CUs Are Quiet as Arizona Ballot Initiative Looms Over Payday Loans
PHOENIX -- Arizona voters have a say in the fight over payday lending this November. But credit unions are mostly on the sidelines, adopting an informal hands-off stance and choosing instead to push for more financial education among the public.
"Payday lending is simply not going to go away, so our approach is to push for real solutions to educate the public on the payday risks and dangers," explained Pat Bodnar, senior vice president of the Arizona Credit Union System, referring to the National Credit Union Foundation program to provide alternative payday-type products through league campaigns.
Like other state leagues, the Arizona system has deplored the payday tactics but is choosing to steer clear of any outright opposition to a referendum to eliminate a provision in state law which would force the industry to effectively close down in 2010.
Arizonans for Financial Reform is seeking 150,000 signatures to put the issue on the Nov. 4 ballot by a July 3 deadline.
Separately, a group of Arizona lawmakers led by state Rep. Marian McClure, (R-Phoenix) complain that the more than 663 payday outlets in the state are threatening economic well being. She is soliciting signatures also for a November initiative to force payday lending shop closings by Oct. 31, 2009. McClure has accused Arizonans for Financial Reform of engaging in a ruse through its referendum to continue its Arizona expansion.
Bodnar said CUs in the state continue to work with the public and members who continue to patronize the payday shops but feel a practical approach is to develop alternative products like the more popular ones developed by East Coast leagues including Pennsylvania's Better Choice and Ohio's StretchPay initiative. She said reps from those leagues have made Arizona pitches and all are currently being studied.
Robins FCU at $1 Bil. Milestone
WARNER ROBINS, Ga. -- Robins Federal Credit Union is the latest to join the billion dollar credit union club.
The credit union has reached $1 billion in assets.
"Robins Federal had strong deposit and loan growth despite an unstable rate environment in 2007," said CEO John Ruffin. "For the most part, we didn't feel the economic slowdown locally. Loans grew in excess of $34 million while deposits grew $30 million. In first quarter 2008, deposit growth alone was in excess of $80 million."
In 2008, Robins Federal plans to add its 17th branch, which is to be located in downtown Macon.
"We want to be where our members and potential members need us," said Robins FCU Executive Vice President John Rhea. "Our goal is not only to be convenient but to provide superior rates, products and services."
'Edgy' Anti-Bank Campaign Debuts
MEMPHIS, Tenn. -- Preparing for a re-branding in 2009, the management of this city's largest credit union, the $560 million Memphis Area Teachers Credit Union, knows it has an "edgy, aggressive" and certainly distinctive marketing campaign under way this spring.
"I've had plenty of resistance from my own directors to these ads and the Web site but I've had to convince them this is the right course to stake out our future," professed Carlos S. Webb, president/CEO.
An extraordinary element in the early going of the radio/print bill-
board campaign, called "Bankdetention" and plays off teacher/school imagery, is that the CU's name is not mentioned in the cover ad underscoring a strategy to downplay the teacher-only member concept.
"Our goal from the start has been to come up with a creative message that targets the up and coming young demographic about being trapped in the banking cycle of paying high rates and fees," explained Maria McLendon, assistant vice president-marketing.
On the Web site, www.bankdetention.com, a stern-looking teacher holding an "itchy" ruler is shown while flashing headlines blare "A Bank is Like a Bully Stealing your Money" and "When Banks Compete, You Lose."
Once the viewer answers a series of five questions relating to MATCU and done correctly, "our hope then is to drive traffic to the credit union's own Web site," said McLendon. At that point, the CU name is revealed.
The first multiple-choice question on the list: "Memphis Area Teachers Credit Union is only for A. teachers. B. librarians C. certified teacher's pets or D. MATCU is for everyone."
The second question asks which Memphis bank offers 5.12% interest on checking accounts. The wrong answers include Bank of America and First Tennessee or "none of the above" with MATCU, of course, being the correct answer.
The other three questions relate to ATM fees, return of profits to members and the various products offered to members.
McLendon said MATCU has long recognized the limitations it faces with having the word 'teacher' in the CU name considering its ability to serve 400 SEGS in metro Memphis.
All ads ever run by MATCU have hit the same stumbling block of the public assuming the CU is for teachers only prompting the decision in March to go for "bold action to change perceptions."
So far the campaign bypassing the name in cover ads is "a radical tactic, but it has proven to be successful, generating 15 new prospective members a day." The campaign began April 25 and will continue through August when the MATCU name will then become prominent in TV spots.
"The goal of all of the unmarked advertising is to drive financial consumers to www.bankdetention.com where consumers can get detailed information about MATCU benefits, advantages and products and services," said McLendon.
"This 'teaser' marketing tactic allows us to expose our products and services to people that normally would not give us a second thought," said McLendon.
Webb acknowledged that some CU directors have been troubled by both the drift away from the teacher-only message as well as the anti-bank rhetoric but now many are going along with the concept. These directors are realizing the need for the CU to re-brand now to ensure future growth in a competitive marketplace, said Webb noting that later in 2008 plans will be worked on to consider renaming the CU.
Visa Card Fraud Protection Will Be Expanded to Cover PIN Transactions
SAN FRANCISCO -- For the first time, Visa Inc. is extending its card fraud protections to transactions validated by a personal identification number.
Visa launched a streamlined recovery program in October 2006 called account data compromise recovery, which improved operational efficiencies and reduced costs associated with assigning liability and collecting reimbursement for counterfeit fraud losses and operating expenses incurred as a result of magnetic stripe storage compromises, the card brand said. However, this program only covered credit and signature debit transactions.
As of Nov. 1, 2008, the ADCR program will be available on transactions conducted over Visa's Interlink ATM network and Plus point of sale network.
"Visa works to help financial institutions prevent fraud. But when a data compromise does occur, our process helps them recover by reducing some of their costs quickly and efficiently," said Michael Smith, head of payment system risk for Visa. Recently enhanced Plus and Interlink fraud reporting capabilities will allow Visa to extend the ADCR process to PIN-based transactions, the brand said.
Financial institutions can benefit from improved back-office efficiencies, including an automation of the process, Visa said. Visa card issuers can realize lower administrative costs and will be eligible for partial recovery of operational costs and incremental fraud losses. Liability for compromises associated with payment card industry data security standard or PCI PIN security violations will be defined through the ADCR program, which has a fixed 13-month window of exposure, allowing for improved liability forecasting.
Smith noted, "Expanding this process to include Plus and Interlink represents a significant improvement over the current recovery process for financial institutions for PIN-based transactions, which may require multiple recovery scenarios for a single compromise event if the event involves Visa-branded and Plus- or Interlink-acquired transactions."
To be eligible for operating expense reimbursement, issuers must enroll in the ADCR operating expense recovery program and be registered to receive CAMS alerts. CAMS is the reporting system used by Visa to alert issuers of their account numbers that have been potentially compromised. Once enrolled in ADCR, issuers may receive operating expense reimbursement only for qualifying CAMS alerts that occur after their enrollment date.
"Visa is the only payment company to provide this level of efficiency and cost-savings on fraud recovery involving either signature or PIN-based transactions," said Smith.