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« December 26, 2004 - January 1, 2005 | Main | January 9, 2005 - January 15, 2005 »

January 08, 2005

Payday Loans Risky for Borrower

The San Diego Union Tribune reports on payday loans.

On the Internet, it's not uncommon to find a payday loan costing $20 for each $100 borrowed. The late fee can be another $20 or more. Because the loans are so short term and the fees so high, the annual percentage rate (APR) of the finance charge can be astronomical.

January 07, 2005

Federal Reserve Reports Drop in Revolving Consumer Credit

The Federal Reserve today reported its monthly consumer credit summary which included news that revolving credit in November fell at an annual rate of 11 percent, the largest drop since the Fed began keeping records on this type of credit.

Federal Reserve Appoints New Consumer Advisory Council Members

The Federal Reserve Board on Friday named eleven new members to its Consumer Advisory Council for three-year terms and designated a new Chair and Vice Chair of the Council for 2005. The Council advises the Board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services. The Council meets three times a year in Washington, D.C.

A Limit to Online vs. Offline Sales?

Chris Anderson of Wired interviewed Amazon.com CEO Jeff Bezos. Among his comments was this answer to a question of how much of retail sales will eventually be done online:

I think online ultimately will be 10 to 15 percent of retail. The vast majority of retailing will stay in the physical world because people have acute needs, they want things now. Also, there are products, like a yard rake, where the economics of delivery don't make sense. But a 600-pound table saw is a great item to sell online because it always gets delivered. And it's expensive enough that there is enough profit in it to cover the cost of shipping. Plasma TVs, same idea.

Online Gift Card Purchases

Internet Retailer cites data from Retail Decisions that indicates that almost half of the attempts to buy gift cards online are fraudulent.

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Credit Report vs. Credit Score

Peter Lewis writes in the Seattle Times about the difference between getting a free copy of your credit report vs. having to pay to get your credit score.

The same federal law that forced credit-reporting agencies to start making credit reports available for free also required them to make credit scores available for a "fair and reasonable" fee.

A Look at Payday Loans

Robert Heady writes in the Whittier Daily News about the fees associated with payday loans.

The typical fee for a $100 two-week payday loan is $15. But when figured over a year, that's a 391-percent annual percentage rate (APR). Compare that with the typical 18 percent of a credit card. Some surveys put the cost of a payday loan closer to 1,000 percent!

MBNA Looks for Super Bowl Magic

Ted Griffith reports in Delaware Online about MBNA's plan to run a Super Bowl ad.

Buying a splashy Super Bowl ad signals a shift for MBNA, Delaware's largest private employer and the No. 3 credit card issuer in the country. The 23-year-old company is dropping its self-described "low-key" approach to marketing and replacing it with what an MBNA executive said will be a national campaign of TV, print, online and radio advertising.

Checks Share of Payments Declines

eMarketer looks at recent Federal Reserve data showing the the number of checks written has declined at 4.3 percent annual rate from 2000 to 2003.

Though the number of check payments has declined over the past few years, check payments still make up the biggest share of non-cash payments, as of 2003, at 45%.

More on Credit Scores and Card Issuers

Kenneth Harney reports in the Boston Herald on more of the story regarding credit bureau scores and card issuer reporting of credit limit information.

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January 06, 2005

Visa USA Releases Holiday Volumes

Visa USA today announced its sales volume during the recent holiday season. The top line news was spending on Visa branded cards in the US totaled $218.7 billion, a 15.7 percent increase over 2003 for the period November 1 through January 2).

Spending on Visa credit cards exceeded $110 billion, while debit spending grew to more than $90.6 billion, a 6.8 percent and 26.2 percent spike over 2003, respectively.

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Why PayPass?

Card Technology reports on why the convenience store chain Sheetz recently announced it was going to accept MasterCard's tap-and-go PayPass proximity cards at its 305 store locations: wanting to be first to market.

The article cites MasterCard test results showing that PayPass transactions are 13% faster than standard credit card transactions with average purchase amounts also up 5% with PayPass.

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Verified by Visa Uses As Phishing Bait

Internet Retailer reports on how some phishers are using Visa's Verified by Visa program as bait in phishing attacks.

Because the security program has been widely publicized by Visa, phishing scams have begun targeting Visa cardholders to encourage them to sign up for it. Fraud experts say they have seen phishing e-mail with Visa logos that request recipients to submit their credit card account information and other data, such as the 3-digit card verification numbers designed to protect against fraud in card-not-present transactions.

Washington Mutual Selects First Data for Debit Processing

First Data Corp. has announced that it has been selected by Washington Mutual to provide authorization and settlement processing for Washington Mutual's nine million card signature debit portfolio -- extending a previously announced relationship between Washington Mutual and First Data's STAR Network where STAR serves as the preferred brand and network for PIN-secured, online debit point-of-sale, and ATM processing.

Gift Cards For Sale?

Ariana Eunjung Cha writes in today's Washington Post about how some folks are using eBay for turning stolen goods into cash -- including gift cards.

Gift card fraud is one of the fastest-growing problems for merchants, according to Richard C. Hollinger, a professor of criminology at the University of Florida. The National Retail Federation, an industry group based in the District, said one of its member companies recently tracked 42 gift cards it found online and found that 22 had been stolen or purchased with stolen credit cards.

Cha goes on to report that eBay recently restricted the sale of gift cards on its site to one per seller per week with a maximum value of $500.

BlueTarp Raises $14 Million Venture Financing

Matt Wickenheiser writes in the Portland (Maine) Press about purchasing card provider BlueTarp Inc.'s recent $14 million venture capital financing.

BlueTarp's business is this: It takes over the trade-credit business for building-materials suppliers. Typically, building contractors have a credit line with a hardware store, or several stores. The stores must manage those accounts receivable.

BlueTarp has made the whole system electronic. It also organizes the purchases in such a way that contractors can track their expenses, even nailing down how much they spent on materials each day on separate jobs. BlueTarp collects a tiny percentage from each transaction.

Former Concord EFS, Bank of America and Visa USA executive Bond Isaacson recently joined BlueTarp as CEO.

MasterCard To Waive Fees on Americans Donations to Tsunami Aid Efforts

MasterCard has announced that it will waive its fees to the American Red Cross, AmeriCares, UNICEF, Save the Children and CARE USA for donations for Tsunami relief made by Americans with their MasterCard cards beginning January 7th.

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MBNA To Run Super Bowl Ad

MBNA has announced that it will be running its first national commercial advertising during the upcoming Super Bowl XXXIX telecast.

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Weak Consumer Demand for Strong Authentication

SG Cowen analyst Walter Pritchard has released the results of a recent survey of over 1,000 consumers regarding their views of security.

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Circuit City General Counsel Joins Constantine

New York Lawyer reports this morning that W. Stephen Cannon, most recently general counsel of retailer Circuit City, is joining the law firm Constantine & Partners as president and a name partner. Cannon will open a Washington, D.C., office for the 20-lawyer Constantine firm, which will adopt the name Constantine & Cannon, effective Feb. 1.

The retailer was one of the major forces behind the antitrust class action suit in the Eastern District against Visa USA, Inc., and MasterCard International Inc., in which more than 5 million merchants claimed the credit card companies acted as a monopoly. The suit, in which Constantine & Partners was lead counsel, last April resulted in a $3 billion settlement, the largest ever for an antitrust case.

January 05, 2005

Visa USA Contributes and Waives Fees for Tsunami Donations

Visa USA has announced that it is pledging a $1 million cash contribution to the American Red Cross in addition to waiving all fees for US Visa card-based donations to five globally recognized charitable organizations from January 6, 2005 through February 15, 2005.

The charities include CARE USA - Asia Quake Disaster Fund, American Red Cross - International Response Fund, Mercy Corps - Southeast Asia Tsunami Fund, Oxfam America - Tsunami Relief and Rehabilitation Fund; and Save the Children USA - Asia Earthquake/Tsunami Wave Relief Fund.

MasterCard Wins Big Debit Account From Visa

That's the headline in tomorrow's Wall St. Journal for a story by Robin Sidel and Joseph Hallinan on the decision announced earlier by Washington Mutual to move its debit card business to MasterCard.

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Racing Says Farewell to Pascarella

Ray Paulick, editor-in-chief of Bloodhorse.com, writes about the influence that Visa USA CEO Carl Pascarella has had over the sport of racing over the last decade.

Ed Seigenfeld, executive vice president of Triple Crown Productions, said Pascarella turned Visa into the most dynamic corporate sponsor in all of sports. "They know how to market their sponsorships--from the Triple Crown to the National Football League," said Seigenfeld.

"Carl's leadership is evident in how he drives his people to maximize the usage of their sponsorships. These events are not just a place to bring people and entertain them. Visa is universally recognized as the best at using their sponsorships."

Retail Decisions Announces Patent Re-Examination Decision

Retail Decisions (ReD) has announced that the US Patent and Trademark Office has stated that it will re-examine the granting of US patent 6,029,154 that is the subject of an infringement claim by CyberSource against Retail Decisions.

The USPTO’s decision is in response to a re-examination request submitted by ReD, following the discovery (by ReD) of “prior art” that pre-dates the Cybersource patent.

US Patent 6,029,154, titled "Method and system for detecting fraud in a credit card transaction over the internet", was filed by inventor John Pettitt on July 28, 1997 and issued on February 22, 2000.

MasterCard, Citigroup Pricing Arrangement

MasterCard yesterday filed an 8-K with the SEC stating that it had entered into an agreement with Citigroup to establish a pricing arrangement for transaction processing services provided by MasterCard to Citigroup affiliates outside of North America. Citigroup and its affiliates own approximately 6.0% of the common stock of MasterCard.

January 04, 2005

Instant Credit Means Instant Identity Theft

MSN Money's Bob Sullivan writes about the risks of instant credit and identity theft, calling instant credit an "equal opportunity nightmare."

"Immediacy is the enemy of accuracy,” says Marty Abrams, former executive at credit bureau Experian Corp., and now an analyst with Hunton & Williams.  “ID thieves are successful because we have a marketplace based on immediacy. We can’t move away from instant credit but it is the enemy of good authenticity.”

Paper or Plastic?

No, not cards vs. checks or supermarket bags but, rather, plastic cash. Eric Weiner writes in Slate about the migration to plastic currency that's taken place in Australia and Mexico.

Plastic money has several advantages over paper. The plastic bills absorb less moisture and are therefore less likely to transmit germs, which is a danger, albeit a rare one, with paper notes. Plastic bills can endure a lot of abuse. You can twist them, bend them, and even put them through a wash/spin cycle without doing serious damage. They last four times longer than paper bills.

Why Gift Cards Are Evil

Daniel Gross writes in Slate about gift cards.

A gift card is great. But every moment you don't use it, Wal-Mart or some other giant retailer is collecting interest on the giver's cash. When you go to redeem it, chances are you'll end up spending some of your own coin. And it probably reflects the giver's implicit criticism of your poor taste and untrustworthiness. Aren't you glad Christmas is over?

Deliver Us From Our Credit Cards

G. Jeffrey MacDonald writes in the Christian Science Monitor about faith-based financial counselers who teach spiritual principles for money management.

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