Economic Crisis
Adam Levitin takes a look at Tim Geithner’s comments in the New York Times on the “too big to fail” principle. Do we really want the government to be in the business of guaranteeing Goldman Sachs’ debt and Capital One’s liabilities?
Data Security
A recent Associated Press investigation has found that banks and other financial institutions handling sensitive data are not being nearly as cautious as they could, particularly with respect to credit card and personally identifiable information.
The parent company of retailers T.J. Maxx and Marshall’s will pay approx. $9.75m in a settlement with multiple states relating to a massive data security breach that exposed tens of millions of payment card numbers.
The rapid growth of cybercrime markets is making spam an even more attractive proposition than it has been in the past according to this article on Dark Reading.
Handelsbanken has teamed with EDB Business Partners to enable Norwegian customers the capability to block the use of their cards in certain geographic areas. The regional blocking service, which was made available beginning in June 2009, makes it possible for customers to use their Internet banking account to manage the geographic areas in which they might want their Visa and MasterCard to be valid.
Payments
Equens, the largest payments processor in Europe, is ready for the introduction of the single euro payments area (SEPA) Direct Debit (SDD) on November 1, 2009. The firm is offering banks an economical Internet solution with a short time and minimal effort for implementation. With Equens’ solution, banks will be able to receive SDDs and fully comply with the SDD regulations and implementation guidelines drawn up by the European Payments Council.
The UK Payments Council is moving to hasten the demise of paper checks by setting a two-year deadline for the withdrawal of the Cheque Guarantee Card Scheme. The Scheme sets the rules for the use and acceptance of guaranteed cheques and uses a depiction of Shakespeare on participating plastic cards as a common identifier.
Credit Cards
On June 22, 2009, American Express announced a unique, new service that provides American Express® Charge Cardmembers with the ability to set spending limits for Additional Cards on their account. It’s the only consumer card on the market to offer this type of spending control. Now, instead of providing cash to their teenagers, other family members, the nanny, or other household helpers, Cardmembers can set, manage and track spending limits on additional Cards, helping them to maintain a tighter household budget and track all family expenditures billed to their Card.
Ryan Bubb and Alex Kaufman opine on the credit-union model of credit cards in a New York Times editorial published on June 23, 2009. Barbara Kiviat reacts at Time Magazine. For those interested, Messrs. Bubb and Kaufman’s study at Harvard University can be viewed here.
Mike Rortybomb (at the blog Rortybomb) inquires into the difference between transactional and revolving credit. Although this opinion piece was written in May, it has direct bearing on the Bubb/Kaufman editorial. Additional commentary by Interfluidity can be viewed here.
Meanwhile, Felix Salmon posts his reaction to the Bubb/Kaufman piece here.
eCommerce
Internet Retailer published the 2009 Edition of its Top 500 Guide, which provides profiles and statistics on America’s 500 largest retail web sites. eCommerce professionals look forward to its publication every June not only to see the relative rankings of the online retailers, but also to pick apart the shifting dynamics of the industry.
Technology Corner/Privacy Rights
Saul Hansell delves into PayPal’s fraud management techniques here. Now, every time someone engages in a transaction via the Internet and arranges payment via PayPal, the service has a limited window of time to decide if it trusts you enough to go through with the transaction or if it will block the sale. It does this by assembling an electronic file on each individual who sets up a PayPal account — by purchasing information from database companies, scouring the Web for clues about that person’s history and by performing the usual tasks associated with a credit check.
Supreme Court
Law.com has an in-depth analysis on questions that may be (or should be) asked of Sonia Sotomayor by the Senate Judiciary Committee. Given the ramifications of the economic crisis and the Government’s response, the Court will very likely be dealing with related issues for the foreseeable future. This ties into the Administration’s proposal of the creation of a Consumer Financial Protection Agency. If Congress directs the head of an independent agency to make policy, does the president have constitutional authority to tell that agency head what policies to adopt? If the answer is yes, are independent agencies unconstitutional?
Electronic Funds Transfer
First Data Corp. recently released its latest addition to its line of point-of-service hardware — a device that makes use of PIN-debit cards and contactless technology.
Adhesive tags that give mobile phones contactless-payment capability are going one step further — wraparound “skins” that provide a way for customers to personalize their mobile device are being marketed to banks and card-fulfillment companies.
Visa Inc. has struck an agreement with NeuStar Inc., a key player in the wireless telecommunications industry, that could enable financial institutions to develop more payment services for mobile devices.
Consumer Financial Protection Agency
U.S. banks are fighting the Obama administration plan to create a consumer agency for financial services as they seek to protect fees, such as credit-card penalties that have almost doubled to $19 billion in five years. — http://www.bloomberg.com/apps/news?pid=20601087&sid=agR2UE7gabLM.
Interchange Fees
Reuters columnist Felix Salmon theorizes why credit card interchange fees should come down (in light of pending legislation on Capitol Hill).
Here is a white paper intended to provide background for understanding the interchange fee debate. The paper describes the operation of a typical payment card system, presents a summary of the economic theory underlying interchange fees and discusses various developments in the U.S. payment cards industry, as well as legal and regulatory developments abroad.
Identity Theft
As opening new lines of credit becomes more difficult, identity thieves are gravitating toward check fraud.
Check fraud is a billion dollar problem. As predicted by the Identity Theft Resource Center, check fraud accounted for 12% of financial crimes in 2007 and increased to 17% in 2008. According to the American Bankers Association Deposit Account Fraud Survey Report, $969 million were stolen via check fraud in 2006, up from a reported $677 million in 2003. Of the $969 million dollars lost to check fraud, 38% was stolen through return deposit scams, 27% was stolen using cloned checks, 28% was stolen using counterfeit checks, and 7% was stolen by altering or washing checks. For more information, view this article on Finextra.
Anti-Money Laundering
Japan’s financial regulator has ordered Citi to stop sales operations at its retail division for a month after the banking giant failed to improve poor AML systems. The Financial Services Agency says there are “fundamental problems” with Citi’s compliance and governance system, which is inadequate for monitoring suspicious transactions.
Related Posts
- News Roundup — June 15, 2009 to June 19, 2009 - June 23, 2009
- News Roundup — June 8, 2009 to June 12, 2009 - June 16, 2009
- News Roundup — September 9, 2009 to September 18, 2009 - September 18, 2009
- News Roundup — June 1, 2009 to June 5, 2009 - June 8, 2009
- News Roundup — May 18, 2009 to May 29, 2009 - May 29, 2009
