Credit Unions Advised of Returned Mail Best Practices When Issuing Credit and Debit Cards

A change of address notice does not satisfy validation requirements of card issuers’ rules.

4/23/2019

Compliance graphic

When sending out member correspondence and statements, we have “return service requested” on envelopes so that we receive notification from the post office of any address changes. When we receive these items back and a change of address label is attached with a new address, we currently make the change and send an email to the member indicating a change has been made. An employee went to a conference and heard that this practice should not be used when it comes to issuing credit and debit cards. Why is this?

The National Credit Union Administration’s guidance states the following:

III. Duties of Card Issuers Regarding Changes of Address (Card Issuers’ Rules) 8 A. IV. Duties of Users Regarding Address Discrepancies (Address Discrepancy Rules)

Address validation requirements

  1. Can a card issuer rely upon the U.S. Postal Service’s change of address procedures to validate a change of address for purposes of the card issuers’ rules?

The fact that a card issuer received a change of address notice from the U.S. Postal Service is not sufficient to satisfy the validation requirements of the card issuers’ rules. A card issuer that receives a notice of a change of address from the postal system regarding a cardholder’s address, and within at least 30 days, a request for an additional or replacement card, may not issue the card unless it has validated the cardholder’s address using one of the procedures set forth in the card issuers’ rules.

Additionally, credit and debit card issuers must develop policies and procedures to verify a request for a change of address that is followed closely (within 30 days or a longer period established in a creditor’s or a financial institution’s procedures) by a request for an additional or replacement card. A card issuer cannot issue the additional or replacement card until it has verified the validity of the change of address request in accordance with the financial institution’s policies and procedures. If a change of address request has been verified before a request for an additional or replacement card is received, it is not necessary to verify the address a second time before issuing the card.

Question of the Week

Q. What documentation is required in order to open a conservatorship or guardianship account?

A. For this type of fiduciary account, it is best to have the court-issued documents —an order appointing a conservator, guardian, or both, and identifying the person. It will also instruct that a conservatorship/guardian account be opened. Once that document (for example, the letter of conservator/guardianship) is obtained, the credit union will need to confirm the identity of the conservator/guardian. In most cases, the tax ID number for the account will be that of the person for whom the conservator/guardian is appointed. However, the account should be titled for the benefit of the person with the conservator/guardian. Note that the person for whom the conservator/guardian was appointed should not have access to the account. This means that the guardian is the only person who should write checks, make withdrawals, and access records.

Legal Briefs

National Credit Union Administration (NCUA)

NCUA released an Advance Notice of Proposed Rulemaking soliciting comments on ways to improve the agency’s regulations limiting a credit union official’s and employee’s compensation in connection with loans and lines of credit to members.

NCUA announced that round two of low-income credit unions interested in Community Development Revolving Loan Fund grants can submit applications between June 2 and July 30.

Consumer Financial Protection Bureau (CFPB)

CFPB announced a symposium series exploring consumer protections in today’s dynamic financial services marketplace.

Financial Crimes Enforcement Network (FinCEN)

FinCEN assessed a civil money penalty against a peer-to-peer virtual currency exchangerfor violations of BSA requirements for money service businesses.

Credit Union National Association (CUNA)

CUNA has provided the first-quarter 2019 update to the credit card MLA fee comparison spreadsheet under the compliance resources tab.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of April 17, 2019. The last update prior to this was April 12, 2019.

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.