July 28, 2016

Four Emerging Risks Challenging Credit Unions Today

By Roger Nettie


As the risk landscape continues to shift and evolve,
credit unions face two challenges: Staying current with risk trends and integrating risk management into their day-to-day plans and operations.
New risks can present themselves at any moment. So credit unions have to deal with familiar threats while recognizing new ones.
At the upcoming NAFCU Risk Management Seminar in Denver, I will speak about four emerging risks and provide action steps credit unions can take to mitigate and minimize exposure. These include:
  1. Wire transfers and ACH. Wire transfer fraud has been an ongoing problem with HELOC accounts, and fraudsters are evolving their attacks through email impersonations and by targeting real estate closings. ACH origination fraud has also become a new issue, as members and fraudsters are finding ways to take advantage of account-to-account transfer capabilities. Electronic payment systems are a favored target since large quantities of money are moved quickly, increasing the difficulty of retrieving it.

  2. Overdraft fees. Overdraft fees have generated class-action litigation, with members seeking monetary damages, restitution, punitive damages and injunction relief. Plaintiff attorneys are arguing that the calculation of overdraft fees isn’t adequately disclosed.

  3. Collection letters. Post-repossession collection letters have caused the most class-action claims against credit unions in recent years. Attorneys have successfully challenged the fact that many of the letters fail to meet the requirements of state laws that call for disclosures of the terms of sale of repossessed collateral. Damages and/or penalties for failing to adhere to these requirements are generally not insurable.

  4. ATMs and the Americans with Disabilities Act (ADA) compliance. This is a hot-button issue as of late, and it has generated lawsuits. ATMs must be accessible to everyone. Some requirements include: detectable warnings (truncated domes) in place on ramps leading to and from ATMs, volume control, tactile symbols for function keys, privacy options, and Braille instructions. Credit unions have been found in violation of ADA laws for failure to comply with these requirements.
Interested in learning mitigation tips for these emerging risks? Join my session, titled “The Unique Footprint of Emerging Risks,” at NAFCU’s Risk Management Seminar on Wednesday, August 10, from 9 – 10 a.m. MT to hear more.
Note: This post originally appeared via the NAFCU Services Blog.
Roger Nettie is a senior risk management consultant for CUNA Mutual Group. Contact him at roger.nettie@cunamutual.com.
CUNA Mutual Group is the NAFCU Services Preferred Partner for Mortgage Payment Protection. For more information please visit www.nafcu.org/cunamutualgroup.
This article is for informational purposes only and should not be construed as legal advice. Credit Unions should contact their own legal counsel for advice with respect to any particular issue or problem.
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