OFT Challenges MBNA’s Default Charges

MBNA has been notified by the U.K.’s Office of Fair Trading that the OFT intends to challenge MBNA’s default charges, such as late, over-limit and returned check fees. The OFT began an industry wide investigation into alleged unfair contract terms in March after Parliament’s “Treasury Select Committee” asked credit card issuers to stop overcharging and misleading customers. The “Unfair Terms in Consumer Contracts Regulations 1999” render unenforceable credit agreement terms relating to default charges to the extent they are disproportionately high in relation to their actual costs to the card issuer. The OFT made inquiry during March to eight card issuers seeking information on revenue generated from penalties imposed on cardholders. Other US-based issuers operating in the UK have not confirmed an OFT challenge. MBNA says it is possible that future default charges revenue could decline and that refunds may be ordered if the OFT prevails. MBNA said it is still assessing the situation.

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Card Fraud Squad Saves GBP 65 Million

The card fraud-busting police squad has received GBP 3 million in new funding to continue its operations. Over the past two years, the “Dedicated Cheque and Plastic Crime Unit” has made 171 arrests and recovered more than 36,000 stolen cards in Britain. The work of the DCPCU has resulted in 52 convictions to-date. The Association for Payment Clearing Services says the fraud fighters have produced estimated fraud savings of GBP 65 million from stolen cards and card details. The unit was set up two years ago to target the organized gangs who are responsible for the lion’s share of the UK’s card fraud losses, amounting to GBP 402 million in 2003. The unit comprises officers seconded from the City of London and Metropolitan Police forces, supplemented by banking intelligence and administrative support supplied by the banking industry.

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Order Express Deploys VeriFone Omni 3750

Marabatio, Michoacan-based money transfer specialist, Order Express, has deployed VeriFone’s “Omni 3750” payment terminals in more
than 700 of its own and agent offices throughout Mexico and the USA. Last year, Order Express completed 1.5 million money transfer transactions. The company is currently distributing more than 50,000 magnetic stripe cards to customers, allowing them to set up and transfer any amount of funds quickly. Order Express utilizes a money transfer application developed for it by IDEA Inc. Order Express says it is able to use the advanced communications capabilities of the “Omni 3750” to utilize DSL and Wi-Fi for broadband access, as well as traditional dial-up.

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ADMS Picks up 8,000 Merchants at No Cost

Memphis-based American Merchant Data Service says the recent deal to add 8,000 merchants to its portfolio came at no cost since it involved an exchange of products and services. With the addition of approximately 8,000 merchants to its merchant portfolio, AMDS will add approximately 12 million transactions, which represent over $180 million of merchant volume annually.

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CTFS Options MasterCard Balances Up 24%

Canadian Tire Financial Services reported that its net managed credit card receivables increased 27% year-over-year to $2.5 billion, driven by a 24% increase in “Options MasterCard” average balances to $1,384. The “Canadian Tire Options MasterCard” currently makes up 96% of CTFS’ credit card portfolio. During the quarter, CTFS partnered with Bank of Montreal to launch the “Canadian Tire Commercial Link MasterCard” for business customers in the third quarter. The card will replace the existing commercial card that is held by more than 50,000 active Canadian Tire business customers. CTFS says estimates that its credit card portfolio will hit $2.8 billion by year end. For complete details on CTFS’ latest performance visit CardData (www.carddata.com).

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Credit Unions Grow After Unloading Card Portfolios

OR-based AssetExchange has released a study based on information filed with the National Credit Union Administration showing that credit unions that sold their credit card portfolios in 2001 or 2002 reported higher growth in both membership and loans-per-member than credit unions that did not sell their portfolios. According to the report average credit union membership grew about 8% from December 2000 to December 2003 among credit unions that sold their card portfolios, versus about 4.5% among credit unions that did not sell. Additionally, average dollars of credit union loans-per-member grew about 24% among sellers versus about 17% among non-sellers. Loans-per-member for sellers increased to about 30% if credit card loans on the outsourced credit card were included. The study analyzed approximately 2,400 credit unions that held credit card portfolios of over $1 million in 2000.

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VISA and Lucky Mag Launch a Wallet Weigh-In

VISA USA and Lucky Magazine have launched a national, month-long “Wallet Weigh-In” sweepstakes with a grand prize of a $2,000 VISA prepaid card, and ten $500 VISA prepaid card first prizes. With an increasing focus on “less is more” in today’s fashion trends, VISA USA and Lucky Magazine are encouraging people to share their personal stories and need for a wallet makeover.

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CyberSource Files a Lawsuit of ReD’s eBitGuard

CyberSource Corporation has filed a patent infringement lawsuit against Retail Decisions. CyberSource alleges that Retail Decisions’ “eBitGuard” product uses technology covered by its patent for “Method and System for Detecting Fraud in a Credit Card Transaction Over the Internet.” CyberSource says its application for the patent was filed in July 1997 and the patent was issued in February 2000. Retail Decisions says in the first seven months of this year “ebitGuard” accounted for approximately 3% of ReD’s group turnover and considerably less of its operating profit. ReD say it is investigating CyberSource’s claim, but says it is not aware of any patent infringement and believes the claim to be without foundation. If this proves to be the case upon further investigation, ReD says it will defend its position vigorously.

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Hudson’s Bay Selects the Rewards Network

Chicago-based Rewards Network has partnered with Hudson’s Bay Company to provide the “Hbc Rewards Dining & Hotels Program”. Members can now earn bonus points on purchases at participating restaurants and hotels. Bonus points can be redeemed for merchandise from the Hbc Rewards Cataloque and are in addition to already special low rates, competitive with leading online travel sites.

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MBNA Blasted for Promoting Credit Counseling Fee Caps

A national consumer advocacy group has called MBNA a hypocrite for publicly endorsing efforts by a number of state policymakers to place caps on the fees credit counseling agencies charge. Consumers for Responsible Credit Solutions says MBNA receives a sizeable portion of its own profits from high over-the-limit and late payment fees, which are far less reasonable, and in most cases, far more burdensome for consumers than credit counseling fees. CRCS says that in many cases, credit card fees are a significant share of the debt burden driving people to seek credit counseling in the first place. The group says that establishing such caps could backfire and hurt the very consumers they are intended to help. A recent CRCS report found that although fee caps are proposed as a pro-consumer measure, they really work to strengthen creditor control of the industry and work against the interests of consumers. Lawmakers in a number of states have proposed fee caps on credit counseling services, some as low as $20 for an initial set-up fee and no more than $20 per month to provide debt management services.

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