Reports of another credit card compromise put Verity on the offensive to protect its members

It looks like yet another compromise of credit and debit card information has reared its ugly head.

On Thursday, January 18, 2007, the Wall Street Journal reported that a “giant retailer” had a customer security breach. You can read about it here (not the WSJ article, but one on MSNBC as you have to pay to read the entire WSJ online version.) According to the article, millions of shoppers that shopped as far back as 2003 at T.J. Maxx, Marshalls and other TJX stores (their parent company) could be affected.

Verity is working aggressively with Visa USA to contact any members that may have been affected. In a nutshell, here is our game plan:

We normally receive daily reports from our credit card vendor (who receives this information from Visa). Credit cards listed on this report mean that there is a possibility that a compromise of information may have occurred. Verity staff checks every card listed to see if it is one of our member’s debit or credit cards.

In light of this incident, the reports are longer than usual, however, there has been no need to do a mass reissue of plastic cards.

The good news is that there have been no reports of fraud so far. However, we are taking the following steps to minimize risk and inconvenience to our members:

1. If a member’s debit or credit card has been reported, we will contact the member in writing.
   
   
2. A new debit or credit card will be reissued to the member immediately. We have determined a time frame that will allow the member to use their current card until the new card arrives which allows the credit union to close the account without denying the member access to their funds.

If you have any questions about your account or this incident, please call our Member Service Center at (800) 444-4589 or call (206) 440-9000. Any updates will be posted on this blog.

Good news if you have $ to deposit!

Earlier this week, our COO shared with me a recent WSJ article titled "Banks' Cry, Give Us Your Cash". The gist of the story is that our national savings rate is at an all-time low, while loan demand remains high, which translates to Banks (and Credit Unions) scrambling for deposits to fund loan demand. This article definitely struck a nerve with me, as I spend much of my working day trying to figure out how Verity is going to continue to fund loans while maintaining an ample interest margin. Interest margin is the difference between the rate we charge for loans and the rates we pay on our deposits. This margin is the primary source of revenue for banks and credit unions and provides for us the resources to build branches, offer technology and maintain a skilled staff.

Verity, and most other financial institutions have seen margins erode during the past 12-18 months. This is due in large part to the flat/inverted yield curve, where short term rates are equal to or higher than longer term rates. Most financial institutions price their deposits off the short end of the curve, while loans are priced off the longer end of the curve. Another major factor, as I alluded to earlier, is the low/negative national savings rate. Increased competition, including sky-high rates and fantastic offers is a third major contributor to our margin squeeze. We did this ourselves with our recent "Pick Your Term" CD special where we offered 5.6% APY for a 6, 9 or 12 month CD. While the dollar results of that special were fantastic (it was our largest dollar-growth special ever), I am finding it difficult to find investment outlets for those dollars where Verity can make much of a spread.

"So what's your point", you might ask. I think 2007 is going to be a very interesting and challenging year for financial institutions. We at Verity are not forecasting much of a change in interest rates, at least for the first part of the year. That means, if we want to grow we will need to be aggressive with rates and innovative with products. That's ok, we've got some great things in the hopper and at the end of the day, it's great for consumers; especially those with dollars to deposit.

Yes Summit exercise: my life's an open wallet

If someone asked to see your wallet, would you show it to them? I did -- on the first day of the Yes Summit to a bunch of people I’d never met before. I like to share.

Actually, it was a group exercise. The youngest person at each table was asked to share the contents of his or her wallet and then answer questions from the group that might help them draw conclusions about how the 18-30 demographic spends money and what kind of products and services they use most. I’m 31, just slightly older than the target demo, but I was the youngest person at the table, and let’s face it, I still think I’m 21 most of the time.

First question from my group: Where’s your check book?

Answer: I only write one check a month – my rent check. Occasionally I write checks for charitable giving or to small places, like my CSA, who do not accept plastic.

How do you pay your bills then? I use Bill Payer.

Do receive paper bills or do you prefer paperless? It’s a mix of both, really. If a company makes it really easy for me to switch to paperless, I usually will as long as they send me email reminders that my bill is due.

How much cash do you usually carry on you? I usually take withdrawals for $40 from the cash machine, so that’s usually the most I ever have on me at one time. Unless I’m traveling and then I might have up to $100.

Then, how do you typically make purchases? Debit card.

What about credit? If the purchase is more than about $50, I’ll use my credit card.

Why? It’s mostly psychological. I don’t want to see a big hit on my checking account. I’d rather have a large credit card bill and pay it off once a month. I know, it makes no sense.

How many credit cards do you have? I carry two in my wallet: a Bank of America card that earns rewards points that I use for cash back, and my Verity Platinum Passport card for dining out. I have two more cards at home that I only use at specific retailers.

What do you look for in a credit card and why do you use Bank of America? I have this B of A card because when I moved to Boston in ‘99 I got a Bank of Boston credit card and eventually they became B of A. I’ve never had any reason to switch cards. I pay my balance off every month, so rates aren’t a big deal to me, and I’m not really that into rewards programs because I don’t charge a lot to my card. I’ve never charged more than $2k in one month. I’d say my average bill is $500. I’ve thought about switching cards to get one that gives money back to my alma mater, but it’s too much of a hassle and I like the fact that I’ve had this card for a long time.

What are all those other plastic cards in your wallet if they aren’t credit or debit? I’ve got my health insurance card, my library card, 2 grocery store club cards, a Fred Meyer gift card and a Blockbuster card.

Do you like having to carry all that around with you? No. When I go out for dinner or drinks or just to hang out with friends, I try to only take my ID and either my debit or credit card. I hate having a wallet full of stuff.

So, would you be interested in one of those small credit cards that attaches to your key ring? No. B of A sends me those when my card renews and I shred them right away. It makes me nervous to have that on my keys. It’s just one more opportunity for theft.

If you had to leave the house and only take one item with you, would it be your cell phone or your wallet? My wallet. My cell phone can’t buy coffee.

The point of this exercise was to show how much you can learn from someone by asking them about their wallet. Why not have a promotion where you give your members $10 for letting you ask them questions about their wallet? Imagine what you might learn. You’ll get so much more information from them this way than by just asking them things like, “What kinds of financial products do you use? How happy are you with your current credit card?”

Everyone at my table agreed that the information I provided was valuable. Isn't this the kind of juicy stuff we try to get out of our members through focus groups and surveys? And I just gave it all up, for FREE.

New Year's resolution: make brain hurt

One of the most challenging aspects of my job is that I find it hard to take off my marketing hat when I’m not at work. For example, if I’m out with a group of people, I will not hesitate to check out what credit cards they use to pay their tab and then ask them why they use that particular card. Or, if someone I’m just meeting asks me what I do for a living, I will tell them I work for Verity Credit Union and then ask them if they’ve heard of us. If they haven’t, I usually start off by saying we’re a not-for-profit financial institution…blah, blah, blah. If I’m lucky, this will result in a response that sounds like this: “Not for profit? What do you mean?” Well, I’m so glad you asked.

It’s not that I love talking about work all the time, it’s just that I’ve had enough conversations to realize that credit unions have a real public relations issue on their hands. I rarely come across anyone outside our industry that even knows what a credit union is. The question I hear most often is: Don’t you have to belong to a union to join a credit union? I hear these comments a lot too: “I think my grandpa belongs to a credit union” and “I only use online banking, so a credit union wouldn’t work for me.” OUCH.

Not only do people not know what a credit union is or how it differs from a bank, they think as a whole we are old-fashioned and frumpy and don’t offer innovative or even modern products and services.

I recently attended the YES Summit in San Diego which focused on serving the 18-30 demographic.* We talked about how important it is to be innovative and not just copy what the competition is doing. We had young folks come in and talk to us about their financial needs and how they perceive credit unions. We did a lot of brainstorming and group activities to get our creative juices flowing. And while I learned a lot at YES and came back to work pumped and ready to go get these young whippersnappers, I realized that much of what we discussed can be applied to people of all generations. Being innovative isn’t only going to attract the under 30 crowd. Finding out what people actually need instead of just offering them what everyone else does is going to get us noticed.

I hope that the year 2007 will be one of innovation and fresh ideas and positive changes for us. One of my resolutions for this year is to make this happen, even if it makes my brain hurt.

*Stay tuned for future posts on the Summit.

Mac ad parody shows that credit unions should be the apple of your eye

I am a diehard MAC fan.

I am the only G5 MAC at work (due to my web and graphic design demands). I have a G5 and an iBook laptop at home. I have a first generation iPod and a 3rd generation iPod. I created a DVD using iPhoto, iMovie and iDVD to document my son's first nine months for the grandparents.

I don't have a life-- I have an iLife.

And the only reason I have a dark blue Dell next to my pretty silver G5 is because there are some financial applications that just don't jive on a MAC. I live in a two-platform world.

So, yes I enjoy MAC products and of late, I've been enjoying those MAC ads featuring the straight-laced, corporate PC guy and the hip, laid-back MAC guy. The ad does a great job of giving a face and personality to two very different computer products. Certainly both computers can give you the tools you need to do what you want, but the ad cleverly plays into the human need to belong or to be "someone." Do you want to be the hip, cool kid or the tie-wearing conservative guy? According to the ad, You are you're computer and vice versa.

I was forwarded a link to a website where the MAC ads was parodied to show the differences between credit unions and banks-- and it does a great job. Here is a link: http://www.bankerspank.com/Site/Blog/Blog.html


In the parody, the "PC guy" is replaced by a well-suited "Bank" and the "Mac guy" is replaced by a casually dressed "Credit Union." There are three parodies in all, emphasizing the differences between the bank and the credit union with the same back and forth comedic tone and dialogue that the MAC ad uses. I found it to be an entertaining way to show how credit unions are not-for profit cooperatives that serve their members.

Check out the parodies yourself. After watching them, don't you feel glad to be a member of a credit union?

And if you aren't, don't you wish you were?

How to become President?

Before I start I need to clarify that this will only work if you are trying to become President of a company. If you want to be President of your country you will have to get advice from a different blog. So how do you become President of the company you work for? Here are three options:

1. Print up business cards referring to yourself as President (of course this is a lie and you will be found out). On a side note I have a friend that recently started his own business. He had business cards made stating that he was owner. He noticed that when he gave them out to potential customers no one was taking them seriously. Then he changed them so it stated that he was President. He tells me that there is a marked difference in how serious people treat him now. That was really random but for some reason I find it interesting.

2. Start your own business. Downside you need something to sell and money to get started. Upside you are in fact the President.

3. Treat the people you serve with an extrodinary level of service. Solve their problems, anticpate their needs, and create a trusting relationship. This might not actually make you president but to the people you serve you will be viewed in a whole new light. Want an example? Look at the nomination for this month's winner of our Extrodinary Service Award. In this member's eyes he is the President of Verity Credit Union.

I have been sitting next to Chris since August and have noticed him being especially kind to a certain member. At least once a week this member comes in and plops himself in front of Chris. To some, this could be a cause of annoyance or frustration. But Chris patiently listens to his problems and helps him to the best of his abilities. Two weeks ago, this member came in and had a problem paying a Sam’s Club bill. I don’t know the exact situation, but Chris was on the phone with a few different people trying to sort out the issue. He was in here for what seemed like more than an hour but Chris patiently helped him out and he left with his predicament resolved. This is not a one time occurrence. As I said before, this happens at least once a week. This member will come in and be talking back and forth with someone about some problem on his cell phone and tell them they can talk to the “President of my Bank.” Anyway, he always has a positive experience when he comes in and Chris helps him with whatever he needs.

That my fellow bloggers is one way to become President (at least to one person).