Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

New cybercrime trends developing

 Permanent link
MADISON, Wis. (8/16/12)--While cybercriminals focus on making a fast buck with e-mail, texting and phone frauds designed to capture consumers' account numbers, other cybercrime trends are worth noting.

Several new ones are featured in the Internet Crime Complaint Center's  (IC3) latest scam alert (Aug. 8), some offering new twists to old scams.  Credit unions in educating their members to be wary of any fraud, may want to include information about these. They include:

  • Fake political survey.  A multi-choice "political survey" is taking advantage of consumers during the election year, said IC3. The scam involves telephone calls to consumers. After answering the survey, they are told they have won a free cruise to the Bahamas.  The caller, after providing a website address to "prove legitimacy," requests the "winner's" e-mail address for notification purposes and credit card information to cover port fees. The website has limited information, with photos, testimonials, and "Caribbean Line" banner.
  • Online phonebook. IC3 received several complaints about a phone book website, where anyone could post other individuals' information to the site. Some were verbally bullied, saw uncensored comments and false accusations posted about them. Personal information available on the site included: full name, unlisted cell phone numbers, e-mail addresses, direct links to private Facebook accounts, photos and more. The website allows users to anonymously call anyone on the site directly from the Web, as well as track them with a Global Positioning System.
  • Free credit service website. A website claiming to offer "free" credit services such as credit scores and credit monitoring generated more than 2,000 complaints to IC3. Customers reported being charged a monthly service fee. The agreement terms advise that the "free" report lasts only for a limited time. At the end of the term, the website, using financial information the customer provided charged a monthly membership service ranging from $19.95 to $29.95. The Better Business Bureau has given the website an F rating because 1,037 complaints were filed against the business, eight were not resolved, 17 were deemed serious,  and advertising issues were involved, said IC3.
In addition to IC3's report, and of specific interest to credit unions' security staff, Guardian Analytics and security firm McAfee have discovered a criminal operation, dubbed "Operation High Roller," that targets high balance bank accounts from the U.S., Latin America and countries from the European Union (softpedia.com June 27 and CIO India News July 5).

The operation highlights the fact that criminals continually evolve and advance their methods and that financial institutions need to re-examine their security controls and assumptions and not rely just on existing security strategies to protect consumers' data, said CIO India News.

The report notes a shift from traditional man-in-the-browser attacks on the victim's PC to server-side automated attacks. Criminals have moved from multipurpose botnet servers to using servers dedicated to processing fraudulent transactions.

It also said the campaign is global, affects commercial accounts and high net-worth individuals, and impacts financial institutions, including credit unions, of all sizes.

CUs help members prepare for back to school

 Permanent link
MADISON, Wis. (8/16/12)--With the start of a new school year just days away, credit unions are helping their members with supplies, budgeting, advice and financial assistance.

Young & Free Michigan spokester Austin Chapman was interviewed on FOX 2 Detroit's Money Monday segment about the importance of finances for students headed to college this fall. Discussing planning, budgeting, and credit management as well as his life as a college student, Chapman shared advice for students and young adults managing their money and living on their own for the first time.

The appearance was part of the larger effort by Michigan First CU, Lathrup Village, Mich., and the Young & Free Michigan program to increase the financial knowledge of local 18-25 year-olds in metro Detroit.

Other credit unions assisting their local schools include:

  • St. Helens Community (Ore.) FCU, which donated nearly $3,400 through its community outreach program, CU 4 A CAUSE to St. Helens Elementary schools. The St. Helens Backpack program provides bags filled with child-friendly, non-perishable food that children take home on weekends during the school year in their backpacks.
  • CO-OP Service CU, Livonia, Mich., which recently completed its fourth annual Backpack Drive. Partnering with Volunteers of America, 96.3 WDVD and Fox 2 Detroit, Co-op Services collected new backpacks, folders, notebooks, pens, scissors, pencils and other supplies at donation boxes in the credit union's eight branches (Michigan Monitor Aug. 13).
  • Educational Community CU, whose staff donated a large load of items to Kids Connections, an organization whose youth-centered goals are to provide life skills and educational programs, build social skills through mentoring/friendship connections and  generate community involvement. Donated items include infant diapers, kids' clothing, books, toys and snacks (Michigan Monitor Aug. 13).
  • A+ Education Foundation, a philanthropic arm of A+ FCU, Austin, Texas. It awarded $67,000 to 74 grant recipients. The funds cover the cost of programs, supplies and training to improve the classroom experience for students in Central Texas. This year's 74 winning submissions included a vocational and life skills program, play materials for school counseling, an outdoor classroom, reading clubs, robotics, a writer's den program, speech therapy, improving the effectiveness of teaching through technology, a social skills enrichment program, linking the school garden to academic achievement, and a motor sensory and therapy lab.
  • Northwest FCU Foundation, Herndon, Va., which recognized the achievements of 26 college students in school, at home and within their communities, with a  combined $115,000 in scholarships. The foundation has two scholarship programs: The Ben DeFelice Scholarship, which presented $5,000 each to 20 students; and the Central Intelligence Retirees Association (CIRA) Scholarship, which awarded $2,500 each to six students.
  • The Suncoast Schools FCU Foundation, Tampa, Fla., which donated $5,000 to Brandon's Emergency Care Help Organization (ECHO). The grant will help fund ECHO's Back to School Program, which provides Brandon-area students with the basic necessities for school. The grant will provide about 250 children with a voucher for a new pair of shoes, socks and underwear and back-to-school items.  Families of the children will also receive food, personal hygiene products and clothing.
  • LBS Financial CU, Long Beach, Calif., which is collecting school supply donations for three local school districts for its second annual Adopt-a-School program. This year, the credit union has adopted Long Beach Unified's Hamilton Middle School and ABC Unified's Tracy High School. LBS Financial CU promoted the drive at area branch offices and on its website during the summer to encourage members and employees to donate. The credit union also matches employee cash donations dollar-for-dollar (Press-Telegram Aug. 7)
  • Coastal Community FCU, Galveston, Texas. At its annual "Back to School Bash,"  it distributed 400 backpacks with free school supplies, provided free vaccines for school-age children, and entertained kids of all ages with music, video games, a moonwalk and fajitas, according to the Texas Credit Union League ( Lone Star Leaguer Aug. 15).

CUNA Lending Council passes 1100-member milestone

 Permanent link
MADISON, Wis. (8/16/12)--The CUNA Lending Council announced it has surpassed the milestone of 1,100 members, a result of several years of consistent growth and members' growing commitment to the credit union industry.

Lending is now among two CUNA councils with membership in excess of 1,100, and among three CUNA councils with membership in excess of 1,000.

"The continued growth in the council membership reflects the value we bring to each other and how the collaboration helps us improve the financial lives of our respective membership each day," said Aaron Bresko, lending council executive committee chair and senior vice president/chief lending officer at GTE Financial CU in Tampa, Fla.

Through Aug. 31, credit union executives can join the Lending Council or any of the other five CUNA councils and save $100 on membership dues. The six councils encompass a network of more than 5,400 credit union professionals.

Calif. DFI OKs four mergers merger expected in Conn.

 Permanent link
SACRAMENTO, Calif. (8/16/12)--The California Department of Financial Institutions (DFI) recently approved four mergers involving California credit unions, while two Connecticut credit unions indicated they would merge.

Bay Media FCU in San Francisco, with $13.2 million in assets, received approval to merge into the $741 million asset San Francisco Fire CU on June 21.   

The $24.5 million asset Family 1 FCU in Placentia merged into CU of Southern California, based in Whittier, Calif., with $552 million in assets. The merger was approved May 11 and became effective July 2.

Inland Empire CU, Pomona, with $38.5 million in assets, was approved to merge into CU of Southern California on June 16. The merger took effect July 2.

Santa Monica (Calif.) City Employees FCU, with $28.1 million in assets, received approval July 26 to merge into Southland CU, Los Alamitos, with $86.2 million in assets.

And in Connecticut, the $21.5 million asset Greater Norwalk (Conn.) Area CU is contemplating a merger with Mutual Security CU based in Norwalk, with $135 million in assets (thehour.com Aug. 9).

Businesses hold FIs responsible for security

 Permanent link
MADISON, Wis. (8/16/12)--Fraud continues to hit a majority of businesses, which still look to their financial institution (FI) as primarily responsible for securing the online channel, said Guardian Analytics' third annual study of small and medium business. Credit unions should take note.

Businesses still are not improving their defenses, and a majority continues to lose money due to fraudulent transactions, said the research company. Businesses hit by fraud continue to take their business elsewhere, showing little patience for an FI that can't protect their accounts.

What's new in this year's study is a clear trend towards greater use by businesses of FI's online and mobile banking channels.

Findings include:

  • Businesses are increasing their use of online banking. Businesses conducting all banking online increased to 20% from 9% since 2010, and now half of businesses conduct at least half of their banking through an online channel.
  • Use of mobile banking is rising. Businesses accessing online banking from mobile devices increased to 54%, up from 23% in 2010.
  • Businesses are looking to their FI for fraud prevention. Seventy-two percent of small and medium businesses surveyed indicate that their FI is most responsible for ensuring online accounts are secure. Such trust in their bankers may explain why the use of various fraud-prevention technologies has been flat since 2010; 43% did not change security practices at all following a fraud episode.

  • Fraud attacks are widespread. Two out of three businesses have suffered fraudulent transactions, and of these a similar proportion lost money as a result. For example, in the online channel, 73% of businesses experienced fraudulent transactions (i.e. there was a fraudulent transaction before attack was detected), and after recovery efforts, 61% still ended up losing money.
  • Businesses are not reimbursed by their FI. While the levels vary by channel, about seven in 10 businesses that suffered fraud losses were not fully reimbursed by their FI.
  • When businesses suffer a fraud loss, the leave. After a fraud episode, 40% of businesses move some or all of their banking business. And 56% indicate that it takes only one fraud loss to lose confidence in their FI.
  • FIs are losing money through Automated Clearing House (ACH) fraud. When a business loses money through a fraudulent ACH transaction, the FI reimburses some or all of the money 54% of the time. That means FIs are losing money.
The study reflected the input from 998 small and medium businesses with fewer than 200 employees and who generated less than $100 million in annual revenue. The surveys were conducted in May.

CO-OP Network offers PIN POS through Star Network

 Permanent link
RANCHO CUCAMONGA, Calif. (8/16/12)--CO-OP Financial Services is introducing CO-OP Network PIN POS service powered by First Data, through which debit cardholders of participating credit unions can access nearly two million STAR Network point-of-sale locations nationwide.

"CO-OP has considered offering PIN POS for many years, but only now have the right circumstances come together," said Stan Hollen, CO-OP Financial Services president/CEO. "In cooperation with First Data's STAR Network, our business partner for nearly 30 years, CO-OP can provide our clients with unmatched national PIN POS coverage and value." 

CO-OP Financial Services has also signed a contract renewal extending its electronic funds transfer network access agreement with the STAR Network.

CO-OP Network PIN POS service offers nationwide coverage that gives credit union members the convenience of being able to use their debit card where they want to, and strengthens credit union relationships with members, especially those accustomed to big bank accessibility, said the company. 

The agreement also means  greater choice in payment method, easier access to money and superior PIN debit fraud protection. The added POS revenue stream benefits all participating CO-OP members and, in the case of CO-OP shareholding credit unions, the POS transaction volume will also increase annual patronage (dividend) opportunity.

CO-OP Financial Services expects to begin implementing the extended PIN POS service with existing clients beginning Oct. 15.

Study More debit card usage more overdrafts likely

 Permanent link
LAKE FOREST, Ill. Wis. (8/16/12)--A recent study indicates that debit card use is growing. With that, financial institutions can expect an increased possibility consumers will overdraft their checking accounts, thanks to a "financial tsunami" enacted in 2003, the study said.

Debit card payments accounted for 43% of 110 billion annual transactions in 2011, an increase from 19.4% in 2003. That was the year that the Check Clearing  for the 21st  Century Act (Check 21 Act) was enacted, according to the study from Moebs Services, Lake Forest, Ill. Check 21 Act eliminated the "float" on checks that kept many from overdrawing their accounts.

Float—the amount represented by a check passing through a financial institution's check clearing cycle--averaged $10 billion a day in 2003--when paper checks constituted 46.3% of the annual check processing system. In 2011, business and paper checks averaged only $400 million in float per day, a reduction of 96% in less than nine years.

"The lack of float and increased debit card usage has made the time between initiating payment and depositing payment--almost non-existent," the study said. "With 87% of checking account users not reconciling their checking accounts, the probability that the average consumer will overdraw is immeasurably increased."

The paper describes a "small cash market" that is created when consumers have a financial need and they do not have liquid funds to meet that need. Credit unions and banks participate in this market when they provide overdraft services. In 2011, financial institutions earned $31.6 billion in fees from overdrafts, according to the Moebs study. The national median price of an overdraft was $29 at all financial institutions in 2011.

Payday lenders also participate in the "small cash market," charging $17.50 per $100 advanced, the study said.

"But community banks and credit unions have been a safe haven for checking accountholder fleeing the penalty pricing tactics of the very large banks," the Moebs study said. "The lack of statistical surveys and a broad focus of all financial institutions have created a climate of 'all are wrong' when only a few big banks victimized consumers."

Credit unions' median charge for an overdraft is $25, the study said. That is less than the national median for all financial institutions, and compares with $35 at Wall Street banks, $30 for all banks, $25 for "Main Street banks and credit unions," and $17 for payday lenders, the study said.

About 67% of the overdraft market is unintentional users, the study said. Losses for banks and credit unions are about $3 billion a year. For an individual transaction, the full cost is about $13 to the financial institution.

Coastal Community achieves Juntos Avanzamos status

 Permanent link
GALVESTON, Texas (8/16/12)--Coastal Community FCU has reached "Juntos Avanzamos" status, signaling it has demonstrated exceptional commitment and service to the Hispanic community, announced the Texas Credit Union League.

Click to view larger image Hundreds of Galveston, Texas, residents turned out at Coastal Community FCU's "Back to School Bash" during which the credit union received the Juntos Avanzamos (Together We Advance) flag for serving Hispanics effectively from the Texas Credit Union League. (Photo provided by the Texas Credit Union League)
In a ceremony in Galveston Saturday attended by hundreds of Galveston residents, the league presented the Juntos Avanzamos (Together We Advance) flag, which represents the $213 million asset credit union's participation in the league initiative (LoneStar Leaguer Aug. 14). The designation is earned through a rigorous application and review process, said the league. The credit union must demonstrate is has the capacity, commitment and compassion to serve the Hispanic market's financial needs.

"We have spent several years working to establish the infrastructure needed to effectively serve all members of the Galveston community," Coastal Community FCU President/CEO Carol Gaylord Purdy noted. "As a locally owned financial cooperative, our entire mission is to make sure people from all walks of life have access to affordable financial services that will help them build long-term stability and wealth."

The goal of the league's initiative is to identify credit unions effectively serving the emerging Hispanic market so that when families see the Juntos Avanzamo flag, they will know that affordable and friendly services are available to them.

Texas Credit Union Foundation Executive Director Courtney Moran presented the flag to the credit union during its "Back to School Bash."

CO-OP Network PIN POS service introduced

 Permanent link
RANCHO CUCAMONGA, Calif. (Filed 1:15 p.m. CT 8/15/12)--CO-OP Financial Services is introducing CO-OP Network PIN POS service powered by First Data, through which debit cardholders of participating credit unions can access nearly two million STAR Network point-of-sale locations nationwide.

"CO-OP has considered offering PIN POS for many years, but only now have the right circumstances come together," said Stan Hollen, CO-OP Financial Services president/CEO. "In cooperation with First Data's STAR Network, our business partner for nearly 30 years, CO-OP can provide our clients with unmatched national PIN POS coverage and value." 

CO-OP Financial Services has also signed a contract renewal extending its electronic funds transfer network access agreement with the STAR Network.

CO-OP Network PIN POS service offers nationwide coverage that gives credit union members the convenience of being able to use their debit card where they want to, and strengthens credit union relationships with members, especially those accustomed to big bank accessibility, said the company. 

The agreement also means  greater choice in payment method, easier access to money and superior PIN debit fraud protection. The added POS revenue stream benefits all participating

CO-OP members and, in the case of CO-OP shareholding credit unions, the POS transaction volume will also increase annual patronage (dividend) opportunity.

CO-OP Financial Services expects to begin implementing the extended PIN POS service with existing clients beginning Oct. 15.