In its continuing efforts to assist credit unions, the New York Credit Union Association’s compliance department provides answers to a range of important questions from member credit unions.
Sarah Hodgens, the Association’s director of compliance, has compiled a list of frequently asked questions by credit unions during the first quarter of 2021, as well as the corresponding answers.
Q: Can the credit union hold our Annual Meeting virtually in 2021?
A: In response to the COVID-19 pandemic, the NCUA has issued a letter to credit unions in which the NCUA is extending the relief measures outlined in Letter to Federal Credit Unions, 20-FCU-02, NCUA Actions Related to COVID-19 – Annual Meeting Flexibility. Federal credit unions can invoke the bylaw provision amendments and hold a virtual annual meeting in 2021.
Q: Can the credit union link accounts for dormancy and escheatment purposes?
A: Yes, based on the below excerpt from the Comptroller’s handbook if the credit union is able to link an inactive savings with an active checking account transactions on the checking would resolve dormancy on the savings.
Linkage of Accounts
For instances in which a reporting organization has the ability to link several accounts of a single customer either manually or electronically, it is our opinion that you may treat an exclusionary action on one of the customer’s accounts as an exclusionary activity for all of the customer’s accounts, including those that are inactive or dormant. However, you should notify the customer of any dormant accounts and instruct him/her to reactivate the account.
Examples of such accounts are savings, checking, IRA, personal trust, loan payment, mutual fund within the same fund group, and brokerage, etc. In the absence of an exclusionary activity, a related inactive account should not delay the reporting of a dormant account.
Q: Does the credit union need a permissible purpose to perform a soft pull on a member’s credit?
A: The terms “hard” and “soft” inquiries are not mentioned in the FCRA. Any credit inquiry that entitles the requestor to a credit report is, in the eyes of the FCRA, the same. It must have a permissible purpose, as defined by FCRA to pull credit [15 U.S.C. § 1681b] .If the credit union determines there is permissible purpose under FCRA then it would be acceptable to pull credit.
Q: If a member wrote their pin number on the back of the debit card resulting in an unauthorized transaction on their account, can we impose greater liability?
A: No, Regulation E commentary states that it is not permissible to impose greater liability due to potential member’s negligence.
2. Consumer negligence. Negligence by the consumer cannot be used as the basis for imposing greater liability than is permissible under Regulation E. Thus, consumer behavior that may constitute negligence under state law, such as writing the PIN on a debit card or on a piece of paper kept with the card, does not affect the consumer’s liability for unauthorized transfers.
Q: What circumstances could result in a member’s account being subject to backup withholding?
A: The credit union would apply backup withholding when:
• A member fails to provide a TIN or certify that the TIN is correct;
• Upon receipt of a B-Notice from the IRS which notifies the credit union that the name and TIN provided by the credit union on a previously filed 1099-INT do not match IRS and Social Security Administration records;
• Upon receipt of a C-Notice from the IRS which notifies the credit union that the member has under-reported tax payments; or
• The member fails to certify that he or she is not subject to backup withholding.