I embarked on the current discussion to point out possible legal issues involved in “stretching” the membership requirements of an insured credit union. Again, these issues have an extremely small probability; we are only addressing the issue of possibility. I view the discussion area as a method for us to learn from other reader’s expertise.
The first issue was the requirement of being within the eligible membership field in order to have NCUA insurance. Recently, there have been a few postings on joining credit unions by claiming membership in an organization and the membership in the required organization is very tenuous. I view that as a risk readers should consider avoiding. This is not in reference to organizations in which you actually complete a membership application.
The second issue involves recovering your funds, not from a credit union or bank closing, but due to employee malfeasance. There are several current court cases involving employee embezzlement. These situations are similar for banks and credit unions. However, with a credit union, an aggressive insurance company could bring the membership issue into question. When you are attempting to recover these funds you do not fall under federal insurance. See reference below. http://www.fdic.gov/consumers/consumer/information/fdiciorn.html Robberies and Other Thefts
Stolen funds may be covered by what's called a banker's blanket bond, which is a multi-purpose insurance policy a bank purchases to protect itself from fire, flood, earthquake, robbery, defalcation, embezzlement and other causes of disappearing funds. In any event, an occurrence such as a fire or bank robbery may result in a loss to the bank but should not result in a loss to the bank's customers.
If a third party somehow gains access to your account and transacts business that you would not approve of, you must contact the bank and your local law enforcement authorities, who have jurisdiction over this type of wrongdoing.