ENDICOTT, N.Y. – NCUA has told at least one credit union to cease using a popular method of encouraging scofflaw lenders to pay up by publishing their names in notices or newsletters calling for their expulsion from the credit union in a special meeting of members.
The publication of names of members who have caused the credit union a loss, though allowable under credit union regulations, violates the confidentiality provision of the Federal CU Bylaws implementing the privacy guidelines of the Gramm-Leach-Bliley Act, NCUA told Visions FCU.
“Generally, an FCU may not disclose any personal information about a consumer to a non-affiliated third party unless four conditions are met,” Mark Treichel, director of the NCUA’s northeast Region One, told Visions in a June letter. Those conditions are: the consumer must be provided a privacy notice, the notice must contain an opt-out provision, the consumer must be given a reasonable opportunity to opt-out and the consumer must not have opted out.
“Since [Visions] does not appear to have complied [with these conditions],” wrote Treichel, “its disclosure in its newsletter of the names of members who maintain a liability to the credit union represents a breach of the FCU Bylaws’ confidentiality provision.”
Frank Berrish, president of the $3 billion credit union, said Friday the new NCUA stance will out a crimp in the credit union’s longtime practice – one shared by hundreds of credit unions – of publishing the names of members in its newsletter who will be voted for expulsion at a special meeting for causing a loss to the credit union. “We decided not to fight it,” Berrish told Credit Union Journal, adding the practice has succeeded in encouraging scofflaw members to pay outstanding debts of as much as $25,000. Under the new policy, he said, Visions will notify members of a special meeting for the purpose of expelling members who caused it a loss but will not name the individuals in the notice.
“This is a common practice,” said Berrish. “We copied it from other credit unions. We’ve been doing it for 10 years; and have probably expelled more than 2,400 members.”
The publication of individuals targeted for expulsion can be useful in several ways, he noted. One is to shame the member into paying up. Another is to encourage other members, some who may also be owed debts by the individual, to attend and participate in the vote. In some cases, members have voted against the credit union’s recommendation for expulsion, he said.
