The Patelco (Potemkin) Village

As San Francisco-based Patelco Credit Union Members are nearing the end of Day 10 of the ongoing lockout of their personal accounts, I wanted to highlight some of the trending Member comments on the few Patelco social media posts, as well as other possible reasons why this is looking less and less like a ransomware attack.

First of all, the credit union’s posts updating Members on the lockout seemed canned and almost as if they were written by AI:

One Member noted the glaring difference between the sycophantic comments on Patelco’s canned Facebook posts versus the skeptical comments on Twitter, the program generated on the X platform. I’ve noticed too that the commenters on Facebook seem to show some kind of empathy, concern and thankfulness for the updates whereas on the other aforementioned platform, Members zero in on the repetitive language, the lack of any real information and the calculated response-timing of each tweet.

The general consensus from Members commenting on all the social media platforms Patelco has taken to (curating responsive messages using Twitter on the X platform, uploading carefully cropped images on Instagram and posting on Facebook) to update Members, is the concern that Member information may be loose somewhere on the Dark Web. One Member on Instagram thanked Patelco for ensuring the safety of his money, but he seemed more concerned about his identity and personal information getting out there for anyone to use.

Another Member used the Twitter program on the X platform to share her frustration. She paid her mortgage directly on her lender’s sight but then found out from her mortgage company Patelco had actually sent out the original payment as scheduled, even though 10 days ago when the outage was first discovered, Patelco said they would not be able to confirm auto-pays from Member accounts. Due to this original message, this Member panicked and essentially paid her mortgage twice, potentially causing an overdraft in her account.

This was the last message emailed to all 500,000 Members. It was sent on July 7 as of the publishing of this blog post:

Many Members wonder why Erin Mendez, the CEO and President of Patelco hasn’t bothered to make a formal statement on Patelco’s YouTube channel. They feel a personal message from her would relieve some of their anxiety and concerns as to the fact that they’ve been locked out of their accounts for 10 days, and counting.

Other Members are viewing the open Patelco Branches through a skeptical lens and see them as operating as nothing more than a sort of “Potemkin Village.” There’s no real substance to the interaction with the Patelco tellers. Patelco tellers and representatives still cannot see if Members accounts are overdrawn and they still cannot access any Member information online. The tellers exist solely for one purpose: to act as human ATM machines. They simply ask for a Member’s debit card and confirm that they are actually Patelco Members then hand them the money. Members have overheard Patelco tellers and employees expressing concern about not getting their bonuses this year.

Since the July 7 email from Erin Mendez, Members have been stonewalled. There’s been no social media updates and no new emails.

It’s during this time that Members start to have a sense of deja vu, as if they’ve been here before. In 2020 when the United States was locked out of its ability to go to work or school or gather, the media branded the phrase “two weeks to flatten the curve” in order to buy enough time to sort of reset what a re-opening of the country might look like. Some are wondering if the same sort of reset is happening with Patelco. The difference here is there is no branded time frame that indicates when that opening will be.

Patelco Members are completely in the dark as to what standing their accounts are in. However, they are finding that for the most part their debit purchases at merchants are being honored and going through. Their rents, utilities, mortgages and various other bills are being paid. In fact, Patelco Credit Union has even said “If you’ve incurred any late fees from your debtors or overdraft fees from us as a result of this we will cover your debtors fees and waive our overdraft fees.”

This also reminds many Members of the time when they couldn’t go to work in 2020 due to being locked out of their jobs; but they were given a specific amount in the form of a stimulus payment, through the Unemployment Department to cover their time off from work. In the case of 2020 it was because of a virus. In the case of Patelco, a cash allotment of $500 per day is allowed, but Patelco’s reason in 2024 is because of cyber terrorism.

Some of the speculation is that Patelco will shut down their operations soon, citing an inability to patch up breaches and unable to come to some sort of negotiation with the cyber terrorists. However, the speculation continues in that they will open up as a smaller, more tightly secured operation greatly diminishing their footprint and costs of operation. The speculation is that any former Member will be welcome to join Patelco Credit Union again and will be issued all new account numbers, debit card numbers and new security measures will be in place under this new operation. This is one speculation.

Another speculation is that they will just open up normally and go back to business as usual.

A third speculation is that they are flooding Member accounts with money, spending down their assets and reserves by paying toward Member’s debts (even if Members don’t have enough in their account to cover it), allowing Members to access cash through an ATM or teller (even if Members don’t have enough in their accounts to cover the cash withdrawals), all so that Patelco can eventually file Chapter 7 and close operations altogether.

Why would they do that? What is not up for speculation and what is fact is that Patelco Credit Union has had to field a myriad of lawsuits over the years: discrimination, class action lawsuits from employees, lawsuits from employee whistleblowers and now this latest slew of lawsuits come from Members themselves, claiming that Patelco has unlawfully locked Members out of their own accounts. If Patelco were to file Chapter 7 they would be exempt from paying out any damages or even settling any of the lawsuits they find themselves embroiled in. In order to file Chapter 7, you have to be insolvent. According to their latest financial report, Patelco claimed it was worth $9 billion. That $9 billion would go to employee paychecks, operations, board members, and also to its Members for the reasons I’ve mentioned above. Once that money is gone, they file Chapter 7 and the company folds for good. This speculation seems plausible because it’s what companies do all the time when their lawsuits become too big to pay off, even through out of court settlements.

A fourth speculation is that perhaps Patelco Credit Union is under investigation and all operations had to cease and desist while an appointed agency investigates. But this wouldn’t explain why Members were still able to access cash and have their debts and loans covered.

A fifth speculation is that A Too Big To Fail Bank has launched a cyber attack against Patelco Credit Union for the sole purpose of putting it out of business and Patelco was simply unprepared and didn’t have sophisticated enough cyber security protocols in place to keep running the operation while they were investigating the cybersecurity issue. If that were the case, it must be the nicest and most thoughtful cyber attack in history because all Patelco Members can still access cash using their debit cards, make purchases on their debit and credit cards and all their debtors are still getting paid.

The biggest complaint from Members is the lack of coverage on this bizarre and extended lockout. Although some Bay Area news agencies are mimicking the talking points Patelco has posted on social media sites, there’s been no real investigation into the issue. Troubling too that Patelco Credit Union has not mentioned the name of the firm that is apparently doing the investigating into the alleged cyber terrorism event that has locked Members out of their own accounts for 10 days.

It doesn’t help that the only news that the media is covering regarding anything to do with San Francisco has nothing to do with the San Francisco based credit union and its bizarre and perpy behavior toward its Members, but instead the news is focusing on two San Franciscans who seem to be at the front and center of the latest political show: Kamala Harris and Gavin Newsom. You would think that as they stump for President Biden they would at least mention their concern for their fellow San Franciscans who have been locked out of their bank accounts for 10 days, even if it is a perfunctory pre-written statement. And, when these two San Franciscans stump, why aren’t reporters asking them for a comment on the San Francisco-based credit union that has locked its Members out of their bank accounts for 10 days?

Any reporter worth their salt in this clown show would at least say something like “Given the fact that this breach, which has locked Members out of their accounts for over a week has occurred in your hometown, how will you keep the country and all its financial institutions safe as well, if nominated as President?”

Perhaps being locked out of our bank accounts and just blindly believing that our financial institutions, or the government that possibly serves them, will cover all our expenses, pay our debts and give us an allotment of cash per day is the new normal some people were talking about.

Or, perhaps this is just a one-off situation and as some Members have said, Patelco was just caught with their pants down.

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