League InfoSight Highlight – Trusted Contacts

July 10, 2023

The NCUA and CFPB have both been providing resources to consumers about establishing “Trusted Contacts” and encouraging outreach to their financial institution in order to help prevent fraud. Specifically, the CFPB has published the following: Financial institutions can help prevent elder financial exploitation with alerts to trusted contacts and Choosing a trusted contact person can help you protect your money. The NCUA has dedicated a page on their website, Protect Your Money With a Trusted Contact.

What does that mean for credit unions? First, the credit union should determine if this is something they want to facilitate for their members. There is no requirement for the credit union to establish a trusted contact program. However, if credit unions choose to facilitate this process, there are some important components to consider:

• Develop a trusted contact form in consultation with an attorney for members to sign and document their trusted contact information.
• Develop an overarching policy for the trusted contact program at the credit union.
• Develop a procedure and script for the credit union’s process regarding when and how staff members can reach out to a trusted contact. This should include details on what information the credit union will and will not share.
• Develop a procedure and a script for staff to use when explaining how the member can establish a trusted contact. This should include a conversation on the importance of selecting a trusted contact the member believes is a good fit for the role who will not have transaction authority.
• Create ongoing training programs for staff so they understand the program and ensures consistency across the organization.

Unfortunately, there isn’t regulatory guidance out there for credit unions to directly utilize when developing a compliant and effective program. League InfoSight has been doing research and is in the process of aggregating information and resources including a model trusted contact form, model policy and model procedures for customization. Credit unions should be on the lookout for that information in both InfoSight and CU PolicyPro!

Glory LeDu
CEO, League InfoSight and CU Risk Intelligence

Posted in Compliance Resources.