The NAFCU Journal July-August 2020 - 16

''

Agreements should be clear,
they should be complete, and
they should actually describe
what you're doing in a way that
consumers can understand.
- HAL SCOGGINS, ATTORNEY, FARLEIGH WADA WITT

"Someone who knows credit reporting
knows the fact of the matter, but the
plaintiff 's attorney doesn't know, so they
might sue the credit union for inaccurate
reporting they claim is damaging the
person's credit score," Scoggins says.
Another collection-based concern
involves claims related to collection
practices under state laws applying to
financial institutions. Some plaintiffs'
attorneys are claiming that a financial institution's practices that would
have violated the Fair Debt Collection
Practices Act, which applies only to
third-party collectors, is evidence that
the organization violated state consumer
protection or deceptive practices acts.
Most credit unions have mastered core
compliance with FCRA, but paying
attention to its breadth is necessary,
says Bredehoft. All pieces of information
relating to a person's creditworthiness
or reputation are covered, demanding
a broad view of sufficiency in
internal controls.
"Gossip is covered," he says, "and I
don't see many organizations with
gossip policies."

REMOTE DEPOSIT CAPTURE

Remote deposit capture has become
a banking mainstay, as familiar to
digital-first consumers as online payments. Credit unions have adopted RDC
through vendors or developed their own
systems. However, the long-running
patent dispute between USAA and
technology developer Mitek over a
key technology remains unsettled. The
dispute encompassed other financial
institutions, with recent court rulings
16

''

requiring Wells Fargo to pay USAA hundreds of millions of dollars for its use of
several patents, but litigation among the
various parties continues.
Could credit unions find themselves
being sued for using the characterrecognition software at the heart of the
dispute? Those that have incorporated
the technology into systems developed
in-house could be sued directly - which
was the case with Wells Fargo - or
pressured into license agreements.
Hunt recommends that credit unions
using vendors review their contracts and
consider developing indemnification
clauses to help shield them from lawsuits.
They could also prepare contingency
plans, in case they can no longer use the
technology in their RDC systems.
"Clearly, credit unions want to be able
to continue to offer remote deposit capture,
and we'll have to see how that litigation
plays out," Hunt says. "The problem is,
until the litigation is resolved, they will
never fully know the answers as to whether
or not these systems are set up appropriately, so we have got to see this through."

FUTURE ISSUES

New state-level data privacy laws enacted
or pending could raise the potential of
lawsuits, Hunt says. Under the federal
Gramm-Leach-Bliley Act (GLBA), credit
unions must explain how they share and
protect consumer information. However,
the U.S. lacks a comprehensive federal
data privacy standard, and states are
stepping into that gap.
California leads the trend with its
California Consumer Privacy Act, which

took effect in January. As NAFCU
noted in its "NAFCU's Principles for
a Federal Data Privacy Standard," a
piecemeal approach could compel credit
unions to comply with multiple state
privacy laws.
"Credit unions of all sizes are beginning
to understand the massive systems
overhaul necessary to comply with
potentially 50 different laws as well as
the potential legal implications of violating these laws," the brief states in its
call for a uniform national standard that
preempts state privacy laws.
The California law does not cover
information that is subject to the federal
Gramm-Leach-Bliley Act. "Different
people will argue about how much of the
information the credit union has is subject to Gramm-Leach-Bliley, but most
is covered," Scoggins says. "That makes
financial institutions less of a target for
class-action attorneys right now."

COMMUNICATIONS

Credit unions have a two-part strategy to
deploy in warding off litigation, especially
cases involving consumer agreements.
"No. 1, say what you do; and No. 2, do
what you say," Scoggins says.
Adhering to that rule requires joint attention on communications and training.
On the communications side, he says,
"agreements should be clear, they should
be complete, and they should actually
describe what you're doing in a way that
consumers can understand."
With their community-service missions, credit unions typically admit any
mistakes they uncover and do what they
need to do to make it right for members.
"In the vast majority of cases, that leaves
the member happy," Scoggins says. If
the credit union disputes a claim, "that's
OK, too. Respond that we're in the right,
and here's why, and here's why we're not
going to do what you wanted."
Internal controls are essential for carrying
out agreements to the letter because most
mistakes are caused by someone who
didn't understand the policy, Bredehoft
THE NAFCU JOURNAL JULY-AUGUST 2020



The NAFCU Journal July-August 2020

Table of Contents for the Digital Edition of The NAFCU Journal July-August 2020

The NAFCU Journal July-August 2020 - Cover1
The NAFCU Journal July-August 2020 - Cover2
The NAFCU Journal July-August 2020 - 1
The NAFCU Journal July-August 2020 - 2
The NAFCU Journal July-August 2020 - 3
The NAFCU Journal July-August 2020 - 4
The NAFCU Journal July-August 2020 - 5
The NAFCU Journal July-August 2020 - 6
The NAFCU Journal July-August 2020 - 7
The NAFCU Journal July-August 2020 - 8
The NAFCU Journal July-August 2020 - 9
The NAFCU Journal July-August 2020 - 10
The NAFCU Journal July-August 2020 - 11
The NAFCU Journal July-August 2020 - 12
The NAFCU Journal July-August 2020 - 13
The NAFCU Journal July-August 2020 - 14
The NAFCU Journal July-August 2020 - 15
The NAFCU Journal July-August 2020 - 16
The NAFCU Journal July-August 2020 - 17
The NAFCU Journal July-August 2020 - 18
The NAFCU Journal July-August 2020 - 19
The NAFCU Journal July-August 2020 - 20
The NAFCU Journal July-August 2020 - 21
The NAFCU Journal July-August 2020 - 22
The NAFCU Journal July-August 2020 - 23
The NAFCU Journal July-August 2020 - 24
The NAFCU Journal July-August 2020 - 25
The NAFCU Journal July-August 2020 - 26
The NAFCU Journal July-August 2020 - 27
The NAFCU Journal July-August 2020 - 28
The NAFCU Journal July-August 2020 - 29
The NAFCU Journal July-August 2020 - 30
The NAFCU Journal July-August 2020 - 31
The NAFCU Journal July-August 2020 - 32
The NAFCU Journal July-August 2020 - 33
The NAFCU Journal July-August 2020 - 34
The NAFCU Journal July-August 2020 - 35
The NAFCU Journal July-August 2020 - 36
The NAFCU Journal July-August 2020 - 37
The NAFCU Journal July-August 2020 - 38
The NAFCU Journal July-August 2020 - 39
The NAFCU Journal July-August 2020 - 40
The NAFCU Journal July-August 2020 - 41
The NAFCU Journal July-August 2020 - 42
The NAFCU Journal July-August 2020 - 43
The NAFCU Journal July-August 2020 - 44
The NAFCU Journal July-August 2020 - 45
The NAFCU Journal July-August 2020 - 46
The NAFCU Journal July-August 2020 - 47
The NAFCU Journal July-August 2020 - 48
The NAFCU Journal July-August 2020 - 49
The NAFCU Journal July-August 2020 - 50
The NAFCU Journal July-August 2020 - 51
The NAFCU Journal July-August 2020 - 52
The NAFCU Journal July-August 2020 - 53
The NAFCU Journal July-August 2020 - 54
The NAFCU Journal July-August 2020 - 55
The NAFCU Journal July-August 2020 - 56
The NAFCU Journal July-August 2020 - 57
The NAFCU Journal July-August 2020 - 58
The NAFCU Journal July-August 2020 - 59
The NAFCU Journal July-August 2020 - 60
The NAFCU Journal July-August 2020 - 61
The NAFCU Journal July-August 2020 - 62
The NAFCU Journal July-August 2020 - 63
The NAFCU Journal July-August 2020 - 64
The NAFCU Journal July-August 2020 - Cover3
The NAFCU Journal July-August 2020 - Cover4
https://www.nxtbook.com/ygsreprints/NAFCU/nafcu_NovemberDecember2020
https://www.nxtbook.com/ygsreprints/NAFCU/nafcu_SeptOct2020
https://www.nxtbook.com/ygsreprints/NAFCU/nafcu_JulAug2020
https://www.nxtbook.com/ygsreprints/NAFCU/nafcu_MayJun2020
https://www.nxtbook.com/ygsreprints/NAFCU/nafcu_MarApr2020
https://www.nxtbook.com/ygsreprints/NAFCU/nafcu_JanFeb2020
https://www.nxtbook.com/ygsreprints/NAFCU/nafcu_NovDec2019
https://www.nxtbook.com/ygsreprints/NAFCU/G109023_nafcu_septoct2019
https://www.nxtbook.com/ygsreprints/NAFCU/G106941_nafcu_julaug2019
https://www.nxtbook.com/ygsreprints/NAFCU/G105388_nafcu_mayjun2019
https://www.nxtbook.com/ygsreprints/NAFCU/G103030_nafcu_marapr2019
https://www.nxtbook.com/ygsreprints/NAFCU/G88665_nafcu_janfeb2019
https://www.nxtbook.com/ygsreprints/NAFCU/G100235_nafcu_novdec2018
https://www.nxtbook.com/ygsreprints/NAFCU/G98517_nafcu_septoct2018
https://www.nxtbook.com/ygsreprints/NAFCU/G96479_nafcu_julaug2018
https://www.nxtbook.com/ygsreprints/NAFCU/G93390_nafcu_mayjune2018
https://www.nxtbook.com/ygsreprints/NAFCU/G90161_nafcu_marapr2018
https://www.nxtbook.com/ygsreprints/NAFCU/G88665_nafcu_janfeb2018
https://www.nxtbook.com/ygsreprints/NAFCU/G83806_nafcu_novdec2017
https://www.nxtbook.com/ygsreprints/NAFCU/G80296_nafcu_septoct2017
https://www.nxtbook.com/ygsreprints/NAFCU/G79086_nafcu_julyaugust2017
https://www.nxtbook.com/ygsreprints/NAFCU/G75911_nafcu_mayjune2017
https://www.nxtbook.com/ygsreprints/NAFCU/G73247_nafcu_marapr2017
https://www.nxtbook.com/ygsreprints/NAFCU/G71923_nafcu_janfeb2017
https://www.nxtbook.com/ygsreprints/NAFCU/G69249_nafcu_novdec2016
https://www.nxtbook.com/ygsreprints/NAFCU/nafcu_septoct2016
https://www.nxtbook.com/ygsreprints/NAFCU/g63853_nafcu_julaug2016
https://www.nxtbook.com/ygsreprints/NAFCU/g61005_nafcu_mayjun2016
https://www.nxtbook.com/ygsreprints/NAFCU/g58935_nafcu_marapr2016
https://www.nxtbook.com/ygsreprints/NAFCU/g56716_nafcu_janfeb2016
https://www.nxtbook.com/ygsreprints/NAFCU/g55605_nafcu_novdec2015
https://www.nxtbook.com/ygsreprints/NAFCU/g53582_nafcu_sepoct2015
https://www.nxtbook.com/ygsreprints/NAFCU/g52154_nafcu_july2015
https://www.nxtbook.com/ygsreprints/NAFCU/g50302_nafcu_mayjune2015
https://www.nxtbook.com/ygsreprints/NAFCU/g48554_nafcu_marapr2015
https://www.nxtbook.com/ygsreprints/NAFCU/g47118_nafcu_janfeb15
https://www.nxtbook.com/ygsreprints/NAFCU/g45886_nafcu_novdec2014
https://www.nxtbook.com/ygsreprints/NAFCU/g44155_nafcu_sepoct2014
https://www.nxtbook.com/ygsreprints/NAFCU/g42892_nafcu_julyaug2014
https://www.nxtbook.com/ygsreprints/NAFCU/g41296_nafcu_mayjun2014
https://www.nxtbook.com/ygsreprints/NAFCU/g39799_nafcu_marapr2014
https://www.nxtbook.com/ygsreprints/NAFCU/g38961_nafcu_janfeb2014
https://www.nxtbook.com/ygsreprints/NAFCU/g38041_nafcu_novdec2013
https://www.nxtbook.com/ygsreprints/NAFCU/g36539_nafcu_sepoct2013
https://www.nxtbook.com/ygsreprints/NAFCU/g34910_nafcu_julaug2013
https://www.nxtbookmedia.com