Appendix to IRCO Community Federal Credit Union Bylaws
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Article II. Qualifications for Membership
Section 5. Member in good standing. A member in good standing retains all their rights and privileges in the credit union. A member not in good standing may be subject to a policy that limits credit union services. A member not in good standing is one who has engaged in any of the conduct in Article XIV, Section 3 related to for-cause termination of membership. In the event of a suspension of service, the member will be notified of what accounts or services have been discontinued. Subject to Article XIV and any applicable limitation of services policy approved by the board, members not in good standing retain their right to attend, participate, and vote at the annual and special meetings of the members and maintain a share account.
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Article XIV. Expulsion and Withdrawal
Section 1. Expulsion procedure. A credit union may expel a member in one of three ways. The first way is through a special meeting. Under this option, a credit union may: call a special
meeting of the members, provide the member the opportunity to be heard, and obtain a twothirds vote of the members present at the special meeting. The second way to expel a member is under a nonparticipation policy given to each member that follows the requirements found in the Act. The third way to expel a member is by a two-thirds vote of a quorum of the directors of the credit union for cause. A credit union can only expel a member through a vote of the directors of the credit union if it follows the policy for expulsion in section 2.
Section 2. A credit union’s directors may vote to expel a member for cause only if the credit union has provided, in written or electronic form, if the member has elected to receive electronic communications from the credit union, a copy of this Article to each member of the credit union. The communication of the policy, along with all notices required under this section, must be legible, written in plain language, and reasonably understandable by ordinary members.
If a member will be subject to expulsion, the member shall be notified of the expulsion, along with the reason for such expulsion. The notice must include sufficient detail for the member to understand the grounds for expulsion and cannot include only conclusory statements regarding the reason for the member’s expulsion. The notice must also tell the member that any complaints related to their potential expulsion should be submitted to the NCUA’s website. The FCU must maintain a copy of the provided notice for its records. The notice must clearly state the member’s right to request a hearing, and if a hearing is not requested membership will automatically terminate after 60 calendar days. The notice shall be provided in person, by mail to the member’s address, or, if the member has elected to receive electronic communications from the credit union, may be provided electronically.
A member shall have 60 calendar days from the date of receipt of a notification to request a hearing from the board of directors of credit union. A member is not entitled to attend the hearing in person, but the member must be provided a meaningful opportunity to orally present their case to the FCU board. The member may choose to provide a written submission to the Board instead of a hearing with oral statements. If a member does not request a hearing, the member shall be expelled after the end of the 60-day period after receipt of the notice. If a member requests a hearing, the board of directors must provide the member with a hearing. At the hearing, the board of directors may not raise any rationale or reason for expulsion that is not explicitly included in the notice to the member.
After the hearing, the board of directors of the credit union must hold a vote within 30 calendar days on expelling the member. If a member is expelled, either through the expiration of the 60-day period or a vote to expel the member after a hearing, notice of the expulsion must be provided to the member in person, by mail to the member’s address, in written form or, if the member has elected to receive electronic communications from the credit union, may be provided electronically. The notice must provide information on the effect of the expulsion, including information related to account access and any deductions by the credit union related to amounts due. The notice must also tell the member that any complaints related to their potential expulsion should be submitted to the NCUA’s website. The notice must also state that the member has an opportunity to request reinstatement by either a majority vote of a quorum of the directors of the credit union or a majority vote of the members of the credit union present at a special meeting.
A member expelled under this authority must be given an opportunity to request reinstatement of membership and may be reinstated by either a majority vote of a quorum of the directors of the credit union or a majority vote of the members of the credit union present at a special meeting. An FCU is only required to hold a board vote or special meeting in response to a member’s first reinstatement request following expulsion. FCUs are required to maintain records related to any member expelled through a vote of the directors of the credit union for five years.
Section 3. The term cause in this Article means (A) a substantial or repeated violation of the membership agreement of the credit union; (B) a substantial or repeated disruption, including dangerous or abusive behavior, to the operations of a credit union, as defined below; or (C) fraud, attempted fraud, or other illegal conduct that a member has been convicted of in relation to the credit union, including the credit union’s employees conducting business on behalf of the credit union.
If the FCU is considering expulsion for a member due to repeated non-substantial violations of the membership agreement or repeated disruptions to the credit union’s operations, the credit union must provide written notice to the member at least one time prior to the notice of expulsion, and the violation or conduct must be repeated after having been notified of the violation.
The written notice must state the exact nature of the violation or conduct and that if the violation or conduct occurs again the member may be expelled from the credit union. Dangerous or abusive behavior includes: (1) Violence, intimidation, physical threats, harassment, or physical or verbal abuse of officials or employees of the credit union, members, or agents of the credit union. This includes actions while on credit union premises and through use of telephone, mail, email, or other electronic method; (2) Behavior that causes or threatens damage to credit union property; or (3) Unauthorized use or access of credit union property. Expressions of frustration with the credit union or its employees through elevated volume and tone; expressions of intent to seek lawful recourse, regardless of perceived merit; or repeated interactions with credit union employees is insufficient to constitute dangerous or abusive behavior.
Section 4. Expulsion or withdrawal does not relieve a member of any liability to the credit union. The credit union will pay all of the member’s shares upon their expulsion or withdrawal less any amounts due to this credit union.
Section 5. An expulsion of a member pursuant to section 2 shall be done individually, on a case by-case basis, and neither the NCUA Board nor any credit union may expel a class of members.
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Official NCUA Commentary – Federal Credit Union Bylaws
Article II. Qualifications for Membership
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(iii) Violent, belligerent, disruptive, or abusive members: Many credit unions have confronted the issue of handling a violent, belligerent, disruptive, or abusive individual. Doing so is not a simple matter insofar as it requires the credit union to balance the need to preserve the safety of individual staff, other members, and the integrity of the workplace, on one hand, with the rights of the affected member on the other. In accordance with the Act and applicable legal interpretations, there is a reasonably wide range within which FCUs may fashion a policy that works in their case.
Thus, an individual who has become violent, belligerent, disruptive, or abusive may be prohibited from entering the premises or making telephone contact with the credit union, and the individual may be severely restricted in terms of eligibility for products or services. So long as the individual is not barred from exercising the right to vote at annual meetings and is allowed to maintain a regular share account, the FCU may fashion and implement a policy that is reasonably designed to preserve the safety of its employees and the integrity of the workplace. The policy need not be identical nor applied uniformly in all cases; there is room for flexibility and a customized approach to fit the particular circumstances. In fact, the NCUA anticipates that in some circumstances, such as violence or a credible threat of violence against another member or credit union staff in the FCU or its surrounding property, an FCU may take immediate action to restrict most, if not all, services to the member. This may occur along a parallel track as the credit union begins the process of expelling the member under Article XIV. In other situations, such as a member who frequently writes checks with insufficient funds, the FCU may attempt to resolve the matter with the member before limiting check writing services. Once a limitation of services policy is adopted or revised, members must receive notice. The FCU should disclose the policy to new members when they join and notify existing members of the policy at least 30 days before it becomes effective. The credit union’s board has the option to adopt the optional amendment addressing members in good standing.
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Article XIV. Expulsion and Withdrawal
As noted in the commentary to Article II, there is a fairly wide range of measures available to the credit union in responding to abusive or unreasonably disruptive members. A credit union can limit services under Article II for a member not in good standing. A credit union may also expel the member for cause after two-thirds vote of the credit union’s directors. Dangerous and abusive behavior is considered any violent, belligerent, unreasonably disruptive, or abusive behavior. Examples of dangerous and abusive conduct include, but are not limited to, a member threatening physical harm to employees, a member repeatedly purchasing gifts for or asking tellers on dates, a member repeatedly cursing at employees, and a member threatening to follow a loan officer home for a denying loan.
A credit union must provide notice to the member of the expulsion. The notice must include the reason for the expulsion. The notice must be specific and not just include conclusory statements regarding the reason for the member’s expulsion. For example, a general statement that the member’s behavior has been deemed abusive and the member is being subject to expulsion procedures would generally be insufficient as an explanation. A credit union is prohibited from expelling a class of members under this provision. That would include a board acting to remove all delinquent members or class of delinquent members. If a special meeting of the members is called to expel the member, only in-person voting is permitted in conjunction with the special meeting, so that the affected member has an opportunity to present their case and respond to the credit union’s concerns. However, an in-person meeting is not required if a member is expelled by a two-thirds vote of the board of directors.
