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CU System briefs (09/14/2009)

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* ATLANTA (9/15/09)--Two Bulgarian men pleaded guilty to using an ATM skimming device to steal bank debit card numbers and passwords, and tens of thousands of dollars from victims' accounts. Yordan Kavaklov, 29, was sentenced Thursday in a U.S. District Court in Atlanta to four and a half years in prison and to make restitution of $64,876. His co-defendant, Nikolay Nikolov, 23, will be sentenced later this month (Atlanta Journal-Constitution Sept. 10). They were arrested in November at an ATM after people noticed them using multiple cards for withdrawals from adjoining ATMs. They had stolen 80 gift cards with altered magnetic stripes with the passwords written on the face of the cards. Police found more than $57,000 in cash, mostly in $20 bills in their car and hotel room. The men would download information to skimming devices and send it to foreign e-mail accounts in Russia and Bulgaria. They then received information to load onto the magnetic stripes of the gift cards. Bulgarians with similar skimming scams have hit Australia, New Zealand and Greece (The Sofia Echo Sept. 4) … * KINGDOM CITY, Mo. (9/15/09)--A suspect in 14 robberies in six states was arrested Saturday in Kingdom City, Mo., after a former state trooper recognized him from media reports of a bank robbery in Caseyville, Ill., and from the "America's Most Wanted" television show. Chad E. Schaffner, 37, of Indianapolis was captured at a restaurant without incident. The robbery spree allegedly began on May 15 with the robbery of United Service CU in Fletcher, N.C. Schaffner was released from prison in December after serving time for armed robbery. His face also appeared on electronic billboards in Alabama, Kentucky, Georgia, North Carolina, South Carolina, Tennessee, Virginia and West Virginia (Citizen-Times.com Sept. 14) … * DAYTON, Ohio (9/15/09)--Scam artists are sending simultaneous texts scams to family members' cell phones, according to an alert from John North, president/CEO of the Better Business Bureau (BBB). BBB received a call from a woman inquiring about text messages she and her husband received on their cell phones simultaneously from a four-digit number. The texts said, "We found a problem in your credit union account. Call urgently!" and left a number to call. A recorded message asked for a credit card number. The woman called to verify the message with her credit union, Day Air CU, Kettering, and was told the message was a scam. Day Air CU has posted a fraud alert message on its website saying it is not sending out such text messages. It won't ask for personal information via texting because it is not a secure channel for communication … * DETROIT (9/15/09)--Michigan's Metro West Chapter of Credit Unions, a chapter of the Michigan Credit Union League, has raised $14,000 for charities. The chapter's 17th annual golf outing to benefit a variety of charities and organizations was held in August in Northville and attracted more than 140 players. This year's $14,000 raised brings the total raised to more than $65,000 the past five years. All of the beneficiaries for this year's proceeds have not yet been named, said a press release …

N.C. governor signs foreclosure-prevention measure

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RALEIGH, N.C. (9/15/09)--North Carolina Gov. Beverly Perdue signed a new law last week that will give state homeowners a 60-day reprieve before their homes undergo foreclosure (CongressDaily Sept. 14). The law allows a clerk of court to postpone a foreclosure hearing for up to 60 days to allow the homeowner additional time to work out a payment plan with the mortgage holder and to remain in the home. Nearly 40,000 homes in North Carolina have gone into foreclosure during 2009. According to the Center for Responsible Lending, more than 2.2 million North Carolina homeowners will see property values decline during the next three years because of foreclosures in their neighborhood (ConsumerAffairs.com Sept. 14). Perdue said the legislation, which sets new rules for debt collectors, protects both homeowners and the state economy from the effects of foreclosure. The law "makes it easier for homeowners to work out a deal with their lenders and avoid foreclosure," said Perdue.

Regional ad campaign launched in MarylandD.C.

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COLUMBIA, Md. (9/15/09)--The Maryland and District of Columbia Credit Union Association (MDDCCUA) Monday announced the launch of its largest integrated advertising campaign this week, designed to educate consumers about the benefits of joining a credit union. The “What’s in it for me?” campaign touts the products, services, and lower rates and fees offered by credit unions versus those of traditional banks through radio spots, regional transit advertisements and an informational website. It will run throughout the Maryland, Washington, D.C. metro, Baltimore metro and Northern Virginia regions. In addition to the transit and bustail advertisements, the campaign’s radio spots were scheduled to air on regional stations in Washington, D.C., and in Baltimore, starting Monday. “The public has rediscovered how accessible credit unions are, the multiple benefits they afford, and how strongly they have weathered this year’s tough economic climate,” said Michael V. Beall, association CEO. “Over 50 regional credit unions are supporting this campaign as a direct result of the increase in member loyalty they have seen this year, and they want to keep that momentum going strong,” Beall said. “Consumers keep coming to credit unions to meet their needs; they see them as a trusted depository for their savings.” Recent industry data has shown an increase in credit union membership participation nationwide. Specifically, the Maryland, District of Columbia and Northern Virginia regions have experienced increases in:
* Share growths of 9.5% in Maryland and 7.4% in Washington, D.C., from June 2008 to June 2009; * Volumes of loan originations throughout Washington, D.C., totaling 34% for the first two quarters of 2009; and * Number of financial products used per person--2.37 in Maryland and 2.44 Washington, D.C.--compared with the national average of 2.35.
MDDCCUA also is planning other community outreach initiatives to create additional awareness of credit unions among consumers. These include:
* Educational tool kits and other consumer-oriented materials; * A year-round schedule of consumer financial events to be hosted by local credit unions; * Coordination with other regional providers of financial literacy and consumer education to benefit the public; and * Continuous updates via www.WhatsInItForMe.org.

Robbery suspect killed by deputies had toy gun

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SHORELINE, Wash. (9/15/09)--A man who was shot and killed by three King County sheriff’s deputies in the aftermath of a credit union robbery Thursday near Seattle, had pulled a toy gun on the officers. The gun was a replica of a G-26 Glock pistol, which some deputies and officers carry on the job (Seattle Post-Intelligencer Sept. 14). The King County Medical Examiner’s Office identified the dead man as Jason W. Williams, 32, the newspaper said. James Bartlow, 47, was arrested in connection with the robbery of an Alaska USA FCU branch in Shoreline, Wash., according to FBI agent Mary Prewett (News Now Sept. 14) . The FBI believes that Bartlow and Williams committed four bank robberies and one attempted robbery that the bureau attributed to a robber dubbed the “Fashion Faux Pas Bandit.” After Thursday’s robbery, witnesses followed the two men to a parking lot about 10 blocks from the credit union and called in the location to police, the FBI said. When King County sheriff’s officers arrived, they confronted Williams, and three officers fired at him. Williams died on the way to a local hospital, the FBI said. A stun gun was deployed on Bartlow to take him into custody. All three officers were placed on paid administrative leave--standard procedure after an officer-involved shooting, a sheriff’s spokesman told the paper. Alaska USA FCU, based in Anchorage, Alaska, has $3.9 billion in assets.

Cards drive increase in non-cash payments worldwide

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PARIS (9/15/09)--Non-cash payments grew 8.6% to 250 billion transactions in 2007 compared with the previous year, according to the World Payments Report 2009. The use of cards is the single strongest driver for the growth, with global card transactions--credit and debit--growing 14.5% in 2007 and 11.2% in 2008. Markets are dominated by the U.S. and Europe, which account for 61% of the transactions. Developing economies continue to grow steadily, the report said. Non-cash payments appear to have withstood the financial crisis, but 2008 figures will indicate the crisis’ full effect on the market, the report added. The report cited Global Transaction Services (GTS) divisions as a stable and profitable source of revenue for financial institutions amidst weak economic conditions. However, they saw reduced volumes in the first quarter of 2009. GTS accounts for 5% to 20% of group revenues. The World Payments Report studies the resiliency of the payments industry, drawing on 36 interviews from 16 major banks and 20 of their corporate clients. The report was written by Capgemini, a consulting firm; the Royal Bank of Scotland; and the European Financial Management and Marketing Association.

Consumers cut card use turn to CUs CUNA tells IWSJI

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WASHINGTON (9/15/09)--The weekend edition of The Wall Street Journal outlines the "new rules for personal finance," with Credit Union National Association Chief Economist Bill Hampel noting that consumers are turning to credit unions for help. In the article, entitled, "By Choice and By Force, Consumers Cut Back on Plastic" (Sept. 11), reporter Jane Kim recommends credit unions and local banks as a still-accessible source for loans. Revolving credit is declining at an 8% annual rate, which indicates that Americans are ditching their plastic both by choice and by force as issuers tighten up, the article says. "In some cases, consumers are turning to credit unions and their local banks for help," said the article. Through March, loan growth at credit unions--including mortgages, small business and car loans and credit cards--rose 5.8%, compared with a decline of 2.9% for commercial banks, Hampel told the publication.

CU helps with car wash biz classic cars

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PLYMOUTH, Mich. (9/15/09)--A car-wash entrepreneur and classic car collector in the Detroit area has relied on a beneficial relationship with Community Financial Members FCU to fund his business and his hobby.
Ray Hicks, a long-time member of Community Financial Members FCU, stands next to one of his award-winning 1953 Corvettes, which he purchased with a loan from the credit union. (Photo provided by Community Financial Members FCU)
Seven years ago, while checking auto loan rates to purchase a car, Ray Hicks visited a Community Financial branch near his home in Northville, Mich. Remembering the first car he bought more than 30 years before with a credit union loan, Hicks knew that credit union loan rates were usually lower than those of other lenders. “After that visit, not only did I become a Community Financial member and purchase a new Cadillac for my wife, I was able to get a commercial loan to expand my business, Hicks said. “Community Financial also helped me with loans for my classic car collection, including several 1953 Corvettes.” During the past 30 years, Hicks’ car wash business has grown to include nearly two dozen properties throughout metropolitan Detroit--success he attributes to being a hands-on worker. He spent 18 years in a General Motors plant before growing his car wash business. Hicks said these experiences have led him to pay attention to bottom-line details such as loan rates. “I don’t change unless there’s a reason to change,” said Hicks, who describes himself as a loyal credit union member. “When you walk in the branch, everyone calls you by your first name. They also look at your goals and what you’re trying to achieve.” “Ray has the business savvy to leverage his classic car collection and car-wash properties to get the best deal,” said David Sanctorum, Community Financial director of business services. Community Financial Members FCU is headquartered in Plymouth, Mich., and has $455 million in assets.

Banks UW CU discover gold in college students

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MADISON, Wis. (9/15/09)--University of Wisconsin CU (UW CU) was one of several financial institutions that visited the University of Wisconsin campus in Madison, Wis., in hopes of attracting incoming students. UW CU was promoting its student account programs. More than 50% of incoming UW students become UW CU members, and 60% keep their accounts after graduation (Wisconsin State Journal Sept. 12). UW CU is offering students the ability to use their student identification card, the WisCard, as a debit card linked to a UW CU checking account. The credit union has a seven-year agreement with UW to offer the program. UW CU will build a new branch at the university’s second student union, which is expected to open in 2011. Students also can sign up for a “campus package” at UW CU that includes a no-minimum balance checking account, unlimited free ATM transactions, e-mail or text message alerts, and Money Link, which allows anyone to transfer money into a UW CU account from any financial institution, the newspaper said. UW CU also offers financial education to its members. Last year, the credit union provided more than 225 financial seminars that reached more than 5,000 people. Other financial institutions appearing at the University of Wisconsin included U.S. Bank and Associated Bank. Both offer account programs targeting college students and said that students are a major focus of their financial institutions. The Journal also interviewed several university students, asking what they would like from their financial institutions. The students cited credibility, online statements, free checking, credit cards with rewards, and competitive interest rates on student loans.

TJX breach suspect pleads guilty in Massachusetts

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BOSTON (9/15/09)--A Miami man who allegedly masterminded the Heartland Payment Systems and TJX Cos. breaches, which involved hacking activity and credit card fraud, pleaded guilty to charges Friday in the U.S. District Court in Boston. Albert Gonzalez, 28, pleaded guilty to 19 counts of computer fraud, wire fraud, conspiracy and other charges for his involvement in breaches that affected major U.S. retailers, including TJX, OfficeMax, Barnes & Noble, and Boston Market, according to the Department of Justice. According to indictments, Gonzalez and his co-conspirators broke into retail credit card payment systems through a series of techniques including “wardriving” and installing sniffer programs to capture credit and debit card numbers at retail stores. Wardriving involves driving in a car with a laptop computer looking for accessible wireless computer networks of retailers. With these techniques, Gonzalez and his co-conspirators could steal more than 40 million credit and debit card numbers from retailers and sell the numbers. They also engaged in ATM fraud by encoding the data on the magnetic stripes of blank cards and withdrawing tens of thousands of dollars at a time from ATMs, according to the indictments. Gonzalez faces a minimum of 15 years and a maximum of 25 years in prison. He also faces a fine of up to twice the victims’ pecuniary loss or $250,000, whichever is greatest, per count. He is scheduled to be sentenced Dec. 8. Earlier, he pleaded guilty to charges in New York for wire fraud in relation to hacks of the Dave & Buster’s restaurant chain. He faces up to 20 years in prison and a maximum fine of $250,000 for the New York case. Gonzalez also remains under indictment for charges brought in August 2009 by the U.S. Attorney’s Office for the District of New Jersey for conspiring to hack into the computer networks of Heartland Payment Systems and Hannaford Brothers Co. Hundreds of credit unions were affected by the breaches because they were forced to replace many of their members’ credit and debit cards whose numbers were exposed as a result of the breaches.

Prelim hearings begin in Heartland data breach case

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HOUSTON (9/15/09)--Preliminary hearings are underway in the class action suit brought by financial institutions against Heartland Payment Systems, the payments processor that suffered the largest data breach in history last year. More than 30 financial institutions--including several credit unions--from 22 states are involved in the lawsuit, which is different than the class action lawsuit brought by consumers against the Princeton, N.J.-based processor. The breach compromised roughly 130 million credit and debit cards. In June, a Multidistrict Litigation (MDL) panel decided the suits would be heard in Houston (News NowJune 15). Richard Coffman, a Beaumont, Texas-based attorney representing the Pennsylvania State Employees CU (PSECU), Harrisburg, Pa., and Lone Summit Bank, told Bank Info Security (Sept. 9) that a case management conference in August was a "very good one" for the financial institutions. Judge Lee H. Rosenthal of Houston's Southern District Court of Texas held a preliminary case management hearing Aug. 24 and named three co-lead counsel: Mike Cadell of Houston; Joe Sauder of Haverford, Pa.; and Coffman. Also at issue in the hearing was discovery--what Heartland will be required to produce now and what can be deferred to next spring after its anticipated motion to dismiss is argued. Heartland has filed a motion for a stay on all discovery until the court rules on the motion to dismiss. The financial institutions are required to file their amended consolidated complaint by Sept. 23, with Heartland required to file its motion to dismiss by Oct. 23. Briefing on that motion is expected by mid-December. If the case is argued in early January, Coffman said a ruling could be issued shortly after that, BankInfoSecurity reported. Coffman estimated that the number of financial institutions impacted by the data breach is much higher than the 670 institutions listed on BankInfoSecurity's website. He said the list reflects about 20% of institutions that had to replace compromised credit and debit cards and absorb unauthorized charges on their cardholders' accounts. That would bring the total number of institutions affected to 3,350. A third set of cases, involving securities issues, was filed in New Jersey and likely will be consolidated into one court later this fall. The MDL panel will decide those cases in October. Heartland hopes to consolidate them and hear them in Houston as well, Coffman told the publication.