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Visa drops Global Payments from compliant list

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ATLANTA (4/3/12)--Atlanta-based Global Payments  Inc. has been removed from Visa's "compliant service providers" list after revealing Friday that part of its third-party card processing system had been breached. However, Global says it has "contained" the breach to less than 1.5 million debit and credit cards.

"The company believes that the affected portion of its processing system is confined to North America and less than 1.5 million card numbers may have been exported," Global Payments said in  a press release Sunday.

The investigation so far has revealed that Track 2 data may have been stolen.  Track 1 and Track 2 data include names, card numbers and validation codes. Global said that cardholder names, addresses and Social Security numbers were not obtained by the criminals who hacked the system.

The breach has prompted a number of alerts from companies serving credit unions, as well as from credit unions themselves.  CUNA Mutual Group issued a risk alert Friday with tips for its bond policyholders. (Use the link).

The Members Group (TMG), a Des Moines, Iowa-based card processing and payment solutions for credit unions, is warning credit unions to be on high alert for credit card fraud stemming from the breach. It is assisting its card-issuing credit union clients with implementing defensive strategies to minimize the impact of card fraud resulting from the breach.

"The best prevention strategies will be different for every issuer and will depend greatly on where and how the fraudulent activity occurs," said Karen Postma, cards risk senior manager at TMG.  For some credit unions reissuing the card may be the best approach to minimizing losses. For others, tighter rule-setting and diligent monitoring will be sufficient, she said.

She explained that fraudsters typically test several different bank identification numbers (BINs) before settling on the one or two that are most profitable. The TMG fraud department is monitoring card activity closely to identify which BINs are most likely to be impacted.

Postma, who advised credit union card issuers through the 2008 Heartland Payments System data compromise, said it's too early to predict the fallout from this particular breach. "We plan to be in close communication with each of our card-issuing clients for the next several months as the investigation into the breach continues," she said.

"Credit unions should absolutely be proactive, however, monitoring their portfolios very closely to understand whether and to what extent they are being affected. If they determine they are being hit with high levels of fraudulent activity, more aggressive measures are likely necessary," Postma said.

Corinne Sherman, senior vice president, fee services for the Pennsylvania Credit Union Association advised credit unions to "pay close attention to information received from your card processor" (Life is a Highway April 2).

"This is very unfortunate and it could be very costly," said Sherman. "If a credit union has any concerns about cards at risk, it is best to err on the side of caution and reissue cards to protect members and its card program."

Credit unions are already reporting some fraudulent charges.  For example, during the last six days of March, Hermiston, Ore., police said they had received at least six reports of fraudulent charges made on credit cards issued by America's Best Community FCU, a $5 million asset credit union based in Hermiston (OPB News March 31).  Although the credit union's system wasn't compromised and members' accounts were safe, the nationwide implications of the Global Payments breach hit home for those members.  One couple charged $60 during the weekend on their card to see it turned into a $480 charge for purchases from a store in Kenosha, Wis. Another member reported $561 in fraudulent charges

Global Payments was working with industry third parties, regulators and law enforcement agencies to minimize potential cardholder impact, it said, adding it "has engaged multiple information security and forensics firms to investigate and address this issue."

"We are making rapid progress toward bringing this issue to a close. Our nearly 4,000 employees around the world are focused on providing exceptional service. We are open for business and continue to process transactions for all of the card brands," said Chairman/CEO Paul R. Garcia.

According to The Wall Street Journal (March 30), the cards were exposed between Jan. 21 and Feb. 25. The total cost of the breach is still being tallied. The company set up a website for consumers seeking information (use the link).

Athough Visa has removed the company from its list of providers, Global continues to process Visa and other branch cards and expects to be reinstated once the compliance issues with  card company standards are corrected.

Visa and MasterCard systems were not breached.  Also, Global made it clear Friday that the breach was not related to merchant/customer relationships.

Wachovia moves to consolidate NCUA suit with RBS case

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KANSAS CITY, Mo. (4/3/12)--Wachovia Capital Markets has filed a motion to consolidate a lawsuit filed against it by National Credit Union Administration (NCUA) over residential mortgage-backed securities (RMBS) sold to corporate credit unions with a similar suit filed by NCUA against RBS Securities.

The NCUA's original complaint against Wachovia alleged that originators of the RMBS had systematically abandoned the stated underwriting guidelines, resulting in riskier RMBS that the corporates would not have bought, had they known, said NCUA.  Wachovia representatives sold about $100 million in RMBS to the two corporates in 2006, and U.S. Central purchased approximately $80 million in RMBS underwritten by Wachovia, according to court documents.

NCUA presented similar complaints in its suit for $565 million in damages from RBS in the U.S. District Court for the District of Kansas, alleging that the firm violated federal and state securities laws when it sold securities to the now-defunct U.S. Central FCU. The agency claimed that RBS sellers and underwriters made numerous material misrepresentations in the offerings documents that caused U.S. Central to believe the risk of loss associated with the investment was minimal.

In the Wachovia case before the U.S. District Court for the District of Kansas, Wachovia asked in a motion filed Wednesday to consolidate the cases 'in light of the existence of common questions of law and fact" of the two cases.

Novartis FCU deposits 325K in Alloya CIF option

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WARRENVILLE, Ill., and EAST HANOVER, N.J. (4/3/12)--Novartis FCU, East Hanover, N.J., has deposited $325,000 in the new Community Investment Fund (CIF) option offered by Alloya Corporate FCU, Warrenville, Ill.

The CIF deposit made by the $125 million asset credit union will support national and state services that include financial education, professional development, community outreach and emergency assistance.

The CIF option was created through a partnership among Alloya, the National Credit Union Foundation and participating state foundations, including the New Jersey Credit Union Foundation.

Credit unions must be a capitalized member of Alloya to use the CIF option, which has a $1,000 minimum investment. Eligible credit unions can choose their investment amount, term and preferred earnings distribution ratio.

Consumers CU launches fraud awareness campaign

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KALAMAZOO, Mich. (4/3/12)--A fraud awareness campaign will use social media and other tactics to help members of $364 million asset Consumers CU recognize and avoid scams.

Consumers CU plans to use Facebook, Pinterest, Twitter, Foursquare and its blog to build member awareness, along with newsletter articles and lobby displays. 

The ongoing campaign will remind members to ask questions that can help them identify con artists, who typically contact people online or by telephone to make offers or ask for "help" in collecting funds. The campaign will reinforce the need for members to seek more information when offers appear "too good to be true."

"Con artists are shrewd and the scams constantly change," President and CEO Kit Snyder said. "While there is no one way to stop fraud it most often circles back to an unusual amount of money being offered for a seemingly easy or innocuous task."

Staff training is another component of the campaign to help tellers and other employees recognize transactions that indicate a member could be a potential fraud victim.  Senior Teller Cindy Powell recently averted two scams involving large sums of money in less than 30 days.

Top 10 March iNews Nowi stories Data breach No. 1

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MADISON, Wis. (4/3/12)--An article confirming a data breach of Visa and MasterCard card customer information at Atlanta-based Global Payments Inc., a third-party payment processor, was the most-read News Now article in March.

The top requested articles for March were:

10. Judge strikes several WesCorp officials' defenses

LOS ANGELES (3/20/12)--A federal judge has granted the National Credit Union Administration's (NCUA) motion to strike down certain defenses offered by officials of the now defunct Western Corporate FCU in NCUA's suit against them to recoup $6.8 million in investment portfolio losses from mortgage-backed securities.

9. Leon-Decker withdraws her name from NCUA consideration

WASHINGTON (3/13/12)--Carla Leon-Decker requested that her nomination to the National Credit Union Administration board be withdrawn and that request was honored by the White House Monday.

8. CUs on a roll as 'best of the best'

MADISON, Wis. (3/27/12)--Communities across the nation continue to recognize credit unions as the best of the best in a variety of areas.

7. Carla Leon-Decker's NCUA nomination has been withdrawn

WASHINGTON (UPDATED 3/12/12 5:48 p.m. ET)--The White House has announced the nomination of Carla Leon-Decker to be a member of the National Credit Union Administration (NCUA) has been withdrawn.

6.  CUNA, coalition seek rejection of merchants' interchange suit

WASHINGTON (UPDATED 3/15/12, 11:00 p.m. ET)--CUNA today joined a broad coalition of trade associations representing thousands of small and large financial institutions to file an amicus brief in a lawsuit brought by merchants against the Federal Reserve Board's rule that sets a debit interchange fee cap.

5. Use smarts to thwart fraud

DALLAS (3/20/12)--You can get ahead in life by being good at what you do. Unfortunately, the same is true for fraudsters (MoneyGram International March 7).

4. CUs remain on top in 2011 customer satisfaction survey

MADISON, Wis. (3/9/12)--Credit unions top the list of U.S. financial institutions when it comes to member/customer satisfaction, according to a new survey released Thursday.

3. Fed's stance on low rates has consequences for CUs--CUNA

WASHINGTON (3/14/12)--The Federal Reserve's stance on the continued low targeted range of the federal funds rate at 0% to 0.25% has consequences for credit unions, including a possible historic low net interest margin, according to a Credit Union National Association (CUNA) economist.

2. Compliance: Three questions CEOs should ask staff

WASHINGTON (3/9/12)--CUNA Comp Blog has released its latest compliance wrap-up, a monthly CompBlog feature that, in part, suggests important questions that credit union CEOs should be asking members of their staff.

1. CUNA confirms Visa, MasterCard notifying CUs, banks of breach

WASHINGTON (Updated: 6:50 p.m. ET 3/30/12)--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.

OP-ED Banks target CUs for aid to small depositorsbiz

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HARTFORD, Conn. (4/2/12)--Banks are targeting credit unions for their willingness to reach out to consumers and small businesses, Norman Halls, chairman of STCU CU, Springfield, Mass., wrote in an opinion editorial recently published on Hartford (Conn.)

"Bankers do not like competition," Halls wrote in his letter, and they are "trying to get back" at credit unions for assisting small depositors and small businesses during the weeks surrounding Bank Transfer Day, when banks were skewered in the media for high fees.

Halls also touted the Small Business Lending Enhancement Act of 2011, which would increase the member business lending cap for credit unions to 27.5% of assets from 12.25%.

Increasing the MBL cap, would inject $13 billion in new funds into the economy, creating as many as 140,000 new jobs in the first year after enactment, estimates the Credit Union National Assocation.

Halls cited a Wall Street Journal Sept. 18 article that said consumers may get "more bang for your buck" with a credit union. He also described the cooperative structure of credit unions.

"Stop banks from taking away your right to bank where you want," Hall concluded. "Contact your senator and congressman and tell him or her to vote for H.R. 1418 and S. 509. It's time that we tell them what direction we want."

CU System brief (04/02/2012)

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  • BISMARCK, N.D. (4/3/12)--The Credit Union Association of the Dakotas (CUAD) will announce the launch of its "We've Been Waiting for You" awareness campaign at two news conferences in Bismarck and Fargo, N.D., this week. CUAD President/CEO Robbie Thompson and Director of Strategic Initiatives Kristie Heit will announce CUAD's strategy, developed with Member Tree Consultants, a division of H2M of Fargo. The strategy includes targeted mass media tied with community visits throughout the Dakotas by CUAD staff and supplemented by social media efforts. The message: Credit unions offer similar services to banks, but with better service; consumers are likely eligible to join one or more credit unions; credit unions have money to lend; and there is a credit union closer than you think …