OFT & FEES

The Office of Fair Trading has ruled that credit card late fees and over-limit fees far exceed the actual damage done to an issuer when a cardholder defaults. The OFT today issued letters to eight major credit card companies notifying them that the fees are excessive and has given them three months to lower the fees or provide more information to justify the fees. Credit card late fees typically range from GBP20 to GBP25. Current British law restricts the damages that can be awarded to compensate for loss suffered as a result of a breach of contract. The breach must be an effective cause of the loss. The innocent party is entitled to be compensated for certain types of loss that were reasonably foreseeable at the time that the contract was made, but is not entitled to more. The OFT has powers to take enforcement action in the courts if necessary to protect consumers.

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Fair Isaac to Hold InterACT Europe 05 in Budapest

Fair Isaac is bringing its annual “InterACT Europe” conference to
Budapest in late October. Pat Cox, former president of the European
Parliament, will deliver the keynote address. “InterACT” will coincide
with a special “European Summit” on the future of the EU in the wake of
the recent French and Dutch rejection of the proposed EU constitution,
and Cox will provide unique insights into the implications for the
economy and businesses in the region. “InterACT Europe” will feature more
than 50 presentations, including case studies, research reports and
industry panels.

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Certegy Profits Rise Nearly 20% in Q2

Certegy posted second quarter net income from continuing operations of $25.4 million, a 19.3% increase year-over-year. Revenue increased 8.0% to $276.0 million and Card Services increased 13.2%, while Check Services increased 1.1%. Card Services generated revenue of $164.1 million driven by growth in institution merchant processing, e-payments, card transactions, new customer signings and increased adoption of card loyalty programs. International card revenue increased 30.6%, primarily due to new customer signings, growth within existing customers, higher software maintenance and support, the prior year CariCard acquisition and favorable currency rates versus the 2004 quarter. Check Services generated revenue of $111.9 million in the second quarter. In June, the Company completed the sale of a majority of its merchant acquiring business, realizing an after-tax gain of $27.3 million. For complete details on Certegy’s second quarter performance, visit CardData (www.carddata.com).

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TNB Migrates 22K Debit Cards to STAR Network

Dallas-base TNB Card Services has finished converting the first of five credit unions to migrate to its new “STAR Network” platform, announced May 31, converting a total of 22,000 debit cards. The five credit unions are Jersey Shore FCU, IBM Texas Employees FCU, 1st University CU; BP FCU and Texas Industries Employees CU and range in size from 4,000 to 32,000 members, with assets from $12 million to $367 million. The STAR Network offers PIN-secured debit acceptance at 1.6 million ATM and retail locations coast-to-coast, including nearly three-fourths of all the ATM terminals in the U.S. TNB Card Services provides full-service credit and debit card processing for more than 450 financial institutions and manages more than 1.6 million cards

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Wireless Cameras Plague ATM Users in California

The California Bankers Association has issued a warning to consumers about a new ATM scam involving the use of a wireless camera affixed to the front of an ATM machine, often trying to disguise it as part of the card-scanning equipment found at most ATMs. The camera records all of the information entered to access the card and is transmitted to a recording device. Consumers who find anything unusual affixed to the card scanning area should find another ATM to use and should notify the owner of the ATM or law enforcement immediately. The California Bankers Association is one of the largest state banking trade associations in the country, serving 300 of California’s commercial, industrial and community banks and savings associations.

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MAY CARD DEBT

Credit card balances inched higher in May to a record A$30.8 billion, a 13.2% gain over year-ago levels. Gross dollar volume on credit cards posted a strong sequential gain of 8.9%, and a year-over-year increase of 10.6%. Credit card volume as been largely sluggish over the past year, impacted by new rules that give merchants the right to pass on their card fees directly to consumers. Credit card balances at the end of April were A$30.6 billion, compared to A$30.3 billion in March, and A$27.2 billion for May 2004. Gross dollar volume on credit card and charge cards in May of A$14.2 billion was A$1.2 billion higher than the prior month, and up more than A$1.4 billion from one-year ago. Based on data from the Reserve Bank of Australia, consumers charged A$13.2 billion in purchases on credit/charge cards during May, compared to A$11.9 billion one-year ago. Card credit limits reached A$85.5 billion at the end of May, compared to A$75.6 billion for May 2004. There are currently 12.0 million credit card and charge card accounts in Australia, compared to 11.3 million one-year ago.

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Reward Card Penetration to Hit 85% by 2009

A new report by MarketResearch.com projects that by 2009, 85% of consumer credit cards in circulation will offer some sort of reward for its usage. The report speculates that younger cardholders will be more likely to use and/or convert to rewards card programs, because they have grown into expecting such programs; the flipside is that older consumers may be less likely to do so. MarketResearch.com publishes research reports on a wide range of consumer industries.

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Elite Toolbar Spyware Hijacks Credit Card Info

The German spyware lab at SaferSurf has issued a report that says the “Elite Toolbar” spyware, which pretends to be a search bar for a search engine, not only sends the postal and email addresses of unsuspecting users to third parties but it is also involved in credit card theft. The EliteBar is a browser hijacker that inserts itself into Internet Explorer, pretending to be a search bar for a search engine. Elite also changes the start page of Internet Explorer, slows the internet connection and makes difficult or even prevents access to encrypted sites. The greatest security risk of Spyware EliteBar stems from its “autofill” option that offers to automatically fill out entry fields on websites, such as address and credit card forms. When using SaferSurf.com all websites as well as files and email that the user downloads over the Internet, have already been screened on SaferSurf servers.

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Chase Ranks #1 in Cross-Selling Campaigns

A new report found that Chase ranked number one among the top five cross-selling direct mail list for both mortgage and banking product categories. Chicago-based Comperemedia’s data shows that the top five mortgage companies heavily using direct mail for cross-selling also include Capital One Bank, MBNA, Citibank and Wells Fargo. For banking, Bank of America, Capital One Bank, Wachovia/First Union and Union Bank of California join Chase in the top five. Compremedia says Wells Fargo has credited part of their current revenue success to cross-selling activities. A staggering 80% of their recent growth stemmed from selling more products to existing customers.

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Providian’s Monthly Metrics Strong Again

Providian’s managed charge-off ratio has plunged more than 450 basis points and its managed delinquency rate has dropped 160 basis points compared to one-year ago. During June, Providian’s charge-off rate dipped below 8% and delinquency declined for the eighth consecutive month. Providian’s managed charge-off ratio now stands at 7.97%, compared to 8.47% on May. One-year ago managed charge-offs were 12.53%. Delinquency, on a managed basis, dropped to 4.84% in June from 4.86% in the prior month and 6.44% for June 2004. Providian recently announced plans to merge with Seattle-based Washington Mutual for $6.45 billion. The issuer reported last week that managed loans outstanding as of June 30th, were $18.6 billion. For complete details on Providian’s latest performance, visit CardData ([www.carddata.com][1]). (CF Library 6/6/05)

PROVIDIAN MONTHLY MANAGED METRICS
Month Charge-Offs Delinquency
Jan 05 8.54% 5.61%
Feb 05 8.12% 5.50%
Mar 05 8.62% 5.16%
Apr 05 8.49% 4.96%
May 05 8.47% 4.86%
Jun 05 7.97% 4.84%
Source: CardData(R) (www.carddata.com)

[1]: http://www.carddata.com

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