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Latest data breach hits supermarket chain

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PORTLAND, Maine (3/18/08)--A breach into the computer system of Maine-based Hannaford Bros. Co. supermarket chain resulted in the theft of up to 4.2 million customer credit and debit card numbers from more than 200 stores in several states, according to the company. The intrusion affected all 165 Hannaford stores in New England and New York State, and 106 Sweetbay stores in Florida. Also affected were certain independently owned retail locations in the Northeast that carry Hannaford products, the company said. Hannaford said in an announcement on its website the data was accessed illegally from the company's computer systems during the card verification transmission process in transactions. The stolen data were limited to credit and debit card numbers and expiration dates. "No personal information, such as names or addresses, was accessed," said President/CEO Ron Hodge. "Hannaford doesn't collect, know or keep any personally identifiable customer information from transactions." The company can't send letters directly to the potentially affected customers "because we do not have their names and addresses," it said on the website. Carol Eleazer, Hannaford's vice president of marketing in Scarborough, Mass., said the numbers potentially exposed to fraud are estimated at 4.23 million (Associated Press March 17). That would put the breach among one of the largest retail breaches experienced so far, but nowhere near the TJX Cos. breach of last year, which compromised up to 94 million cards and resulted in a number of lawsuits from financial institutions seeking to recoup expenses from reissuing cards. Hodges said the company became aware of unusual card activity on Feb. 27. Investigators discovered that the data breach began on Dec. 7 and it wasn't contained until March 10. "We would advise customers that have made purchases at our stores using credit or debit cards over the last three months, and who suspect that their accounts may have been compromised, should immediately notify their card issuer or bank," said the Hannaford website. The Massachusetts Bankers Association said that between 60 and 70 of its member banks were contacted by Visa and MasterCard but the retailer was not identified. An attorney with the Maine Credit Union League asked for help from the Credit Union National Association in alerting credit unions.

Maryland closing-costs bill goes to governor

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ANNAPOLIS, Md. (3/18/08)--A credit union-backed, closing-costs measure that reverses the Maryland Court of Appeals Bednar v. Provident decision passed the Maryland General Assembly last week and is on its way to the governor for signature. The reversal means that a financial institution can recapture closing costs from a borrower who repays a mortgage loan early, according to the Maryland and District of Columbia Credit Union Association (MDDCCUA) (FOCUS Newsletter March 17). In December, the Court of Appeals had ruled that a financial institution could not recapture closing costs because to recapture waived closing costs essentially created a prepayment penalty. However, no commissioner on financial regulation had ever guided state-chartered institutions this way, said MDDCCUA. Maryland would have been the only state required to comply with the decision. Senate Bill 347 and House Bill 852 allows state-chartered credit unions and banks to continue legally the practice of collecting the closing costs on both mortgage loans and lines of credit that are repaid early. MDDCCUA CEO Mike Beall and outside counsel Jim Brown testified in support of the legislation during legislative hearings last month.

First woman elected presidentCEO of Desjardins Group

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QUEBEC CITY (3/18/08)--The Desjardins Group Saturday elected the first woman to become president/CEO of the group--Monique F. Leroux. Leroux is senior vice president and chief financial officer of the group. She succeeds Alban D’Amours, who held the position since 2000. She will take office at the Annual General Meeting March 29 in Quebec City. Leroux has served as senior vice president of the group since August 2004. Prior to her position, she served as the president of the Desjardins Financial Corp. and CEO of its subsidiaries. She also has been named as one of Canada’s Top 100 Most Powerful Women by the Women’s Executive Network of Toronto, and one of Canada’s Top 25 Women to Watch in 2008 by the Women’s Post. Desjardins is the largest integrated cooperative financial group in Canada, with assets of more than $144 billion as of Dec. 31, 2007. It consists of a network of caisse populaires (credit union), their branches and financial centers.

Filene i3 seeking 12 new members

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MADISON, Wis. (3/18/08)--The Filene Research Institute is seeking 12 new members for its i3 (ideas, innovation and implementation) research group. The 39 members of i3 are credit union innovators from the U.S. and Canada who study factors affecting credit unions, and explore demographic changes, buying and investment patterns and needs of consumers to create sustainable growth for credit unions. Members reflect diversity in experiences, credit union positions, geography and credit union membership. They serve three-year terms, must be in a position of substantial responsibility (but not yet a CEO) and are required to attend two national meetings per year. Support from their credit union is essential. Candidates can apply online by May 27. For more information, use the link.

Wisconsin lawmakers adjourn for year minus CRA-type bill

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PEWAUKEE, Wis. (3/18/08)--Wisconsin legislators Thursday adjourned for the year without acting on a bill introduced last month that would require state-chartered credit unions to prove they serve people of modest incomes. The bill, supported by the Wisconsin Bankers Association, would have placed requirements on state-chartered credit unions with more than $100 million in assets. The requirements would have been similar to those contained in the Community Reinvestment Act (CRA). The league has argued that the bill would burden credit unions with costly and unnecessary regulation. “Looking at the many REAL Solutions programs our credit unions are engaged in, it’s clear they meet this requirement every day, all across the state,” Tom Liebe, vice president of governmental affairs at the Wisconsin Credit Union League, told News Now. During a state Assembly Committee on Financial Institutions, league staff reminded committee members that a reading of Wisconsin law reveals that a credit union exists to “encourage thrift among its members, create a source of fair credit at a fair and reasonable cost, and provide an opportunity for its members to improve their economic and social conditions.” “Introduction of the bill certainly makes clear the need for credit unions to continue to stand up and tell decision makers their unique and meaningful stories of service to members and communities,” Liebe said.

Utah governor signs CU business loan reform bill

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SALT LAKE CITY (3/18/08)--Utah Gov. Jon Huntsman Jr. has signed a bill that would result in fewer restrictions against Utah's state-chartered credit unions in the areas of business loans and loan caps. He signed Senate Bill 296, sponsored by Sen. Curtis S. Bramble (R-Provo), last week, according to the State Legislature website. "For nearly a decade Utah bankers have been telling our legislature that the world is flat," Scott Simpson, president/CEO of the Utah League of Credit Unions, told News Now. "The passing of this bill, though not perfect, is a sign that our legislative leaders are beginning to see through the hyperbole and hollow arguments. "Our House speaker and Senate majority leader have shown great leadership in the face of intense pressure on this issue." Simpson added. The new law:
* Increases the amount a credit union can loan to its members to 4% of assets from the current cap of 1%; * Eliminates a requirement that borrowers must be members at least six months before they can get a business loan and makes members eligible for a business loan immediately upon joining a credit union; and * Maintains the current $250,000 cap on business loans but allows the cap to increase with inflation, beginning May 5 with an increase each year on Jan. 1. The inflation figures are tied to the Consumer Price Index.
The bill was part of a compromise solution negotiated between the Utah League of Credit Unions and the Utah Bankers Association in which both groups promised not to seek changes in the law for at least five years (News Now Feb. 26).

CUNA releases new Desjardins rules forms for 2008

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MADISON, Wis.--The 2008 Desjardins Youth Financial Education Award recognition program will include changes to both the credit union and league judging criteria. “Based on input from the judges, we’ve refined the criteria to allow credit unions the choice of having their in-school branch programs evaluated. We’ll also be assessing league entries in terms of recordkeeping—compiling data to illustrate credit union leadership in financial literacy,” said Philip Heckman, director of youth and young adult programs for the Credit Union National Association (CUNA). “Both of these changes are meant to better reflect the movement’s wide-ranging innovation in personal finance education,” Heckman added. As in the past, raw scores will be compared as a percentage of maximum points, as determined by the decision to enter in optional categories or not. For 2008, credit union and chapter entries will be judged on three mandatory and two optional criteria:
* Awareness and teacher training; * Youth instruction; * Collaboration; * In-school branch programs (optional);and * Legislative and regulatory advocacy (optional).
League criteria for 2008—four mandatory and one optional—will be:
* Awareness and teacher training; * Youth instruction; * Collaboration; * Recordkeeping; and * Legislative & regulatory advocacy (optional).
Participating leagues will determine entry deadlines for their respective states. The deadline for leagues to submit state winners in one of six categories to CUNA for national judging is Oct. 1. Further details and all entry forms are available on CUNA’s website. The Desjardins Award is named in honor of Alphonse Desjardins, the founder of the North American credit union movement. It considers all activities supporting the personal finance education of young members and nonmembers, including, but not limited to, face-to-face teaching, publicity, lobbying for curriculum requirements, teacher and volunteer training, and promotion and use of the National Endowment for Financial Education High School Financial Planning Program. Each year, national Desjardins winning and honorable mention awards are presented at CUNA’s Governmental Affairs Conference in conjunction with the Dora Maxwell Social Responsibility and Louise Herring Philosophy in Action recognition programs.

ATM hack attack at former CU spreads

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BEDFORD, Texas (3/18/08)--An ATM hack attack at Omni-American Bank (formerly Omni-American CU) has spread, affecting members at other financial institutions, including credit unions. Fort Worth Community CU members who used their debit cards at ATMs owned by OmniAmerican Bank reported unusual activity on their accounts to the credit union, Diane Dorsey, vice president of operations at Fort Worth Community CU told News Now. When Fort Worth Community CU first received the reports of suspicious activity, it reissued members new cards. It also checked the unusual activity for common denominators and found that the affected members had used OmniAmerican ATMs. “It was not a breach of our system,” Dorsey emphasized. About 50 members of Forth Worth Community CU reported suspicious activity. “The effects were really quite limited,” Dorsey said. Omni-American Bank ATMs had stored card data “that they were not supposed to,” Dorsey said, so when the data system was hacked into, the hackers were able to use cardholders’ information to make purchases. OmniAmerican replaced about 40,000 cards, Dorsey added. The ATM hacking also spread to Naval Air Station Fort Worth--whose victims had accounts at Bank of America, USAA and Navy FCU in Vienna, Va. (Fort Worth Star-Telegram (March 15).