The Minnesota Twins are suing Visa and MasterCard, alleging the associations gouge fan ticket purchases when they use their credit card. Alleging unfair, uncompetitive “swipe fees” hurt small merchants, cost jobs and raise the price of everything and can run as high as 4% of a purchase, the Team asserts these fees add up fast to around $50 billion a year for the banks, with profit margins of thousands of percent. Every merchant large and small in the country has to pay these fees because Visa and MasterCard control the vast majority of the market for credit and debit cards, according to the team. The Twins had joined thousands of merchants and service companies in suing Visa and MasterCard in a class-action lawsuit. But like many other companies, they dropped out and have now filed their own suit to end the anti-competitive abuses of the credit-card industry.
The National Retail Federation and the Retail Industry Leaders Association asked an appeals court to overturn a federal judge’s approval of a controversial lawsuit settlement over Visa and MasterCard’s credit card swipe fees, saying it was negotiated by only a handful of merchants and would do nothing to bring the fees under control. Both organizations filed notices of appeal with the 2nd U.S. Circuit Court of Appeals in New York earlier this year, and followed up today with a joint brief asking the court to overturn a December 13, 2013, ruling by U.S. District Court Judge John Gleeson. The district court approved the antitrust settlement even though NRF, RILA and other opponents argued for more than a year that it failed to reform the price-fixing system under which Visa and MasterCard set fees for credit cards issued by thousand of banks. Rather than lower the fees, the card companies proposed in the settlement that they be passed along to consumers as a surcharge. Major retailers rejected the surcharge proposal, saying it was the opposite of what they had sought.
Hagens Berman is investigating potential claims against five prepaid debit card companies, including First Data Corporation, Green Dot Corporation, Account Now, Netspend Holdings and Unirush Financial Services after the Office of the Attorney General of Florida issued subpoenas challenging whether the companies misled consumers regarding hidden fees, or engaged in other deceptive practices. Prepaid debit cards, once loaded with funds, can be used to withdraw money from ATMs or purchase items, just like any other debit card. They are, however, not associated with any bank account and are instead loaded with funds in advance. Hagens Berman is interested in talking to consumers who used a prepaid debit card and feel that the company providing the card failed to disclose hidden fees or otherwise misrepresented the card’s features.
MerchantService.com merchant account services has released a new video and article on their website titled “PCI DSS Compliance Mandatory for Credit Card Merchant Accounts.” The article focuses on the required compliance to Payment Card Industry Data Security Standards (PCIDSS) for all merchant account holders, the potential penalties and fines caused by non-compliant credit card processing, and some important guidelines for meeting PCIDSS regulations. Many vendors don’t realize that owning a merchant account means abiding by the regulations set forth by the Payment Card Industry Security Standards Council, or PCISSC. Penalties ranging from $10,000 to $600,000 await those who are not in compliance with the PCIDSS regulations. Credit card processing privileges may also be suspended permanently.
Usually a solid performer, Diebold felt a 4Q/10 loss from continuing operations of ($119.9) million from the $7.9 million gained in the year ago period. Revenue was up though by 9%, posting a solid $791.0 million from 4Q/09 thanks to global orders having increased 7%, a growth of 12% since 4Q/09. Every region of the world was good to Diebold throughout the quarter with revenue growth from 3% in EMEA on the low end to 19% in Latin America. Performance was thanks to financial self-service orders in North America having grown in the recovery and a growing demand for deposit automation solutions. While Latin America and Asia are reliable markets for the Company, Europe continues to prove a challenge. Diebold is seeking to tap the market and re-engineering its infrastructure to free up more resources, after experiencing less than 3% on the Continent. Meanwhile, total operating expenses as a percentage of revenue for the quarter was 41.9%, an increase of 21.5% Y/Y, and included a net $0.3 million of restructuring charges and $9.2 million in restructuring charges thanks to U.S. workforce reduction. For the full-year 2010 operating loss was (0.1%) of revenue, down 5.6% from the year ago period while non-GAAP operating profit was 6.9%, up 0.7% year-over-year.
The Wall Street Reform and Consumer Protection Act has lead to debit card sales volume outstripping credit cards with an ever-widening gap. The Durbin Amendment to Dodd-Frank gave the Fed 9 months to decide on âreasonable and proportionateâ rates for debit card interchange. With this, Some observers are predicting that the Durbin amendment will mean the end of signature debit, arguing that signature owes its dominant market position to the higher revenues it generates for the issuer (at the retailersâ expense, claim merchant coalitions). Reduce the price gap between the two and PIN should become dominant by virtue of its lower incidence of fraud.
Option Consommateurs, a not-for-profit association dedicated to the defence and promotion of consumers’ rights, is
concerned about the adoption of the Code of Conduct for the Debit and Credit Card Industry introduced by the Finance Department in November 2009 and slated for adoption in the latest federal budget. If adopted as is, this voluntary code would give more power to merchants, to the detriment of consumers. Option Consommateurs
has stated that whenever consumers make a purchase, they must be able to freely and transparently choose their preferred payment method from among those offered by the merchant. However, the voluntary code allows merchants to require the payment method of their choice and the government should prohibit overbilling resulting from the mode of payment used, in order to permit consumers to compare competitors’ prices more easily.
Option consommateurs wants to warn consumers about certain practices
used by credit cards issuers that are likely to get them deeper into
debt, such as introductory preferential rates which skyrocket after the
initial introductory period. Options also is warning consumers of the
preferential rate only offered on certain types of transactions, such as
balance transfer and how easily lost the benefit of the introductory
rate is. In response, the organization recommends the federal government
take serious steps toward the introduction of a comprehensive
legislative structure with regard to electronic payment, including
credit cards and provincial governments regulate and monitor commercial
practices related to credit cards and information disclosure.
A new consolidated complaint combining 13 lawsuits against AZ-based
LifeLock identity-theft-prevention services claims the company
misrepresented its product, illegally sold insurance and breached
contracts. Among the components of the lawsuit is the question of
whether or not LifeLock can lawfully place fraud alerts for consumers
and has been reprimanded to advise consumers they cannot legally do so.
The agency has since stopped accepting and renewing requests to place
fraud alerts although LifeLock continued to collect monthly payments for
the alert services. LifeLock’s refusal to comply with the Fair Credit
Reporting Act (FCRA), which states only an individual can place a fraud
alert and excludes corporations such as LifeLock, is another component
of the lawsuits. Finally, LifeLock’s “$1 million
guarantee” insurance in no-way complies with Arizona Insurance Code
rules and regulations. The complaints against LifeLock include the
violation of the Arizona Consumer Fraud Act, false and misleading
advertising of an insurance product, unjust enrichment and breach of
The FTC and former MD-based AmeriDebt have signed a settlement that returns $12.7 million to consumers nationwide. Andris Pukke and his companies, AmeriDebt and DebtWorks, also agreed to return an additional $7 million to consumers as a result of class-action settlements with the defendants and related credit counseling agencies. About 287,000 AmeriDebt consumers have been mailed redress checks. Consumers who qualified for redress, a total of about 460,000 consumers, obtained a DMP from one of 11 credit counseling agencies serviced by DebtWorks between January 31, 1998 and October 7, 2004.
An Arizona consumer has filed a lawsuit claiming fraud against ID protection service LifeLock. The lawsuit alleges that the company defrauds customers by offering services it cannot legally perform, and by touting a $1 million guarantee that the suit alleges is wildly misleading. According to the suit, LifeLock’s “proven solution” consists of illegally placing and renewing fraud alerts under consumers’ names with credit bureaus which is banned under FCRA. According to the complaint, one of LifeLock’s founders, Robert Maynard, has been investigated and prosecuted by the FTC and the State of Arizona for fraud in connection with his previous “credit repair” enterprise.
VA-based transaction communication specialist TNS reported second quarter revenue of $79.4 million, an 9.2% increase over 2Q/06. Second quarter GAAP net income was $0.5 million versus a second quarter 2006 GAAP net loss of $0.9 million. Revenue from the International Services Division increased 25.1% to $32.4 million. Revenue from the Financial Services Division increased 17.3% to $10.1 million. Revenue from the Telecommunication Services Division decreased 3.7% to $16.1 million. Revenue from the POS Division decreased 3.1% to $20.8 million on 1.51 billion transactions. For the third quarter, TNS anticipates total revenue growth of 11-15% to $81.0-$84.0 million. For more information on TNS’ second quarter performance visit CardData ([www.carddata.com]).