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InfoSight Highlight – Service Denial and Expulsion

Mon, Aug 3, 2015

Columbia, Maryland

The funds that a credit union holds belong to its members. When a particular member causes the credit union to suffer a loss, that loss is borne by all members of the credit union. In light of this, some credit unions implement either a "member credit denial" policy or a "member expulsion" policy to deal with members who are indebted to the credit union and who cannot, or will not, repay their outstanding obligations. Another common issue is abusive or threatening members. In cases like this, many credit unions choose to adopt a service denial policy as a means of addressing the problem member.

In conjunction with these policies, the credit union may consider implementing a membership denial policy that denies a former member who has caused the credit union a loss and who either has not repaid that loss or is not in the process of repaying that loss, the privilege of re-obtaining membership at the credit union.

Definitions:

A "member credit denial" policy simply denies future credit to any member who has caused the credit union a loss and who either has not repaid that loss or is not in the process of repaying that loss. The implementation of a credit denial policy is justified on the basis that any member who has caused the credit union a loss is not entitled to any future credit until that member has either repaid that loss or is in the process of repaying that loss.

A "member expulsion" policy denies a member the privilege of continued membership at the credit union. This applies to a member who has caused the credit union a loss and who either has not repaid that loss or is not in the process of repaying that loss. The implementation of a member expulsion policy is justified on the basis that any member who has caused the credit union a loss, and who either has not repaid that loss or is not in the process of repaying that loss, is not entitled to retain his or her membership at the credit union.

service denial policy is a policy that simply denies certain member privileges or services (i.e. checking account, inside lobby transactions, etc.) to those members who are abusive or threatening in some fashion.

For additional information, click here for the topic.

Review the information today to help your credit union remain in compliance.