ARTICLES OF INTEREST

Recruit the Best With Compensation: 12 Tips

Bankruptcy Prevention by Committee

 Disaster Planning: How to Protect Your CU

Beware the Accidental Saboteur

Ten Ways to Connect With Online Members

eChannel: Effciency vs. Enrichment
By Sara Waugh, Callahan Financial Services, Callahan & Associates, Inc.

While eStatements save a stamp and make credit unions efficient, the online delivery channel has more opportunity. Credit union marketing sometimes receives negative feedback from members who view the efforts as spam or junk mail, tainting the brand. What are the best ways to reach penetration goals? More importantly, how can you add member value through online marketing? The ability to deliver timely information that members find useful can rejuvenate a credit union’s message.

Members who want to use the online delivery channel will make that clear to the credit union. Members who want eStatements and e-Alerts will opt-in for these services. If the credit union can fulfill these member's wants then they will be providing value, otherwise, members may look to other financial institutions to fill this information gap.  Add value to your online channel by enriching communication: provide members with online opportunities to penetrate credit union products and services.

Member Relationship Management

Through eStatements and e-Alerts, there is opportunity to turn member service into member relationship management. E-Alerts and eStatements are an untapped marketing channel for credit unions. By adding marketing to the member through this communication, the credit union enhances the member experience and enriches the online delivery channel.

Mass customization has never been more capable and appropriate for credit unions. Make communication a personalized effort for each member. Advertisements should be highly relevant. Create opportunity not only for the credit union but for the member. By delivering a message that has been requested or is timely -- for instance, notify the member that they have not used bill pay in 60 days, the member will see that their credit union is keeping tabs on their actions and not just lumping them into "a group" with everyone else. Deliver requested information to members who find themselves to be in-market at a given time. The credit union's ability to stay top of mind is what separates them from a bank; personalized messaging is not an option anymore, it's a necessity.

GAO reports on account fees, disclosures

NCUA and other member agencies of the Federal Financial Institutions Examination Council will review their Truth in Savings Act exam procedures in response to GAO findings from a review of account fees and disclosures, GAO said in a report released Monday.

On fees specifically, GAO analyzed data from private vendors and found that “a number” of fees, especially for insufficient funds and overdraft transactions, have generally risen since 2000; others, particularly monthly maintenance fees, have decreased. “In general, banks and thrifts charged higher fees than credit unions for checking and savings account services, and larger institutions charged more than smaller institutions,” it stated.

Overdraft fees overall rose about 11 percent from 2000 to 2007, but they have been on the decline since about 2005, GAO’s report shows. ATM fees rose from 2000 to 2003 and declined in 2006.

The report was requested by Rep. Carolyn Maloney, D-N.Y., who last year introduced H.R. 946 to beef up disclosures and prevent overdraft fee abuses. As introduced, the bill would revise the Truth in Lending Act. NAFCU worked with Maloney and other key players last fall to address issues related to credit unions’ federal usury ceiling and others, including its impact on finance charges. The bill awaits mark-up.

GAO, in its report, said it had staff visit 185 branches of 154 depository institutions—banks, thrifts and credit unions—to obtain disclosures on account fees, terms and conditions. Staff were unable to get detailed information at one-fifth of branches visited and could not find such information on many institutions’ Web sites, it said.

In other findings, GAO said:

·                      federal regulators examine depository institutions’ written policies and related information, but they do not determine whether consumers receive disclosure documents;

·                      regulators review consumer complaints about institutions’ practices, but they do not determine if fees are reasonable;

·                      just 5 percent of total consumer complaints received by regulators from 2002 to 2006 related to account fees and their disclosure;

·                      regulators cited 1,674 violations of fee-related disclosure regulations, or 335 a year on average among some 17,000 institutions.

Fed slates work on unfair credit card practices (NAFCU)

The Federal Reserve Board expects to issue a proposed rule this spring addressing unfair and deceptive acts or practices by credit card issuers, Fed Board Chairman Ben Bernanke told lawmakers last week.

Bernanke, testifying before the House Financial Services and Senate Banking committees on the economy, also updated lawmakers on a series of Truth in Lending Act rulemakings under way.

While not giving a specific timeline for a final rule, Bernanke said the Fed hoped to take “expeditious” action on a final rule regarding unfair and deceptive acts or practices in mortgage lending. This Truth in Lending Act rulemaking, revising Regulation Z, focuses on provisions under the Home Ownership and Equity Protection Act.

The Fed issued a proposal last December that addresses loan documentation, disclosures, changes in terms and advertising regarding mortgage lending. While reviewing potential rule changes, Bernanke said the Fed is also working with other federal and state agencies to establish how to better monitor practices of all mortgage lenders, including non-federally regulated ones.

On credit cards, the Fed is also working toward a final rule on credit-card disclosures and is beginning to draft a rule on unfair or deceptive acts or practices in that area as well. 

“We are actively reviewing potentially unfair and deceptive practices by issuers of credit cards,” he stated. “Using the board's authority under the Federal Trade Commission Act, we expect to issue proposed rules regarding these practices this spring.”

At least 17 financial institutions--including several credit unions in Washington State and elsewhere--have seen a sophisticated, high-dollar scam involving wiretapping to steal hundreds of thousands of dollars from home equity lines of credit (HELOCs).

The actions have occurred in the past 30 days, said the Washington Credit Union League, and are similar to what happened to a member at Woodstone CU, based in Federal Way, when someone transferred $665,000 from a HELOC (News Now Jan. 14).

"All of the thefts are in the high-dollar amounts, some with as much as seven figures," said David Bennett, director of public relations at the league. "The cases are very similar and involve transferring credit to the Far East, namely China, Korea and Japan."

The league issued a fraud alert to its member credit unions Friday, he told News Now.

The fraud involves telephone, fax or e-mail requests made to the credit union for large-dollar advances on HELOCs. The fraudster then requests the money be wire transferred, often to a foreign country.

"What makes this fraud even more unique is that the fraudsters have extensive personal information about the members, such as the information to answer many authentication or challenge questions, transaction history and account information," says the league's fraud alert.

The fraudsters "have found ways to circumvent the credit unions' 'call back' procedures, which are used to verify the identity of non-in person requests for wire transfers." They either request phone-line forwarding from the phone company, or--more than 30 days prior to the request to advance the funds--call the credit union to change the member's phone number.

"Thus, when the credit union calls back the phone number it has on file for the member, the call goes directly to the fraudster," said the alert.

In the Woodstone case, the credit union and member are cooperating fully with law enforcement authorities. The member "is protected and isn't out of a single penny," Bennett said.

The fraud alert has six suggestions for credit unions:

1. Inform staff of the scam, especially those processing HELOC loan advances and wire transfers;
2. Rigorously scrutinize large-dollar requests for HELOC advances made over the phone, fax or e-mail;
3. Rigorously scrutinize requests to wire transfer HELOC advances, especially if the request is to a foreign country;
4. Review change of phone number or address requests made on accounts that are requesting HELOC advances by phone, fax or e-mail;
5. Review large dollar requests for HELOC advances to see if this is the type of activity generally performed by the member and further scrutinize out-of-the-ordinary transactions; and
6. Alert call center and member service employees to be wary of persons calling to request information that is not otherwise publicly available.

"Because of obvious concerns about terrorism and the high dollar amount, the police, Secret Service and Federal Bureau of Investigation are all involved. The Secret Service has about 20 agents just on this basket of cases. It's definitely an international incident," said Bennett.

By Mike Darnell

Credit union members enjoy the speed and convenience of online services—but while online they also visit the Web sites of other financial institutions. Today's online consumers have questioning minds: They want to "get the big picture," learn about their financial options, and set a course for a secure future.

Members deserve to know the most recent and useful financial news, and it would be ideal if they could find it all on their credit unions' Web sites. But that's not realistic, as keeping a site current is a job in itself.

On the other hand, if members think their credit unions' sites lack useful content, or if other Web sites they visit seem more impressive or complete, it can challenge a member's confidence. How can a credit union enhance its public image and maintain relevance and trust?

One of the most effective image-building tools is available to credit unions right now: e-mail newsletters.

Education is public relations

Credit unions across the country are meeting the challenge to serve and educate online members using e-mail newsletters. With speed, economy, and trackable results, e-mail newsletters that use graphic-rich layouts make a stronger impression than e-mails using plain text: An image showing a pie chart has more impact that the same data represented as numbers alone.

Even if readers opt to read their e-mails without graphics, the newsletter format still allows for more attractive layout options similar to a Web page.

Yet the most compelling reason to send e-mail newsletters has little to do with design or style. It's about building relationships.

The same credit union newsletter that shares the latest financial updates, news, or tips can also describe the credit union's portfolio of services or encourage members to meet with a credit union financial consultant—a trusted source of information and advice about planning for the future.

Clearly, credit unions' educational role has never been more important. Though members may gather financial information from many sources, they typically lack the background, experience, and objectivity to apply it to their lives. More information isn't always better. Only the right information properly applied will bring results.

Not just another e-mail

With this understanding, e-mail newsletters take on a strategic importance in member relations as a low-pressure but compelling way to encourage personal consultations and long-term relationships.

And though a reader's inbox is a competitive space, newsletters from a trusted sender, like a credit union, survive the cut. They have a high perceived value because their content is relevant, accurate, and timely. When a credit union's newsletter supplies a member's informational needs, members don't have to look elsewhere.

Send like a friend

Today's standard e-mail programs are designed for sending messages to a small number of readers. But to send e-mail newsletters to large groups, the most practical and affordable option is to work with an e-mail marketing company.

When looking for an e-mail marketing service, consider each company on a personal level—because the company that sends your members their newsletters quickly takes on a significant role in advancing the credit union's objectives.

The best e-mail marketing companies have skilled tech support. They'll be your teachers at the outset and give more personal assistance down the line.

You'll see a basic similarity in services and in pricing structure among e-mail marketing companies due to the industry's competitive nature. Most e-mail companies provide:

The entire process takes place online, using a Web browser such as Internet Explorer so there's no software to install. Best of all, because sessions are done while connected directly to the e-mail marketing system, your account data and materials are available anywhere you log in, so you can work from the office or at home.

The cost per member is small when compared to the level of technical expertise an e-mail marketing company can provide. That leaves your staff free to focus on creating useful content and working directly with your members.