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More Digital Engagement Calls for Compliance Check-Ins in 3 Key Areas

July 7, 2020

By Jovilyn Herrick, Director, Compliance Consulting Services

Although not without its challenges, the increase in digital engagement with members has been one of the silver linings to come out of the pandemic response. For credit unions that have devoted years to promoting online and mobile banking, the sudden uptick in use serves as reassurance that the investments they made in technology, training and process improvements were very much worthwhile.

As with every dramatic shift in member behavior, however, there are compliance implications. Credit union leaders heading up the regulatory compliance effort will want to keep these three areas in mind as they work to maintain their cooperative’s compliance.

Two Parts to E-SIGN Compliance

When Congress enacted the Electronic Signatures in Global and National Commerce Act (E-SIGN Act) in 2000, legislators could never have predicted the vast importance electronic signatures would take on 20 years down the road. Yet, during COVID-19, E-SIGN usage is through the roof, helping credit unions and their members keep account and loan transactions moving while also maintaining social distance.

For compliance leaders, it will be vital to ensure credit union staff are checking off two critical areas when it comes to communicating with members around E-SIGN transactions – disclosures and consent. Especially when staff are moving fast or find themselves out of their elements, it can be tempting to ask for verbal consent for E-SIGN from a member. However, consent must be received after presentment and acceptance of the required disclosures.

Minding the T&Cs of Digital Wallets

Credit unions are not the only ones to have experienced a greater number of digital users. Each of ‘The Pays,’ (i.e., Apple Pay, Google Pay, Samsung Pay) are no doubt seeing dramatic increases in use both at the POS and in e-commerce environments, as retailers encourage digital wallet use to conduct transactions at home.

For credit unions enrolling larger numbers of members in these services, the terms and conditions (T&Cs) can get a little tricky. Mainly, however, credit unions should follow the lead of the digital wallet provider, as that is the ultimate party with whom the member is engaging.

It’s super important to over-communicate this with members, as they may feel safer or more confident trying out a new payment method because it’s offered by their credit union. Compliance, payments and marketing departments should work closely together to ensure members understand each of the terms they are agreeing to before they agree to them.   

Back to the Security Basics

Because many of the members downloading banking apps for the first time during COVID-19 could be doing so reluctantly, they may not be as technically or security savvy as the average mobile user. Credit unions should monitor new users closely to ensure a few things: 1) they are opting into the highest possible security options, such as two-factor authentication; 2) they understand the terms and conditions; and 3) they are not engaging in unsafe behavior, such as sharing a username and password with another person. Some of this monitoring can be done on the back end, simply by reviewing the data trail of new users. If resources allow, other outreach may be best conducted one-on-one or through targeted outreach to a specific segment.

Cyber scammers are just as aware of the uptick in mobile banking usage as credit union industry leaders. Therefore, compliance will want to link up closely with fraud, IT and infosec to make sure all the I’s are dotted and the T’s are crossed from a security and member education standpoint.

While much of the digital engagement that began in recent months was somewhat forced, there is an opportunity for credit unions to maintain it even during “normal times,” whatever that may look like in a still unknown future. A positive digital experience – for both the credit union and the member – will be paramount to keeping members engaged in these new ways. Compliance has an important role to play in helping the credit union provide that positive, maybe even exceptional, experience.


Services performed by ViClarity are compliance and not legal in nature, and do not form an attorney-client relationship or any of the protections attendant to the attorney-client relationship.


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