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Member Education: Online Authentication; Savings Bonds; Share Insurance

A few recent NCUA Letters to Credit Unions have included information regarding member education. Below are a few areas where credit unions have been encouraged to educate members - in addition to the required regulatory disclosures already provided.

Member Education for Online Authentication

The recent online authentication guidance included a section on member education. Pages 7 and 8 of the guidance include information on educating members. Below are two of the types of communications that are expected:

  • An explanation of under what, if any, circumstances and through what means the credit union may contact a member on an unsolicited basis and request the member’s provision of electronic banking credentials; and

  • A listing of institutional contacts for members’ discretionary use in the event they notice suspicious account activity or experience member information security-related events.

The guidance does not mention how often or in what format this information should be provided. This provides credit unions with some flexibility in communicating with members. It is quite possibility that credit unions already provide some of this information to members on a regular basis as a fraud prevention tool. If so, be sure include those efforts in your documentation for the latest FFIEC guidance.

Savings Bonds - Reminder: No more over-the-counter savings bonds sales after 12/31/2011

NCUA's Letter to Credit Unions 11-CU-15 on Changes to Savings Bonds included information on educating members. Here is from the Letter:

"Educate members about the upcoming changes. Let your members know they will no longer be able to buy paper savings bonds at your credit union or by mail order. You are also encouraged to refer members to www.treasurydirect.gov where they can purchase, manage, and redeem electronic savings bonds online. Electronic savings bonds are secure and convenient to manage in a TreasuryDirect account, and your members will no longer have to worry about storing, misplacing, or losing paper savings bonds. In addition, with a TreasuryDirect account, members can purchase electronic savings bonds as gifts and convert paper savings bonds to electronic ones."

In this situation, NCUA is simply indicating credit unions should make members aware of the change and their options going forward.

Share Insurance Coverage

Going back to 2008, NCUA issued Letter to Credit Unions 08-CU-18 on educating members on share insurance coverage. The 2008 letter was written during the uncertainty of the financial crisis. However, the message should not be lost on credit unions - especially with the influx of new members coming over from banks who might not be familiar with the share insurance coverage provided by the National Credit Union Share Insurance Fund.

Going Forward

As the CFPB begins to regulate, there will most likely be additional pushes toward member education. Credit unions should continue their efforts to provide education to members through their websites, newsletters and statements to ensure members are informed.

As your credit union provides education to your members, document your efforts. The credit union might offer this education anyway, but it can also be useful to document compliance. For example, if you credit union offers identity theft or fraud prevention workshops - be sure to include this information as part of your compliance efforts to meet the expectations of the latest online authentication guidance. ***

Member Education: Online Authentication; Savings Bonds; Share Insurance:

Written by Steve Van Beek

Programming Update: NAFCU's offices will be closed on Friday, December 30th and Monday, January 2nd. We'll be back blogging in 2012! Have a Happy New Year!



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