CURRENT Newsletter | 12 November 2020 - Virginia Credit Union League

Del. Jeion Ward (D-92nd) has been honored by Virginia-based credit unions as their 2020 Legislator of the Year. In a presentation ceremony on Nov. 10, Del. Ward was recognized by the Virginia Credit Union League, the state trade association for the Commonwealth’s 116 member-owned credit unions, for her longstanding support and for recently serving as patron for key credit union legislation during the 2020 General Assembly session. That legislation became law and aids state-chartered credit unions in attracting and retaining board members.

"For more than 15 years, we’ve been able to count on Del. Ward’s support, for which we’re grateful and appreciative,” noted Virginia Credit Union League President Rick Pillow. “She’s a fiercely proud credit union member and her leadership and support on credit union legislation this year was key to our success.”

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League Hosting Small CU Webinar Nov. 17 on Digital Marketing

Your League is helping host a webinar Nov. 17 as part of the CUNA-Leagues Small CU Webinar series. During this webinar, we will talk about the tactics credit unions need to implement for a robust digital marketing strategy.

In our current climate, it is more important than ever to be forward-thinking when it comes to digital marketing for your credit union. Topics covered will include:

Why is digital important to your marketing strategy?
How do I get started with digital marketing?
The top must-haves for successful digital marketing.

Programming in this series is FREE!

Richmond Chapter Selling 2020 White House Ornament to Benefit VACUPAC

The Richmond Chapter of Credit Unions will be selling the 2020 White House Ornament to benefit VACUPAC. The cost this year will be $25 for each ornament. To place an order, please send information to Chris Miller by Nov. 17. Payment is due by Nov. 30 (checks payable to the Richmond Chapter of Credit Unions).

In addition, if your staff would be interested in completing their collection and purchasing previous year's ornaments, they are available for order as well!

The White House Historical Association's Official 2020 White House Christmas Ornament honors John Fitzgerald Kennedy, the thirty-fifth president of the United States.

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New Resource: InfoSight NACHA Account Validation Topic

The ACH/Electronic Payments channel has been reviewed and a new topic, NACHA Account Validation, was recently added to assist and protect financial institutions from posting fraudulent or incorrect unauthorized payments.

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CUs Need Congressional, NCUA Actions to Expand Service

Credit unions remain in a position to help consumers, but looming stress suggests Congress and regulators need to act quickly to avoid a deeper economic crisis, CUNA wrote to the Senate Banking Committee Tuesday. The committee conducted a hearing with federal financial regulators Tuesday, including NCUA Chairman Rodney Hood.

CUNA’s letter notes two surveys that indicate significant economic assistance to consumers and small businesses is critically important.

“As Congress contemplates further COVID-recovery legislation and exercises its oversight responsibilities over the Federal financial regulators, it is critical that policy be examined and modified to ensure credit unions remain in a position to serve their members throughout and after this crisis,” the letter reads.

Compliance / Regulatory Affairs

Fair Lending, Consumer Compliance Webinar Set for Nov. 17

NCUA will host a webinar on a range of fair lending and consumer compliance topics Nov. 17. Registration for the “Fair Lending and Consumer Compliance Regulatory Update” webinar is now open. It is scheduled to begin at 3 p.m. (ET).

The information presented reinforces the NCUA’s commitment to expanding the availability of safe and affordable credit to meet the needs of diverse and underserved communities, which is a pillar of the agency’s financial inclusion initiative, ACCESS: Advancing Communities through Credit, Education, Stability, and Support.

Staff from the NCUA’s Office of Consumer Financial Protection will discuss the focus areas for the agency’s consumer compliance exams in 2021, including a review of COVID-19-related loan modifications and credit reporting, and fair lending policies and procedures. The discussion will also include the findings from the 2020 consumer compliance exam reviews.

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Tennessee Appellate Court First to Affirm Dismissal of Class Action Challenging Multiple NSF Fees for Same Transaction

Earlier this year, Balch & Bingham reported on the dismissal of one of the first class actions challenging financial institutions for charging multiple “overdraft” or not sufficient funds (“NSF”) fees for the same transaction or “item.” In these cases, Plaintiffs allege financial institutions may only charge an overdraft fee once for each “item” – be it a debit, check, draft, withdrawal, ACH payment request, etc. – no matter how many times merchants represent the transaction or item to the bank for payment. Last week, the Tennessee Court of Appeals became the first appellate court to affirm the dismissal of one of these cases.

There have been at least 25 trial court decisions on motions to dismiss in multiple NSF fee class actions – mostly in state trial courts. Because state trial courts often prefer a factual record before ruling on a complaint, the plaintiffs have won most of these early decisions. However, the tide may be turning even on early motion to dismiss rulings. At least five courts have now granted motions to dismiss. In addition to the Tennessee courts and Virginia federal court, a federal court in Illinois and two state courts in the last two weeks (Oregon and Washington State) have dismissed similar cases.

While the tide of decisions in the multiple NSF fee class actions might be turning in the financial institutions’ favor, financial institutions should nevertheless remain vigilant.

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Pandemic Response

New Data Shows Certain Populations Under More Economic Stress Due to COVID

More Americans are feeling financial hardship from the pandemic than a month ago, reversing a trend of gradual improvement from previous monthly surveys, according to a TransUnion report released Tuesday.

In its latest Financial Hardship Study, based on an online survey of 3,100 adults conducted Oct. 28, the Chicago credit reporting agency found 54% of Americans are financially impacted by COVID-19, up from 51% in its Sept. 30 survey.

TransUnion found other key indicators have reversed. The change is being driven by younger generations and Hispanic consumers — segments that have reported high levels of impact throughout its surveys.

Among those impacted, 77% said they are concerned about being able to pay bills and loans, up from 70% a month ago and back to its highest levels.

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Loans in Forbearance Fall at Big Banks, But Concerns Remain

“Loans in forbearance at the largest U.S. banks more than halved in the third quarter but remained elevated," underlining how the outlook for defaults remains murky eight months after the pandemic took hold" the Financial Times reports. "Customers were still taking payment holidays on loans totaling $90 billion at the end of September, regulatory filings from the top four lenders reveal, down from $190 billion at the end of June.” About 5% of all loans to individuals and small businesses are in forbearance.

“It is positive in that it is coming down as quickly as it is. The real issue is how far does it come down from here,” said Marty Mosby, analyst at Vining Sparks. (Financial Times, Nov. 11)

How the Coronavirus Has Affected American Consumers' Savings

Consumers have notably focused on savings in the volatile economic environment brought on by the coronavirus pandemic.

The U.S. personal savings rate, a measure of the percentage of disposable income saved by households, skyrocketed to 33.6% in April, up from 12.9% in March, MagnifyMoney reported Wednesday.

Researchers examined savings and retirement data from before and after the crisis erupted in order to determine how the pandemic has altered American consumers’ savings.

According to the report, the 160.5% month-over-month increase in savings indicates that consumers used unemployment benefits and economic impact payments to supplement their savings accounts after the pandemic erupted and unemployment soared to record levels.

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Financial Services / Economic News

OCC Report Identifies Top Emerging Risks for Financial Institutions

The Office of the Comptroller of the Currency (OCC) has released a new report in which it said its top “emerging risk” is credit risk.

The OCC said in its Semiannual Risk Perspective for Fall 2020 report that credit risk “is increasing as the economic downturn impacts customer ability to service debts.”

The report seeks to provide an overview of the risks facing the national banks and federal savings associations regulated by the OCC and is based on data through June 30. It focuses on four primary areas: operating environment, bank performance, special topics in emerging risk, and trends in key risks.

The full report can be found here.

Member Service

Why Investment Services Are Crucial to Your Members

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.

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Risk Management / Fraud Prevention

Court Ruling Opens Door for CU Class Action Lawsuit in Sonic Data Breach

A federal judge’s ruling cleared the path for a credit union class action lawsuit to represent all financial institutions that may have suffered damages from the 2017 data breach of drive-in food chain Sonic restaurants, which compromised payment cards for up to five million customers.

The class action claim against Sonic was brought by the $8.6 billion American Airlines Federal Credit Union in Fort Worth, Texas, the $1.5 billion Arkansas Federal Credit Union in Jacksonville, Fla. and the $6.2 billion Redstone Federal Credit Union in Huntsville, Ala.

For their class action suit, the credit unions sought to represent all financial institutions affected by the Sonic breach.

However, to represent all financial institutions affected by the data breach, the credit unions first had to ask U.S. District Court Judge James Gwin in Cleveland to certify that the credit unions could sue as a class of financial institutions under four prerequisites required by a federal civil procedure rule.

After determining that the four prerequisites were met, Judge Gwin on Monday granted the credit unions’ lawsuit the certification to represent a class of financial institutions of banks, credit unions and other financial institutions in the U.S. that received notice of the breach and took action to reissue credit cards or reimbursed a compromised account from any card brand involved in the Sonic data breach.

There are potentially thousands of class member financial institutions that were affected by one of the largest data breaches in 2017, according to court documents.

Between April 7, 2017 to Oct. 28, 2017, hackers used malware installed on point-of-sale systems at 762 Sonic restaurants to steal payment card information. According to court documents, many Sonic restaurants used obsolete technology that was vulnerable to hacking.

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Member HELOCs Used to Fund Counterfeit Checks

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.

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FinCEN Issues Advisory on Unemployment Insurance Fraud

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.

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News From Credit Unions

BayPort Credit Union Promotes Jennifer Little to Lead Mortgage Operation

BayPort Credit Union has promoted Jennifer Little to Vice President, Mortgage. This new promotion is intended to help drive the credit union’s longstanding legacy of service to its Peninsula and Southside communities.

Little has been with BayPort for 18 years and has specific capabilities in mortgage lending, management, sales, training, and regulatory compliance.

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BayPort Hires Tonya Edwards as New Vice President, Business Banking

BayPort Credit Union has hired Tonya Edwards to serve as Vice President, Business Banking. This new appointment is intended to help enhance the credit union’s continued commitment to excellence in business services and banking.

Edwards is a commercial banking professional and brings more than 15 years of experience in portfolio management, business relationship management, treasury management, and commercial lending. Prior to BayPort, previous positions include Vice President, Business Banking Relationship Manager; Commercial Relationship Manager; and Vice President, Business Banking.

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