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Tax refund fraud is among latest scams

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WASHINGTON (2/18/10)--Credit unions should warn members that tax-filing season brings out tax-preparation frauds. The latest scheme involves tax refunds transmitted as a direct deposit or automated clearing house (ACH) credit. CUNA Mutual Group alerted its policyholder credit unions Monday of the ACH Tax Refund fraud scam and urged credit unions to inform employees that consumers are being drawn in to fraud schemes by individuals claiming to be tax preparers (The Daily Exchange Feb. 17). In this type of fraud, the victims unwittingly provide the bogus tax preparers with personal information such as their name, Social Security number, bank account numbers, investment information and more so the preparers can complete the tax forms. The tax preparer inflates the information with fraudulent information to obtain a larger refund. Some victims have found their tax preparers have claimed children they don't have, day care expenses and so on. The tax refunds are transmitted as a direct deposit (ACH credit) to a newly created account or to an existing account with an impersonator added as a joint owner. These accounts are established by an impersonator or a recruiter. Once the tax refund is deposited into the account, the impersonator or recruiter withdraws the tax preparation fee. The remainder of the ACH credit goes to the refund recipient. CUNA Mutual told credit unions that the Internal Revenue Service (IRS) will attempt to reclaim the ACH credits involving fraudulent tax returns. Credit unions, as the receiving depository financial institutions, are not liable if funds have been removed from the member's account and no funds are available to return, said the insurer. Credit unions should not honor a return request from the IRS since IRS warrants the liability, the company said. To mitigate risks, credit unions should be alert to these situations:
* The addition of new joint owners on a member's account. Consider freezing the account if the credit union suspects this involves a fraud. * New account openings receiving an ACH credit into the account from IRS. * The scammer has already removed the funds. In this case, the credit union is not required to return the ACH credit to the IRS if the credit union was unaware of a misdirected payment.
CUNA Mutual suggested these actions:
* Contact the association the credit union works with for ACH questions. * If the credit union has encountered this fraud situation, it should contact the local IRS, even if the credit union has not taken a loss: and * File a Suspicious Activity Report (SAR).
Last year the IRS prosecuted more than 200 people as phony tax preparersn said Seattle-based (Public News Service Feb. 17). The IRS is already busy checking up on new tax scams, ranging from filing false returns to convincing clients they don't need to pay income taxes, The agency warns consumers about tax fraud scams every year. Richard Panick, field media relations specialist with the IRS, warned consumers to be extra careful when a preparer bases the fee on a percentage of promised refund. Consumers should also avoid preparers who claim to know something special or that they can get more money than anyone else, Panick told the news service. Also plan to sit with the preparers as they fill out the tax forms. Never just sign a blank form and trust them to file it, he said.

Superhacker Iceman sentenced to 13 years

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PITTSBURGH (2/18/10)--A former computer security consultant from San Francisco was sentenced Friday in Pittsburgh to 13 years in prison for stealing nearly two million credit card numbers from financial institutions, businesses and other hackers. Max Ray Vision, 37, who recently changed his name from Max Butler and was known as "Iceman," pleaded guilty in June to wire fraud and identity theft charges. He received the longest hacking sentence in U.S. history--for now. In addition, he will face five years of supervised release and must pay $27.5 million in restitution to his victims. Vision faced life in prison but has been cooperating with authorities. Vision was arrested with 1.8 million stolen credit card numbers belonging to thousands of financial institutions, possibly including credit unions. The fraudulent charges totaled more than $86.4 million, said Wired.com (Feb. 12). He even stole from other criminals. Vision ran an online forum for thousands of identity thieves called CardersMarket.com, where he sold credit card magnetic stripe data for about $20 a card, said Wired.com. He hacked into carder forum websites where criminals bought and sold stolen card numbers, wiped out their databases and forced them to conduct their business through CardersMarket.com, said Computerworld (Feb. 12). In the late 1990s he provided information to the Federal Bureau of Investigation on security and piracy threats and created an open source library of attack signatures used to detect computer intrusions. However, in 2001, he was sentenced to 18 months in prison for launching an attack that launched malicious software on thousands of Pentagon systems. In prison, he met former bank robber Chris Aragon, who became his partner. Aragon, whose trial on related state charges in California is pending, allegedly used Vision's stolen card data to create counterfeit cards, complete with holograms, and recruited shoppers who used the cards to snap up designer merchandise for resale on eBay, said police. Vision's plea deal wraps up a separate federal case in Virginia, where he was charged with staging the first documented "spear phishing" attack against employees of a financial institution by unlawfully accessing the corporate network of Capital One bank. His record sentence likely will be broken next month when confessed TJX Cos., Heartland Payment Systems and Hannaford Bros. hacker Albert Gonzalez is sentenced. Gonzalez has two sentencing hearings. One of his plea agreements is considering a term of 17 to 25 years in prison.

CU is first in West Virginia to hit 300M assets

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WEIRTON, W.Va. (2/18/20)--First Choice America Community FCU, based in Weirton, W.Va., is the first credit union in West Virginia to surpass $300 million in assets, according the Daily Times Online (Feb. 16). During First Choice's 71st annual membership meeting, West Virginia Credit Union League President Ken Watts explained the credit union has continued to grow when other financial institutions have had difficulties and it continues to stand as the largest credit union in the state, the newspaper reported. Watts noted that although 2009 did not have a lot of bright spots, "One of them was right here with your credit union." Board member Edward Kennedy said First Choice has been able to increase the number of loans and deposits while keeping its delinquencies lower than many other banks and credit unions.

The real difference--media spotlight on CUs

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MADISON, Wis. (2/18/10)--Monday's deadline for certain provisions of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act presented a flurry of opportunities for media coverage of credit unions' lower rates. At least five credit card-related articles in the past two days brought consumers' attention to credit unions. That's on top of a two-week long media spree that featured national publications discussing credit unions related to credit cards, member business lending, and an anti-big bank consumer movement to "Move Your Money" to credit unions. Two separate stories, written by CreditCards.com staff, were published by Fox Business's website. Entitled "One in 10 has given up--or lost--credit cards in the past eight months," it reports a survey by the Consumer Federation of America and the Credit Union National Association (CUNA) that found most Americans don't clearly understand the CARD Act and its implications (foxbusiness.com Feb. 15). In it, CUNA Chief Economist Bill Hampel explains that it's no wonder consumers are confused. "They've been inundated by changes," he said. "Given the significant volume of mailings consumers have received from the credit card companies and the number of pages that are in those mailings, actually knowing what changes are involved is no trivial feat." The CFA/CUNA study is also cited in a second article, "White House to answer consumer questions about Credit CARD Act," about consumers' unawareness of the new protections in the act (foxbusiness.com Feb. 15). In The Lantern, Ohio State University alumna Jamie Chase, co-inventor of American Debt Relief Challenge, says Americans who took the challenge saved $20 million by transferring their debt from banks to credit unions. She compares typical bank interest rates (18%-20%) with credit unions' rates (6%-12%). "Banks exist to make a profit. Credit unions are more like libraries; they only exist to serve," Chase told the publication. She added, "They only exist to make life better, and a lot of people don't know that." Chase also mentioned a credit union program in Mali, West Africa and the PBS's BizKid$ money management show for children that is underwritten by credit unions. "Credit Union Credit Cards May Bring Better Rates and Lower Fees Than Banks," an article in the blog, Red, White, and Blue Press, advises several times to look into a local credit union and compare rates and fees on credit cards. "On average, customers of a credit union with a credit union credit card are getting better rates and fees than at banks." The article also discusses how credit unions are different from banks (rbwpress.com Feb. 16). An Associated Press article addressed to consumers fed up with their bank's credit card fees and terms and asking "Would switching to a credit union bring any relief?" is still making the rounds after the initial article was published in The New York Times early last week. The latest version surfaced Monday in the Grand Junction Free Press.

Georgias Mercer advises readers on managing card debt

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DULUTH, Ga. (2/18/10)--While the new Credit Card Accountability, Responsibility and Disclosure Act of 2009 going into effect Monday will bring some changes to the credit card landscape, consumers still need to be fiscally responsible and look for the best card deals, said a Georgia credit union official. “Unfortunately there’s no magic formula to make bad debt go away or keep people from overspending,” Mike Mercer, president/CEO of Georgia Credit Union Affiliates, said in the Savannah Morning News Wednesday. “My advice today is the same as it would always be: make payments on time, pay more than the minimum, and shop around for the best rates,” he added. “There’s really no way around it,” said Mercer. “We just have to live within our means, and we can’t be reckless with credit.” Credit unions historically have lower interest rates because as nonprofits they have no incentive to make large profits, he added. To read the article, use the link.

Bucks First FCUs IYouTubeI commercial a hit

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BRISTOL, Pa. (2/18/10)--A Bucks First FCU’s YouTube commercial has received more than 300,000 views, said Hilary Reed, Bucks First vice president of marketing. “Including the behind the scenes videos, we’re totaling more than 600,000 views. We think this is awesome for all credit unions across the nation ... the more we can spread the word about credit unions, the better,” Reed told the Pennsylvania Credit Union Association (Life is a Highway Feb. 17). The humorous 90-second commercial touts how the credit union takes care of “bucks” (money) better than banks. It went live Feb. 3. Bucks First FCU, based in Bristol, Pa., has $88 million in assets. To view the commercial, use the link.

League opposes Honolulu plan to up property tax

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HONOLULU (2/18/10)--The Hawaii Credit Union League testified before the Honolulu City Council Budget Committee Feb. 10, opposing a bill that would raise or eliminate a deeply discounted property tax on nonprofit institutions such as credit unions. In addition to credit unions, the city’s $100 minimum tax for nonprofits applies to churches, private schools and other social service organizations (Honoluluadvertiser.com Feb. 17). However, because Honolulu is grappling with a $140 million budget shortfall for the coming fiscal year, the $100 minimum tax is becoming harder to justify, Nestor Garcia, City Council Budget Committee chairman, told the newspaper. Although the committee deferred two proposals that would raise or eliminate the minimum tax, the measures could be reintroduced during budget deliberations slated to begin in March, Garcia told the paper. The league opposes a proposed cap on the real property tax exemptions credit unions for several reasons, Michael Leach, league legislative/regulatory affairs manager, told the committee. News Now obtained a copy of Leach’s testimony. Leach said the league seeks to retain the “real property tax exemption for credit unions” because:
* Credit unions are not-for-profit, member-owned financial cooperatives with the sole purpose of serving member needs, particularly members of modest means; * The cost of any tax paid by a credit union is a cost paid by that credit union’s member-owners; * Unlike for-profit financial institutions that are able to access capital from external sources (issuing common or preferred stock for instance), a credit union can add to (strengthen) its capital only by retention of net income; and * As a consequence of deriving capital only from credit union members, any impairment on a credit union’s net income will reduce its ability to grow capital needed for safe and sound operations, especially in this troubled economy.

W.Va. CUs loan growth remarkable says league

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PARKERSBURG, W. Va. (2/18/10)--Loan growth at West Virginia credit unions is “remarkable,” the West Virginia Credit Union League told the Charleston Gazette Sunday. As of Sept. 30, loan growth was 5.5%--or $1.5 billion, Rich Shaffer, league senior vice president of marketing and communications, told the newspaper. The growth is remarkable because the last four quarters were some of the worst economic declines in history, he added. Assets also grew by 8.5% last year and savings increased by 7.6% in the same time period. West Virginia has 107 credit unions as of Sept. 30 with combined assets of $2.6 billion and savings of $2.1 billion. Shaffer also commented on an independent national survey that showed credit unions scored higher than banks in 10 of 11 interest-rate categories. Banks do poorly in such surveys because their structure is to maximize profits for stockholders, whereas credit unions are nonprofit institutions, Shaffer told the paper (Feb. 14). The article, “Credit unions are low-cost alternative to banks,” also noted that credit unions have garnered positive media coverage from personal finance guru Suze Orman, who talked about credit unions on CNN’s “Larry King Live,” and Diane Sawyer, who mentioned credit unions in a story appearing on ABC’s “World News Tonight.” Orman and Sawyer said that many consumers are moving their money to credit unions from banks because they are tired of banks’ poor customer service and high fees.

SECU partners on IDAs for homeownership

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RALEIGH, N.C. (2/18/10)--State Employees’ CU (SECU), Raleigh, N.C., will serve as the primary financial institution for a program that will offer eastern North Carolina residents individual development accounts (IDA) to help them purchase homes. SECU is supporting River City Community Development Corp.’s efforts to help residents attain homeownership with grant funding from the North Carolina Department of Labor. The grant will help create the IDA programs in the state. SECU will open IDAs for current and potential members who quality for the program. The program will allow residents of Chowan, Fates, Pasquotank, Dare, Camden, Currituck and Perquimans counties to open IDA accounts and receive matching funds to make a down payment on a home. Every dollar saved up to $1,000 will be matched at a 2-to-1 ratio. “Northeastern regions of our state have higher concentrations of low-income residents who often struggle to save and attain long-term goals such as homeownership,” said Tyrone Tyler, senior vice president of SECU’s Elizabeth City-Halstead Boulevard branch. SECU has $18 billion in assets.

CU System briefs (02/17/2010)

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* LOS ANGELES (2/18/10)--California Bear CU board member Sherman Grancell celebrated his 100th birthday and 58 years of service on the board Friday. Grancell became a board member of the credit union
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in 1952 while working as a judge and deputy commissioner for the state's Workman's Compensation Board. He continued on the board after he left state employment in 1979 to start a law firm, Grancell, Kegel and Tobin, and still is an active board member today. A life-long resident of Southern California and one of the founding members of UCLA, Grancell graduated from University of Southern California Law School. He is a major sponsor of the arts in Los Angeles, having established scholarships to four music schools and cultural centers. "The greatest thing about having someone like Sherman on our board is the depth of knowledge about and the perspective that he can give on the issues facing our credit union and the industry today," said credit union CEO Jennifer Oliver. Grancell is shown here with his sister-in-law, Ruth Kaufman. (Photo provided by California Bear CU) ... * RENO, Nev. (2/18/10)--Members of Frontier Financial CU, an $85
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million asset credit union based in Reno, Nev., raised more than $10,601 during 2009 for Children's Miracle Network, a national organization that benefits patients at children's hospitals across the country. Frontier Financial President/CEO Bruce A. Rodela presented a check for $10,601.80 on Feb. 9 to representatives of the Renown Health Foundation. Pictured are, from left: Rebecca Johnston, Frontier Financial CU; Kiemmy Boc, Renown Foundation; Rodela; Becky Haas, Renown Health; and Joel Muller, Renown Foundation. (Photo provided by Frontier Financial CU) ...