Show Us Your Tweets Before Entering the US


By Robert McGarvey

The US government now has announced a policy where applicants for US visas are asked to disclose their social media handles. Apparently about 15 million foreign visitors will be impacted annually.

Would you disclose your Twitter, Facebook, and other accounts to a foreign government?

My Twitter account is @rjmcgarvey, ditto on Facebook, and I have never posted on Instagram, Snapchat, et. al. I have nothing to hide. But I do have questions about this new US information grab.

Is the US overreaching in its paranoia? Should what you post on social media figure into your ability to travel the world? And remember that others will follow the US policy – that is, many nations will start asking for social media handles on visa applications.

So US citizens too will be impacted.

Which brings us to the question: why did the US make this change?

According to TIME, the US explained this thusly: “National security is our top priority when adjudicating visa applications, and every prospective traveler and immigrant to the United States undergoes extensive security screening. We are constantly working to find mechanisms to improve our screening processes to protect U.S. citizens, while supporting legitimate travel to the United States.”

The free speech advocate inside me recoils at yet another government act that may stifle speech.

Even so, I have assumed for some years that the big governments – especially the US, China, possibly Russia – routinely sift through all social media postings.  I would also assume that many who post inflammatory stuff do so under pseudonyms. So a visa applicant might have a humdrum account on Twitter in his/her real name – and another account full of hideous nonsense under a fake name.  Which account would you guess he’d disclose on his visa application?

Is there any point to this new government intrusion?  Will demanding social media handles deliver anything of value?

Then, too, many millions of foreigners enter the US under a visa waiver program that allows passport holders from countries such as Australia, France, Germany, Ireland, Japan, South Korea, and the United Kingdom to enter without a visa.  

In FY 2015, about 22 million came in under the visa waiver program (Japan was the leader with 3.7 million).  That’s half again more than will come in with a visa but that makes sense because most developed countries are in the waiver program (and in most cases US citizens do not need visas to enter these countries).

As for the new US demands, civil liberties folks are up in arms.  Per the New York Times, “This seems to be part and parcel of the same effort to have an extraordinary broad surveillance of citizens and noncitizens,” Elora Mukherjee, director of the Immigrants’ Rights Clinic at Columbia Law School, said of the latest development. “Given the scope of the surveillance efforts, it is hard to find a rational basis for the broad surveillance the Department of State and the Department of Homeland Security have been doing for almost two years.”

Probably, too, this search won’t actually prevent any terrorism. A Washington Post story from a few years ago took up exactly this question and said, naw, it won’t work.  Why? The vast majority of posts are about the same old stuff – “Almost all were about traffic, celebrities or the weather. Discovering whether a visa applicant has ever voiced suspect opinions will require searching through acres of haystacks in the hopes of finding a few needles,” said the Post as it reviewed Ukrainian posts after Russia’s seizure of Crimea. Note that timing. Even tho war was breaking out, the overwhelming majority of social posts were about the same old trivialities of everyday life.

Then, too, added the Post, the Internet is awash with hate speech – vide Trump’s Twitter account.  There’s a lot of bluster, a lot of ranting, and a lot of plain hate. That means “identifying suspicious social media activity cannot be conclusive without additional labor. Whittling hundreds of thousands of flagged accounts down to a manageable watchlist will be an expensive and time-consuming human effort, not the work of algorithms.”

So probably this is actually just a Washington DC witch hunt not worth the time and effort.

Is Member Ownership a Credit Union “Missed Opportunity”?


By Robert McGarvey

It’s a loud, universal credit union mantra: we are not a bank, we are member owned.

Are they really?

Of course credit unions are not shareholder owned, nor are they owned by a proprietor so – sure – on paper they are are indeed cooperatives owned by their members.

But do they walk the talk?

These dark thoughts flooded my mind in a recent conversation with cooperatives researcher Nathan Schneider that resulted in a wide ranging podcast that, ultimately, to my ears is very optimistic about cooperatives, especially new kinds that are forming to serve new needs (platform co-ops and worker owned co-ops for instance).  

But at roughly the 15 minute mark Schneider said that many cooperatives drop the ball, with a loud thud, by not stressing that they are in fact a democratically run cooperative because that kind of structure will appeal to a new generation.

“It’s a missed opportunity,” said Schneider who then issued “a challenge to cooperatives to reinvigorate their democratic spirit.”

Credit unions, he’s looking at you.

In fact he said, “that goes for credit unions too.”

“They need to rediscover the power of democratic involvement in these businesses.”

Do you vote in the annual meeting at your credit union? I belong to two and, as I confessed to Schneider in the podcast, I have never voted in a credit union election. Never as in not once.

I am embarrassed by that but I also am sure I am the credit union norm. And that’s very wrong.

I have often voted in annual elections of publicly held companies because they send me a proxy statement.  They make it easy for me to vote. And so I have.

I don’t even know when my credit unions’ annual meetings are.  I know one is 2500 miles from me. The other is within 10 miles. But I don’t know where or when.

Do credit unions care about the dismal member involvement in governance – keeping in mind we are, per the mantra, member owners?

Nope.  

Schneider said that a recent annual meeting of a large Colorado credit union he belongs to, he counted around 30 members in attendance and so he asked the CEO what he was doing to increase member involvement.  The CEO’s answer: “Credit unions aren’t like that any more.”

“That’s a big problem,” said Schneider of the indifference to member involvement.

He stressed that member ownership is a huge differentiator from other financial institutions – and yet credit unions aren’t making the most of this difference.

Schneider concluded: “If your main differentiating factor is no longer important, that’s a problem.”

CUNA of course has its “Open Your Eyes to a Credit Union” campaign – where a central plank is member ownership – but what if that ownership adds up a big zero? What if?  (Listen to Teresa Freeborn on the CUNA campaign, which she chairs, in this podcast.)

This really is the game. Credit unions are local, they usually offer free checking and lower cost loans, and they are member owned – that’s the three part argument.  It’s a great foundation for a marketing campaign. But when member ownership is an unfulfilled promise, the argument crumbles.

Schneider is right.  Credit union boards and management need to get serious about raising member participation.  When members feel they have the same stake in a credit union that they would have in Chase if they banked there – zilch in other words – credit unions have blown it.

Set a goal. Double member participation in the next meeting. Double the number of votes.  Get more members posting about the credit union on Facebook. Let’s see the members acting as owners.

Make it a core business goal to dramatically up member participation. Boards can make this a key consideration in grading a CEO’s performance.

Some credit unions get this. Some allow voting by members online. Some even allow Facebook voting. Bravo.

There are ways to introduce 21st century voting into credit unions and thereby to up member participation.

Most credit unions don’t deploy such tools however. Annual meets are still in person only. In the 21st century! There’s the “missed opportunity.”

But every credit union needs to commit to dramatically upping member involvement in the democratic control of the institution.

Upping member involvement won’t come easily. But this is an obligation that can’t be ducked. Never forget: democratic member control is the 2nd of the Rochdale Principles. “Co-operative societies must have democratic member control. According to the ICA’s Statement on the Co-operative Identity, ‘Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions.’”

That’s not hard to understand.

It may not be that easy to do.  But the doing is what will give credit unions a winning proposition.

Talk is cheap.

Democracy isn’t.

The Cooperators Podcast Episode 12 David Gill Marquette Brewing, Drink Up

by Robert McGarvey

Mark your calendar. Late June is when Marquette Brewing in Michigan is slated to open, making it one of around 10 cooperative breweries in the US.

That number isn’t big but just about all these co-ops have formed in recent years. It’s a growing sector.

Understand, Marquette is a small town, population maybe 25,000, in Michigan’s remote Upper Peninsula.  There’s not a lot of population to draw upon in forming a new co-op but over 200 have joined Marquette Brewing, ponying up $99 apiece.

All in the co-op has raised over $200,000.

An important takeaway from this podcast is how much help other co-operatives have given Marquette Brewing. The co-operative principles really work.

Another takeaway: the rich information board president David Gill shares about this co-op’s journey to opening. He gives what amounts to a how to blueprint.

Great stuff.  Drink up.

Listen to this podcast here.

Like what you are hearing? The Cooperators Podcast seeks sponsors and supporters to help us spread the word about cooperatives and how they often are the better way. Contact Robert McGarvey to find out what you can do to sustain this podcast.

How Credit Unions Can Win the Fees Fight

By Robert McGarvey

Want to pick a fight you should win? Everytime? Even when battling the biggest banks?

That’s a real probability for credit unions that pounce on an opportunity that could bring them notice of their generally lower fees by consumers hunting for a financial institution that clicks exactly that box.

Surf over to TrueFees and ponder the possibilities. Founder Ben Premo is building out a consumer facing search site where consumers in many cases would find their better deal will be a credit union and that is because Premo lets the consumer search for a financial institution by any of 10 different fees, from monthly service fees to overdraft fees, even foreign wire transfers.

Premo said that when he’s looked for that info on financial institution websites, maybe half of the banks he’s investigated did not post that info or if they did, it wasn’t readily visible.

Credit unions – most of which still offer free checking – are much more transparent about their fees or lack thereof.  But even credit unions may be less than forthcoming about fees for wire transfers, cashier’s checks, and similar.

So he set about building TrueFees where a consumer can input a zipcode and be shown the institutions with the best deals.

He also said he is looking for credit unions that want to partner with him, paying a fee only when a consumer actually opens an account.  There’s no charge to get entered into the database. “Truefees will bring exposure to financial institutions with low charges,” says Premo.

Right now, digital only banks are the primary players at TrueFees but Premo is insistent he wants to change that by adding info about more credit unions.

That is a possible way to change today’s playing field which is one where the big institutions generally win.

Most new checking accounts open at the predictable, mammoth institutions, the ones with big marketing budgets and lots of TV advertising.  Are they the best deal for an average consumer?

Absolutely not, certainly not for the 98% of us.  

At Chase, Total Checking costs $12 monthly. It can be free if the consumer maintains a checking balance that never dips below $1500, or $5000 in linked accounts (such as savings).  That sounds good until you remember that four in five of us say they live paycheck to paycheck.  You might as well tell them the minimum balance for free checking is $1 million.  They can’t manage $1500 any better than that million.

The consumer’s best chance at free checking with Chase is to arrange a recurring automatic deposit of at least $500 monthly. That will do it. But not everybody has an employer or similar willing to play along.  

So get ready to pony up $12 monthly.

At Affinity Federal Credit Union in New Jersey – where I do most of my checking – a checking account is free. No minimum balance required.  

At Chase the overdraft fee is $34.  Affinity charges $33.

But a growing number of digital banks and some credit unions, said Premo, charge nothing or a nominal fee for overdrafts.  If overdrafts are a personal problem, look for a provider with small or no fees and that’s where the TrueFees search tool will prove valuable.

Don’t be shy, either.  In 2017, overdraft fees paid by Americans hit $34.3 billion – that’s billions. It’s money that does not need to be spent.  (Grain Technology, by the way, has a tool that could absolutely end overdrafts. Hear the podcast here.)

Fee specificity, by the way, is an obvious hook for TrueFees: the consumer can drill down to exactly what fees interest him/her. Personally I have never wired money abroad so fees for that are inconsequential to me but for those who regularly wire money abroad – and I know people who do that to India, the Philippines, Mexico, and in years past, Ireland – it’s potentially easy to hunt for nearby institutions with attractive charges for foreign wires.

A plus for the consumer who uses TrueFees to find and open a new account is that TrueFees will put a $25 bonus in the consumer’s pocket.

Check out TrueFees. It just may be a smart way to find a game where credit unions are destined to win because most truly offer the better deal.

A CU2.0 podcast with Ben Premo where he talks at length about TrueFees posts in mid May 2019. Find it here.

Travel Companies Are Hacker Targets Because You Are


By Robert McGarvey

Probably your principal travel providers – airlines, hotels, online travel agencies, and the like – know a lot of information about you, very sensitive information, perhaps including passport number, driver’s license details, credit card information, and loyalty program details.

The bad news is that, increasingly, travel companies are hacker favorites, ranking second or third among the chief targets.

You already know that hotel restaurants, bars, and gift shops are under relentless assault – so much so that my loud advice is to never use a debit card in them, really try hard not to use a credit card, and pay cash to maintain safety.

And then there have been the many attacks on hotel loyalty programs.  

But what IBM is talking about is something different.  Sophisticated nation state players are suspected of hacking into travel company databases in a  search for information about travelers.

“I don’t see that slowing down any time soon. If you’re a nation state, you’re building large scale databases of people because the more you understand about people, the more you can manipulate and extort,” said Caleb Barlow, an IBM vice president, at a recent Amadeus event in Madrid.  

He added, according to Phocuswire reporting on the event,  “Not all attacks want to leverage the information straight away. Nation states might want to use it in 20 years.”

That has to scare you.  

Do you want a nation such as Saudi Arabia or Hungary or Russia to have your travel history and preferences at their disposal?

Do you want the US to have it?

A morsel of good news is that, recently, per IBM’s Barlow, many hackers have shifted from data exfiltration to cryptojacking, which is putting victim computers to use mining cryptocurrencies for money.  

Travel sites too appear to be victims of this. What impact might that have on travelers? Hard to say, since currency mining as such shouldn’t impact a consumer’s data. But when a hacker has control of the computers it stands to reason he/she would also pull out useful data to keep or to sell, simply to optimize the financial return of the hack.  So I don’t see cryptojacking as mutually exclusive with data exfiltration. Not hardly.

Exactly what can you do to protect yourself in an age where travel sites are getting hacked?

I play with the idea of registering under a false identity, using, say, a good quality but fake Irish driver’s license and a fake passport.  The problem of course is that fakes won’t pass scrutiny by government employees such as TSA.  At a hotel, sure, I believe fakes generally will work fine.  Note: I am not advocating scamming hotels, just creating false data trails that when stolen by a hacker will deadend.

But then there’s the problem of my data that already is in the system at multiple hotel groups, airlines, and assorted other travel vendors.  A new, fake identity won’t erase the past, accurate data.

So here’s what I am doing in response to the epidemic hacking at travel providers: going online, stripping out all data that isn’t needed and filling in false data where possible — challenge questions for instance. There is no need whatsoever to use your father’s real middle name in a challenge.  The only requirement is knowing what fake name you used.

My sense is that it is easier and safer to use substantial fake data with hotels.  Not so much with airlines.

And keep remembering that ever more travel company data is in the hands of hackers.  

Remember too that the hackers often appear to be highly skilled and that means the worse news is that very possibly there are plenty of hacks that so far have gone undetected. But our data may be leaking out.

That puts the burden on you.  Keep monitoring financial accounts and regularly – at least yearly – look at a credit report.  I also check my credit score monthly (free via various banks, credit unions, and credit card issuers).

But the sticky issue is if the thefts are by nation states with no intent to monetize the data via fraud it just may be impossible to divine what data has been copied.

That’s maddening.

But it also is reality.

When Small Credit Unions Go, So Do the Big Ones


By Robert McGarvey

A chart in consultant Marvin Umholtz’s year-end CU Strategic Hot Topics newsletter jumped out at me and triggered a tsunami of worries about the future of credit unions.

Crunching NCUA data, Umhoeltz said there were 5480 credit unions as of mid 2018.  But get this: 3904 have assets under $100 million.

1454 have assets under $10 million.

Just 542 have assets above $500 million.

So what?

Here’s what: many experts I talk with tell me that the minimum size needed for credit union survival is $1 billion. Some scoff at that and say a well run institution with $500 million will do fine.

Nobody is optimistic about the future of micro credit unions.

But, increasingly, I believe that it is the micro credit unions that are the face of the movement and they are cause of some benefits that go to even big institutions.

Such as tax exemption.  No politician wants to give tax exemption to big credit unions that can go toe to toe with community banks – if only because community bankers continue to raise a loud, pained whine about tax exemption. But it is hard to turn down the plea of a micro credit union.

Small credit unions bring other benefits.  When credit unions “walk the Hill” – knocking on legislators’ doors in Washington DC – the ones who are likeliest to gain entry are the small institutions.  How do I know? Because CEOs of some of the biggest credit unions told me exactly that, that they ride in the wake of the small institutions.

But the terrible news is that as credit unions shrink in number it is the small ones that are folding.  Sometimes it’s because a longtime CEO retires and who wants to take over a small institution where the hours are long, the pay is low, and the responsibilities are high?

When a board can’t find a CEO increasingly it throws in the towel and merges with another institution.

Other credit unions give up because they can no longer keep up with government demands for BSA, AML, Patriot Act scrutiny of accounts and deposits.  

Sometimes, too, credit unions fold because they can’t figure out how to offer the technology that’s needed to stay current.

Occasionally, too, credit unions fold because they made hideously bad investments – think of the failures due to over exposure to taxi medallions.

But, really, bad investments are the lesser cause of closures these days. Now it’s mainly regulatory fatigue and inability to keep up in the personnel wars.

But this doesn’t mean small credit unions necessarily must close. They don’t.

Two years ago, I wrote a piece “How to Save Thousands of Small Credit Unions.”  

That article by the way noted that in 2010 there were 7486 credit unions.  That means 2006 closed in eight years. That’s roughly five a week, one every working day.

Wow.

In 2016 by the way there were 5916 credit unions.  Two years later there were 436 fewer.

Cue the bagpipe dirge.

For the big credit unions too because – again – they need the small ones.

In that 2017 article, I quote Jim Blaine, then CEO of State Employees Credit Union of North Carolina, the nation’s second biggest, thusly: “I hope we do a lot to help smaller credit unions. If the small credit union goes away, the larger ones will be in a mess.”

Blaine is spot on.

What can big credit unions do?  They can offer free ATM access for instance, that’s a big plus for members of tiny credit unions with maybe two ATMs. They can offer free management consulting. They can direct restless, ambitious, talented staff to cut the cord and take a job with a micro credit union, they can help spearhead innovative solutions, sometimes through credit union leagues, where small credit unions learn how they can join together to collectively hire a BSA expert or even a CEO (and, yes, there are cases where one person acts as CEO of multiple institutions).

Accept that the survival of small credit unions is critical to the survival of all and, suddenly, extreme actions start to make sense.

Word of advice: don’t shrug off the next death notice you read about a small credit union.

Because next the bells may toll for thee.

Tune into the CU2.0 Podcast for continuing thinking on credit unions, their challenges, and what tomorrow may bring.