degree.
  • Nearly nine in 10 of consumers surveyed disapprove of the procedural components of arbitration. Many found these features unacceptable: ongoing relationships between arbitration companies and financial institutions; the limited opportunity to appeal an arbitrator's decision; and the requirement that the consumer pay the bank's legal fees regardless of the outcome of the dispute.
  • Despite overwhelming dissatisfaction with the arbitration process, half supported the overall goal of arbitration: to be a simpler, less costly alternative to court.
Credit unions in the survey were:

  • Navy FCU, Vienna, Va.;
  • State Employees' CU, Raleigh, N.C.;
  • Pentagon FCU, Alexandria, Va.;
  • Boeing Federal (BECU), Tukwila, Wash.;
  • Schools First CU, Santa Ana, Calif.;
  • Alliant FCU, Dubuque, Iowa; and
  • The Golden 1 CU, Sacramento, Calif.
For the full report, use the link.

Fairwinds CU replaces bank as official campus FI

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ORLANDO, Fla. (12/3/12)--Orlando-based Fairwinds CU has become the official campus financial institution of University of Central Florida (UCF), replacing SunTrust Banks Inc., whose 10-year contract expired earlier this year.

It is the first time that a credit union has been the official banking partner of UFC (Orlando Sentinel Nov. 29).

Fairwinds, a $1.7 billion asset credit union, signed a contract for five and a half years. It will open a branch in a former SunTrust branch on campus in January.

University officials, in noting Fairwinds beat out big banks, said it became clear that the credit union sought to be more than a business partner and recognized it would be investing in students who are future community leaders.

Although many colleges work with their own employee credit unions, Fairwinds is one of a few to land an official university partnership, Mike Bridges, vice president of marketing and communications at the League of Southeastern Credit Unions, told the Sentinel. The university has 60,000 students--a big opportunity for membership growth, he said.  He noted that Florida and Alabama credit unions have gained 199,000 members in the past 12 months, the largest single year expansion in decades.

UCF banking professor Stanley D. Smith, a SunTrust customer, told the newspaper that the bank didn't believe it could meet its profitability targets based on the kinds of services the university wanted.  The credit union's nonprofit structure made it a better fit for what the university wanted in a partner, Smith said.

For the full article, use the link.

CU employees assaulted shots fired reward offered

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FORT WAYNE, Ind. (12/3/12)--Authorities are offering a $5,000 reward for information about three gunmen who entered a Fort Wayne, Ind., credit union Thursday morning, roughed up three employees and fired weapons before they fled with cash.

The incident occurred at ProFed CU just after 8 a.m. Thursday. Three men wearing sweatshirts with hoods pulled over their heads ambushed an employee as she arrived for work and forced her inside at gunpoint (The Journal Gazette Nov. 30 and News-Sentinel Nov. 29). Two other employees were inside.

The men battered the three employees and bound their hands and ankles. The men fired their weapons inside the building before fleeing. None of the employees required medical attention.

No members were inside the credit union at the time. However, a member waiting at the drive-through outside witnessed the robbers fleeing at the rear of the building and called 911.

A police dog led offices behind the credit union to a residential area but lost the scent. It was Fort Wayne's 13th robbery of a financial institution this year.

The Indianapolis office of the Federal Bureau of Investigation is offering the reward for information leading to the robbers' arrest.

BluCurrent CUs no-interest holiday loans popular

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SPRINGFIELD, Mo. (12/3/12)--BluCurrent CU in Springfield, Mo., is offering a zero-interest-rate Holiday Loan for a limited time that has proved to be in high demand.

Within the first seven days of offering the loan, BluCurrent's branches have disbursed 86 loans, totaling $138,000.

The loan includes:

  • Up to $1,000 at a 0% annual percentage rate with approved credit;
  • Twelve-month repayment period; and
  • Weekly or monthly repayment options for as little as $19.24 per week.
"When making the decision to offer this loan, our priority was to provide an option that would ease the stress that a tight budget can often bring during the holidays," said Randall Bettis, BluCurrent senior vice president of lending.  

"Many turn to high-interest credit cards or payday loans, especially this time of year," he added. "Being a local financial institution, we're fortunate that we have more freedom to offer unique types of loans to help save people money."

"We started offering the Holiday Loan the Monday before Thanksgiving, and since then we've seen loan volume in all of our branches increase significantly over this time last year," said Brad Christman, BluCurrent director of branch services.

"While $1,000 may not seem like a lot of money to some people, it's a big deal to those going through a rough patch during the holiday season," Christman added. "It's so rewarding to know that we can help them buy gifts for their kids; help them as they get back on their feet. That's what the holiday season is truly about."

Calif law CUs must report central site for legal process

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SACRAMENTO, Calif. (12/3/12)--As of Jan. 1, certain credit unions in California, like other financial institutions in the state, will be required to provide their regulator with information about locations designated to receive certain legal notices involving accounts.

Gov. Edmund G. Brown Jr.  signed Assembly Bill 2364 into law. It requires financial institutions to provide the California Department of Financial Institutions (DFI) a list of one or more central locations that would be served notices of levy or attachment against deposit accounts, the contents of safe deposit boxes, and other property held by institutions.

"This new law applies to all banks, credit unions and corporations engaged in safe deposit businesses with branches or offices in California, whether they are licensed by the DFI, federally chartered, or headquartered in another state," said DFI's Monthly Bulletin (October).

Specifically, credit unions and financial institutions with 10 or more California branches or offices must designate one or more central locations for service of the legal process, said the DFI. "Failure to designate a central location will result in all of the institution's branches or offices being deemed as central locations," the DFI said.

Those institutions with fewer than 10 branches or offices in the state have the option to designate one or more central locations as their legal process service location.

The state statute requires the DFI to maintain the information. DFI is also mandated to make the information accessible to the public by providing it to anyone who requests it or by posting the information online.

DFI is developing an electronic form to collect the information, which would include the address and hours of operation of the designated locations.  DFI licensees will receive an e-mail to their designated e-mail address with a link to a secure form to fill out.  Institutions not licensed by DFI may receive an e-mail with the link by subscribing to the "AB2364" e-mail top on DFI's subscription manager. Use the link.

San Diego County CU Poinsettia Bowl set for Dec 20

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SAN DIEGO (12/3/12)--The eighth annual San Diego County CU Poinsettia Bowl, a college football game, is set for Dec. 20.

The game--to be played in Qualcomm Stadium in San Diego, home to the National Football League's San Diego Chargers--will pit the hometown San Diego State Aztecs, with a 9-3 record, against the 7-5 Brigham Young University Cougars, whose campus is in Provo, Utah.

San Diego County CU is San Diego's largest locally owned financial institution, serving three local counties. It has $5.8 billion in assets and more than 240,000 members.

The credit union has been the bowl's title sponsor since the bowl was established in 2005. It has received nationwide media attention as the title sponsor over the years.

NerdWallet highlights 11 CUs money market accounts

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MADISON, Wis. (12/3/12)--NerdWallet has highlighted 11 credit unions that it says have good and sometimes unique money market accounts. is a personal finance and credit card comparison website launched in March 2010. It delivers recommendations on credit cards, personal finance options, discounts and gas prices. It also reports on credit card industry news and politics while providing financial advice and travel tips. The site's features include tools for comparing credit cards, online stores, gas prices, interest rates and credit unions. 

"Just like a savings account, a money market account is a deposit account that pays interest on your balance and limits you to a set number of withdrawals per month," NerdWallet said. "What's different? Money market accounts typically offer higher yields than savings accounts, and many of them give you the ability to write a limited number of checks as well. They'll also require you to maintain a high minimum balance to avoid a monthly fee.

"You'll be happy with a money market account if you already have a high savings balance and want a risk-free, interest-bearing account that allows you to access your money occasionally," NerdWallet added. "If that sounds like you, you know where to go: your local credit union."

NerdWallet singled out these credit unions for having worthy money market accounts:

  • Partners FCU, Burbank, Calif.;
  • Diamond CU, Pottstown, Pa.;
  • Trona Valley Community FCU, Green River, Wyo.;
  • Dover (Del.) FCU;
  • Space City CU, Houston;
  • Landmark CU, Danville, Ill.;
  • Ashland (Ky.) CU;
  • Penobscot County FCU, Old Town, Maine;
  • Chessie FCU, Cumberland, Md.;
  • Big Dutch Fleet CU, Holland, Mich.; and
  • Linn-Co FCU, Lebanon, Ore.
Several of the credit unions--Trona Valley Community FCU, Landmark CU, Penobscot County CU and Chessie FCU--offer tiered interest rates or tiered accounts.

Also, several of the credit unions offer money market checking accounts.   

To read the article, use the link.

Malware extorting ransom money under IC3 name

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WASHINGTON (12/3/12)--Cybercriminals using the Citadel malware platform to deliver Reveton ransomware are deploying a new extortion technique. The most recent version of the ransomware uses the name of the Internet Crime Complaint Center (IC3) to frighten victims into sending money to the perpetrators.

Besides creating a fear of prosecution, the malware claims the user's computer activity is being recorded with audio, video and other devices, IC3 said. IC3 is an interagency website that tracks cybercrimes and frauds.

The malware lures the victim to a drive-by download website, and installs the ransomware on the user's computer. Once installed, the computer freezes and a screen displays a warning that the user has violated U.S. federal law. The message declares that a law enforcement agency has determined that a computer using the victim's Internet provider address has accessed child pornography and other illegal content.

To unlock the computer, the user is instructed to pay a fine with prepaid money card services. The geographic location of the user's personal computer determines what payment services are offered. In addition to installing the ransomware, the Citadel malware continues to operate on the compromised computer and can commit online banking and credit card fraud.

"This is not a legitimate communication from the IC3, but rather is an attempt to extort money from the victim," said IC3's website. Users receiving such messages or something similar they should not follow payment instruction.

Instead, IC3 suggested they should:

  • File a complaint at ;
  • Keep operating systems and legitimate antivirus and antispyware software updated; and
  • Contact a reputable computer expert to assist with removing the malware.

CU System briefs (11/30/2012)

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  • CONCORD, N.H. (12/3/12)--Prince Sage, 28, of  New York and Laconia, N.H., was sentenced to five years in prison for his role in a December robbery of Northeast CU, Manchester, N.H. Sage pleaded guilty to robbing the credit union. He was the second defendant to be sentenced last week in the U.S. District Court for the District of New Hampshire for the robbery. Walter Williams, 44, Compton, Calif., received a 20-year prison sentence for several jewelry store holdups and the credit union robbery. Others arrested included Shyloe Johnson, who pleaded guilty to aiding and abetting a robbery, and Delano Nelson, whose trial will be in January (Federal Information & News Dispatch Inc. Nov. 29) …
  • IRONDALE, Ala.  (12/3/12)--Corporate America CU's new president/CEO, Pete Pritts, has begun his first week on the job. Pritts took over the helm of the $3 billion corporate during Thanksgiving week. He spent his first day meeting with employees, attending a chapter meeting as guest speaker and meeting some of the Irondale, Ala.-based corporate's long-time members in North Alabama.  Pritts also is planning to attend other chapter meetings to meet more credit unions served by the corporate credit union.  "We have loyal and dedicated people here," Pritts said. "It's obvious to me our staff cares very much about our membership, and I want that to continue as we move forward." (Photo provided by Corporate America CU) …
  • RALEIGH, N.C. (12/3/12)--
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    The Statesville, N.C., branch of Raleigh based State Employees' CU (SECU) kicked off its Supports the Troops campaign by displaying student artwork from Statesville Middle School. The visual art students used mixed media to create art inspired by the lyrics and songs of Bruce Springsteen's album, "The Rising."  Titled "The Illustrated Springsteen," the 24-piece collection included poems, pictures and word collages illustrating Springsteen's music in response to the aftermath of the Sept. 11, 2011 terrorist attacks.  The Supports the Troops campaign collection period ran from Sept. 15 to Oct. 31. SECU branches display local schools' artwork as part of an ongoing project established in 2003 to provide art teachers a venue to feature their school's programs and student artists. Originally launched with elementary school artwork, the project was so well received that SECU expanded it to include middle and high school students' artwork.  (Photo provided by State Employees' CU) …
  • TACOMA, Wash. (12/3/12)--Dave Olson, former manager and treasurer of Tacoma Telco FCU (now Sound CU) in Tacoma, Wash., died Nov. 27. He was 95 years old.  Olson led the credit union from 1969 through 1981. Before accepting that role, he served on the board of directors from 1953 to 1968.  He was chairman of the board for 11 years, vice chairman for three, and a director for two years. He previously was president of the Pierce County Chapter of Credit Unions. That organization recognized him with a lifetime achievement award in 1996. "Dave Olson was a true leader in the credit union movement," said Sound CU President/CEO  Richard Brandsma. "He took great pride in his service to the credit union and his contributions will not soon be forgotten."  Olson is survived by his son, Douglas Olson …

iBelong commercials premiere in four Pa cities

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HARRISBURG, Pa. (12/3/12)--
Chatting after the initial premier of Pennsylvania's iBelong commercials Thursday were, from left, Tim Ames, CEO of York, Pa.-based Heritage Valley FCU, and Pennsylvania Credit Union Association President/CEO Jim McCormack. (Photo provided by the Pennsylvania Credit Union Association)
The first premiere of new iBelong commercials for 2013 was Thursday for 17 Pennsylvania credit union attendees, said the Pennsylvania Credit Union Association (PCUA).

The new spots position credit unions as the best resource for loans said PCUA in its newsletter, Life is a Highway (Nov. 30).  Each spot ends with the tagline "Get the Credit You Deserve."

PCUA's service corporation, Pacul Services Inc., provided funding for the new commercials.

The credit unions attending were from the Harrisburg-Lancaster-Lebanon-York media market. More premieres will be conducted this week in Altooona/Johnstown, Pittsburgh and Erie media markets.

Next week the Lehigh Valley/Berks and Wilkes-Barre Scanton media markets will see the ads for the first time.