The Federal Trade Commission said Wednesday it reached a settlement of a complaint against a San Diego-based company in regard to the marketing of credit card loss protection and other credit-related goods or services. The complaint against Membership Services, Inc. was filed as part of the FTC’s “Operation Ditch the Pitch.” In pitching advance-fee credit cards, the FTC says the defendants allegedly misled consumers by representing that by purchasing their service, they would receive a low-interest VISA or MasterCard credit card. They also allegedly represented to these consumers that they were affiliated with their credit card issuers when this was not the case. The complaint also charged the defendants with misrepresenting that consumers would be held fully liable for all unauthorized charges made to their credit card accounts if they did not buy the “protection” services offered. The individual defendant is to pay restitution in the amount of $30,000, and the corporate defendant is to pay approximately $50,000.Details
Providian has selected the Genalytics “Predictive Suite” for advanced marketing decision support and risk management software to improve the accuracy of promoting products, selecting prospects, and targeting offers. The Genalytics Predictive Suite helps firms like Providian build predictive models designed to improve the accuracy of promoting products, selecting prospects, and targeting offers. Genalytics is a supplier of predictive intelligence software that helps marketers and data analysts increase customer profitability and better manage risk. Providian Financial ([www.providian.com]) is a leading provider of credit cards to Middle American customers throughout the U.S. By combining experience, analysis, and technology, Providian seeks to build long-lasting relationships with its customers by providing products and services that meet their evolving financial needs.
The Office of the Superintendent of Financial Institutions has approved the opening of Sears Canada Bank. According to this week’s CardFlash International (www.cardflashinternational.com), current “Sears Card” and “Sears MasterCard” holders will receive an information package regarding their new issuer during the first quarter. Sears Canada submitted its application to the OSFI for a federally regulated bank in July. The sale of the U.S. Sears credit card portfolio was the key incentive for establishing the bank. The company says the establishment of a bank will, among other things, facilitate the offering of a wide variety of innovative MasterCard products to customers. The “Sears Card” represents the single largest credit card franchise in Canada. Last year, the company introduced the “Sears MasterCard.” First rolled out in Ontario, the card has been introduced in British Columbia and Alberta. Sears Canada says a bank will bring greater regulatory certainty and harmonization across Sears Canada’s national financial services operations.Details
Laurentian Bank unveiled a new rewards program for its “VISA Gold” credit card offering customized and extraordinary experiences. The new “Passport” rewards program is subdivided into four main categories: “Travel Chic,” “Outdoor Passions,” “Techno Fun” and “A la carte.” Examples of rewards include an African safari, spa relaxation in the Alps, or a Lamborghini for a weekend. Offers are not limited to predetermined packages as any combination is possible. The customer may also combine points and money for rewards.Details
Fiserv Credit Processing Services has selected BMC Software’s “MAINVIEW” systems management solutions to handle its nine million credit processing accounts and 80 million transactions per month. Fiserv Credit Processing Services’ goal of keeping its business-critical transactions available is directly in line with BMC Software’s strategic direction focused on Business Service Management (BSM). MAINVIEW has allowed Fiserv Credit Processing Services to be more proactive in solving its customer problems and allowed the organization to enhance its services. Fiserv is able to ensure the health of local as well as remote transaction servers by having MAINVIEW monitor and notify personnel in the command center of fluctuations in processing rates that fall outside the normal parameters. Fiserv, Inc. provides industry leading information management systems and services to the financial industry, including transaction processing, outsourcing, business process outsourcing and software and systems solutions. BMC Software, Inc. is a leading provider of enterprise management solutions that empower companies to manage IT from a business perspective.Details
Morgan Stanley reported this morning that its Credit Services division, including the “Discover Card,” posted lower net income for the fourth quarter compared to 4Q/02. Net income of $131 million was off 31% compared to one-year ago and down 29% compared to third quarter 2003 profits of $185 million. The lower fourth quarter earnings reflect special charges of $35 million in pretax severance and facilities closing charges. Merchant and cardholder fees were $512 million, down 6% from last year’s fourth quarter. Discover says an increase in merchant discount revenue driven by higher sales activity was more than offset by a decline in cardholder late fees. Total transaction volume declined 9.1% to $23.0 billion, due to a lower level of balance transfers. Account growth was flat, but active accounts declined more than 8% from 4Q/02. The credit card net charge-off rate was 6.87%, 91 basis points higher than a year ago but 3 basis points lower than the third quarter. The over-30-day-delinquency rate declined 8 basis points from last quarter to 5.97%, and the over-90-day-delinquency rate declined 9 basis points over the same period to 2.82%. The decline in the over-30- day-delinquency rate was the third consecutive quarterly decrease. For complete details on Discover’s fourth quarter performance visit CardData ([www.carddata.com]).
DISCOVER CARD PORTFOLIO SNAPSHOT
4Q/02* 1Q/03* 2Q/03* 3Q/03* 4Q/03* Y/Y CHNG
Outstandings: $51.1b $51.8b $50.9b $50.0b $48.4b -5.3%
Volume: $25.3b $26.1b $24.0b $24.8b $23.0b -9.1%
Accounts: 46.5m 46.5m 46.4m 46.3m 46.1m -0.9%
Actives: 22.6m 22.3m 21.8m 21.3m 20.8m -8.0%
Chargeoffs: 5.96% 6.17% 6.50% 6.90% 6.87% +91bps
Delinquency: 5.96% 6.33% 6.21% 6.05% 5.97% + 1bps
Yield: 12.45% 11.78% 11.97% 11.94% 12.05% -40bps
4Q/02 ended 11/30/02; 1Q/03 ended 2/28/03; 2Q/03 ended 5/31/03; 3Q/03 ended 8/31/03; 4Q/03 ended 11/30/03.
Source Source: CardData (www.carddata.com)
The International Card Manufacturers Association has named Tai Kyu Choi, chairman of KBC Corporation, president. The association, meeting in Cancun for this year’s “Annual Expo” also elected Herbert Grun,
director of engineering solutions for Giesecke & Devrient, as vice president. Also joining the ICMA Board, as an associate member representative, is Bill Knotts, president of Spartanics. Designed to educate members and keep up on the latest business and industry-related challenges, issues, technologies and trends, this year’s “ICMA EXPO” also included a comprehensive seminar program highlighting issues such as counterfeit and plastic card fraud, standards, smart labels, 2D bar codes, smart card operating systems, EMV migration and personalization, and software and “Magneprint”, which is the latest magnetic stripe security innovation.
Discover has launched the “Discover Card Gift Finder” on its Web site. The Discover Card Gift Finder ([discovercardgiftfinder.com]) enables Cardmembers to screen for appropriate gifts and receive special merchant offers, in addition to earning Cashback Bonus(R) awards. The Gift Finder asks Cardmembers the age, sex and interests of the prospective gift recipient, as well as if the recipient has been “naughty” or “nice.” Discover Financial Services, a business unit of Morgan Stanley, operates the Discover Card brands and the Discover Business Services network for its more than 50 million Cardmembers.
Lloyds TSB is rolling-out MasterCard’s “Premium Collection” throughout 2004 that includes premium offerings to “MasterCard Gold,” “MasterCard Platinum” and “World Signia MasterCard” cardholders.
As part of the Lloyds TSB pilot, some 300,000 premium cardholders across the UK were mailed, for a four month period, with exclusive offers from several organizations participating in the MasterCard program.
Lloyds will be the first bank in Europe to roll-out the new generation of MasterCard’s “Global and European Premium Collection.” The “Global Premium MasterCard Collection” aims to help member banks increase their MasterCard premium card customer acquisition rates, boost card activation and usage, and improve customer retention. It has been customized according to an analysis of card spend which revealed MasterCard premium cardholders spend more on travel, entertainment, fashion, cars and home furnishings.
U.S. Bank has expanded its “ReliaCard VISA” in the State of Iowa whereby the state disperses child support payments on the prepaid card. The U.S. Bank ReliaCard Visa functions like a debit card though it is not attached to a checking or savings account. Since U.S. Bank introduced this product, which began as a pilot in the states of Washington (DCS Card) and Colorado (Family Support Registry Card) in 2001, it has become a recognized and valued tool used by more than 70,000 customers in multiple states. U.S. Bank operates 15 branches in Des Moines, 102 branch locations and 224 ATMs in Iowa. U.S. Bancorp, with assets of $189 billion, is the 8th largest financial services holding company in the United States.Details
Circuit City reported this week that the final conversion of its $1.5 billion bankcard portfolio to Fleet Boston will occur in the quarter ending May 31st. The retailer completed the sale of its card portfolio to Fleet on November 18th for $1.3 billion. Circuit City says it anticipates that the sale will result in an after-tax loss of approximately $82 million, including $75 million of adjustments to the carrying value of the company’s retained interest in the bankcard portfolio and approximately $7 million of other costs, including severance and lease termination. (CF Library 11/20/03)Details
Advanta said this morning it expects 2004 managed receivables to grow 10% to 20% and that its earnings for 2004 to be between $1.40 and $1.60 per share. Advanta is a highly focused financial services company serving the small business market. Advanta leverages direct marketing and information based expertise to identify potential customers and new target markets and to provide a high level of service tailored to the unique needs of small business.Details