HEADLINE NEWS

National CU Appeal Launched to Help Fund Relief for Credit Unions Destroyed in Tsunami
     The National Credit Union Foundation (NCUF), in support of efforts being undertaken by the World Council of Credit Unions (WOCCU) and the Credit  Union National Association (CUNA), is launching an appeal to the United States credit union movement to help fund the rebuilding of CUs demolished by the recent tsunami in South Asia.
     As you know from media reports, the needs are almost incomprehensible. WOCCU associate member Sri Lanka Credit Union Federation in Sri Lanka reports more than 800 community credit unions have been destroyed in that country alone. To help CUs in the affected area, the League encourages you to consider personal and organizational contributions.
     The National Credit Union Disaster Relief Fund will disburse funds raised to the World Council of CUs for distribution to its member CUs in the affected areas. Individuals or organizations wishing to make a contribution can do so by check or wire transfer. A donation form can be found on the Foundation’s website at www.ncuf.coop. Simply click the donation form link in the headline story.
     First State FCU Sets Up Disaster Relief Account. Karen King, loan supervisor at First State FCU, has notified the League that the CU is setting up a special account to solicit funds from its members toward the disaster relief effort. Using guidelines provided by Amy Swanstrom at the NCUF, a CU can open an account using its own EIN number. The account name would be “Account for Disaster Relief” and the purpose of this restricted account would be “assistance for tsunami victims.” Another way to set up the account would be to make the purpose of the account “relief funds” and then use that account for various charitable efforts such as the tsunami relief effort, Children’s Miracle Network, or assistance for soldiers overseas. In this method, a definitive date for fund-raising would be needed. For more information on how to set up a special disaster relief account, contact Amy Swanstrom at (800) 356-9655, ext. 4395, or email awanstrom@ncuf.coop.

General Tsunami Victims’ Relief
     If you are interested in providing assistance for broad humanitarian relief instead of contributing to the national credit union effort, Steve Delfin, executive director of NCUF and former fund-raising executive at the American Red Cross, suggests giving a contribution to one of the major organizations with a track record in the area. “Organizations like the American Red Cross, AmericaCares and others have track records in massive relief efforts and have on-line giving capability, which is the most cost-effective way to raise funds.” Acting as a clearinghouse for humanitarian aid, the following websites are a good place to start: http://www.networkforgood.org  and http://usafreedomcorps.gov
     House Allows Charitable Deductions. Congress has passed tax legislation (H.R. 241) that allows people to itemize charitable contributions they make for tsunami relief in South Asia through January 2005 on their 2004 tax returns.  

Tsunami Relief Scam Alert
     In the wake of the tsunami disaster, the FBI has issued warnings about a variety of online scams asking for monetary donations that purport to help victims. Online users should consider these rules:
§         Do not respond to any unsolicited (SPAM) incoming e-mails.
§         Be skeptical of individuals claiming to be surviving victims or foreign government officials asking for aid.
§         Go directly to the websites of aid organizations, instead of following a link which might lead to another site.
§         Be leery of e-mails claiming to show pictures of disaster areas in attachments which may have viruses.

COMPLIANCE RECAP 

CAN-SPAM Act Requirements
     The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act) requires the Federal Trade Commission (FTC) to issue rules that determine when an e-mail message has a commercial primary purpose. Every such e-mail is required to: (1) clearly and conspicuously indicate that the message is an advertisement or solicitation; (2) provide recipients with an opportunity to "opt-out" from receiving additional commercial e-mail messages from the same entity; and (3) provide a physical postal address of the sender. "Transactional or relationship" e-mails are not covered under these CAN-SPAM Act requirements. The FTC has issued a rule outlining the criteria for determining when an e-mail has a commercial primary purpose, specifically those e-mails that also contain transactional or relationship content. The National CU Administration will be responsible for enforcement for federally chartered CUs. The rule will be effective March 28, 2005.

Fair Credit Reporting Act Change
     The Fair Credit Reporting Act states that where a consumer reporting agency is permitted to charge a reasonable fee for making a disclosure to a consumer, the fee should not exceed $8.00. This fee became effective in 1997 and is required to be adjusted based on the Consumer Price Index, rounded to the nearest fifty cents. The fee has been increased to $9.50, effective as of January 1, 2005.

OFAC Filings Also Fulfill SAR Requirements
     The Financial Crimes Enforcement Network (FinCen) has recently issued interpretive guidance clarifying that reports filed with the Office of Foreign Assets Control (OFAC) of blocked transactions with Specially Designated Global Terrorists, Specially Designated Terrorists, Foreign Terrorists’ Organizations, Specially Designated Narcotics Trafficker Kingpins, and Specially Designated Narcotics Traffickers will also fulfill the requirements to file Suspicious Activity Reports (SARs) with FinCen. The guidance revises earlier instructions issued last year by FinCen indicating that such duplicative filings were required.
     Additional SAR reporting will be required under the following situations:
§         The transaction would have been required to be reported to FinCen under the SAR rules even if there was no OFAC match.
§         If the financial institution possesses information with regard to the suspicious activity that is not included in the blocking report filed with OFAC. For a copy of FinCEN’s interpretive guidance, go to: http://www.fincen.gov/sarguidanceofac.pdf 

Fed Adjusts Threshold for HMDA
     The Federal Reserve Board published last month its annual notice and final rule of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The adjustment was effective January 1, 2005. The asset-size exemption for depository institutions will increase $1 million to a level of $34 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2004. As a result, depository institutions with assets of $34 million or less as of Dec. 31, 2004, are exempt from data collection in 2005. An institution's exemption from collecting data in 2005 does not affect its responsibility to report the data it was required to collect in 2004. HMDA and the Board's Regulation C require most depository institutions and certain for-profit, non-depository institutions to collect, report and disclose data about applications for and originations and purchases of home mortgage loans, home improvement loans and refinancings. The purposes of HMDA include helping to determine whether financial institutions are serving the housing needs of their communities and assisting in fair lending enforcement.

Check Overpayment Scams
     The Federal Trade Commission has issued a new consumer alert, “Check Overpayment Scams: Seller Beware.” This scam targets consumers selling cars or other valuable items through classified ads or online auction sites.
     According to FTC officials, the scams work like this: Someone responds to your posting or ad and offers to use a cashier’s check, personal check or corporate check to pay for the item you’re selling. At the last minute, the so-called buyer (or the buyer’s “agent”) comes up with a reason for writing the check for more than the purchase price and asks you to wire back the difference after you deposit the check. You deposit the check and wire the funds back to the “buyer.” Later, the check bounces, leaving you liable for the entire amount. The checks are counterfeit, says the FTC, but good enough to fool unsuspecting bank tellers.
     In a different version of the scam, the FTC says, consumers get a check that has their “winnings” from a lottery. They’re asked to pay taxes or fees. Sometimes, the sender claims to be trapped in a foreign country without any way to cash the check. Either way, federal officials say, if you deposit the check, you’ll lose.
     Here’s how to avoid a check overpayment scam:
§         Know who you’re dealing with. In any transaction, independently confirm the buyer’s name, street address, and telephone number.
§         Don’t accept a check for more than your selling price, no matter how tempting. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Don’t send the merchandise.
§         Consider an alternative method of payment. As a seller, you can suggest an escrow service or online payment service. There may be a charge for an escrow service. If the buyer insists on using a particular escrow or online payment service you’ve never heard of, check it out. Visit its website, and read its terms of agreement and privacy policy. Call the customer service line. If there isn’t one or if you call and can’t get answers about the service’s reliability, don’t use the service. To learn more about escrow services and online payment systems, visit www.ftc.gov/onlineshopping
§         If you accept payment by check, ask for a check drawn on a local bank, or a bank with a local branch. That way, you can make a personal visit to make sure the check is valid. If that’s not possible, call the bank where it was purchased and ask if the check is valid. Get the bank’s phone number from directory assistance or an Internet site that you know and trust, not from the person who gave you the check.
§         If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers don’t pressure you to send money by Western Union or a similar company. In addition, you have little recourse if there’s a problem with a wire transaction.
§         Resist any pressure to “act now.” If the buyer’s offer is good now, it should be good after the check clears the issuing bank.
§         Throw away any offer that asks you to pay for a prize or a gift. If it’s free or a gift, you shouldn’t have to pay for it. Free is free.
§         Resist the urge to enter foreign lotteries. Most foreign lottery solicitations are phony. What’s more, it’s illegal to play a foreign lottery through the mail or the telephone.
The full FTC alert is available at www.ftc.gov/bcp/conline/pubs/alerts/overpayalrt.htm.

SYSTEM NEWS

IRS Provides Tax Filing Resources
§         The Internal Revenue Service (IRS) is taking steps in several areas to help taxpayers. Many of these features can be found on the agency’s website – www.irs.gov/individual.index.html – including: 
§         “Earned Income Tax Credit” Assistant – Available in English and Spanish, this feature allows taxpayers to type in a little information and follow easy directions to determine if they are eligible for the EITC.
§         “1040 Central” – Taxpayers again will find a one-stop shop for their tax return needs by visiting “1040 Central.” The newly expanded page will connect taxpayers to basic income tax preparation needs such as key forms, answers to frequently asked questions and critical links to key tax issues.
§         “Where’s My Refund?” – The popular “Where’s My Refund?” function allows taxpayers to answer the most frequent question they pose during the tax year.
§         Simpler forms for more taxpayers – The income limits for using the Form 1040EZ and Form 1040A will increase from less than $50,000 to less than $100,000. Last year, approximately 18 million taxpayers filed a Form 1040EZ and another 24 million filed a Form 1040A. The change in the threshold will mean 1.6 million more taxpayers are eligible to file the 1040EZ or 1040A.

Succession Planning Resource
     With a recent CUNA survey revealing a large percentage of CU CEOs planning retirement in the next five years, plus the improving economy and job market, both managed and emergency succession planning loom as important issues for CUs in coming years.
     A new CUNA white paper, CEO & Board Succession Planning,” is a checklist of considerations to help boards and management prepare for vacancies at the CEO or senior management level. It also assists in complying with NCUA’s requirements for a clear, documented succession process.
     This white paper sells for $30 and is available as an Adobe PDF. For more information or to order online, visit http://buy.cuna.org/ and type stock #26226 in the product finder box. The League also has a copy in our lending library.

Online Home Value Estimator Helps CUs Build Leads into Loans
     Credit unions can more effectively drive and convert home equity leads into loans through an online home value estimator for consumers, available at a reduced cost through CUNA's new marketing agreement with ClickRSVP, a lead generator and e-marketing company. 
     Credit unions can add the Home ValueBot link to their Web site's home page. This provides details on beginning the loan process and applications to encourage members interested in home equity loans to begin the loan process through their credit union. Because the product does not contain external advertisements or links to other lenders, it keeps members on the credit union's Web site.
     Consumers need only supply basic information, such as their address, city and state, or zip code, and the Home ValueBot calculates a home value estimate within seconds. Underlying valuation data is calculated through public record information and professional appraisal techniques. The information is updated on a weekly and monthly basis to accurately reflect changing market conditions.
     Annual subscription fees are based on asset size. CUNA members are encouraged to visit www.cuna.org and enter Home ValueBot in the search box for more information.

Notice of League Director Election
     At this year’s League annual meeting in April, two three-year terms for League director will be filled. The terms of Charles Miller, Dover FCU, and Betty Sartin, Newport Site EFCU, will expire in 2005. Each CU board may nominate one eligible person as a candidate for the League board of directors. Nominations must be in writing and be accompanied by a brief written biography. Nominations are due at the League office by 4:30 p.m. on Monday, February 21, 2005. There will be no nominations from the floor during the meeting.
     No credit union may have more than one director serving on the League board. The five other directors currently serving on the League board are Cheryl Chilcutt, Chestnut Run FCU; Michael Whaley, Delaware State Police FCU; Joel Romaine, DPL FCU; Jim Everhart, Louviers FCU; and Kate Toner, Wilmington Postal FCU.