✅ Collective punishment is often used as a disciplinary measure in institutions such as schools (punishing a whole class for the actions of one known or unknown pupil), military units, prisons, psychiatric facilities, etc. The logic underlying collective punishment is weak at best, but collective punishment is definitely effective in breeding distrust and resentment within groups.
Got it? Let's take a look at the use of collective punishment at SECU in connection with risk-based lending and how it affects the SECU membership - you and me.
✅ Fraud is an interesting word. Think we all know what it means, but just for a refresher: Fraud - wrongful or criminal deception intended to result in financial or personal gain. Pretty clear, right? Are we all together on what fraud means?
1)
When a loan officer makes a loan at SECU - whether it is in
the A, B, C, D, or E risk-based lending tier - that loan officer
expects that loan to be repaid. If a loan officer makes a loan which she
doesn't believe will be repaid, then that loan officer is committing
fraud. Easy enough, right? If you make a loan that you believe will not be repaid, you are committing fraud against SECU and its' members.
2) So, every loan made at SECU is a good loan when made by the loan officer. Every loan is expected to be repaid, that includes every A, B, C, D, and E loan made.
3) Despite the fact that every SECU loan is good when made - or else the loan officer committed fraud - the SECU Board has decided, by implementing risk-based lending, to charge 50+% of all SECU borrowers higher rates in the B, C, D, E risk tiers for that good loan they just made.
Why would the Credit Union overcharge an SECU borrower for a "good when made" loan? This unjustified, pre-profiling via RBL of "certain" SECU members is purposeful, reckless discrimination... and unwarranted collective punishment!
4) Why is overcharging 50+% of all SECU members collective punishment? Lets' look at an example. Loan losses at most financial institutions are highest on unsecured loans and credit cards. So, lets assume that 1 out of 10 SECU "E"- paper borrowers default on their "good when made" unsecured loan. That would be a very high 10% default rate! 1 out of 10 of those "E" borrowers in the example didn't pay - and yes, that's bad!
But, what is far worse is that the SECU Board fully supports overcharging - without justification - the entirely innocent 9 out of 10 SECU members who did faithfully repay their "E"- paper unsecured loans. "Good when made and now good when paid!" No question, 90% of these SECU borrowers were unfairly overcharged.
5) All the credit bureaus explicitly tell lenders - the SECU Board included - that credit scores can not and do not predict which individual SECU borrowers will default on a loan. Yet with RBL, the SECU Board has chosen to actively discriminate, collectively punish, and financially harm the majority of SECU borrowing members - in the B, C, D, E tiers.
6) If you and I were being incorrectly overcharged 90% of the time at the grocery store, at the gas station, at Walmart, Target, Lowe's, Cracker Barrel or Bojangles, we would be screaming FRAUD! ... and we would be justified in our outrage!
Why do the same rules of fairness no longer apply at SECU?
