The U.S. Federal Trade Commission has launched a new Web site to fight
cross-border fraud.The most common cross-border frauds perpetuated in
Canada against U.S. residents include phony prize promotions, foreign
lottery schemes, advance-fee loan scams, fraudulent travel offers, and
unnecessary credit card loss “protection” offers. The Web site contains
information on recent FTC law enforcement actions against cross-border scam
artists, as well as FTC coordination with law enforcement agencies in other
countries to combat this multi-billion dollar problem.


FleetBoston 4Q Update

FleetBoston reported this morning that net credit chargeoffs and writedowns (excluding Argentina) for the fourth quarter will total approximately $500 million. Three well-publicized credits account for about $150 million of the total and these relate to a major airline bankruptcy, a European energy company, and an Enron-related financing tied to the recently announced settlement by JPM Chase with various insurers. Excluding the incremental provision above the third quarter level, earnings from continuing operations are expected to approximate $600 million or $.57 per share in the fourth quarter. The core customer facing businesses continue to demonstrate solid progress.


FHMS Buys Ski Processor

First Horizon Merchant Services has acquired substantially all of the assets of CA-based Merchant Card Management Systems, the largest provider of card-based processing services to the United States ski industry. MCMS was formed in 1992 and quickly focused on the ski resort industry, currently supporting more than 50 ski areas in the U.S. Providing processing, host-based and LAN-based loyalty card solutions, networked terminal applications and customized transaction reporting has given MCMS above-average client retention. MCMS’s client base also includes other travel and entertainment merchants as well as general retail.


Debit Suit Hearing

A summary judgment hearing is scheduled for this morning in federal court in Brooklyn, New York in regard to the merchant class action, debit card, antitrust lawsuit against VISA and MasterCard. Attorneys representing merchants said last night they will present “compelling evidence” today to support their requests for the court to grant summary judgment on “tying” and “attempt to monopolize” claims, which if granted, will leave only the damages to be decided in the upcoming trial. A jury trial is set to begin on April 28th. The litigation involves a certified class of more than five million merchants with damages. Last month, MasterCard and VISA asked Judge John Gleeson to dismiss the antitrust litigation asserting the retailers’ claims are legally and factually deficient, and do not merit being presented to a jury. The networks also asked the court to throw out the retailers’ request for billions of dollars in damages saying it is not based on any facts. MasterCard said this morning the requested damages are based entirely on the guess-work of one economist, Dr. Franklin Fisher, who has ignored marketplace reality and a raft of evidence showing that merchants have benefited from taking signature debit cards. Because of similar deficiencies, two courts have recently disregarded damages theories offered by Dr. Fisher in other cases, and have dismissed those cases prior to trial. Meanwhile, both sides continue efforts to draw consumers into the dispute. Merchants insist that off-line debit transactions are slower, less safe, and cost merchants and their customers much more than on-line PIN debit, cash or checks. The card associations insist that merchants are trying to take away from their customers the ability to choose which payment option to use and are attempting to shift the cost of debit transactions to the retail customer. (CF Library 12/16/02; 11/15/02)


Convergys KMS

OH-based Convergys has updated its “Credit Card Acquisition Program” with a “Knowledge Management Services.” The new KMS feature provides integrated voice response-based acquisition and balance transfer capabilities, and point-of-service evaluation services. Convergys says issuers using “KMS” have boosted sales per hour by up to 28% while cutting their cost per sale by as much as 15%. Convergys’ “Credit Card Acquisition Program” handles more than 700,000 separate credit card acquisition interactions each month. The solution is designed for major North American credit card issuers and is available on an outsourced basis. Convergys clients in the financial services industry comprise six of the top 10 credit card issuers, including Capital One.



NY-based X/Net Associates announced its “CrediSphere” credit origination suite now supports over thirty external service integration options. CrediSphere provides external service integration throughout every step of the lending process: application data entry, credit bureau access, automated and judgmental decisioning, host system and database access and notification. External services available with CrediSphere include consumer and dealer web access, credit insurance calculations, automotive vehicle valuation services, credit bureau services, voice lending systems, flood, property search and AVM services, CRA and HMDA analysis and data reporting systems, host systems, electronic documents, and reporting systems.


STAR Buying CU24

Concord EFS confirmed Thursday it has signed a non-binding letter of intent to acquire the Credit Union 24 network. The FL-based CU24 connects over 400 credit unions via 7,200 ATMs and 7 million cardholders in 35 states. A definitive agreement is currently expected to be reached by March 31st. Concord currently serves more credit unions than any other network, including those owned by credit unions.


Debt Contraction

Americans knocked-off $1.6 billion in revolving credit, mostly credit card debt, during November, marking the first contraction for 2002. The most recent pay-down in revolving credit occurred in 2001 in the wake of the recession and 9/11. In November 2001, Americans added $11.6 billion to revolving credit, a typical pattern for the beginning of the holiday shopping season. However, “Black Friday 2002,” the day after Thanksgiving, came on the next to the last day of November. It is expected the normal November surge will be reflected in the December 2002 data to be released in early February by the Federal Reserve. Between November 2001 and November 2002, revolving credit has grown 3.5%. Bank credit card debt at the end of the third quarter was $632.7 billion or roughly 87% of total revolving credit, according to CardData ([][1]). According to the government figures released yesterday, American consumers were $1.721 trillion in debt, exclusive of home mortgages during November. Overall, consumer credit declined 1.5%, the first such decline in overall consumer credit in five years.

Nov 02 Oct 02 Sep 02 Aug 02 Jul 02 Jun 02 May 02
GRWTH: -2.6% 4.0 3.0 6.2 8.9 6.0 4.1
$OWED: $722.1 723.7 721.3 719.5 717.4 715.6 712.1

Apr02 Mar 02 Feb 02 Jan 02 Dec 01 Nov 01 Oct 01
GRWTH: 8.0% 4.8 2.2 1.8 -9.7 12.7 -7.1
$OWED: $708.7 705.4 705.0 702.4 692.4 698.0 686.4

Source: Federal Reserve; revised figures as of 01/08/03; For complete
historical data visit CardData (



Major Smart Card Conference Scheduled for January

The Royal Bank of Scotland Group reported that withdrawals from its
British ATMs hit record levels in December. RBS ATM volume rose from £947
million in December 2001 to £1,154 million for December 2002, a 20%
increase. For the year, ATM volume exceeded £11,799 million in more than
207 million transactions. The number of withdrawals during December has
also risen from 15.3 million to 18.1 million, and the average withdrawal
has risen from £61.89 to £63.75. The busiest single day was Friday, 20th
December – when £70.1 million was withdrawn.


Debt and Diet Resolutions

MA-based Cambridge Credit Counseling has released a new survey which shows that 29% of Americans ranked getting out of debt as important as losing weight as top New Year’s Resolutions. These findings are the result of monthly nationwide telephone poll of 1000+ adults conducted by ICR/International Communications Research in the past week, sponsored by The Debt Relief Clearinghouse.



ACE Cash Express said it now has a $290 million cash inventory lined up for this year’s tax season. The funds will be used for self-service check-cashing machines to be placed in 248 H&R Block retail offices nationwide. With the company’s seasonal revolving credit facility available from its bank lenders of a maximum of $55 million, a total of cash inventory of $345 million will be available to cash tax refund and refund anticipation loan checks during the 2003 tax season. During fiscal 2002, ACE cashed over 575,000 tax refund checks with a face value of more than $649 million, resulting in fees totaling $21.3 million. ACE has more than doubled the number of SSMs in fiscal 2003 from the 100 machines deployed in fiscal 2002.