Taking a look at a couple of recent developments involving credit unions from the “no spin zone” perspective made popular by cable TV and radio news analyst and best selling author Bill O’Reilly could prove to be interesting. For example, when it was first reported that a credit union marketing firm had a computer stolen that contained some credit union membership information on it, it was said to be no big deal. Soon thereafter, it was revealed that the missing information included some pretty important stuff. Like the credit union’s members’ social security numbers and account numbers. Still later, it became clear that a second very large credit union had similar member data on the stolen computer. It eventually turned out that possibly as many as 20 credit unions had sensitive data stolen. Not to worry was the general response. It is very unlikely, said the marketing firm whose computer was no more, that any of the data stolen will be used for fraudulent purposes such as identity theft. All the files had comprehensive password protection they explained. Besides, they added, investigators believe the thieves were more interested in selling the machine for parts. Cutting through the spin, the stolen data is indeed a big deal for what should be very obvious reasons to all involved. As for password protection, a number of firms are making a good living demonstrating to credit unions just how easily even the cleverest passwords can be broken in literally seconds. As for stealing a computer to sell for parts, who is kidding who? It is almost impossible to give away a computer free these days. New ones are so cheap. Any salvageable parts from an old computer would have a hard time finding a home and potentially bring in very little money for even an honest seller. At the moment, everyone involved has their fingers crossed that the entire incident is as simple as the spin makes it appear. To their credit, meanwhile they continue to do whatever they can to prevent the problem from becoming a major catastrophe. New cards have been issued, letters sent to members, new security procedures implemented, credit bureaus alerted, etc. Still the spin continues that this incident isn’t a major one even though the stolen computer has yet to be located. But beyond the spin is the fact that this is a big deal. Especially in these super-sensitive times of privacy protection, why would any credit union be so careless with vital member information as to allow it to be stored by an outside party for marketing purposes? Even if any firm needing member names and addresses to make targeted direct mailings could provide an iron-clad guaranty that the information would never get in the wrong hands, the reality is they have no need for social security numbers or account numbers to carry out the tasks for which they were engaged. Certainly credit union members would not see any reason for anyone giving out their social security number or account number without their knowledge or permission. Forget all the “opt-in”, “opt-out” gobblygook. These two pieces of data are all fraud identity theft perpetrators would need to inflict significant damage on who knows how many members? The marketing firm said something else troubling: “It was one of those things that was uncontrollable.” But it was controllable. The credit unions involved should never have released data that included social security numbers and account numbers. Never. The marketing firm should never have agreed to accept it and thus put themselves in a position of being held responsible for its safekeeping. Never. Unfortunately, these types of things go on all the time. The latest stolen computer incident is one instance of many recently. For example, a very large credit union discovered that a merchant was retaining member VISA card information it had no legal right to keep for whatever purpose. That little maneuver put everyone at risk from the members to the merchant to the credit union. However the spin is presented regarding why someone other than the credit union to which the member belongs and which the member trusts must have vital information, don’t believe it. It would behoove all credit unions to make sure they know exactly who has what when it comes to protecting members’ privacy and sensitive member data. And to guard it at all costs. The marketing firm involved in the stolen computer also said, “We feel some good will come out of this.” Let’s hope so. Here are a couple of other spin examples: A large credit union out West decided it will not cash member checks or give cash back at its newest branch. Instead it will issue a CU check to be cashed elsewhere. Reason given was that the credit union wanted to better serve its members with personal service, to operate efficiently, and not to spend unnecessarily to show off. Right! After 67 years as a credit union, a West Coast CU converted to a mutual savings bank charter because it ran into restrictions in offering home improvement financing to contractors who perform work out of state. Oh sure that’s all the reason needed to do what the CEO was determined to do one way or another. Banks in Wisconsin have accused the state of legislating by audit as banks located there continue to make negative headlines for moving substantial assets to Nevada to avoid Wisconsin taxes. The best headline as far as cutting through their spin appeared in Credit Union Times recently: “Wisconsin Banks Offered Settlement Framework for Back Taxes; Ten of State’s Largest and Most Profitable Banks Paid No Taxes Last Year.” Italic emphasis added to show how to describe current controversy sans spin. Finally, we turn to the champion spinmeisters, the not-for-profit, tax-exempt American Bankers Association (ABA) for this parting salvo: “We endorse those credit unions which are properly chartered, adequately supervised, and whose members enjoy a true common bond.” Talk about spin! Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected].

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Peter Westerman


Credit Union Times

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