MemberWorks & NY

MemberWorks Incorporated (Nasdaq:MBRS), the leading provider of consumer and membership services through affinity marketing and on-line channels, today announced that it had entered into a voluntary agreement implementing its industry leading marketing practices in New York. The agreement, with the New York Attorney General’s office, was not based upon any specifically identified consumer complaints, but rather the general concern that some consumers may be confused by disclosures made while marketing the programs. The Company also agreed to reimburse the State for its $75,000 in expenses to address these best practices issues.

Gary Johnson, President and Chief Executive Officer of MemberWorks stated, “This voluntary agreement reflects our position as the preeminent member services marketing company and demonstrates our continued commitment to the highest standards of marketing practices. MemberWorks strongly endorses the privacy polices of, and is fully compliant with, the Gramm-Leach-Bliley Act and is committed to maintaining public confidence in the direct marketing industry.”

About MemberWorks

Headquartered in Stamford, Conn., MemberWorks is a leader in bringing value to consumers by designing innovative membership programs that offer services and discounts on everyday needs in healthcare, personal finance, insurance, travel, entertainment, computing, fashion, and personal security. As of June 30, 2000, 6.9 million members are enrolled in MemberWorks programs, gaining convenient access to thousands of service providers and vendors. MemberWorks is the trusted marketing partner of leading consumer-driven organizations, and offers them effective tools to enhance their market presence, to strengthen customer affinity, and to generate additional revenue.


ACE Portfolio Deal Closed

UICI announced that it has completed its previously announced sale of substantially all of the non-cash assets associated with its United CreditServ credit card business, including its credit card receivables portfolios and its Sioux Falls, South Dakota servicing operations, for a cash sales price of approximately $124.0 million.

While the sales price was less than originally projected, the shortfall was offset by higher than projected cash collections on credit card receivables made through the closing of the sale. In addition to the cash sales price received at closing, the transaction contemplates an incentive cash payment contingent upon the post-closing performance of the ACE credit card portfolio over a one-year period. UICI continues to hold United CreditServ’s building and real estate in Sioux Falls, South Dakota, and has leased the facilities to the purchaser pursuant to a long-term lease. UICI has also retained the right to collect approximately $250 million face amount of previously written off credit card receivables.

In connection with the sale, UICI or certain of its subsidiaries have retained substantially all liabilities associated with its credit card business, including liability for payment of all certificates of deposit issued by United Credit National Bank (an indirect wholly-owned subsidiary of UICI), merchant holdback liabilities, liabilities associated with pending litigation and other contingencies. Following the sale, United Credit National Bank holds approximately $96.0 million in available cash, cash equivalents and short term U.S. Treasury securities and has approximately $79.0 million of certificates of deposits outstanding. United Credit National Bank has initiated a program to prepay all of its outstanding certificates of deposit and currently expects to discharge all such deposit liabilities on or before October 31, 2000. United Credit National Bank is in the process of preparing a formal voluntary plan of liquidation to be filed with and approved by the Office of the Comptroller of the Currency, and UICI currently anticipates that the voluntary liquidation of United Credit National Bank, including the provision for all remaining liabilities and distribution to UICI of all residual cash, will be complete on or before year-end.

“We are very pleased to have successfully completed this critical step in UICI’s orderly withdrawal from the credit card business,” commented Gregory T. Mutz, UICI’s chief executive officer. “We look forward to formally closing United Credit National Bank by year-end and turning our full attention once again to the core businesses that have served our shareholders so well in the past.”

Separately, UICI has learned that the plaintiffs in previously disclosed litigation have filed motions to compel UICI to, among other things, deposit a significant portion of the proceeds of the sale of UICI’s credit card business in escrow under court supervision. UICI believes that the motions are wholly without merit and intends to oppose them vigorously.


UICI, headquartered in Dallas, Texas, is a diversified financial services company offering financial services, health administrative services and insurance through its various subsidiaries and divisions to niche consumer and institutional markets. UICI provides health insurance through its insurance subsidiaries, UGA-Association Field Services and Cornerstone Marketing of America; enrollment, billing and collection claims administration and risk management services for healthcare payors and providers through UICI Administrators; financial services and products for college, undergraduates and graduate students, including tuition installment plans and federally- guaranteed student loans through Academic Management Services Corp. and manages blocks of life insurance and life insurance products to select markets through its OKC Division. UICI also holds a 39% interest in, Inc., a leading web-based insurance retailer providing fully integrated, end- to-end, web-enabled solutions for health insurance distribution and administration.


Cross Country in WV

West Virginia Governor Cecil Underwood and Rocco Abessinio, Chairman and CEO of Applied Card Systems, announced that the company will open a new customer operations assistance center at the former Sun Electronics building in Beckley.

Applied Card Systems services Visa and MasterCard customers primarily for Cross Country Bank, a leading national issuer.

The new center, Applied Card’s second in West Virginia, will employ about 450 associates, Abessinio said. A center in Huntington, which opened in September 1998, currently employs about 1,000 associates.

“The combination of West Virginia’s outstanding telecommunications infrastructure and its highly motivated work force proved irresistible to a company proud of its technology and its customer service,” Underwood said. “Today’s announcement reaffirms Applied Card Systems’ commitment to West Virginia.”

“Since Applied Card Systems started in 1987, we have experienced explosive growth,” Abessinio said. “The outstanding work of the 1,000 associates at our operations center in Huntington is one reason for that growth. Their work ethic prompted us to explore opportunities for other sites in this region. I have great confidence that we will attract the same high-quality associates in the Beckley area.”

The combined efforts of a highly-motivated workforce and the State’s Development Office have exceeded our expectations,” Abessinio said. “We have great confidence in the people of West Virginia.”

“The Beckley area seems like a great fit for us,” he added. “We look forward to becoming an active and respected member of this community.”

Applied Card Systems will start interviewing candidates on October 4, 2000. Positions in the areas of Customer Assistance, Human Resources, Learning and Development and Information Technology are available. The Company offers a comprehensive salary and benefits package including health benefits, a 401k plan and annual bonus. Persons interested in applying for employment opportunities at our Beckley site should apply at the Work for West Virginia Career Center Job Service Office at 250 Value City Center in Beckley. No appointment is necessary for the application process.

Applied Card Systems, founded by Abessinio in 1987, services approximately 3.5 million nontraditional VISA and MasterCard customers. Applied Card Systems employs over 3,500 associates nationwide, at offices in Huntington, Ashland, Ky., Boca Raton, Fla., and the company’s headquarters in Wilmington, Del.


Reg Z Amendments

The Federal Reserve Board announced Friday it is amending Regulation Z, which implements the Truth in Lending Act, to revise the disclosure requirements for credit and charge card solicitations and applications. Under the final rule, the APR for purchase transactions must be in 18-point type. Cash advance and balance transfer APRs must be included in the table. Balance transfer fees must be disclosed either in or outside of the table. The FRB also said it has also included specific requirements on the “prominent” location of the disclosure table and the level of detail about cost information required or permitted in the table. The revisions are effective immediately; compliance is mandatory as of October 1, 2001. In May of this year, the Federal Reserve asked for public comment on a number of proposed amendments to Reg. Z including a requirement for disclosure on the specific events that trigger a punitive interest rate. The Fed also asked for public comment on requirements for disclosures made using electronic communication. (See CF Library 5/22/00)


Premiums Soar

The premium for performing credit card portfolio sales is running about 800 basis points above the 1999 average sales price. Super prime portfolios, with chargeoffs of 3.50% or less, are now producing average premiums of 22%. The year-to-date results come from Thousand Oaks, CA-based R.K. Hammer Investment Bankers. According to the study, the number of deals completed so far this year has significantly exceeded the total deals completed in 1999. The data are based on portfolio sales with at least $15 million in assets.

3Q/00 2Q/00 1Q/00 1999
# Card Deals 10 9 10 21
Card Assets Sold $12.2b $1.2b $3.7b $19.4b
Avg. Portfolio $ 1.2b $138m $370m $923m
Avg. Premium 17.20% 17.00% 17.50% 16.42%
Source: R.K. Hammer Investment Bankers


Red Lion Adds Alaska Airlines

Red Lion Hotels & Inns Friday announced the addition of Alaska Airlines as its newest travel partner.

Alaska Airlines Mileage Plan members are now eligible to receive 250 or 500 miles for each qualifying stay, in addition to receiving Red Lion Club credits earned for each night’s qualifying stay at nearly 35 Red Lion Hotels & Inns across the Western U.S.

“Our new partnership with Alaska Airlines provides another ‘reward-winning’ choice for our business and leisure guests who stay at Red Lion Hotels and Inns across the Western U.S.,” said Tom Murray, chief operating officer of Red Lion Hotels & Inns and senior vice president — hotel division for Hilton Hotels Corporation. “This is just another way for us to say ‘thank you’ to our frequent guests for choosing to stay with us.” Alaska Airlines is a dominant carrier in the Western U.S. Along with Horizon Air, Alaska’s regional carrier in the Pacific Northwest, the Alaska Airlines network serves 73 cities — all in areas where Red Lion Hotels & Inns has the strongest brand recognition.

Alaska Airlines is equally enthusiastic about its relationship with one of the premier names in the hospitality industry. “Red Lion exemplifies the quality that we look for in a Mileage Plan partner,” said Gregg Saretsky, Alaska Airlines, senior vice president/marketing and planning. “This partnership is good for Alaska Airlines and Red Lion, and most important, it is good for our customers.”

The partnership includes the Red Lion Club program, which provides frequent guests with special discounts, complimentary late checkout times, and Red Lion Club Rewards. After staying the required number of nights, and then being eligible for a reward, guests may choose either a free night, a $50 U.S. Savings Bond, or 1000 bonus miles from participating airline partners. Alaska Airlines Mileage Plan now joins Northwest Airlines(R) WorldPerks(R) and American Airlines(R) AAdvantage(R) Program as travel partners of Red Lion, rewarding guests with program miles for specified room rates and with bonus miles in Red Lion Club Rewards.

Red Lion Hotels & Inns was founded in 1959 and is part of Hilton Hotels Corporation, recognized internationally as a preeminent hospitality company. The company develops, owns, manages or franchises approximately 1,800 hotels, resorts and vacation ownership properties. Its portfolio includes many of the world’s best known and most highly regarded hotel brands, including Hilton(R), Doubletree(R), Embassy Suites(R), Hampton Inn(R), Hampton Inn & Suites(R), Harrison Conference Centers(R), Hilton Garden Inn(R), Homewood Suites(R) by Hilton, Red Lion Hotels & Inns(R), and Conrad International(R).


BannerDirect eMessaging

BannerDirect, a direct marketing agency, announced this week it has formed a partnership with Digital Impact, Inc., San Mateo, CA, the leading provider of integrated eMarketing. Together the companies will create, design and implement national and regional eMessaging programs for BannerDirect’s clients. The eMarketing programs are expected to encompass customer acquisition, retention and analysis initiatives. “This alliance will expand BannerDirect’s stable of services offered to clients to make us even more of a one-stop campaign coordinator,” says Christine Fontana, president of BannerDirect.

BannerDirect chose to work with Digital Impact because of their strict advocacy of consumer rights and superior expertise in permission-based online messaging to platforms including email, set-top box and wireless. In addition, Digital Impact’s client-focus compliments BannerDirect’s client services mission statement.

“One advantage of eMarketing is that our clients can get a read on responses within hours,” says Susan Lasley, Senior Vice President for BannerDirect. Price, product or creative elements can be tested, analyzed and reworked within days instead of months. “Plus the level of responsiveness and personalization email messaging makes possible is much higher. It can truly become a one to one communication,” she says.

BannerDirect is a full-service direct marketing agency recognized for the development and execution of direct response marketing programs for clients in the financial, entertainment, telecommunications, association, retail and medical industries. Its service and expertise include: comprehensive marketing strategy and planning, creative development, production management, list procurement list processing and data analysis. A recognized leader in card marketing, BannerDirect is headquartered in New York City; Production, creative coordination and fulfillment are managed from BannerDirect’s Wilmington (NC) office, with sales offices in New York City, Milwaukee (WI), Carson City (NV), Charlotte (NC) and Brightwaters (NY).

Digital Impact is the leading provider of integrated eMarketing solutions that enable businesses to acquire, retain and analyze their customers. Through its combination of industry leading technology and world-class service, Digital Impact helps its clients maximize their marketing investment with campaign results that average double-digit click-through and triple-digit ROI’s. The Digital Impact technology platform is comprised of a web-based eMarketing Dashboard for campaign management, execution, reporting and analysis. On the back-end, the Mass Personalization Engine (MPE) targets, delivers and tracks billions of unique digital messages across a variety of media, including email, set top box, and wireless devices. Each message is personalized to contain offers based on the customer’s unique transaction data, demographic data, web logs, and external site browsing behavior. These campaigns are delivered only to customers who have specifically requested to receive them, a practice known as permission-based marketing. Digital Impact is a member of the TRUSTe Privacy Program and works only with companies that are advocates of strict consumer privacy guidelines.


m-Commerce Signatures

Schlumberger Test & Transactions and Baltimore Technologies announced Friday they intend to develop and deliver solutions aimed at enabling wireless handset subscribers to digitally sign transactions using a mobile phone. The cooperation will involve integration between the Schlumberger regional data processing hubs and Baltimore ‘UniCERT’ to enable the bulk issuance of SIM/WIM smart cards containing digital certificates. Specifically, the solutions will be based on Baltimore’s certificate management system, ‘Telepathy’ and ‘Simera e-motion’, and Schlumberger’s ‘WAP 1.2’ compliant SIM/WIM card.


Aiming for Spinoff

Equifax confirmed this morning it wants to dissect itself into two independent public companies. The Company’s Board of Directors approved a plan Friday to create an ‘Information Services’ company and a ‘Payment Services’ company. The Company intends to accomplish the separation through a spinoff of Payment Services to its shareholders. Equifax says it believes that spinning off Payment Services will help unlock the value of these businesses and provide the financial community with a more focused investment decision. Equifax stock price has been sagging since late 1998 and closed at approximately $27 per share on Friday. Equifax also noted this morning that its earnings for 2000 are on track and it expects to achieve EPS in the range of $1.67 to $1.71, consistent with current analyst estimates. For 2001, Equifax expects total revenue from both businesses in the aggregate to increase by 10-12%. For ‘Information Services’, the increase in revenue is expected to be in the range of 8-10% and, for ‘Payment Services’, revenue is expected to grow approximately 13-15% in 2001. The name for the new ‘Payment Services’ company will be selected later.


FIDO Account Access

Canada’s Royal Bank began offering wireless transactional banking services including access to VISA account information this week. Royal has teamed up with Microcell Solutions to jointly offer the services. Microcell is a national provider of ‘Fido’ Personal Communications Services. The new service provides customers with the ability to access information on their bank accounts through their Fido wireless handsets, as well as perform a range of transactions, such as: check available credit lines and the last five transactions on VISA credit card accounts. Other options include: checking checking and savings account balances; paying bills; and transferring funds between accounts. Royal Bank Mobile Banking is the only wireless banking service in Canada to use Fido’s smart card technology to protect customer passwords. The handset’s smart card is also used to store the customer’s account and bill payee list. This allows customers to quickly initiate functions such as bill payment before connecting to the wireless network to execute the transaction. To activate ‘Access Finances’, current Fido customers must purchase a kit at the cost of CN$25. New customers can take advantage of this service by purchasing ‘Royal Bank/Fido In-a-Box’ for CN$75, which includes a Nokia ‘5190’ handset. ‘Access Finances’ is offered to Fido customers who subscribe to a monthly airtime package and can be accessed in all areas covered by Microcell’s PCS network in Canada. The service will be billed at 20 cents per request, starting December 16. Royal Bank’s Mobile Banking is offered to customers who subscribe to telephone or online banking service. The service is included free of charge with those services.


eProcurement Card

The world’s largest issuer of VISA corporate and purchasing cards unveiled a ‘VISA eProcurement Card’ yesterday. U.S. Bancorp said the new card helps companies fully capitalize on the potential of their electronic procurement engine implementations. U.S. Bank has alliances with six of the leading EPE providers: Ariba, Clarus, Concur Technologies, Extensity, Remedy and The new ‘eProcurement Card’ differs from traditional purchasing cards in that it: automatically reconciles transactions with all leading EPEs from the time the order is taken to when it is billed; enables a company to instantly set up a purchasing card account online that will track purchases from a specific supplier; tracks detailed data for sales tax reporting purposes; and offers suppliers pricing discounts for large ticket and large volume transactions. U.S. Bank’s Corporate Payment Systems customer base of more than 1,800 corporations currently include 169 ‘Fortune 500’ companies.