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ALEXANDRIA, Va.-Federal credit unions may provide members an advance in anticipation of a deposit to be made, according to a recent legal opinion from NCUA. NCUA Associate General Counsel Sheila Albin recommended that the credit union, however, consider individual and aggregate limits and address any other safety and soundness issues. The institution should also ensure compliance with requirements regarding the extension of credit. According to NCUA’s letter (05-0115), the inquiring federal credit union is proposing to allow members “meeting certain criteria” access to the credit union’s Web site and authorize them to identify funds they will be depositing within 10 days. The credit unions would then provide `provisional credit’ up to $1,500. At that point, the funds could earn dividends and be available for withdrawal. The service would be offered at no charge or interest by the inquiring credit union. If the member does not reimburse the credit union within 10 days or if it is returned unpaid, NCUA wrote, “We assume, however, the credit union would charge the member its usual overdraft fees if a member failed to make a deposit and an item were paid despite insufficient funds. Also, if the credit union does provide overdraft protection with this service, we assume the credit union would charge the member its usual fee for an item returned because of insufficient funds.” Albin also recommended that the federal credit union “establish controls to limit or terminate member participation in case of a member’s failure to make committed deposits.” Member eligibility determinations should conform to the nondiscrimination requirements in the Fed’s Reg B. Pennsylvania State Employees CU is the innovator of this service with its [email protected] product. According to PSECU CEO Greg Smith, PSECU has processed over 620,000 Upost transactions in the two and a half years of its existence. That’s well over $250 million through those transactions. PSECU’s losses to date have been about $7,000.

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