Consumer Financial Protection Agency
John Pottow has an opinion piece regarding the proposed CFPA in the Detroit Free Press. He observes that the proposed agency would help small banks relative to big banks because of reduced fixed regulatory costs and would improve the market for simple financial products that are the strong suit of small banks.
Mr. Pottow is an internationally recognized expert in the field of bankruptcy and commercial law. He is a professor of law at the University of Michigan Law School where his area of expertise concentrates on the issues involved in regulation of cross-border insolvencies. In addition, he is a frequent commentator on national and international media outlets such as NPR, CNBC, CNN, C-SPAN and the BBC.
At Reuters, Felix Salmon has the full text of President Obama’s speech at Federal Hall, delivered in New York City on September 14, 2009. His analysis can be viewed here while the Republican rejoinder is here. Over at the Wall Street Journal, Michael Corkery posted a live blog of the proceedings which you can view here.
Credit and Debit Cards
Part of a series of articles on the changing practices of the consumer credit industry, this New York Times article focuses on the growth of debit cards and their effect on consumer spending. The story was written as part of a joint reporting project with the PBS news program Frontline. Related: (1) A lengthy video showcasing the history of the credit card industry, albeit produced in 2004; (2) a roundtable discussion regarding the pros and cons of using debit cards. Participants are Rebecca Borne (Center for Responsible Lending), John Berlau (Competitive Enterprise Institute), Sam Myers (economist and professor of policy analysis at the University of Minnesota), Ronald Mann (professor of law at Columbia Law School), Richard Briesch (associate professor of marketing at Southern Methodist University), Dave Ramsey (host of a radio show based in Nashville, TN) and Todd Zywicki (professor of law at George Mason University and a regular contributor to The Volokh Conspiracy, a legal blog); and (3) — a documentary that was shown on September 9, 2009 on WNET that offered straightforward financial advice on topics ranging from budgeting, credit cards and student loans to taxes, health insurance and retirement savings. HSBC was one of the principal sponsors of this program.
As the recession deepens and more Americans lose jobs, many are increasingly struggling to pay their credit card bills, forcing some banks to do what they have been loath to do in the past — forgive some of the debt or modify it in the cardholders’ favor.
Recent and highly publicized data breaches at merchants and processors involving payment cardholder data have had a significant impact on the payments industry. For example, Wired magazine reported that Heartland Payment Systems estimates that the breach it experienced in January 2009 has conservatively cost the company in excess of $12 million. According to Bank Info Security magazine, the breach impacted at least 659 banks and credit unions. Smart Card Alliance recently issued a position paper that “proposes an alternative to end-to-end encryption, protecting cardholder data by using chip card technology, but in a different way than has been considered in the past.”
An article that appeared on September 13, 2009 in the NYTimes’ Business section describes credit card issuers’ focus on offering premium cards to their customers.
Felix Salmon poses the question on whether it’s more desirable for a credit card issuer to be competitve than transparent.
Prepaid Cards
An article at Consumer Affairs highlights the differences in fees and charges that an atypical user can expect between a prepaid debit MasterCard and a traditional checking account.
Identity Theft
Skimming is one of the financial industry’s fastest-growing crimes, according to the U.S. Secret Service. The worldwide ATM Industry Association reports over $1 billion in annual global losses from credit card fraud and electronic crime associated with ATMs. This blog post on Bank Innovation describes the methods by which this scheme is perpetuated and what you can do to protect yourself against this particular type of scam.
International Payments News
Although the United States is the leading market for non-cash payments, accounting for approximately 40% of transactions with Europe accounting for 21%, China appears to be a leading growth market with nine percent of transactions, according to the latest edition of the annual World Payments Report from The Royal Bank of Scotland, Capgemini and Efma.
In an article published on September 18, 2009 on FinExtra, the total value of checks cleared in the United Kingdom in the second quarter of 2009 fell about 20% compared to the same period in 2008, as more and more British continue to turn to debit cards as a means of payment.
Data Security
The European Network and Information Security Agency (ENISA) has released a report regarding the situation of ATM crime in the European Union. According to the agency, the rate of such crimes increased by 149 percent in 2008 and resulted in over 485 million euros being lost to fraud during last year.
An American couple who had thousands of dollars stolen from their online account has been given the go-ahead by a court to sue their bank for failing to provide adequate security. The case is Shames-Yeakel v. Citizens Financial Bank, U.S.D.C., Northern District of Illinois (07-c-5387). More details can be read here.
Chase Bank has sent out data security breach notification letters to an undisclosed number of customers after a computer tape with sensitive information was reported missing from a third-party vendor’s storage facility.
SB 20 is a bill that if signed by Gov. Schwarzenegger, would make California’s data security breach requirements the most stringent in the nation. The bill, which was approved by the state legislature during the week of September 6 to 12, 2009, will require any company operating in California OR holding data on California residents to provide guidance to affected individuals on how to guard their identities and remediate identity theft once such data is compromised.
The Tech Herald has an in-depth primer on evaluating and managing your privacy settings on Facebook. After reading, an individual should be able to understand the basics for securing and controlling the privacy of his or her Facebook account, as well as possess a fundamental grasp of why proper privacy management on Facebook is important.
The foundation of the intersection of social networks and e-commerce/m-commerce is that consumers will be much more likely to trust and buy from a retailer if they know that their friends are already buying from that chain. At StorefrontBacktalk, Evan Schuman writes about the Catch-22 posed by the challenges of these kinds of interaction. For example, it’s more difficult to get a consumer to name a friend without some immediate benefit to that consumer. Disclosure of friends’ identities who already shop at an e-commerce or m-commerce site is seen as a benefit to the retailer, not to the consumer.
StolenID Search is a new, free Internet-based search service that combs through real identity-theft tracking forums used by criminals and lets consumers proactively check if they are a victim of identity theft, according to this article on Dark Reading. The site is a partnership between ID theft prevention firm TrustedID and U.K.-based Lucid Intelligence, a firm founded by two former Scotland Yard investigators that maintains a massive database of more than 120 million compromised personal accounts.
Evan Schuman blogs about the increasingly prevalent practice by major retailers who use payment card data as a means of customer verification, in the same way that businesses use Social Security numbers for identification even though they were never supposed to.
Interchange Fees
Merchants recently turned up the heat on banks and bank card networks yesterday by releasing a report showing that interchange fees in the U.S. are much higher than in other countries, and arguing that policymakers in the U.S. should regulate interchange as have their counterparts overseas. A related Washington Post article can be viewed here. Also, the Electronic Payments Coalition issued a press release, viewable here.
Pending Litigation
Card Activation Technologies Inc. received a favorable ruling with respect to claim construction in its patent infringement lawsuit against McDonald’s et al. Card Activation, a Chicago-based company, owns a patented POS technology for processing gift cards, phone cards and other debit purchase transactions. Claim construction is crucial in patent litigation, usually determining two elements of the case — the validity of the claim and whether the patent was infringed upon. The case is Card Activation Technologies Inc. v. McDonald’s Corp., No. 06-05578 (N.D. Ill.) and is currently pending in the U.S. District Court for the Northern District of Illinois, Eastern Division.
Checks and Check Cashing
Senator Christopher Dodd (D-Conn.) will soon propose legislation that will require bank customers to sign up for overdraft protection. If they don’t, banks will not be allowed to charge a fee even if the customer overspends. Under this scenario, banks are likely to deny charges that would exceed a customer’s credit limit.
Privacy Rights
Congress is currently in the process of considering legislation to prevent American firms from collecting data to build profiles of people’s Internet surfing habits. The bill is currently being drafted by Rick Boucher (D-VA), chairman of the House Energy and Commerce Subcommittee on Communications, Technology and the Internet. A related (and somewhat more in-depth article) at the New York Times can be viewed here.
Micropayments
Google is developing a micropayment platform that will be available to both Google and nonGoogle properties within the next year, according to a document the company submitted to the Newspaper Association of America. Although one of Google’s founding principles is that information should be available to all, “accessible” does not necessarily translate to “free”.
Related Posts
- News Roundup — August 24, 2009 to September 8, 2009 - September 8, 2009
- News Roundup — September 28, 2009 to October 7, 2009 - October 7, 2009
- News Roundup — August 6, 2009 to August 14, 2009 - August 14, 2009
- News Roundup — May 18, 2009 to May 29, 2009 - May 29, 2009
- News Roundup — October 26, 2009 to October 30, 2009 - October 30, 2009
