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Benefits of Credit Union Membership
The Credit Union National Association's (CUNA) state-by-state report on the financial benefits of credit union membership.

CUNA's Crisis Planning Tool
Your customized analysis of the NCUA Prompt Corrective Action Regulation, Proposed Risk-based Net Worth Requirement, and Complex Credit Union Calculation.

Regulatory Burden Study
With the support of state credit union Leagues, CUNA commissioned Cornerstone Advisors to perform an updated rigorous analysis of the current financial impact of regulation on credit unions, and how much it has changed over the last several years. The study found that the combined effect of increased costs and reduced revenues due to regulation amounted to at least $6.1 billion in financial impact to credit unions, including $614 million in Virginia. 

Credit Union Profile
Your League's quarterly report on the credit union system and its financial performance, with detailed report on the Commonwealth's credit unions.

CUNA’s Economic Update
CUNA Economic Update videos provide 15-minute monthly overviews of the economy and its impact on credit unions. 

CUNA's Environmental Scan
CUNA E-Scan combines trends across industries, expert analysis and forecasting data to provide strategic planning guidance for credit union professionals. The insights in CUNA E-Scan are organized into 10 trend-based chapters that provide actionable insights from industry experts and practitioners, so you can make timely, future-focused decisions that keep your credit union agile and ready to meet member needs. 

CUNA Mutual Group’s Credit Union Trends Report
The Credit Union Trends Report is a monthly "pulse check" on the state of the credit union marketplace, often placed in a historical context.

NCUA's Credit Union Analysis
NCUA’s economists and analysts spotlight the credit union system’s financial performance, merger activity, changes in credit union chartering and fields-of-membership, as well as broader economic trends you should track.

Holidays and Pandemic Team Up to Enhance Fraud & Scams (November 2020)
As the holidays approach, e-commerce merchants are preparing for a continued increase in online sales as a result of store closures and restrictions due to the COVID-19 pandemic. Members should be aware of scams that target the convenience of online shopping such as fake or spoofed websites and pop-ups, e-skimming, porch pirates, or impersonations for your curb-side pick-ups.

Rise in Litigation for Failing to Refund Unearned GAP Premiums (November 2020)
There has been a recent increase in class action litigation directed toward indirect loans that were originated by automobile dealers on retail installment sales contracts (RISC). The allegations accuse creditors of failing to process refunds when a Guaranteed Asset Protection (GAP) Waiver terminates early, which may include:

  • Loan payoff prior to maturity, including sale or trade of vehicle
  • Repossession and disposition of vehicle
  • Customer cancellation of the GAP Waiver

Why Investment Services Are Crucial to Your Members (November 2020)
We’ve known for some time that credit union members would prefer accessing financial services at a credit union. While more than half of members report that, only 3% of members utilize their credit unions for investment services. That’s according to research from Kehrer Bielan, sponsored by CUNA Brokerage Services, Inc. (CBSI). Now, during a time of global pandemic and economic uncertainty, it may seem counterintuitive to focus on investments. Members are struggling economically and face nerve-wracking uncertainty. But this is exactly when these services and strong financial planning need to be present and proactive within credit unions.

FinCEN Issues Advisory on Unemployment Insurance Fraud (November 2020)
The Financial Crimes Enforcement Network (FinCEN) recently issued an advisory (FIN-2020-A007) to alert financial institutions on the unemployment insurance fraud occurring during the pandemic. Credit unions across the country have assisted states in recovering unemployment insurance benefits that were fraudulently applied for by fraudsters.

Member HELOCs Used to Fund Counterfeit Checks (November 2020)
Credit unions have incurred large losses from counterfeit checks that draw funds from members’ home equity lines of credit (HELOCs), including counterfeit HELOC checks and counterfeit checks drawn on member checking accounts funded from unauthorized advances against member HELOCs. In many cases, fraudsters social engineered call center employees to request a canceled HELOC check or to order share drafts on member accounts.

Ransomware Attacks Extorting Sizeable Ransoms Not Letting Up (November 2020)
Security experts are reporting a potential increase in ransom attacks for the foreseeable future. As ransomware tools and deployment methods advance, criminal groups have launched more targeted attack campaigns resulting in increased paid ransom demands. Beazley reports ransomware claims increased 239% from 2018 to 2019, while the average ransom payment in Q2 2020 was $178,254, a 60% leap from Q1, according to Coveware. Access CUNA Mutual Group’s Ransomware & Cyber Threats Overview (UserID and Password required) for more info.

Election Drives CU Preparedness (October 2020)
Credit unions are preparing their organization, staff, and facilities amid the upcoming election. Voting-leave rights, social political demonstrations, increased law presence, and business disruption are just a few questions being raised during these uncertain times. Carefully assess policies, locations, and potential vulnerabilities while also considering additional preventative measures for employee and workplace safety.

Mortgage Closings Targeted in Compromised Email Scams (October 2020)
Real estate loan closing funds are being targeted by fraudsters through compromised emails. The fraudsters are hacking title company and/or closing agent email accounts and sending “updated” wire transfer instruction resulting in losses. Title companies and closing agents for real estate transactions often use wire transfers to fund the closings and payoff existing mortgages due to the high dollar amounts. In recent losses, title company and closing agent email accounts are being hacked to look for upcoming real estate closing transactions.

Check Holds Not Used As Fraudsters Take Off With 6-Figure Amounts (October 2020)
Fraudulent deposit losses associated with new account scams are increasing at an alarming rate. Fraudsters either opened the new account with a fraudulent check or waited up to six months before depositing a fraudulent check. Savvy financial criminals frequently wait more than 30 days before making a fraudulent deposit, or they will make small deposits and withdrawals in the first month to establish a pattern.

The fraudulent checks have ranged from $1,000 up to $87,000. Unfortunately, check holds were not imposed in most cases, and the fraudsters were able to withdraw the funds immediately at another branch location, shared branch location, or through an ATM.

Emerging Risk: Changing Business Practices (October 2020)
The unprecedented pandemic event has required businesses, including credit unions, to close offices, implement a more remote workforce, increase reliance on digital products/service, and re-open offices. This has been uncharted territory for many decision-makers as you face more pervasive, complex challenges than ever before. CUNA Mutual Group has resources available to help you navigate this new reality.

Fraudulent Wire Transfers Generated From Email Scams (October 2020)
Cybercriminals have gone to great lengths throughout 2020 to commit theft or fraud by manipulating credit union executives, employees, and even business members using fake or doctored emails. The surge of business email compromise (BEC) and fraudulent instruction scams typically request large wire transfers. These urgent requests often exceed $1 million.

Class Action Lawsuits Again Swirl Around Collection Letter Deficiencies (September 2020)
Plaintiff attorneys continue to be successful with class action lawsuits against credit unions due to deficiencies in collection letters. Specifically, Notices of Intent to Sell Collateral that has been repossessed and Deficiency Notices sent after the collateral has been sold are the letters/notices targeted. Lack of detail in these notices is being scrutinized. These lawsuits have been going on for several years with credit unions being required to waive remaining deficiency balances, return payments toward deficiency balances, return 10% of the principal amount of the original debt, and pay statutory damages.

Credit / Debt Relief Scams On The Rise (September 2020)
There are reputable companies and organizations that can help negotiate concessions with creditors or set consumers up with a plan to pay down debts. However, scammers that guarantee to get you out of debt quickly and cleanly with an upfront payment are often illegal and on the rise. Even with legit companies, debt relief and credit relief carries considerable risk. Many firms instruct consumers to stop paying their debts, on the premise that creditors will negotiate a reduction.

Increase in Fair Credit Reporting Complaints May Lead to Increased Litigation
In April and May, the CFPB received approximately 42,400 and 44,100 complaints, respectively—the highest monthly complaint volumes in the Bureau’s history. The most common creditor violations of Fair Credit Reporting Act (FCRA) include:

  • Creditors provide inaccurate financial information to reporting agencies
  • Creditors fail to send notifications about credit report or score
  • Creditors pull credit reports for an impermissible purpose
  • Creditors utilize credit reports pulled for a permissible purpose to market or cross-sell additional products and services

The most recent issue impacting credit unions is based in the requirement to establish a permissible purpose before pulling a member’s individual credit report.

Keeping the Talent Pipeline Strong in Today’s Climate
Our focus on identifying and fostering talent in our industry cannot slow down. That means growing our talent pipeline and particularly growing the diversity of that pipeline.

Life After COVID-19; Proactive Loss Mitigation Strategies for Your Loan Portfolio
When thinking about the COVID-19 impact, look how credit union business adapted and shifted to meet the needs of employees and members. Consider the risks that credit unions also faced and continue to face under this “new normal." One significant risk, for example, is how the inherent risk of your loan portfolio - the largest earning asset of your credit union - has increased dramatically.

Meeting Members Where They Are: What Consumer Sentiment Data Tells Us About How to Serve Members
As we grapple with the ever-changing nature of the pandemic and the roller-coaster of information, it’s important that we pause and do our best to understand how consumer sentiment is also evolving. Doing so will help us best serve the members who need us more now than ever.

Business Changes Introduce New Robbery and Physical Security Threats (June 2020)
An increase in robberies across the country have occurred at drive-thru lanes, through ATM attacks, and within lobbies. In some instances, these acts are being conducted by criminals wearing masks - taking advantage of the use of face coverings by the general public to help reduce the spread of the Coronavirus. The increase in crime is likely due to difficult financial times and the additional opportunity to change the modus operandi with changes in credit union business operations.

Counterfeit Checks Fraud Alert - (June 2020)
Counterfeit cashier's checks and/or corporate checks that closely resemble credit union authentic checks have been presented for payment at financial institutions in connection with scams. Slight alterations in check color, check stock, logo, or location of key credit union check branding elements have been reported. In many cases, Routing & Transit Number (RTN) and MICR information are accurate.

CUNA Mutual Group Risk Alert: CUs Face New Threats of Lawsuits Related to Overdraft Fees (May 2020)
Plaintiff attorneys continue to send demand letters and/or file lawsuits against credit unions alleging improper assessment of overdraft and/or NSF fees. Reports of these cases are occurring at a faster rate than the past. Recent trends also show smaller credit unions are being targeted. Plaintiff attorneys pursue potential clients through websites and social media – some websites even identify specific financial institutions. They also search for member account agreements and other docs on CU websites. A Washington, D.C.-based law firm may be sending demand letters to area financial institutions. 

Here are recent CUNA Mutual Group Risk Alerts related to overdrafts:

Civil Unrest & Riot Preparedness: An Essential Component of Safety
After a tumultuous beginning of 2020 with the COVID-19 pandemic, growing concerns over civil unrest manifesting into riots are alarming many credit unions. While having other types of safety processes and procedures in place are fairly common, many credit unions have not always accounted for or trained their employees on what to do in the event of a riot.

Sophisticated Social Engineering Scams Lead to P2P Fraud
Fraudsters are launching social engineering attacks to members by posing as the credit union to obtain online banking credentials. They are defeating out-of-band / 2-step authentication by scamming the member into providing this passcode to them. Once they have the passcode, they login to the member’s account and use peer-to-peer (P2P) services, such as Zelle and Payzur, to transfer funds elsewhere. Credit unions have reported losses ranging from $30,000 to $2 million due to this fraudulent activity.

Establishing Risk Tolerance in the Face of COVID-19 Ambiguity (May 2020)
As more of the COVID-19 impact and various government models for support have come into view, credit unions can allocate more time to strategic thinking around their plans for community support. With both snapshot and trending data, as well as qualitative insights from members and employees, leaders have more of the intelligence they need to establish an adjusted risk tolerance.

The Great Data Demand Facing Credit Union CFOs (May 2020)
As the number of business units demanding data-driven guidance grows, so too does the CFO’s need for highly consumable, real-time and accurate financial performance data.

Recent Ransomware Attack Validates Growing Trend Targeting Vendors
A major provider of automatic teller machines (ATMs) and payment technology, Diebold Nexdorf, recently suffered a ransomware attack that disrupted some corporate operations and services for over 100 of the company’s customers. While Diebold has determined that the spread of the malware has been contained, the attack validates a growing trend of third-party vendors being aggressively targeted by cybercriminals deploying ransomware in 2019, according to Beazley Breach Solutions.

Fraudsters Use Stolen Identities to File for Unemployment Benefits
Fraudsters from an international fraud ring have been using stolen identities to file for unemployment benefits in several states according to the Secret Service. The fraud network is believed to consist of hundreds of money mules creating potential losses in the hundreds of millions of dollars. Several credit unions have reported that members are receiving ACH deposits representing unemployment benefits –possibly after being recruited as money mules.

Data Privacy and Credit Unions: What to Expect in 2020 (February 2020)
In a changing digital world, many consumers continually weigh convenience and customized experiences with the privacy of their personal information. Consumers become accustomed to perks like scanning their loyalty card for an extra five dollars off. Simultaneously, they demand increased protection of their personal information and transparency over how the information is used. While today’s data privacy concerns generally target tech companies, these consumer calls may also impact credit unions where strict data privacy laws already drive action.

Credits Unions Use CDAs to Boost 'Cause Marketing' Partnership With CU4Kids (January 2020)
CUNA Mutual Group—in addition to its corporate and employee donations to CU4Kids—has been introducing credit unions to a relatively new funding mechanism, the “charitable donation account” (CDA). The NCUA allows certain investments within a CDA that have the potential to earn higher returns, with additional risks, than certificates of deposit and other typical credit union investments. CUNA Mutual Group helps credit unions analyze the different risks these investments present, and closely track the CDA’s performance.

 

 

Veterans Day (November 11) Veterans Day Closing Sign
Thanksgiving (November 26) Closing Sign - Thanksgiving 2020
Thanksgiving (November 26 & 27) Closing Sign - Thanksgiving 2020
Christmas (Early December 24 / December 25) Closing Sign - Christmas 2020
Christmas (December 24 & 25) Closing Sign - Christmas 2020

 

 

CUNA Notes Rising Risk of Overdraft Litigation

CUNA/Leagues have been tracking overdraft-related suits and demand letters, which have evolved significantly over the past few years. "Overdraft litigation" is actually a convenient umbrella term for several different types of legal allegations and fact patterns. In fact, many of you may remember demand letters alleging mere "vagueness" in account agreement or improper re-sequencing of transactions.

Learn more

 

 

Effective July 1, 2020 changes to the Code of Virginia will allow a state-chartered credit union to compensate members of the board of directors.  While state law previously permitted compensating members of supervisory and credit committees, the bylaws of most credit unions prohibited the practice.  Compensation of credit union officials requires that the board of directors adopt written policies, provided that annual compensation for an individual member does not exceed $6,000.  Compensation is permissible, not required, and credit unions choosing to provide compensation will need to amend their bylaws accordingly.  We have updated the standard bylaw template to reflect this option.

As you may know, the National Credit Union Administration issued a revised set of federal standard bylaws effective January 2, 2020.  We have reviewed those changes and made a few additional edits to the Virginia document.  We do not believe these changes are substantive, but some credit unions may find them relevant to their operations. Please note that the indemnification provision in Article XVII will only provide the maximum protection from liability if adopted by the members at an annual meeting (it is acceptable to present only Article XVII subject to member vote).

Credit unions may adopt bylaw amendments as provided in the articles of incorporation and bylaws of the institution.  A copy of the amended bylaws should be sent to the Commission for their records.  You are reminded that credit unions must continue to submit bylaw changes regarding field-of-membership (Article II) to the Commissioner for approval.  Additionally, any changes to a credit union’s Articles of Incorporation still require submission to the clerk’s office of the State Corporation Commission.  For example, Article I (Name) would require approval of the State Corporation Commission as it would be a change to the Articles of a Virginia non-stock corporation.

As a legal matter, a credit union’s bylaws must conform to, and cannot be inconsistent with, any provision of its charter, Code of Virginia Title 6.2 Chapter 13, or other laws or regulations applicable to the credit union’s operations.  A general review of the standard bylaws has been performed by the League’s counsel, Hunton Andrews Kurth.  However, you should consult your attorney when in doubt.

Download Bylaws

 

View the Virginia Code (new law effective July 1, 2020)

The Virginia Credit Union League provides the following basic recommendations for a credit union’s Board of Directors to consider when implementing a Compensation Policy for their credit union officials.  The League makes no warranty as to the sufficiency of these guidelines as each credit union is responsible for adopting policies consistent with their governance practices.

Purpose:  This policy details how directors (and/or committee members) are compensated for their contributions to the credit union.

Compensation philosophy: (Name of credit union) board of directors bears ultimate fiduciary responsibility for the credit union, protecting members’ interests and financial assets.  To attract and retain the best officials (directors, committee members) possible, the board sets compensation at a rate to reflect the level of risk and responsibility taken, the professional expertise required and within the limits prescribed by the Code of Virginia.

Organizational relationship: Directors and committee members are defined by statute as non-employees.  Pay to attend official credit union meetings or any compensation otherwise associated with performing duties required of the elected or appointed positions does not create an employee relationship.  If paid, credit union officials are treated as independent contractors.  Compensation will be reported as required by IRS on Form 1099-MISC.

Compensation structure: The credit union should develop their methodology for structuring the compensation of officials using one or more (or a combination thereof) of the options below.  In no case should the total annual compensation for an individual member of the board or committee exceed $6,000 (current limit under state law – credit unions may establish a lower threshold).

  1. Officials may be paid a flat-fee annual retainer that compensates them for the meetings they attend (regardless of number and format, whether in-person, conference call, or virtual).
  2. Officials may be compensated based upon their positions.  For example, the Board Chairperson or a Committee Chair may be compensated at a higher level.  Additionally, compensation of board and committee members are independent decisions (i.e. a credit union is not obligated to pay all officials).
  3. Officials may be paid on a per meeting basis (attendance may be mandatory to receive the allotted compensation).

Payment of Compensation: The credit union should establish when officials are to be paid (ex. monthly, quarterly, semi-annual, annual) and establish a system of recordkeeping.

Disclosure of Compensation: The credit union will report compensation to officials as directed by state and federal law.  (The Board may adopt additional reporting requirements if desired.  Ex. Membership at the credit union’s annual meeting).

Related Policies: Health, accident, and term life insurance protection (if offered) for a director or committee member shall not be considered compensation.  Directors and committee members, while on official business of the credit union, may be reimbursed for expenses consistent with Internal Revenue Service guidelines and such reimbursement will not count as compensation under this policy.

General Conditions: The Board of Directors will safeguard against payment of compensation that is excessive or could lead to material financial loss to the credit union.  If the credit union falls below the required regulatory capital minimum, compensation to officials will be eliminated.

Authority: Compensation of officials is at the sole discretion of the Board of Directors.  This policy does not convey an obligation or contract for payment.  The Board may amend, suspend, or rescind this policy at any time without prior notice to any official. The board will not be discriminatory in its compensation practices.

As an affiliate of your League, you have access to a free hotline for compliance issues via the Woods Rogers Law Firm.

Contact the hotline at 800.552.4529 for answers to compliance questions, including those involving share accounts, loans, and supervisory issues.

As an affiliate of your League, you have access to a free hotline service for day-to-day human resource issues via the Woods Rogers Law Firm.

Contact the hotline at 800.552.4529 for answers to basic human resource management questions.

 

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