Today, the Consumer Financial Protection Bureau (CFPB) released research revealing that Reserve and National Guard members called to active duty are paying an extra $9 million in interest every year because they are not always receiving the benefit of their right to rate reductions under the Servicemembers Civil Relief Act. The Servicemembers Civil Relief Act (SCRA) gives servicemembers on active duty the right to request interest rate reductions on outstanding loans during the time they are activated and for an additional year in the case of mortgages. However, according to the CFPB’s research, only small fractions of activated Guard and Reserve servicemembers receive interest rate reductions. Financial institutions can take steps to ensure these individuals can more easily assert their rights. The SCRA interest rate cap is more salient given rising interest rates on consumer credit.

“Our analysis suggests that members of the Reserves and the National Guard who serve in active-duty status are not receiving interest rate reductions on their loans pursuant to the law,” said CFPB Director Rohit Chopra. “Given rising interest rates, financial companies should take steps to ensure military family financial rights are respected.”

Congress enacted the SCRA to provide legal and financial protections so that servicemembers on active duty can focus on their mission. These protections include the right to a reduced interest rate on any pre-service obligation to a maximum of 6%. The Act also includes protections against repossession of certain property without a court order, protections against default judgments in civil cases, and protections against home foreclosure without a court order. Eligible servicemembers can also terminate certain residential housing and automobile leases early without penalty.

The right to an interest rate reduction represents a significant financial benefit that increases in value in a higher interest rate environment, or in situations where servicemembers took out larger loans or remain on active duty for a substantial period. To put the value of the rate reduction into perspective: for today’s report, the CFPB looked at data from between 2007 and 2018, and found $100 million of foregone interest rate benefits on auto and personal loans. Since that time, interest rates have moved steadily upward.

For a servicemember to benefit from their right to reduced interest rates, many creditors continue to require proactive notifications from the servicemember about a shift to active-duty status. In fact, the servicemember generally must notify each of their creditors in writing with a copy of their orders to active-duty service or any other appropriate indicator of military service, including a certified letter from a commanding officer, that shows the date they began active-duty service. Additionally, some creditors continue to require written requests or supporting documentation be submitted by mail or fax instead of offering a wholly online process. However, creditors could just as easily access a Department of Defense system that checks any borrower for active-duty status. By using the Defense Manpower Data Center SCRA website, creditors would help ensure servicemembers benefit from their right to interest rate reductions.

The challenges servicemembers face in receiving the benefits of their right to an interest rate reduction is negatively affecting the financial strength of military households. Specifically:

• Between 2007 and 2018, data indicate that fewer than 10% of auto loans and 6% of personal loans received a reduced interest rate: While there is evidence that interest rates on some loans are being reduced consistent with the SCRA interest rate cap, its low use means few loans actually receive interest rate reductions.
• In addition to the $100 million of foregone benefits on auto and personal loans, members of the reserve component also infrequently benefit from interest rate reductions for credit cards and mortgage loans: The CFPB estimates that a mortgage loan with an interest rate between 6.5% and 7.5% could accumulate savings of between $1,890 and $5,670 per activation. By comparison, the per activation numbers for auto and personal loans are $331 and $249, respectively.
• For longer periods of activation, when an interest rate reduction would be most beneficial, the utilization rate continues to be low: While reserve component servicemembers are more likely to obtain a reduced interest rate during longer periods of activation, even among activations of a year or more, the likelihood of an interest rate reduction remains under 16% for auto and personal loans.

To ensure that reserve component servicemembers benefit from their right to an interest rate reduction, the CFPB recommends:

• Creditors apply SCRA interest rate reductions for all accounts held at an institution if a servicemember invokes their rights for a single account: If a servicemember requests an interest rate reduction for one account, the creditor could apply that request to every account held at the respective institution.
• Creditors automatically apply SCRA rights: Beginning in December 2014, the Department of Education required federal student loan servicers to check the Defense Manpower Data Center SCRA website monthly to identify borrowers eligible for the SCRA interest rate cap. When automatic interest rate reductions were applied for federal student loans, utilization increased dramatically. The low utilization rates identified in this report suggest that automatic application of benefits should be pursued where possible, and public and private sector resources should be aligned to increase adoption of an automatic application process.
• Development of comprehensive and periodic indicators of SCRA interest rate reduction utilization:  Better and more frequent information on SCRA rate reduction utilization would help inform and evaluate future efforts to expand servicemembers’ financial rights and protections.

Read the report, Protecting Those Who Protect Us: Evidence of activated Guard and Reserve servicemembers’ usage of credit protections under the Servicemembers Civil Relief Act (SCRA).

The Civil Rights Division of the U.S. Department of Justice (DOJ) enforces the SCRA. The CFPB’s Office of Servicemember Affairs monitors the market and refers SCRA violations to the DOJ. For example, the CFPB worked with the DOJ to reach a $60 million resolution against Sallie Mae and Navient for overcharging servicemembers on student loans.
Consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
​
Employees who believe their companies have violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB’s website.

FlowTracker today announced a new product that enables Credit Unions and Community Banks to lower funding costs and increase liquidity to accelerate profitable growth. Active Deposit Management (ADM) is an innovative solution combining comprehensive deposit analysis and member relationship strategy. These capabilities enable financial institutions to actively build loyal member relationships by detecting and reacting quickly to demand signals while optimizing and validating key pricing and promotion decisions.

"The combined forces of the soaring cost of funds and evaporating liquidity have pushed deposit management to the top-of-mind position for C-suite executives and Boards of Directors." observes Dave McNab, CEO at FlowTracker, "Competition for retail consumer funding demands active deposit management strategies and tactics."

"Sounds like more community banks should use your services to proactively measure potential cannibalization before they run their next deposit special!" said Matthew, Treasurer and Chief Investment Officer at a leading bank.

Features and benefits of ADM for Credit Unions and Community Banks include:

• Patented Business Intelligence
• Systematic Repeatable Results
• Industry Knowledge Transfer
• Fast and Easy Implementation

ADM will be available starting December 1st, 2022, with Special Pricing. For more information on ADM, visit FlowTracker Analytics.

​Co-op Solutions has unveiled a new industry white paper designed to help credit unions both plan and execute their own highly effective member-centricity strategies. An actionable blueprint created to integrate easily with strategic planning, the information is based on proprietary credit union member research and insights from credit union CEOs.
 
Credit union leaders can access the white paper, “Building the New Member Centricity: A Blueprint for Credit Union Leaders,” at no charge here. The white paper stems from Co-op’s research in partnership with EY and Filene, as well as in-depth conversations with industry leaders who attended Co-op’s inaugural, multi-day THINK CEO Summit in mid-2022.
 
Between 2021 and 2022, for instance, PayPal grew its primary financial relationships (PFRs) by a factor of five. Among the strategies catapulting the fintech newcomers to PFR dominance is a focus on customer centricity – or specifically, life-centricity. It’s a strategy Accenture predicts will generate annual growth rates nine percentage points higher for the organizations that deploy it. Indeed, Co-op’s market research of earlier this year, reported in Co-op CU Growth Outlook, found that “creating active, daily engagement aimed at financial wellbeing…can achieve increases of 34 percent in member market share.”   
 
“A great member experience is not just a service opportunity, it is a path to greater member economic participation,” said Samantha Paxson, Chief Experience Officer for Co-op. “Based on the collective thinking of the nation’s leading credit union CEOs at our CEO Summit, we’ve created an economic growth blueprint to help credit unions pinpoint their individual opportunities to do more for members.
 
“Each credit union will discover a different set of existing competencies, as well as new areas for evolution, to drive member-centric, daily interaction, and transaction strategies to increase utilization,” Paxson continued. “By focusing on their unique strengths, credit unions will activate value for their members’ growth through meaningful, daily engagement to be the preferred financial interaction.”
 
A “How To” Guide on Building Member-Centricity
 
Co-op’s strategy guide for credit union leaders is divided into two sections. The first includes concepts for transforming challenges – from reduced income to aging tech stacks – into opportunities.
 
As an example, the white paper includes input from CEOs on their top challenges in the current environment. Improving the member experience topped the charts with 46 percent of credit union leaders naming it as the number one issue; member experience was followed closely by challenges around evolving the earnings mix, with 43 percent of CEOs choosing that option.
 
In the second section, credit union strategists will find practical steps for moving their cooperatives toward measurable growth in PFR. The section walks through seven elements for achieving member-centricity:
 

1. Build a foundation of service
2. Modernize technology infrastructure
3. Optimize data
4. Redefine financial wellness
5. Establish payments as the path to growth
6. Protect against future risk
7. Develop talent for the future

 
Co-op recommends strategists begin with the first section to level-set peers’ perspectives against their own. After that, the second section will help strategists begin to craft their own customized plan of action to address the seven key components of member-centricity.
 
To download “Building the New Member Centricity: A Blueprint for Credit Union Leaders” please click here.

​SRM (Strategic Resource Management), an independent advisory firm serving financial institutions and other industries across North America and Europe, today released its most recent report, “Rising to the Challenge: SRM’s Seven Rules for Optimizing Vendor Contracts.”
 
Click to Download
 
Banks and credit unions are more reliant than ever on vendors and third-party technology providers to keep pace with the continuously evolving digital landscape and to provide the state-of-the-art experiences that customers expect. A natural synergy exists between fintech firms and financial institutions - fintech is well-equipped to design and deliver solutions rapidly, often at a lower cost than in-house development.
 
However, important areas must be navigated before arriving at a successful partnership. Millions of dollars are at stake when negotiating a bank or credit union’s portfolio of vendor agreements. Based on SRM’s 30 years of representing clients in contract negotiations, we have identified seven keys to determining success. This new report discusses these seven rules and outlines the unifying theme of the need for a financial institution to bring the proper skills to the table to solve the power imbalance inherent in these discussions.
 
“With today’s challenging economic conditions, the current inflationary environment, and labor shortage struggles, banks and credit unions must explore all possible avenues to control their cost base, making vendor contract negotiation more important than ever,” said Patrick Goodwin, President of SRM. “For more than 30 years, we have been representing our clients in vendor negotiations, which has led us to develop strong best practices in this arena. Working with an experienced and objective third-party expert with clearly defined roles and responsibilities is a crucial step in helping financial institutions gain both operational and financial success with vendor contract negotiations.”

Ocean Financial Federal Credit Union (OFFCU) has donated $8,500 to the Catholic Youth Organization (CYO-LI) in support of their ongoing athletic programs that serve thousands of Long Island Children every year.
 
CYO of Long Island was established in 1958 and has since then provided affordable, quality, educational and recreational services to more than 25,000 children every year. Programs include basketball, cheer, chess, flag football, field hockey, swimming, track and volleyball. The donation will also benefit CYO programs including Amazing Children Engaged in Sports (ACES), for children with physical and intellectual disabilities.
 
“We are so grateful to Ocean Financial for their support that helps us give children of all ages and athletic abilities the opportunity to be active and to be a part of a team,” said Carol Sciotto, Executive Director of CYO-LI. “If we can teach our kids leadership skills, how to overcome adversity, how to be a part of a team, and how to simply be a nice person, then we as an organization will have succeeded.”
 
Funds were raised through sponsorship of CYO-LI’s Annual Golf Outing held in September and its Role Model Dinner held in April.
 
“We’re honored to contribute to such an amazing organization,” said Joe Tedesco, President and CEO of Ocean Financial Federal Credit Union. “CYO-LI is incredibly inclusive and is deeply rooted in our shared Catholic values. We are proud to assist them in their mission of supporting the community and teaching children the values of team sports that will stick with them throughout their lives.”
 
Video attached, credit Ocean Financial Federal Credit Union and CYO-LI.
https://www.youtube.com/watch?v=Yh6wUPpCIEo

​Ascend Federal Credit Union, the largest credit union in Middle Tennessee, announced today that it will return $5 million to members in the form of bonus dividend payments, loan interest refunds and reward payments for loyal debit card use. With the addition of this year’s return, Ascend’s volunteer, unpaid board of directors has approved giving a total disbursement of more than $104 million to the credit union’s members since the member return program began in 2005. According to the Credit Union National Association (CUNA), Ascend is among only 1% of American credit unions – 51 out of nearly 5,000 institutions – that annually share the institution’s financial success with members via a member return.
 
“In what has been a challenging economic year, Ascend continues to show strength in its steadfastness and security,” said Caren Gabriel, Ascend president and CEO. “Our credit union’s ability to consistently offer this return yearly is another example of the many benefits that Ascend provides for its members.
 
Gabriel said the member return is never guaranteed, but it is a goal of Ascend’s board to distribute it every year. Thanks to growing membership and use of the credit union, as well as prudent management, members have received a return every year for the last 18 years.
 
The credit union examines its financial performance each year to identify how the return will be calculated and what amount will be given. Generally, the more checking/debit or savings activity someone has with Ascend, the greater their bonus payment, and the more loans they have, the greater their loan interest refund. In order for a loan to receive an interest refund, it must not be delinquent.
 
The 2022 return will appear on members’ December statements.

​LexisNexis® Risk Solutions released the results of its first Global State of Fraud and Identity Report, exploring research and insights from industry experts on recent statistics and trends from our industry-recognized studies on the Global True Cost of Fraud and transaction data from over 39B transactions from the LexisNexis® Digital Identity Network® from January 2022 to June 2022.
 
The report demonstrates how digital transactions dominated the global marketplace as the pandemic-driven trend of consumers migrating to online interactions became commonplace behavior. Digital transactions in the LexisNexis Digital Identity Network rose by 37% YoY for the period.
 
Pandemic-driven digital transaction growth continued to attract fraud attacks, with global businesses recording a 32% jump in the human-initiated attack rate over the past 12 months, while high-velocity automated bot attacks were up 38% YoY.
 
Shifts to mobile channels continued to increase, reaching 76% of all transactions in the Digital Identity Network. Consumers today use an average of four connected devices to facilitate digital economy transactions. The addition of new ecommerce channels via marketplaces and within the wider banking ecosystem, along with a proliferation of payment options such as Buy Now Pay Later (BNPL), digital wallets and QR codes, contributed to a growth in transactions across mobile channels.
 
As consumers adopt multiple digital channels and payment formats, they expect a positive experience and trusted security measurements at every touchpoint. Identification and authentication solutions across the entire customer journey are becoming mandatory, as fraudsters build attack strategies at every stage. 1 in 12 new account openings and 1 in 20 password resets represent an attack.
 
Greater connectivity is leading bad actors to continually devise new methods and expand the complexity and scale of their attacks. Cybercriminals quickly launch complex attacks on the weakest link in the omnichannel network, targeting individuals who are newer to transacting online with less cybersecurity awareness while targeting companies that in their rush to provide consumers with digital transaction options, have not deployed adequate defenses.
 
Large-scale cybersecurity breaches and the recent digital evolution have created an ideal incubator for scams to cultivate and thrive with identity theft. Studies show that optimizing identity verification approaches leads to safer omnichannel ecosystems.
Key Findings from the LexisNexis Risk Solutions Global State of Fraud and Identity Report:
 

• Bot Attacks Continue Rising: Businesses globally experienced a 38% increase in malicious bot attacks in the past 12 months. Ecommerce businesses in particular face a bigger threat as the bot attack rate increased 155% YoY. Regionally, EMEA recorded the highest growth in bot volume (98%), followed by LATAM (83%).

 

• Human-Initiated Attacks Also Continue to Grow: Human-initiated attack rate grew 32% YoY globally. North America showed the highest YoY increase of 52%, followed by EMEA (19%).

 

• Fraud Evolves with New Payment Methods: Increased adoption and strong demand for contactless payment methods in APAC are major contributors to the rise of QR code fraud. QR code payments and peer-to-peer transfers are becoming the leading payment channels in Southeast Asia and India. BNPL is gaining traction globally and in EMEA particularly, leading to an increase in New Account Opening fraud.

 

• Risks Across the Customer Journey: Fraud networks are increasingly industrialized and pervasive in the omnichannel digital ecosystem leading to a dramatic rise in scams including social engineering, identity theft, password reset and account takeover fraud. The escalating risk of account takeover fraud is one of the biggest threats, as mobile app logins attack rates increased 211% YoY.

 

• Identity Verification Remains the Top Hurdle: Customer identity verification remains a top challenge for global businesses across APAC, EMEA, LATAM and NAM. Global businesses cited limited real-time third-party data (46%) and limited real-time transaction tracking (43%) as the two biggest challenges in verifying customer identity in online channels.

 

• Industrialized Fraud Networks Attack Businesses Across Border: Fraudsters work within complex networks. Every piece of data used is linked to the next valuable piece of data on a mass global scale. Therefore, businesses and industries need greater collaboration globally to fight the fraud network but also to understand who the trusted consumers are. Gaining visibility of trusted consumers allows businesses to open up new revenue channels and upsell to a loyal consumer base.

 
"Digital fraud has continued to grow as economies around the world re-opened in 2022, as we anticipated in our H2 2021 Cybercrime Report. The latest surge in scams shows how the fraud landscape will continue to morph. Organizations need to use flexible fraud prevention models coupled with an adaptive authentication approach," said Stephen Topliss, vice president, fraud and identity, LexisNexis Risk Solutions.
 
"Using digital identity intelligence can improve the omnichannel consumer experience by providing a unified and persistent view of associated risks, helping to drive conversion rates, customer satisfaction and loyalty. A solution approach deep in layers, combining behavioral biometrics with global digital identity data and risk-appropriate authenticators, enables businesses to confidently make risk-based decisions while delivering a friction-appropriate customer journey."
 
Download a copy of the Global State of Fraud and Identity Report.

​Trellance, a leading technology partner providing innovative analytics and talent solutions to credit unions, today released a list of the credit union league partnerships it added in 2022. Partnering with credit union leagues and state trade associations was a priority for Trellance this year as part of an effort to further understand the needs of credit unions and provide best-in-class solutions and technologies to further support the credit union mission.
 
2022 league partnerships include:

• Cooperative Credit Union Association (CCUA)
• Indiana Credit Union League
• Tennessee Credit Union League
• The Raiffeisen Group (TRGroup)
• Kentucky Credit Union League
• Mississippi Credit Union Association
• GoWest Credit Union Association
• Virginia Credit Union League
• Carolinas Credit Union League
• Louisiana Credit Union League
• West Virginia Credit Union League

 
“Credit Union leagues are critical to the ecosystem as they have a pulse on some of the most pertinent pain points credit unions are experiencing right now,” said Karan Bhalla, Trellance’s chief growth officer. “Our league participation helps us gather the broader information needed to focus our product development and partner with technology firms to build out innovative, comprehensive solutions for our clients.”
 
The partnerships provide mutual benefits; through Trellance, leagues can provide educational resources to members such as timely webinars and thought leadership and also offer access to Trellance’s extensive network of credit union industry technology providers through our Trellance Partner ecosystem. League members can also tap into Trellance’s network of analytics, technology and talent experts.
 
Credit union leagues and state trade associations that are interested in learning more about partnering with Trellance are invited to contact James Gukeisen, senior manager advocacy & outreach, at jgukeisen@Trellance.com.

Giving back to the community has been and will always be a core value for Westerra Credit Union. Throughout the year, Westerra prioritizes giving time and monetary contributions to meet various community needs. “We are constantly reassessing the changing needs of our community and schools, and adjust our giving opportunities accordingly,” said Andrea McDermott, Community Relations Manager at Westerra Credit Union.

Highlights from Westerra’s 2022 charitable contributions include: 

• Financial Literacy: Contributed $39,629 to enhance financial literacy in schools and communities.
• Basic Needs: Donated $72,914 to local charities.
• Community Response: When tragedy hits our local communities, Westerra is there to provide support. This year, this included a corporate donation to the Community Foundation Boulder County - as well as funds raised by Westerra’s employees and members - to benefit the Wildfire Relief Fund; and a corporate donation to Colorado Healing Fund to support victims of the Club Q attack in Colorado Springs.
• Education: The launch of the Westerra’s scholarship program awarded $52,500 to high school seniors seeking higher education, as well as over $245,000 in school sponsorships.

Westerra’s School Grant Program, which was launched in 2010, has become a cherished tradition. Over the years, the program has contributed over $500,000 to more than 1,000 Denver metro area schools. These monetary awards enable teachers and school staff to purchase items, such as, art supplies, sports fees and equipment, after-school programs, and classroom materials, which bolster academic success and personal growth. This year, Westerra was pleased to award 71 grants to local schools. A full list of the 2022 School Grant Program Recipients is available here.