Compliance Blog

Word of warning: The following applies to federal credit unions.  If your credit union is state-chartered, you'll need to look to your state law and guidance.

Inevitably, some relationships go sour.  Your credit union may have members who are abusive to staff, or who have caused the credit union a loss.  Can't you just kick such members out of the credit union?  Not so fast, my friend. 

If you are a federal credit union, there is only one way to give a member the boot.  And that is through the expulsion process.   This NCUA legal opinion letter does a good job of highlighting the expulsion issue as it relates to a member who caused the credit union a loss.  In short, once a member becomes a member, they have certain rights that must be respected.  Expelling members is not an easy process, and if you read the letter, I think you'll understand why.

But if you can't easily expel a member, you may be able to limit their services in certain situations.  NCUA has a long line of legal opinions that underscores the ability of a federal credit union to limit services to a member who caused the credit union a loss, or who was abusive to a credit union employee.  If you want to take advantage of this ability, NCUA indicates the following:

1. There should be a logical relationship between the objectionable conduct and the limitation of services.
2. The policy needs to be in writing, and it must be distributed to the credit union membership so that members are aware of the policy.
3. The policy, or its implementation should not violate anti-discrimination laws or regulations.

Here's a good NCUA legal opinion letter that discusses the "limitation of services" issue.