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CURRENT Newsletter | 15 August 2013

Aug 15, 2013 by Lewis Wood

News and Information For and About Virginia's Credit Union System

Headline News

News About Credit Unions

Compliance/Regulatory Affairs News

Governmental Affairs News

Financial Services/Marketplace News

Education & Networking Opportunities

News From Credit Unions

Chapter News

Community Involvement

Marketing News

Security/Fraud Prevention

Technology News 

Headline News

Judge Gives Fed One Week to Make Decision on Interchange Rule; Now Talk Turns to 'Damages'

A U.S. District Court judge on Wednesday gave the Federal Reserve Board one week to decide if it will move ahead with making changes to its final rule capping fees on debit card transactions. U.S. District Judge for the District of Columbia Richard Leon warned attorneys representing the central bank he wanted a clear answer on the Fed's position on issuing an interim final rule and how quickly it could be completed.

He also raised the specter of forcing banks and other financial institutions to reimburse excess amounts of swipe fees that have been collected since the interchange rule took effect in October 2011. (Institutions with less than $10 billion in assets are technically exempt from the rule.)

The judge's ruling effectively sends regulators back to the drawing board unless they choose to appeal the decision. The Fed has until Sept. 30 to make that determination. But Leon made clear he had no plans to await the Fed's decision on an appeal. Instead, he said the Fed had one week to decide whether it would make changes to its final rule and issue an interim regulation. The judge set the next hearing for Wednesday, Aug. 21 at 2 p.m.

The judge also asked lawyers from both sides to detail how companies can refund interchange fees that were higher than should have been allowed.

He gave them until Sept. 16 to file briefs on that issue. Observers expect the Fed to punt on issuing an interim final rule, which could wind up being more disruptive for the industry, and instead challenge the court's decision and request a stay from the Court of Appeals.

"For the Fed, there is little-to-no downside to appealing this decision," wrote Isaac Boltansky, a policy analyst at Compass Point Research & Trading, in a note. "Furthermore, we believe it would be surprising if the Fed decided to let such a strongly worded rebuke of its rulemaking authority stand as the final world. It would be wholly inconsistent with the Fed's regulatory persona to not appeal this decision." (American Banker Online, Aug. 15)

[related: Judge to Fed: Have An Interim Rule Decision By Next Week]
[related: Judge Fierce On Fed Interchange Rule]
[related: Judge Scolds Fed for Inaction on 'Swipe' Fees]

>> Resource: CUNA's Bill Cheney on Issues Raised by yesterday's hearing.

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Ways & Means Chair, New Financial Services Member Support CUs

As credit unions continue their tax status advocacy efforts, Rep. Dave Camp (R-Mich.), who is currently working on tax reform measures as chairman of the House Ways & Means Committee, noted the "very important role" credit unions play in communities across Michigan and the rest of the country.

"I will continue to look for ways to reduce regulatory burden and to help credit unions in their mission of serving consumers and small businesses with affordable financial services," Camp added in a statement delivered to the Michigan Credit Union League & Affiliates.

"The significance of this statement is that the chairman has made a very clear and strong statement of support for credit unions...," MCUL & Affiliates' CEO David Adams said. Camp and Senate Finance Committee Chairman Max Baucus (D-Mont.) have talked tax reform in town hall-style field meetings across the country, and tax reform is likely to be on the agenda when Congress returns in September.

[read more]
[related: CUs' 'Don't Tax' Message Resonates]

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Softer U.S. Mortgage Rule Said to Be Proposed at End of August

A new version of a rule requiring lenders to keep a stake in risky mortgages that they securitize will be proposed by U.S. regulators in the last week of August, according to two people familiar with the matter. The 500-page draft regulation written by a panel of six agencies will replace a more stringent proposal for the Qualified Residential Mortgage rule, said the people, who asked not to be identified because the plan isn’t public.

The first version drew protests from housing industry participants and consumer groups when it was released in 2011. The plan will require financial institutions to retain a slice of mortgages when borrowers are spending more than 43 percent of their monthly income on all of their debt.

The earlier version would have required banks to keep a stake in loans when borrowers were spending more than 36 percent of their income on all loan payments and in loans with a down payment of less than 20 percent. The rule will carve out mortgages backed by Fannie Mae and Freddie Mac, one of the people said.

[read more]

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FHA Plan Would Make Lenders Eat a Lot More Faulty Loans

The cost of doing business with the Federal Housing Administration could skyrocket if the agency adopts a new method for calculating lenders' liability for poorly underwritten loans that default. The method under consideration would have the FHA examine a random sampling of each lender's loans, calculate the percentage of loans in the sample with underwriting defects, and then extrapolate that rate to the lender's FHA portfolio.

Lenders would then have to compensate FHA for the "estimated total risk" to the agency's insurance fund. "If this goes through, it means it will be a lot more expensive to be an FHA lender," says Phillip Schulman, a partner at the law firm of K&L Gates. (American Banker Online, Aug. 13)

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Volunteers Needed: Quit The Hit Hits the Road Next Month to Promote CUs

Come join us for some fun with our traveling QuitTheHit Photo Booth! Your League is planning to attend various festivals and events throughout Virginia this Fall to showcase Quit the Hit and continue to drive younger potential members to credit unions. Volunteers from area credit unions are needed at the events listed below.

We specifically selected events across the Commonwealth that brought in our targeted demographic (18- to 34-year-olds). The current list of festivals include:

  • Hampton Bay Days - Sept. 6-7, Hampton
    (Most attendees are from Greater Hampton Roads)
  • Dulles Day Plane Pull – Sept. 14, Sterling
    (Almost all attendees from Loudoun, Fairfax and Prince William counties)
  • Good Times, Tastes & Traditions – Sept. 21, Staunton
    (Most attendees are from Staunton, Waynesboro, Harrisonburg, Fishersville, and Lyndhurst)
  • Martinsville Race – Oct. 25-27, Martinsville
    (Majority attendees from Roanoke, Lynchburg, southwest Virginia, and Piedmont areas)
  • 2014 Richmond Race on April 25-27, Richmond
    (Tentative date; firming up details now!)

All that is required of our credit union volunteers is your time. Your League will be covering the cost of admission (sorry, race tickets not available!), food and gas, and you get the additional bonus of a FREE Quit The Hit T-shirt to wear to the event.  

You are welcome to bring marketing collateral for your credit union to any events you attend. You can send us your marketing collateral for the booth if you are not able to send a representative from your credit union.

Let’s make the second phase of Quit the Hit a big one! If you have any suggestions on other events in your area please email them to your League's Bethany Scott at bscott@vacul.org. Questions about volunteering for an event can also be forwarded to Bethany. 

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News About Credit Unions

New CUNA Video Makes Case for Winding Down Corporate Assessments

In a new "Inside Exchange" video from CUNA, Chief Economist Bill Hampel discusses with Paul Gentile the future of corporate stabilization assessments. Hampel also outlines how much credit unions have already paid in assessments, the role of liquidity and how the recovery of the economy, and the housing markets, play key roles.

CUNA maintains a strong position that the assessments should be over, and the case for doing so is highlighted in this episode.

[view the video]

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Credit Unions ‘Fighting for Turf’ in Small-Loan Market

Financing small-ticket items was once a popular offering at credit unions. However, over the past 15 years, the credit card has taken the place of unsecured loans for financing, according to a new white paper from the CUNA Lending Council, “Fighting for our Turf: Threats to Credit Union Loan Markets.”

According to the council, the credit card has become a substitute for the installment loan, albeit at a higher price, for items such as electronic equipment, furniture and jewelry. With advances in technology and shifts in consumer behavior, though, a number of opportunities still exist for offering small loans, the council noted. The white paper focuses on how credit unions can regain these lending opportunities and make the portfolio viable.

[read more]

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Temkin Survey: CUs Continue High Scores In All Areas

Credit unions continue to be held in high regard by their members, according to a new Temkin Ratings survey. This time credit unions are the only financial institutions that made it into the top 20 of all five consumer feedback categories. Credit unions did well in the areas of experience, loyalty, forgiveness, trust, customer service and Web experience.

Their main competition was a financial non-profit cooperative bank, USAA. The Waban, Mass.-based Temkin Group asks consumers to rate their experiences with more than 100 companies, including individual banks.  Credit unions are included as a combined group, with no particular credit union being rated.

[read more]
[related: Consumers Typically Put CUs On Top For Satisfaction]
[related: Banking At Bottom Spot On Trust Index]

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Banks Beat Credit Unions in Phone Service, Survey Finds

Banks, which have become a target of criticism since the financial crisis, do a better job of picking up after the first ring than credit unions, and, even when they don't, the median hold time is shorter at banks, according to a study released Monday by Lake Bluff-based Moebs Services.

The economic research firm in June called 1,676 institutions and found that banks and thrifts answer their phones 56 percent of the time on the first ring, and, when they don't, the median hold time is 42 seconds. In contrast, 44 percent of credit unions surveyed had no hold times, and, when members had to wait, the median hold time was 90 seconds.

The credit union industry responded to the survey with a spirited defense. The Credit Union National Association, a Washington, D.C.-based national trade group representing credit unions, said its industry has consistently beaten banks in overall customer satisfaction.

[read more]

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Credit Unions Hiring and Raising Pay: CUNA Survey

One-in-four credit unions will be adding full-time employees to their payrolls this year, and four-in-every-five credit unions plan to provide pay increases to their workers this year, according to CUNA’s 2013-14 Staff Salary Report.

“Many credit unions are taking advantage of an improving economy by adding to their workforce and rewarding their workers for helping them and their members get through the tougher days of the recession,” Jon Haller, CUNA director of corporate and market research, said Tuesday in a release. “Our survey results indicate clearly that credit unions are positioning themselves to help their credit unions grow and deliver more services to members,” Haller said.

He said the survey reported that salary and wage increases for managers are expected to be 2.6%.

[read more]

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Compliance/Regulatory Affairs News

NCUA Introduces FAQ+, a New Search Engine for CUs

Credit union professionals have a new online search engine to help get answers to frequently asked questions: FAQ+, a project of the National Credit Union Administration’s Office of Small Credit Union Initiatives (OSCUI). FAQ+ is the latest example of NCUA harnessing technology to improve service to small, low-income, and new credit unions, to help them become better-informed and more efficient.

The FAQ+ search engine will be available around-the-clock through OSCUI’s web page on NCUA’s website. Visitors will have easy access to web links, documents, videos, agency forms, and other content.

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Metsger to Take Oath of Office as NCUA Board Member Aug. 23

The Honorable Richard T. “Rick” Metsger will be sworn in and join the three-member National Credit Union Administration Board Aug. 23, at 10 a.m. in a private ceremony on Capitol Hill. Metsger replaces former Board Member Gigi Hyland, who left the agency in October 2012. His term will expire Aug. 2, 2017.

CUNA's Latest Regulatory Advocacy Report Available Online

The Regulatory Advocacy Report keeps you on top of the most important changes in Washington for credit unions — and what CUNA is doing to monitor, analyze and influence government agencies and federal law.

Read the full report: CUNA Regulatory Advocacy Report: August 12, 2013

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Governmental Affairs News

Learn the Latest on State Races, CU Legislative Initiatives at Free Forum on Sept. 25

Hunton & Williams, our external lobbying team, is playing host to your League's free Legislative Leadership Forum, featuring political analyst Bob Holsworth, as well as representatives from CUNA and Hunton.

At lunch, we have the honor of hearing from House leaders Tim Hugo and Mark Sickles, who will give us their partisan lowdown on this fall’s races. Be informed...join us on Sept. 25 in Richmond!

[register here]

>> And thanks to all of those signing on to sponsor the 25th Annual VACUPAC Golf tournament (Sept. 24). View that growing list here!

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Aid Our Advocacy Mission: Report Your Micro-Lending Initiatives

Credit unions: We're again collecting your micro-loan data through our Reality Check survey. We're asking you to report information on loans you've made of $3,000 or less, excluding credit cards. Please give us a hand and provide this data, which we use to support our advocacy efforts!

Report your aggregate micro-loan data for the first six months of 2013 at this web address: Online Survey

> We would also love to share your stories about members helped by your small loans. Photos of the members you've helped would also be appreciated! Email them to pr@vacul.org.
> We have a downloadable version of the survey as well! (PDF, 267kb)

We use this information to produce our Impact Report, the latest version of which we've been distributing to lawmakers!

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Financial Services/Marketplace News

Regulators Mulling Rules on Investment Advice

Should the companies managing your 401(k) be allowed to sell you products that they know will actually make your retirement less secure? That’s the question being debated in Washington, as regulators mull rules that would require the financial services industry to act in the best interest of its clients when giving advice on which investments to buy.

This fall, the Department of Labor is expected to issue a new rule that would impose a “fiduciary duty” on investment professionals who service company-sponsored retirement accounts, like 401(k)s, as well as individual retirement accounts (IRAs).

[read more]

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For This Tepid Economy, There's Only One Way Out

A stunning government report says the U.S. economy has gone through a frightening structural change since the recession: a reduction in our capacity to grow. The U.S. faces a future of diminished expectations like nothing witnessed since World War II. Unless business and government take daring, extraordinary measures, the economy is destined to generate sluggish growth that's more than one-third slower than in the past.

That scenario will stifle incomes, pressure corporate earnings and stock prices, sap tax revenues required to support the rising ranks of retirees—and shrink the savings Americans need to buy houses and send kids to college.

An excellent study from consulting group McKinsey, "Game Changers: Five Opportunities for U.S. Growth and Renewal," provides a compelling blueprint for how America can re-establish a strong growth trajectory. The solutions, appropriately, focus on massively mobilizing private investment, instead of on heavier doses of government subsidies.

[read more]
[related: The Really Bad News Behind the Jobless Claims Drop]
[related: New Normal Returns to DC This Fall: Fiscal Chaos]

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Facts About Household Debt in the US

What’s really happening with household debt in the United States, and what does it augur for the future? The New York Fed’s quarterly report on household debt provides some of the best evidence. The second quarter report was released Thursday, and here is what we can discern from it.

  • Debt levels really are coming down. Total household debt fell another $78 billion, or 0.7 percent, in the second quarter of 2013.
  • Mortgage debt is where the action is. There has been plenty of attention paid to the role of credit cards and student loan debt in weighing down Americans. But in the overall numbers, housing-related debt dwarfs those burdens. Add the $7.8 trillion in outstanding mortgage debt and another half a trillion in home equity credit lines, and that’s more than three-quarters of all household debt.
  • All is not well with student loans. Of the major types of household debt, the rate of delinquent payments is highest among student loans, and the rate has risen over the last two years even as the proportion of people behind on their payments has fallen for most other types of debt.

[read more]
[related: U.S. Consumer Debt Drops in Second Quarter, Continuing Post-Crisis Trend]

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Foreclosure Activity Down 32% Year-Over-Year

The nation's foreclosure crisis continues to abate, but some states still have a long way to go. Foreclosure filings last month — including default notices, auctions and bank repossessions — increased 2% from their 78-month low in June but were still down 32% from a year ago, market researcher RealtyTrac says.

Foreclosure starts — the beginning of the process — were up 6% from June but 38% lower year-over-year. While down nationwide, foreclosure starts actually increased from a year ago in 15 states. [read more]

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The Great Debate: Do Millennials Really Want Cars, or Not?

Why are young people less likely to purchase cars, or even have driver’s licenses nowadays? One theory has it that the generation that came of age with the Internet and smartphones thinks cars are pretty lame. Automakers prefer to see the situation differently — that young people today love cars just as much as any other group, but just can’t afford them right now.

[read more]

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Experian: Auto Repos Are Lowest On Record

Vehicle repossessions dropped during second quarter 2013 by 14.8% to the lowest rate since Experian Automotive began tracking the data seven years ago, announced Experian Tuesday. Roughly 0.36% of all vehicle loans ended in a repossession, down from 0.43% in second quarter 2012. 

The change represented a 10.4% decrease from the previous low of 0.41% in second quarter of 2006. The total balance of outstanding automotive loans grew to nearly $751 billion, compared with $682 billion in second quarter of 2012. 

[read more]

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80% of College Students Chipping in for Education

Just as the Great Depression left a lasting mark on the generation who lived through it, the children of the Great Recession may already be shifting their world view about money, judging by a new survey that says about 80 percent of them are shouldering some or all of their college costs.

[read more]

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Education & Networking Opportunities

Oct. 1 Online Discovery Conference – Free Registration Now Open!

The annual Online Discovery Conference is back in full force and designed to arm credit unions with relevant, reliable and actionable information that can be put into practice right away. For the fourth straight year, CUNA Mutual will offer this opportunity – at absolutely no cost.

You’ll access great content and connect with peers from the convenience of your own computer.This year’s agenda is stacked with industry-focused content including 13 thought leader sessions, a trade show, and opportunities to network with peers. Three tracks will focus on the issues most important to credit unions:

  • Remaining relevant to members
  • Managing compliance & risk
  • Driving growth

Learn More or Register

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Upcoming League Events:

Other Educational Opportunities:

    • VACUL32 --50% off all registrations
    • 32NEW -- Anyone bringing someone new will receive 10% off their registration

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News From Credit Unions

Enterprise Holdings Foundation Donates $4,500 to Argent Credit Union in Support of Community Involvement Initiatives

The Enterprise Holdings Foundation has donated $4,500 to Argent Credit Union in support of its community involvement initiatives with the Lucy Corr Village, providing quality assisted living care for seniors in the Greater Richmond community and FeedMore, Central Virginia’s hunger-relief leader made up of the Central Virginia Food Bank, Meals on Wheels serving Central Virginia, and the Community.

[read more]

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Washington Gas Light Federal Credit Union Supports Washington Gas 2013 School Supply Drive

Washington Gas Light Federal Credit Union donated 300 composition books to support the Washington Gas 2013 School Supply Drive. The drive supports local students and ensures they have the tools needed to facilitate learning.

[read more]

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Belvoir Federal Supports the ‘La Leche League’ of Fort Belvoir

On Aug.4, Belvoir Federal helped sponsor the “La Leche League” of Fort Belvoir by donating a $100 gift card, used to purchase food and six cases of water. “La Leche League,” which is the most renowned mother-to-mother breastfeeding support group, had 50 people in attendance at Fort Belvoir’s inaugural Breastfeeding Recognition Ceremony.

[read more]

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8th Annual Celebrate Fort Belvoir Set for Aug. 24

Belvoir Federal’s 8th Annual Celebrate Fort Belvoir will be held at the New Exchange on Fort Belvoir on Aug. 24. Join the credit union and 98.7 WMZQ for food & drinks, games, rock wall climbing, moon bounce, balloon animals, face painter, music and more. Visitors will also have a chance to win prizes.

[read more]

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Richmond Magazine Readers Honor VACU for Best 'Bank' Service

Virginia Credit Union was recently honored for offering the “Best Bank Customer Service” in Richmond Magazine’s annual survey of reader picks. “At Virginia Credit Union, we never forget that we work for our members,” says VACU President/CEO Jane Watkins. “As a member-owned cooperative, our focus is on our members and on helping them achieve success.”

[read more]

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Chartway FCU Consolidating Utah Divisions Under One Name

Chartway Federal Credit Union announced this week that it will be bringing two of its divisional credit unions - Utah Central and HeritageWest Credit Unions -- together under one name.

On Oct. 1, 2013, Utah Central will begin operating under the name HeritageWest. As a result, of the name unification, members will have access to 17 convenient locations throughout the state.

[read more]

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Foundation Supports Life Skills, Football Camp

The Credit Unions Care Foundation of Virginia was recognized this week for a $1,500 donation to the Kids & Pros Camp, held recently in Lynchburg. Not only do the young people learn football skills, staff also focuses on important life skills.

[read more]

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Chapter News

Richmond Chapter Meets Aug. 20

Patrick Pillow, son of League President Rick Pillow, will be the featured guest speaker at the Richmond Chapter's Aug. 20 meeting.  You may have seen the heartwarming article in the Richmond Times Dispatch recently about him “Answering the Call.”

Patrick will speak about the value of serving others. The Chapter will also celebrate Staff Appreciation Night!

[learn more]

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Roanoke Valley Chapter Plans Aug. 23 Golf Tournament to Benefit VACUPAC

Join the Roanoke Valley Chapter Aug. 23, for a day on the links to benefit the Virginia Credit Union Political Action Committee (VACUPAC). Proceeds will help the chapter meet its 2013 VACUPAC goal and support the governmental affairs and advocacy mission of Virginia's credit union system. Registration fee is $75 per golfer and a number of sponsorship opportunities are available for credit unions and their business partners!

[Download the tourney packet for details] (pdf, 944kb)

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NoVA Chapter Meets Sept. 12

World Council of Credit Unions Vice President Victor Corro will be the featured speaker at the NoVA Chapter's Sept. 12 meeting. Since 2004, Corro has worked to develop, coordinate and oversee WOCCU's International Partnership program, which currently includes 20 partnerships spanning 21 countries.

Among those partnerships is the 5-year-old relationship between the Virginia Credit Union League and credit cooperatives in the Baltic nation of Estonia. Location: Marriott Fair Oaks. Time: 5:30 p.m. networking; 6 p.m. meeting.

[learn more]

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Tidewater Chapter to Hold Sept. 12 Meeting

Dr. Larry Filer, of Old Dominion University, will be the featured speaker at the Tidewater Chapter's Sept. 12 meeting. Location: Greenbrier Country Club (1301 Volvo Parkway, Chesapeake). Time: 6 p.m. social; 6:30 p.m. dinner and meeting.

[learn more]

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Community Involvement

Miracle Jeans Day Sept. 18

Credit unions: Sign up now to participate in Miracle Jeans Day Sept. 18, and help raise funds for your local Children's Miracle Network Hospital!

[learn more]

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Marketing News

Invest In America/Dell Partnership Offering $200 Gift Card with Qualifying Purchase

Now is a great time to get the latest technology from Dell and get a $200 Dell promo eGift card. Credit union members are eligible to receive a Dell $200 promo eGift card when purchasing a qualifying PC or tablet priced at $699.99 or higher through the Invest in America program. You can use your eGift card to purchase software, electronics, Xbox 360, tablet, TV, PC or accessories at Dell.com.

Visit the Dell page on the LoveMyCreditUnion.org website for complete offer details and other great credit union member discounts from Dell.

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Security/Fraud Prevention

FBI Warns FIs Of Possible Sept. 11 Cyberthreat

Credit unions are being warned about a possible cyberthreat to both U.S.- and foreign-based financial institutions  in September, and the Credit Union National Association is encouraging credit unions to be on the alert. A Federal Bureau of Investigation (FBI) Advisory said the potential threat would be "on or about Sept. 11.

"Although previous iterations of this effort have had limited if any impact to the targeted entities, the FBI encourages the private sector to take reasonable steps to secure cyberinfrastructure in light of possible threats," said the advisory.

[read more]

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Technology News

CO-OP Paper: Mobile Wallets Have Arrived

Credit unions should operate from the assumption that mobile wallets aren't a technology of the future, but in fact, are here now, according to a new white paper from CO-OP Financial Services.

What's preventing widespread adoption of the technology is the uneven experience of the options currently available, spotty awareness and low use, said the paper, "Digital Wallets in Depth: What are they? How do they work? And where do credit unions fit in?"

Gartner Inc. predicts 45 million people worldwide will use mobile payment technology this year, generating $235 billion in transactions, in its report, "Forecast: Mobile Payment, Worldwide, 2013 Update." By 2017, the research firm expects the ranks of mobile payment users to reach 450 million, with $721 billion in transactions.

[read more]

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Mobile Device Share of Financial Transactions Vaulting Higher

Security company iovation and consulting firm CEB TowerGroup have announced the results of a study that documents a spike in the number of financial services transactions performed on mobile devices.

The research shows that mobile now claims 20% of all online financial transactions. That is up from 11% in 2012.

[read more]

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