Changes to Membership and Account Agreement

UW Credit Union’s Membership and Account Agreement was recently amended to include a binding arbitration agreement, class action waiver and jury trial waiver. We are adopting arbitration as the method of resolving legal disputes with members. This means that instead of filing lawsuits in the traditional court system to resolve a legal dispute, we will take our dispute to a neutral third-party arbitrator who will hear the claim, receive evidence from both UWCU and the member, and make a decision. The arbitration process is less formal than a courtroom hearing or trial, and it is usually much quicker. Under UWCU’s arbitration agreement, members are not able to file or participate in a class action lawsuit against UWCU. Each claim is arbitrated on an individual basis.

We are committed to providing transparent information to our members about this change and are available to answer member questions. Through one-on-one phone conversations with members and discussions taking place on social media platforms, we’ve identified a few key topics members are interested in learning more about:

Why was this change made?
This was not a decision that we came to lightly but was necessary to adapt to this reality and protect UW Credit Union and our members. The UW Credit Union is a community-focused, member-owned financial cooperative whose mission is to improve the financial wellbeing of our members. In keeping with our commitment to our members, and our status as a credit union, we have always focused on pro-consumer business practices. While most other financial institutions long ago adapted arbitration processes, we, along with most other credit unions, did not. The pro-consumer business practices of credit unions, including member elected boards of directors and internal member due process protections, have historically kept credit unions out of court. Unfortunately, the legal landscape has been shifting rapidly and the frequency of unnecessary and avoidable class action lawsuits have created a substantial cost for credit unions that is no longer sustainable. Law firms actively recruit credit union members to be plaintiffs, and defending these lawsuits creates substantial costs for the credit unions targeted. Most law firms never even contact the credit union to attempt to resolve the claim, as attorney fees can be lucrative in class action suits.

How was this decision made?
UW Credit Union is democratically run and are governed by long-established bylaws to ensure the CU stays true to its mission while honoring the voice of members. We acknowledge the complexity and differing views of this change to our member agreement. With more than 300,000 members, we recognize the tension that exists in decision-making and have seldom introduced any change that doesn’t draw criticism, including when we introduced a $15 sustainable wage for our employees. To learn more about our governance, visit https://www.uwcu.org/about-us/corporate-governance which details our bylaws and how to contact the President, and Board of Directors.

Why would UWCU take this action when I’ve heard that a only a small number of credit unions across the country have done so?
Several commenters on social media have referenced a CFPB report that collected data on the prevalence of arbitration agreements from nearly a decade ago, in 2013. The landscape has changed dramatically in the past few years with exponential increases in class action lawsuits against credit unions. Many of these focus on the remaining large credit unions known nationally to not have arbitration processes in place. It’s unsustainable for our institution to be one of a declining number of large credit unions to draw the focus from potentially frivolous class action lawsuits.

How does UW Credit Union keep in touch with members?
We have governance processes in place to monitor the operations of the credit union and provide the board of directors continuous insight into how membership is receiving and reacting to how decisions are made. The board monitors member sentiment through regular monthly, ongoing Member Satisfaction survey results. Additionally, UWCU’s President and CEO regularly includes his email address in member communications – including at annual member meeting and each annual report. Member comments and questions are shared with the board of directors on a regular basis. The governance section of the website presents options for members to share suggestions and concerns with the board of directors, and board policy requires that the full board review correspondence from members addressed to the board.

Why were members notified of this change via postal mail?
We took care to provide a prominent notice to members and a verifiable response method to best document their selection. Letters that notified all UWCU members of the change in account terms related to arbitration were mailed on May 3, 2021 and provided members with the option to accept, or opt out of, the change no later than June 2, 2021.

Why doesn’t UWCU leave the membership agreement open ended to opt out anytime?
We do want to give members the opportunity to opt out of the change in terms if they believe it is right for them. However, the protection against class action lawsuits the credit union is trying to achieve will not be effective unless the change eventually goes into effect. Delaying the change is counter to the conclusions the board of directors has taken.

Is it a bad move for members to not opt out?
This is a decision each member needs to make for themselves. Many members may choose to not opt out having previous negative experience with the results of being a class member in a lawsuit, or desire for the credit union as a whole to be protected from large legal bills to defend such suits. In addition, in many cases arbitration leads to timelier dispute resolution for individual consumers.

What are new members’ options when joining the credit union after this notice is sent?
The arbitration agreement is included in the Members Guide to Services for all new members joining the credit union. New members also have 30 days after joining the credit union to opt out of the arbitration agreement.

Can’t a credit union just protect itself against class action lawsuits by having pro consumer business practices?
Historically that was true, and UW Credit Union has been a leader in pursuing ethical and fair practices. For example, the credit union has very consumer friendly overdraft practices. Today, rather than focusing on unfair practices, many of these lawsuits simply point to a single phrase in the account agreement and claim the meaning is unclear. Often firms immediately offer to settle the claims for the amount similar to what the credit union will spend in attorney fees defending it. In these types of suits a large credit union can expend substantial legal fees even if the credit union prevails.

How can I keep up-to-date on what’s going on at UW Credit Union?
We share regular, ongoing updates about the credit union through our quarterly newsletter, annual report and member meeting, news and announcements section of the website and social media platforms.

How do the annual member meetings work?
Visit our governance page to learn more about the bylaws governing our annual member meeting under Article IV: Meeting of Members and Voting. The 2021 annual member meeting was conducted in compliance with those standards and the limitations of the virtual environment in accordance with the guidance from the Department of Financial Institutions Office of Credit Unions. Four of the members in attendance at the annual meeting submitted questions related to the change in account agreement and the board chair and CEO both provided a comprehensive response to their concerns. In addition, as the meeting closed the president posted his email on the screen and invited follow-up with any additional question. None have been received since the meeting. (Update: Questions were received via email after the close of business on June 2, 2021, eight days following the annual meeting).

How does this affect my membership?
This change does not impact how you use your UW Credit Union accounts or services. If you have a legal dispute regarding any product, service or experience with UW Credit Union covered by the arbitration agreement, we will first attempt to resolve it informally. If that isn’t possible, we will use arbitration to resolve the dispute. Should a member need to bring a matter against the credit union in the future, we pick up the cost of the arbitration process so that it’s no more expensive than a court case to the member.

Where can I find my membership agreement?
The membership agreement is provided in the Members Guide to Services at account opening. It is also available online at www.uwcu.org/legal.