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Vermont No one size fits all answer in breach

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SOUTH BURLINGTON, Vt. (3/24/08)--There is no easy solution for dealing with the effects of a recent data breach involving Hannaford Bros. grocery stores, the Association of Vermont Credit Unions said Friday. About four million cards were compromised by the breach, which Scarborough, Maine-based Hannaford announced last week (News Now March 19). “Although dwarfed in size by last year’s massive TJX breach, this one hits closer to home because so many New England residents buy groceries with their debit and credit cards at Hannaford stores,” the association said (Newsline Express March 21). The association also said credit unions are handling the breach in various ways. Many credit unions are re-issuing credit cards to protect against fraud. Others are alerting members to the breach and asking them to monitor their accounts closely. Those re-issuing cards must weigh several considerations, including:
* Fees incurred for reissuing cards that may never be used fraudulently; * Potential for losses to members and the credit union if a compromised card is used for fraud; * The inconvenience to members if a card is deactivated before they receive a new card; and * Increased expenses for labor and public relations.
The association recognized that while technology is improving at a rapid pace, criminals continue to find ways to circumvent security. The only good thing to come out of the scenario is for those investigating the case to learn how to prevent future breaches.

Iowa CUs ready to hunker down for 2008 economy

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DES MOINES, Iowa (3/24/08)--Iowa's credit unions are preparing for how the 2008 economy will affect their members and the credit union. Iowa's credit unions and banks have mostly sidestepped the subprime loan crisis, but are now preparing for a falling-interest-rate environment, reported a survey by the Des Moines Sunday Register (March 16). Nearly 48% of credit unions and banks in the state surveyed expect lending conditions to become more challenging, while 27% of the 33 credit unions surveyed expect a "good to excellent 2008. Credit unions are offering programs to help their members and developing strategies to grow in a challenging economy. Ascentra CU, based in Bettendorf, has experienced members asking for help with home loans they took out elsewhere and were having trouble repaying. If a home still has equity, the loans can be remodified, the credit union told the newspaper. The Iowa Credit Union League has several initiatives to help credit unions have a good year in 2008, Pat Jury, league president/CEO, told News Now. "In 2007, the league formed its Credit Union Growth Commission, comprised of 23 Iowa credit union leaders, to review trends in the industry and market research related to credit union growth," he said. The commission will offer recommendations for credit union growth strategies. "Earlier this year, the commission identified five substantive issues critical to the discussion of credit union growth and vitality," Jury said. The prioritized concepts are:
* Back office support credit union service organization (CUSO); * Human resources support CUSO; * Marketing support CUSO; * Mobile banking; and * Virtual bank.
The league "will continue to research these five areas and develop business plans for these models. While the Growth Commission has accomplished a great deal over the past several months, this is just the first phase to achieving credit union growth in Iowa," Jury said. A second initiative is making financial education a top priority in the state. The league's governmental affairs team has worked with both the public and private sectors in support of Senate File 2216, which would require school districts to implement a core curriculum into current courses that include the teaching of financial literacy. This legislation has passed through the Senate and is expected to be debated in the House Education Committee this week, the league said. In a third initiative, the Iowa Credit Union Foundation, with Coopera Consulting, will soon launch the Credit Union Family Partnership Program, an individual development account (IDA) program in which credit unions offer a savings account to qualified new and existing members and match the amount saved, dollar for dollar. "The money saved can be used toward closing costs and down payment on a first home; to start or expand a small business; to pay for post-secondary education or job training, or to purchase a vehicle to get to work," Jury said. IDAs help low-income families build positive net worth and improve their financial stability. The program is available to those who receive Iowa's Family Investment Program, are eligible for the Earned Income Tax Credit, or whose income is at or below 200% of the federal poverty limit. The foundation program is possible thanks to a $250,000 anonymous donation and a $10,000 grant from Prairie Meadows in Central Iowa. The foundation's Executive Committee will announce credit union participants in the next few weeks, Jury said.

New study Payday lenders in Ohio still growing

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COLUMBUS, Ohio (3/24/08)--The number of payday lenders in Ohio increased to 1,638 in 2007 from 107 in 1996, indicated a study released Wednesday. The study, conducted by Housing Research and Advocacy Center, and Policy Matters Ohio, also sent testers to visit 36 payday lenders in Cleveland and Columbus. They found that the lenders charged maximum interest rates and fees under Ohio law. Payday lending staffers also were not always able to explain percentage rates (Dayton Daily News March 19). On average, fees were $15 for each $100 borrowed--391% annually, the newspaper stated. The article noted that credit unions in the state continue to offer payday loan alternative StretchPay--including Wright-Patt CU, Fairborn; Day Air CU, Kettering; and First Day Financial FCU, Dayton. StretchPay charges 18% interest on 30-day loans of $250 or $500. The program started in Dayton in 2006. It now has 27 locations in Ohio and five in other states. The program saved has members $3 million in interest so far, Patrick Harris, director of media relations at the Ohio Credit Union League, told the Daily News. The article also cited hearings held by the Ohio House Financial Institutions and the Real Estate Securities Committee regarding three payday lending bills. Two of the bills would allow check-cashing lenders to charge 36% per year on loans, and the other would allow lenders to charge 25% annually (News Now Dec. 21).

Hannaford lists 24 other grocers affected in breach

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BOSTON and SCARSBOROUGH, Maine (3/24/08)--Hannaford Bros., the Maine-based grocery store chain that announced a data breach last week, has posted a list of 24 other, independent groceries affected by the breach. The grocers are located in Maine, New Hampshire and New York. They include several Shop 'N Save and Paradis stores and others. (For a full list, use the resource link.) They are in addition to the 165 Hannaford Bros. stores in several New England states and 106 Sweetbay stores in Florida affected when the company announced the breach last week. Maine's credit unions and banks will feel the brunt of the attack, which the Maine Credit Union League has called more significant to Maine's credit unions than last year's TJX Cos. discount store breach. Jon Paradise, governmental and public affairs manager at the league, told media that just about everyone in Maine probably bought groceries in the time period of the breach--from Dec. 7 to March 10, so the pool of users in the state affected would be much larger. "We're still trying to get our arms around it and figure out what the whole scope of it is," he told Associated Press (via Business Week March 21). Already, the 68 credit unions are reissuing more than 100,000 credit and debit cards to try to limit the amount of fraud. Hannaford says that about 4.2 million card numbers are compromised. Security specialists are calling the breach the first-of-its-kind crime, because the credit and debit card numbers were stolen while in transit when a consumer swiped their card at a purchase, rather than from a database with stored information. (Mainebiz March 21). The new information prompted the Massachusetts Attorney General's office Friday to "strongly urge" Hannaford customers to "take precautionary steps" and contact the fraud departments of their card issuers, review their account statements and cancel the card if they find evidence of fraud. "We now believe that any consumer who made any purchase with either a credit or debit card at a Hannaford Brothers Supermarket between Dec. 7, 2007, to March 10, 2008, should assume that their credit or debit card numbers have been compromised," said Attorney General Martha Coakley. Two lawsuits already have been filed in the breach (News Now 3/21/08).

Fire at host facility shuts down CUs website

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APPLETON, Wis. (3/24/08)--A fire at a web hosting site facility in Green Bay, Wis., Wednesday night temporarily shut down the website of Appleton-based Prospera CU, along with other clients, the credit union said Friday. Members could still make online transactions by visiting, calling or visiting branches, the credit union said, adding the outage won't affect the security of members' funds (Appleton Post-Crescent March 21. The fire was at Connecting Point, which is housed with Camera Corner in Green Bay. The business was open Thursday but was without telephone or Internet service, according to the Green Bay Fire Department (Press-Gazette March 20). The credit union's e-mail communications were also impacted, but were back up Friday. "We could get and send e-mail internally but not externally," said Kristi Van Schyndel, director of marketing. The credit union hoped to have its regular site back up and running within 72 hours of Wednesday night's fire, Van Schyndel told News Now. "Right now we're working on getting e-mail communication to our members, and we're trying to get a splash web site up as soon as the web host can redirect it." The credit union Friday was sending an e-mail communication to members informing them how to continue making transactions and accessing their funds. It also was trying to contact the web host so the host could redirect visitors to a "splash" website" until the regular site is live again. The cause of the fire, which was confined to the company's computer network room, has not been determined, said the fire department. Damage to the company is estimated in the "hundreds of thousands of dollars." It wasn't known how many websites were affected or whether other credit unions were among them.