NCUA Opinion Puts An End To 'Householding' Of Statements

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In a decision that could be costly for some credit unions, especially smaller ones, NCUA said that federally insured credit unions may not combine member statements from a single family in the same envelope because of privacy concerns.

The new legal opinion formally bans so-called householding, a practice many credit unions have adopted over the years to save costs on mailing and postage.

But Carolyn Warden, longtime credit union examiner and manager who requested the legal opinion on behalf of her current employer FedComp, hailed the ruling as one that should help credit unions retain some younger members who were offended by the householding practice. "This made young people furious," said Warden. "Credit unions shot themselves in the foot," by including younger members' account statements in the same envelope as their parents' statements.

"Credit unions are trying to save 11 cents on an envelope and they're losing thousands of dollars in loans because they offended younger people," she said.

Reason For Request

FedComp requested the legal opinion from NCUA at the behest of a credit union client.

"Basically, FedComp was asked to automate the practice, to blend families, step-families, in the same mailing," said Warden, who said it is mostly smaller credit unions, some who still send out member statements by hand, which continue householding. "We knew we could do this, but the question was, 'should we do this?'"

In its legal opinion, NCUA said its own privacy rules prohibit sharing non- public, personally identifiable financial information, like that included in member statements, unless members are afforded an opportunity to 'opt-out' of the information sharing arrangement. "Absent compliance with these procedures, the cost savings that may be achieved through mailing more than one member statement in a single envelope do not overcome the right of each credit union member, even members of the same family or household, to separately receive and review his or her personal financial information."

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