If you have a credit card or a bank card, like me, you’ve gotten the notices that they’re changing any number of terms of the agreement. Especially when the rates change. Now, imagine the terms of a car or house loan changing drastically, and as far as you can tell, you received no notice.
That’s what is alleged to have taken place in Rapid City with what’s cited to be the largest credit union in the state, Black Hills Federal Credit Union, with over 4400 of their loans.
In July 1999, the credit union, after receiving advice from the life insurance company, placed a notice in the monthly credit-union newsletter stating that the premium for the credit disability insurance would increase as of July 1 that year.
Despite the premium increase, the Thurmans’ monthly payment never changed.
The lawsuit claimed they changed the terms of the loan based on the credit life/disability insurance rates, never correspondingly changed the premium (decreasing the amount paid towards the principal), and “maybe – kind of – sort of” loosely provided notice to the people obtaining the loans? The insurer providing the coverage, and also a party to the lawsuit, CUNA Mutual Insurance Society, is a creature of the Credit Union National Association (CUNA), a trade association that advocates on behalf of credit unions across the U.S.
What could go wrong?
As you might have thought, it took a while but – a couple of setbacks in court later – it didn’t really appear the courts weren’t looking favorably at the Black Hills Federal Credit Union about all of this. So they settled, noting..
“Black Hills Federal Credit Union denies any wrongdoing; however, the parties agreed to settle because of the uncertainty, expense, and inconvenience associated with continued litigation.”
“We believe the settlement is in the best interest of BHFCU and our members.”
It is hard to see how they were acting in the ‘best interest’ of their members when they changed the terms of the loan agreement with little or no notice. I’m not sure how much comfort that members can take in Black Hills Federal Credit Unions’ assertion that “Credit Unions are not-for-profit cooperatives working to improve lives,” as they claim on their website. Because it doesn’t sound like they were doing much for their members as described in the lawsuit.
Congress gave credit unions a 100% exemption from payment of any federal income taxes or state income taxes because they were supposed to provide lower income families a place to borrow money. In fact, credit unions have pushed for their own removal from the Consumers Financial Protection Bureau’s oversight.
But when things like this happen… it’s worth noting that maybe they should be subject to the same playing field that banks are required to play on.