New Study: Consumers Turning to Mobile/Online for Banking Posted by AVCU on 11:31 AM

A study of 3,000 demographically representative U.S. households with Internet access shows that a growing number of consumers are completing banking transactions, like paying a bill, through online and mobile services, as reported in a research paper by FiServ. Here are some highlights:

• Those using mobile banking: 25%
• Paid a bill using a phone: 40% of mobile banking users (up from 28% in 2010)
• Transfer money on a mobile phone: 32% (up from 25% in 2010)
• What type of mobile banking used:
• website in browser = 60%
• downloadable app = 41%
• text messaging = 32%
• Trust bank/credit union to handle mobile payments: 40%
• Trust PayPal to handle mobile payments: 35%
• Trust VISA for mobile payments: 33%
• Online banking through an iPad or other tablet: 40%
• Use of online bill payments: 50% of all bill payments made by U.S households with Internet access

Read more and download the report here.

Beware Different Names on ACH Tax Refunds Posted by AVCU on 11:02 AM

CUNA Mutual Group is warning credit unions to be on the alert with tax preparer accounts at credit unions. In some reported cases, credit unions receive tax refunds via ACH from the IRS but the payee name does not match the name on the tax preparer’s account. Under such circumstances, the credit union is not required to return the ACH item to the IRS, even if a reclamation notice is received.

Another fraud involves persons claiming to be tax preparers obtaining names and social security numbers to create tax returns. The tax refunds are set up for ACH direct deposit to the credit union and the credit union member. The member account receiving the ACH direct deposit was recently opened, or a joint owner was added to an existing account. Once the tax refund (ACH credit) is deposited into the member’s account, the tax preparer withdraws the funds.

If the credit union becomes aware that an agency has originated an ACH credit entry to an account that is not owned by the payee (whose name appears in the ACH payment entry), the credit union should promptly notify the IRS.

If the credit union is the RDFI and the funds from the ACH direct deposit received from the IRS have already been withdrawn from the member’s account, the credit union should not return the funds nor comply with the reclamation request from the IRS. The IRS warrants the liability.

Public Assistance Families: "We Don't Do Banks" Posted by AVCU on 1:09 PM

The Filene Research Institute has released a new research study focused on the how policymakers can ease the financial lives of financially tenuous citizens. Credit unions with members in the same straits can take a more immediate role by making sure that, for all its popularity, cash is only one of several good options for low-income households.

The author conducted in-depth interviews in California with 37 state aid recipients. State aid candidates in California must qualify as a single parent with two children earning less than $12,000 annually, and the maximum benefit is $600 per month.

The interviews show a group that is aware of the limits of a low-income, low-asset lifestyle. What’s striking is the concurrent mistrust that many have for traditional financial institutions, despite the fact that unbanked consumers spend hundreds of dollars per year conducting routine financial transactions. They especially feel the costs of accessing cash, which for many is their payment and savings vehicle of choice. Contrary to stereotypes, they seem wary of payday loans and even responsible short-term debt. And many of them devise elaborate savings mechanisms outside of traditional savings accounts.

The brief finishes with several specific policy recommendations, but it spells out several lessons for credit unions designing products for cash-centric consumers like those profiled:

• Prepaid cards are seen as a substitute for a financial institution.
• Interviewees prize predictable, transparent fees.
• Credit unions should offer transparent basic accounts.

Filene members can download the report for free. Others can purchase it here.

Free Webinars: Economic Update, Manage Human Capital Posted by AVCU on 2:01 PM

CUNA Mutual continues to deliver its 2012 Discovery Webinar Series with two new sessions added for March:

• Simplify Human Capital Management: 3/14/2, 12:15 p.m. CT. Presenter: Brad Pricer, JD, GBA, human resources process leader, CUNA Mutual Group. Learn how simplifying human capital management can reveal the workforce strengths and vulnerabilities needed to identify opportunities and develop strategies to proactively manage your human capital.
  
• Firmly Balanced on the Edge: An Economic Update: 3/28/12, 12:15 p.m. CT. Presenter: Dave Colby, chief economist, CUNA Mutual Group. Dave will share two possible scenarios of the economic environment going forward and what it means for the nation’s credit unions. 

To register, visit www.cunamutual.com/discoverywebinars

Don't forget this week's webinar with Jeff Post. Nearly 500 people have already registered to hear the CUNA Mutual CEO's presentation on  “Navigating Today’s Risks to Capitalize on Today’s Opportunities.” The webinar runs from 12:15 pm to 1:30 pm CT this Wednesday. Use the same link from above to register.

State Regulators Object to NCUA Loan Participation Proposal Posted by AVCU on 10:17 AM

NASCUS, the association of state credit union regulators formerly chaired by Vermont's Tom Candon, expressed objection this week regarding NCUA's proposal to regulate loan participations by federall insured state chartered credit unions. The National Association of State Credit Union Supervisors (NASCUS) expressed its objection a comment letter to the National Credit Union Administration (NCUA).

NASCUS said in its letter that concerns about loan participations can be reduced with strong underwriting, adequate program contract review and effective third party due diligence.

"We strongly recommend NCUA work with state regulators to address supervisory concerns regarding loan participations in a manner that does less harm to the dual chartering system, more effectively mitigates material risk, and improves oversight while not unnecessarily burdening credit unions," NASCUS wrote.

NASCUS agrees that loan participations present some material risk, but feels that NCUA's proposed rule fails to make a convincing case that is the best way to mitigate that risk, especially considering its impact on dual chartering and state law. Historically, state-chartered federally insured credit unions have looked to state law and regulation to govern their loan participation activities. NCUA’s proposal effectively wipes out the distinction between state and federal charters, according to NASCUS.

Vermont law permits loan participations by state chartered credit unions.

Javelin Research: Fraud on the Rise Posted by AVCU on 5:01 PM

Javelin Strategy & Research released a study this week in which they report that over 11.5 million U.S. adults were victimized with identity fraud in 2011.  The findings are reported in Javelin's 2012 Identity Fraud Report: Social Media and Mobile Forming the New Fraud Frontier. Here are highlights from the report:

• In 2011 identity fraud increased 13% over 2010, but the dollar amount stolen remained the same.
• Consumer out-of-pocket expense due to fraud has decreased 44% since 2004 due to improved prevention and detection tools and fraud alerts.
• Certain social media and mobile phone behaviors have higher rates of fraud. LinkedIn, Google+, Twitter and Facebook users had the highest incidence of fraud, but there's no proof of those products being the cause.
• Despite warnings, consumers still share a significant amount of personal information frequently used to authenticate a consumer’s identity in social networks.
• 68% of people with public social media profiles shared their birthday information; 63% shared their high school name; 18% shared their phone number; 12% shared their pet’s name. All are prime examples of personal information a company would use to verify your identity.
• 7% of smartphone owners are ID fraud victims, 1/3 higher than the general public. The cause? 32% don't update to a new operating system when available; 62% don't use a password on their phone; 32% save login information on their phone.

One big contributor to the increase of fraud is likely the 67% increase in Americans touched by data breaches compared to 2010. Data breach victims are 9.5 times more likely to experience identity fraud than others.

CFPB to Probe Overdraft Practices Posted by AVCU on 10:27 AM

As reported by American Banker, on Wednesday the Consumer Financial Protection Bureau (CFPB) announced that it will target financial institution overdraft protection practices for closer scrutiny, in spite of recently increased overdraft regulation. The CFPB said its inquiry builds on previous efforts by the FDIC, Federal Reserve, the Comptroller of the Currency, OTS and NCUA . . .all of whom have issued supervisory guidance outlining best practices for overdraft protection. The CFPB feels that many of the regulator issued practices are not being followed.

Consumer advocates hailed the move, which they said could help bring a more comprehensive set of standards to the overdraft space, where they feel there is still a lot of confusion among consumers about what it means to opt in to overdraft protection.

The CFPB intends to scrutinize four areas:

1. reordering of transactions
2. missing or misleading information about the terms of overdraft programs
3. how those programs are marketed, and
4. whether they have a disproportionate impact on low-income and young consumers.

The CFPB has requested data from large banks about their overdraft protection practices, and is launching a campaign to let consumers know what they can do to avoid overdraft fees. It also intends to revisit a 2008 FDIC study that found that 9% of checking account customers bear 84% of overdraft fees, and that 46.6% of young-adult consumers have incurred overdraft fees.

Economic Upate from NCUA Posted by AVCU on 10:10 AM

Watch the latest video presentation by NCUA chief economist John Worth.

Free Paper - Board Succession Planning Posted by AVCU on 10:26 AM

CUNA's Community Credit Union Committee just released a new white paper - “Effective Credit Union Board Succession Planning.”  It examines the demographics of community credit union board members, issues that arise and strategies for successful board succession and retention.

This paper evaluates the changing demographics of community credit union board members and reveals that most credit unions do not have a reliable system for attracting the next generation of board members. Further, many boards struggle to reflect the diversity of their members. Through a series of case studies and expert recommendations, the paper:

• illustrates how successful board succession planning looks in the real world
• what credit unions can do to reverse negative trends, and
• provides concrete instructions for how to prepare for the future.

Download the "Board Succession Planning for Community Credit Unions" free of charge.

PayPal Targets VISA/MasterCard Posted by AVCU on 10:15 AM

The popular online payments processor PayPal, owned by eBay, isn't stopping its foray into retail merchants with the Home Depot pilot we previously reported. A store version of PayPal is already in 51 Home Depot stores, with eBay planning to have it installed in all of the home improvement chain's stores next month. But they're not stopping there. Reuters reports that PayPal is expected to be implemented in Office Depot stores nationwide next, and that plans are in place to introduce PayPal as an alternative to paying with VISA or MasterCard in 20 big merchant chains by the end of this year.

How do you use PayPal in a store? As reported by Time's MoneyLand section:

• the payment terminal at the cash register includes a separate “PayPal” button along with the usual options like debit and credit.
• a customer choosing PayPal enters a mobile phone number and PIN for verification.
• the customer gets a paper receipt
• PayPal generates a digital receipt that goes in their PayPal account.

For customers not using a mobile phone number, PayPal will issue an access card with a magnetic stripe (like a debit or credit card) that contains the vital information, along with a PIN.

Why would merchants want to bear the burden of adding PayPal to their payment options mix? Although merchants pay a transaction fee similar to what they pay a card-issuing bank and network processor, but reportedly PayPal subsidizes the merchant costs on point-of-sale transactions in an effort to bring retailers online and grab market share.

For more details read the Time article and the Reuters article.

Free Webinar - Capital Risks from Today's Opportunities Posted by AVCU on 10:41 AM

While credit unions are enjoying tremendous opportunities to capitalize on an ever-growing animosity toward large, national banks, they are also facing market-specific and global economic risks, a changing competitive landscape, and the challenges of growing lending in today’s environment. This Discovery Special Feature will address these key issues and provide insights to help your credit union strategize. It's a broadcast of a session presented by CUNA Mutual President Jeff Post, followed by a live question-and-answer will Jeff.

Navigating Today’s Risks to Capitalize on Today’s Opportunities

Jeff Post, President & CEO of CUNA Mutual Group

Wednesday, February 29, 2012 12:15 p.m. – 1:30 p.m. Central Time

Click here to register.

10 Steps To Effective Board Meetings Posted by AVCU on 11:22 AM

Popular credit union speaker Mark Arnold lays out his 10 Steps to an Effective Board Meeting in his latest blog post. See his suggestions here.

AVCU Partner Diebold Adds Mobile Banking Posted by AVCU on 9:18 AM

Diebold, a strategic partner of AVCU and CUNA Strategic Services, has added another service to help credit unions serve their members.  The ATM provider has added mobile banking to the suite of products that range from ATMs to security solutions. Using Diebold’s MobiTransact® mobile banking platform, members can view balances and transactions, be alerted of transfers or low balances, and transfer funds. It can also enable functionality that protects ATM debit cards by notifying users of any transactions that occur while their card is locked. Additionally, credit unions can leverage the two-way mobile channel as a marketing tool to inform members of special offers or cross-sell appropriate products.

Click here for more information

New: Monthly Compliance Summary WrapUp! Posted by AVCU on 9:40 AM

CUNA just released its first edition of a monthly summary of key compliance information drawn from CUNA’s Compliance CompBlog. This monthly “Wrap-Up” isn’t intended to be a substitute for tracking CUNA's compliance blog every day, or other detailed compliance tools. However, so many people need an easy reading monthly summary of compliance highlights that CUNA has created something that provides a monthly snap-shot of the major compliance issues, effective dates, and key questions already reported in the CompBlog. Links are embedded in the summaries connecting to more detailed CompBlog postings.

Click here for the CompBlog Monthly Wrap-Up.