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CU System briefs (03/30/2012)

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  • DES MOINES, Iowa (4/2/12)--A Des Moines-based credit union wired $14,000 to an account in Australia to help out a member who wanted to pay for funeral expenses for a nephew and had requested the wire transfer. However, the request was bogus. A crook had hacked into the member's e-mail account and sent the request via e-mail to the credit union. Financial Plus CU has reimbursed the member's account and is trying to recover the funds that went overseas, police said. The member's nephew is alive and does not live in Australia (Des Moines Register and CBS 2 March 30) …
  • EL PASO, Texas (4/2/12)--El Paso Mayor John Cook is the latest Texas city official to sign an "International Year of Cooperatives" proclamation, signifying the critical role played in the community by nine Texas credit unions making up the El Paso Chapter of Credit Unions. Pictured are credit union representatives who attended the signing ceremony Tuesday.  "Credit unions are among the most recognizable and widely embraced cooperative businesses in Texas," said Texas Credit Union League President/CEO Dick Ensweiler. He noted the proclamations help the public understand that by joining a credit union, they are actually earning money.  El Paso joins Corpus Christi, Del Rio, Fort Worth, Galveston, Houston, Kingsville, Tyler and other communities that have made proclamations that stress the opportunities that cooperatives provide for local economic development and people from a variety of socioeconomic backgrounds (LoneStar Leaguer March 30). (Photo provided by the Texas Credit Union League) …
  • WYOMISSING, Pa. (4/2/12)--Utilities Employees CU (UECU), a credit union serving the energy and utility industry nationwide, has passed the $1 billion asset range, the Wyomissing, Pa.-based credit union announced Friday. UECU is a virtual credit union that provides financial services to employees for 600 utility companies and their families. The milestone makes the credit union one of the 200 largest credit unions in the U.S. in terms of asset size. "Our operating expenses are consistently less than half those of the typical credit union our size," said Glen A. Yeager, president/CEO at UECU. "We have developed a virtual business strategy that allows us to run efficiently and return profits to our members, while providing a superior level of personal service," he added. For more than 75 years, UECU has operated without a branch system, initially handling its long-distance transactions by mail. Today members can manage their accounts 24 hours a day through its online home banking system and other electronic services, or by phone …

Retired CEO helps nab CUs robbery suspect

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SEATTLE (4/2/12)--When Bob Harvey retired in July as CEO of the $567 million asset Seattle Metropolitan CU, he had no idea he'd be involved in arresting a woman suspected of robbing his former credit union.

Harvey hung up the suit and ties but kept the police uniform he'd worn in the Seattle Police Department's Reserve Unit since 1994, said the Northwest Credit Union Association (NWCUA)  in its newsletter, Anthem (March 27).

On March 9, Harvey was asked to participate in a stakeout along a bus route in Auburn, Wash.,  to wait for two female suspects in a Key Bank robbery that afternoon.

One woman was also a suspect in a Feb. 28 robbery of a credit union in Seattle. When Harvey looked at the address of the credit union, he had a "Wait a minute" moment. The address was a branch of Seattle Metropolitan.

Soon the two suspects got off the bus and they were arrested without incident."They were cooperative but were very surprised we found them," he told NWCUA. He didn't tell them he had once run the credit union one would be charged with robbing. "When I'm in that uniform, I'm Officer Harvey," he explained.

He noted that executives, business owners and other successful people do well in police reserve programs, and said other credit union professionals could consider such a program as another way to give back to their communities.

The reserve program requires full Academy training--between six and eight months' worth--followed by frequent weekend training sessions. His fellow reserve officers include business owners, government employees and a senior executive officer of an airline. They are not paid with money; their payment is in the satisfaction of serving people.

While it's nice to catch the bad guys, Harvey explained the job is more about helping people, such as reuniting many lost children with panicked parents after games at the old Kingdome.  He noted that a police department's heartbeat changes when a child is reported missing.

"It is amazing," he told NWCUA. "Everything else shuts down. No one goes home for the day. No one eats dinner. Everyone stays focused until the child is found."

Harvey said he read a lot of books about how to retire. Many plan for retirement financially and socially, but some are not mentally ready to retire. So he will keep being Officer Harvey for now.

What to do to mitigate breach risks--CUNA Mutual

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MADISON, Wis. (4/2/12)--The large-scale data breach revealed Friday at Atlanta-based card processor Global Payments Inc. has prompted CUNA Mutual Group to send its credit union bond policyholders a Risk Alert with advice on what they should do.

CUNA Mutual said it was informed of the breach by the card associations such as Visa and MasterCard. The breach involves both credit and debit cards, and the card data at risk involves the entire magnetic stripe information, both Track 1 and Track 2, the alert, issued Friday, said.

"Credit unions impacted have an exposure to future magnetic stripe fraud," said CUNA Mutual. "We strongly recommend credit unions consider blocking and reissuing the impacted open card numbers. Credit unions electing not to block and reissue could experience magnetic stripe fraud in the future," the alert said.

Among the steps to take to mitigate the risks are:

  • Determine fraud exposure. Evaluate the card number compromise information to determine if your credit union has an increased exposure for future magnetic stripe fraud.
  • Match names for Track 1. Confirm the credit union uses name matching to help prevent future card fraud where the fraudsters change cardholder names on Track 1.
  • Report to the credit bureau.  Since Track 1 carries the cardholder name, the cardholder may want to place an initial fraud alert with the credit bureaus to prevent identity fraud.
  • Review card association alerts. The alerts are:  Visa CAMs US-2012-0244A-PA (Proactive alert) and MasterCard's alert MCA0238-US-12.
  • Review open accounts. Determine which cards contained in the alerts are still active (open).
  • Move up card expiration dates.  Accelerate the card expiration date on active cards contained in the alert if the card number will expire in the next 30 to 180 days. Credit unions could reissue those cards now.
  • Review other accounts.  Determine which cards contained in the alerts have been closed due to fraud.  Analyze the fraud pattern on the closed accounts to detect the possible common point of compromise.
  • Identify compromised location.  If you identify a common point of purchase (CPP), report the location to Visa using its common point-of-compromise form or MasterCard (or your processor) using their ADC (account data compromise) form.  These forms can be found on their secure websites.
  • Take recovery action.  Confirm the card association's available dispute action on the compromised cards, as well as any timeframes.
  • Engage in ongoing monitoring. Continue to watch for any follow-up information tied to this breach and if additional action is needed.
  • Confirm fraud reporting. Confirm all fraud associated with the event has been reported to the card associations and to CUNA Mutual Group. (Visa: Fraud Reporting System--TC-40. MasterCard--Safe System. Plastic Card Customer Card Center.)
CUNA Mutual Groups said it will continue to monitor the situation with Visa and MasterCard and will notify policyholders when new information becomes available.

Like CUNA Mutual, the Credit Union National Association (CUNA) is monitoring events related to the breach and is seeking more detail  from card associations. RELATED STORY: News Now's article "CUNA seeks CU info in massive breach."

CUNA seeks CU info in massive breach

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WASHINGTON (4/2/12)--The Credit Union National Association (CUNA)  is seeking specific credit union information from Visa and MasterCard in the wake of the disclosure Friday that the companies are notifying card-issuing credit unions and banks of a massive data breach at a third-party payments processor, Atlanta-based Global Payments Inc.

In a phone call with CUNA Friday afternoon, Visa said that about two weeks ago it was notified by an entity that it suspected a breach.  By March 22, Visa received a file from the entity listing the accounts it believed to be at risk.  Visa distributed to issuers with impacted accounts so they could distribute cards to the impacted individuals.  Visa said that malware was installed in the entity's system and the card data was "scraped."  

Visa did not identify the entity. However, Atlanta-based Global Payments on Friday afternoon issued a press release saying it had discovered the breach in a portion of its systems in early March. It determined card data may have been accessed and said it "identified and self-reported unauthorized access into a portion of its processing system." It "immediately engaged external experts in information technology forensics and contacted federal law enforcement. The company promptly notified appropriate industry parties to allow them to minimize potential cardholder impact" and "is continuing its investigation into this matter," the press release said.

"It is reassuring that our security processes detected an intrusion," said Global Payments Chairman/CEO Paul R. Garcia. "It is crucial to understand that this incident does not involve our merchants or their relationships with their customers," he added.

Both Visa and Mastercard, in statements e-mailed to CUNA, noted that there was no breach of their systems.

"There has been no breach of Visa systems, including its core processing network VisaNet," said Visa's statement.

"Visa has provided payment card issuers with the affected account numbers so they can take steps to protect consumers through independent fraud monitoring and, if needed, reissuing cards," said Visa's statement.

"It's important for U.S. Visa consumer cardholders to know they are protected against fraudulent purchases with Visa's zero liability fraud protection policy, which exceeds federal safeguards," said Visa. The company encouraged cardholders to "regularly monitor their accounts and to notify their issuing financial institution promptly of any unusual activity." It provided a link for additional consumer security tips (use the resource link).

"Every business that handles payment card information is expected to protect the security and privacy of their customers' financial information by adhering to the highest data protection standards," Visa said. "Visa also supports advanced security layers such as encryption, tokenization and dynamic authentication through EMV chip technology to further protect sensitive account information and minimize the impact of data compromises," it continued.

MasterCard also confirmed today to CUNA that it "is currently investigating a potential account data compromise event of a U.S.-based entity and, as a result' we have alerted payment card issuers regarding certain MasterCard accounts that are potentially at risk."

The Purchase, N.Y.-based company, in a statement sent to CUNA, said it "is concerned whenever there is any possibility that cardholders could be inconvenienced, and we continue to both monitor this event and take steps to safeguard account information. If cardholders have any concerns about their individual accounts, they should contact their issuing financial institution."

It also noted that "law enforcement has been notified of this matter and the incident is currently the subject of an ongoing forensic review by an independent data security organization. It is important to note that MasterCard's own systems have not been compromised in any manner."

The number of cards compromised and the number of credit unions and banks being notified were not announced. The breach was first reported by Krebs On Security blog.

After it was revealed by media that Global Payments was the entity, company shares dropped 13% and the company halted trading of its shares.

Global handles electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies, and multi-national corporations throughout the U.S., Canada, Europe and Asia-Pacific region. Its solutions encompass credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services and terminal management.

For information on steps to take, see related the News Now article, "What to do to mitigate breach risks--CUNA Mutual."

Court orders CU Wall Street banks to negotiate

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FORT LAUDERDALE, Fla. (4/2/12)--A federal judge has ordered a Florida-based credit union and the Wall Street banks and ratings agencies it is suing over $100 million in losses from collateralized debt obligations (CDOs) to go to the negotiating table.

U.S. Magistrate Judge  Barry S. Seltzer in the U.S. District Court for the Southern District of Florida Wednesday issued the order requiring mediation in the case filed by Melbourne, Fla.-based Space Coast CU, acting as successor in interest to the defunct Eastern Financial Florida CU, against Merrill Lynch and other banks and ratings agencies.

Eastern Financial Florida CU, which was based in Miramar, Fla., was acquired by Space Coast in 2009 after becoming the largest natural person credit union failure in history. The suit seeks to recover more than $100 million in investment capital paid by Eastern Financial for the CDOs  during 2008 to 2010, plus damages.

Defendants in the case include: Merrill Lynch and its credit corporation, Merrill Lynch Home Loans; Wells Fargo Securities (former Wachovia Capital Markets); J.P. Morgan Securities (formerly Bear Stearns & Co. Inc.); UBS Securities; Barclay's Capital Inc.; Richard S. Fuld Jr., who ran Lehman Brothers at the time; Moody's Investors Service Inc.; and The McGraw-Hill Cos. Inc. (formerly Standard & Poor's Ratings Services).

In the order requiring mediation, the court gave the parties 14 days to agree upon a mediator. All proceedings will be confidential and privileged. At least 14 days before the mediation date, the parties, whose representatives must have full authority to enter into a compromise and settlement, must present their confidential briefs identifying the issues to be resolved.  Cost of mediation will be shared equally by the parties unless otherwise ordered by the court. After the mediation conference, the mediator has seven days in which to file the mediation report.

The court noted that if mediation is not conducted, the case may be stricken from the trial calendar and other sanctions imposed.

The court, in a separate scheduling order, set a pre-trial time line with pretrial motions set for May 24, 2013. It also set a date for a two-week trial to begin Sept. 9, 2013.

CU Resources buys 13 interest in Catalyst building

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PLANO, Texas (4/2/12)--Credit Union Resources Inc. has bought a one-third interest in the Catalyst Corporate FCU building in Plano, Texas, for the future headquarters for Credit Union Resources and the Texas Credit Union League (TCUL).

Key factors precipitating the purchase included: low interest rates on investments, a buyer's real estate market, and investment in a premium building in a marketplace that is expected to experience significant recovery, TCUL said (LoneStar Leaguer March 30).

"Our space requirements fit nicely into one-third of the Catalyst building and we can once again own our office space, thereby helping to control future housing costs," said Dick Ensweiler, president/CEO of TCUL and Credit Union Resources.

"Timing is everything," Ensweiler added. "The Catalyst Corporate FCU building is considered prime real estate, but we were able to take advantage of current economic conditions and purchase a share of the building at a substantially lower cost than if we were to build today."

Economies of scale that both organizations can pass on to their members will be realized by sharing space with TCUL, said Kathy Garner, Catalyst's president/CEO. "This move gives Catalyst added flexibility that will allow us to continue providing innovative products and services," Garner explained.

Credit Union Resources, a wholly owned subsidiary of TCUL, offers fee-based products and services.

Wisconsin regulators announce 250K for fin lit grants

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MADISON, Wis. (4/2/12)--The Wisconsin Department of Financial Institutions (DFI) and Wisconsin Department of Public Instruction (DPI) have made $250,000 available to the state's K-12 public and private schools to promote financial literacy through a new program announced Friday--just in time for National Financial Literacy Month.

Schools can apply for up to $10,000 in funding to promote financial literacy through the program, a collaborative effort that includes DFI, DPI, Gov. Scott Walker's Council on Financial Literacy and the Wisconsin Women's Council.

The application deadline for grants is June 15. Award recipients will be notified by July 27. DPI is administrating the program.

The $250,000 financial commitment from DFI will come from settlement funds the department has received over the last couple of years, DFI Secretary Peter Bildsten said.

"Through our enforcement actions, DFI at times collects payments from entities that have wronged Wisconsin consumers," Bildsten said. "Some of those settlement funds are designated specifically for financial literacy efforts. What better way to invest these funds than in the personal financial knowledge of our young people."

The intent of the program is to support the efforts of individual teachers and school districts to begin new and sustainable programs and events. Teachers, schools or districts are eligible to apply for awards ranging from $500 to $10,000 and may submit proposals for each school level--elementary, middle and high school.

A subcommittee of the Governor's Council on Financial Literacy will review recommendations from DPI and select the final award recipients. All proposals must indicate how they support approved academic curriculum and integrate Wisconsin's Model Academic Standards on Personal Financial Literacy.

Credit unions and the Credit Union National Association (CUNA) are promoting financial literacy this month with the month-long National Youth Saving Challenge, held in conjunction with National Credit Union Youth Week. This year, National Credit Union Youth Week will be held April 22-28, with the theme "Be a Credit Union Super Saver."

News Now will report throughout the month on credit unions' financial literacy activities.

Governor mayor laud CUs commitment to community

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PORTSMOUTH, N.H. (4/2/12)--The governor of New Hampshire and mayor of Portsmouth, N.H., lauded Service CU, a $1.98 billion asset credit union based in Portsmouth, for its community service during its 55th annual meeting Thursday night.

At the event attended by nearly 300 credit union employees and members, Gov. John Lynch and Mayor Eric Spear made remarks, with Lynch serving as the keynote speaker (Seacoastonline.com March 29). 

Lynch praised Service CU for consistently giving back to the community and noted the credit union's leadership in helping the state weather several natural disasters over the course of many years. He was reported as saying, "I can't think of another company who has been more helpful to the state since I've been governor than Service CU."

Spear, in his remarks, said he was thankful the credit union is based in Portsmouth. He mentioned the credit union's efforts in adding to Portsmouth's community and economic prosperity and its thoughtful investment of financial capital in local businesses and employees.  

Service CU also has invested social capital into wide-ranging programs that enhance the quality of life in the area, he added.

40 students attend reality fair during GAC

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MADISON, Wis. (4/2/12)--About 40 students participated in a financial reality fair sponsored by the National Credit Union Foundation (NCUF) during the Credit Union National Association's (CUNA) Governmental Affairs Conference (GAC) in Washington, D.C.

U.S. Rep Jim Himes (D-Conn.) (second from left) stopped by the National Credit Union Foundation's Reality Fair during the Credit Union National Association's  Governmental Affairs Conference. Himes is pictured with, from left, Kathy Chartier, president/CEO, Members CU, Stamford, Conn.;  Tony Emerson, president/CEO, Credit Union League of Connecticut; and Joanne Todd, president/CEO, Northeast Family FCU, Manchester, Conn. (Photo provided by National Credit Union Foundation)
The fair, in its the second year, was held in the Cannon Office Building on Capitol Hill March 21, with student from nearby Roosevelt Senior High School participating. GAC attendees stopped by to observe the fair during their Capitol Hill visits, as did U.S. Rep. Jim Himes (D-Conn.).

A reality fair a hands-on experience in which students identify their career choice and starting salaries, then complete a budget sheet requiring them to live within their monthly salary while paying for basics such as housing, utilities, transportation, clothing and food. Additional expenditures such as entertainment and travel also are factored in.

Throughout the fair, there are temptations for additional spending. Students must learn to balance their wants and needs to live on their own. After the students have visited different booths covering components of independent living, students balance their budget, and then sit down with a financial counselor for review. 

Almost 90% of the students who participated said they will start a monthly budget, and 100% said the fair changed the way they will save and spend money.

The GAC event was sponsored by NCUF with support and expertise from:

  • The Credit Union League of Connecticut;
  • Maryland & D.C. Credit Union Association;
  • Congressional FCU, Washington, D.C.;
  • HEW FCU, Alexandria, Va.; and
  • GPO FCU, Washington, D.C.
"Giving students a taste of 'reality' in a safe environment is one of the best ways I've ever witnessed to teach students about financial responsibility," said Charles A. Mallon, Jr., Congressional FCU president/CEO.

CU opens five branches in 62 days

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Texas State Rep. Jose Menendez (D-124) joined Generations FCU board of directors, senior managers and H-E-B Plus Store staff to cut the ceremonial ribbon for the credit union's five new retail branches opened within 62 days. (Photo provided by the Texas Credit Union League)
SAN ANTONIO (4/2/12)--Texas State Rep. Jose Menendez (D-124) joined Generations FCU and H-E-B Plus Store Tuesday at an event held at an H-E-B store location in San Antonio to open the credit union's five new retail branch locations Tuesday. The credit union opened the five branches within 62 days at H-E-B stores.

With the newest branches, the $385 million asset, San Antonio-based Generations now has 14 locations across San Antonio and Bexar County (LoneStar Leaguer March 29).

"This is more than just a ribbon-cutting event for us," said President/ CEO Tim F. Haegelin. "Our staff came together and opened five new branches in 62 days. It's a monumental task by any standard, and we really wanted to take this opportunity to recognize all the hard work and dedication that went into making this relationship with H-E-B a reality."

All Generations H-E-B retail locations are full-service branches where members and potential members can open accounts, request debit cards and apply for loans, among other services. Anyone who lives, works, worships, volunteers or attends school in Bexar County, and family of current members, are eligible for membership.

"One of the directives of our founding members was to be a true financial advocate for our community, and a significant aspect of that is access, convenience and availability," Haegelin said. "This relationship with H-E-B is just another way that we as a credit union can reach out into the community every day and live up to that original challenge of our founding members."

Filene survey Online investor education changes behavior

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MADISON, Wis. (4/2/12)--A new research report from Filene Research Institute indicates that online education is an effective means of improving financial literacy among surveyed credit union employees--and could produce similar results with credit union members.

"Investor Education for Credit Union Employees: Survey Results for Wisconsin" analyzes research conducted at the University of Wisconsin-Madison in cooperation with the Wisconsin Credit Union League. Researchers administered a series of surveys followed by financial education modules to hundreds of employees at Wisconsin credit unions.

Researchers wanted to know whether employees would gain knowledge and improve their financial behavior after taking part in a nine-part online education series--covering topics such as "Basics of Investing," "Investing in Mutual Funds" and "Working with Financial Advisers."

Credit union employees scores on interest and credit responses rose 3% to 4%  after taking part in the series. Scores improved 11% for knowledge of investing for retirement, 21% for knowledge of stocks and bonds and 25% for knowledge of investor information available online.

Following the courses, 8% of the participants reported opening an individual retirement account, 6% reported establishing a written budget, and 5% each reported drafting a written financial plan and saving for three months of expenses.

The data may be somewhat skewed because of the high proportion of married women that took part in the study.

If credit union employees mirror ordinary members, the research supports the idea that online education can lead to increased financial knowledge and better habits, according to author J. Michael Collins, PhD, assistant professor and director of the Center for Financial Security at the University of Wisconsin.

"That's promising in a cultural environment that increasingly prizes on-demand information access and in which members may be less inclined to sit through traditional financial education," Collins writes. "Granted, the time-intensive modules used in this research were given to users with some financial expertise, but if they can learn and show positive behavior changes, how much more effective might similar education be for the average member?"

NEW CUNA confirms Visa MasterCard notifying CUs banks of breach

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WASHINGTON (Updated: 6:50 p.m. ET 3/30/12)--The Credit Union National Association (CUNA) has confirmed that Visa and MasterCard are notifying card-issuing credit unions and banks of a possible massive data breach involving Atlanta-based Global Payments Inc., a third-party payment processor.

Visa Inc. told CUNA this morning that it "is aware of a potential data compromise incident at a third party entity affecting card account information from all major card brands. There has been no breach of Visa systems, including its core processing network VisaNet."

"Visa has provided payment card issuers with the affected account numbers so they can take steps to protect consumers through independent fraud monitoring and, if needed, reissuing cards," said Visa's statement.

"It's important for U.S. Visa consumer cardholders to know they are protected against fraudulent purchases with Visa's zero liability fraud protection policy, which exceeds federal safeguards," said Visa. The company encouraged cardholders to "regularly monitor their accounts and to notify their issuing financial institution promptly of any unusual activity." It provided a link for additional consumer security tips (use the resource link).

"Every business that handles payment card information is expected to protect the security and privacy of their customers' financial information by adhering to the highest data protection standards," Visa said. "Visa also supports advanced security layers such as encryption, tokenization and dynamic authentication through EMV chip technology to further protect sensitive account information and minimize the impact of data compromises," it continued.

MasterCard also confirmed today to CUNA that it "is currently investigating a potential account data compromise event of a U.S.-based entity and, as a result' we have alerted payment card issuers regarding certain MasterCard accounts that are potentially at risk."

The Purchase, N.Y.-based company, in a statement sent to CUNA, said it "is concerned whenever there is any possibility that cardholders could be inconvenienced, and we continue to both monitor this event and take steps to safeguard account information. If cardholders have any concerns about their individual accounts, they should contact their issuing financial institution."

It also noted that "law enforcement has been notified of this matter and the incident is currently the subject of an ongoing forensic review by an independent data security organization. It is important to note that MasterCard's own systems have not been compromised in any manner."

Later in the day Global Payments Inc. announced part of its system had been accessed. It promptly notified law enforcement authorities and industry parties to allow them to minimize potential cardholder impact, said Global Payments. See Monday's News Now for more detail.

The number of cards compromised and the number of credit unions and banks being notified were not announced. The breach was first reported by Krebs On Security blog.