Posts Tagged Credit card
FTC Declares Rachel From Cardholder Services ‘Enemy Number 1′; Files Complaints Against Five Scammy Robocollers | Techdirt
Posted by Michael B. Calyn in Legal on November 2, 2012
FTC Declares Rachel From Cardholder Services ‘Enemy Number 1′; Files Complaints Against Five Scammy Robocollers
from the always-in-arizona-and-florida dept
A few weeks ago, we noted that the FTC was offering up $50,000 to anyone who could help stop“Rachel from cardholder services” robocalls. It appears they don’t really need that much help, as the agency has filed complaints against five such operations based in Arizona and Florida (why is it that so many scammy operations seem to be based in Florida and Arizona?). FTC boss Jon Leibowitz overstates his organization’s infatuation with robocalls:
“At the FTC, Rachel from Cardholder Services is public enemy number one,” said FTC Chairman Jon Leibowitz. “We’re cracking down on illegal robocalls by bringing law enforcement actions and pursuing technical solutions to the problem.”
Of course, I think that it’s important not to get confused about what the real problem is here. While robocalls are both annoying and illegal, the real problem isn’t the calling, but the scams behind the calls. They’re basically trying to get people to fork over money for services that are never actually delivered.
In the robocall cases announced today, the FTC alleges that the defendants place automated calls to consumers, typically with a prerecorded message from “Rachel” or someone else from “Cardholder Services.” The calls purport to have an “important message” regarding an opportunity to reduce high credit card interest rates. Consumers are urged to “press 1” to connect with a live representative, or “press 2” to discontinue getting such calls. Consumers who press 1 are connected to live telemarketers. Most consumers have no way to screen the calls using Caller ID, as the incoming number allegedly is often “spoofed,” or displayed as a false number. In many cases, the name displayed on the Caller ID is so generic, such as “Card Services,” that it provides little information about who is calling.
According to the FTC, consumers who reach a live telemarketer are then pitched allegedly deceptive offers to have their credit card interest rates substantially reduced, sometimes to as low as 6.9 or even zero percent. The telemarketers allegedly guarantee that lowering card interest rates will save the consumers thousands of dollars in finance charges in a short period of time and will allow them to pay off the balances more quickly. Some telemarketers allegedly claim that consumers will save at least $2,500 in finance charges and will be able to pay off their balances two to three times faster, without increasing their monthly payments.
In some cases, according to the FTC, the telemarketers claim to be calling from the consumer’s credit card company. In other cases, they use “Cardholder Services” to suggest a relationship with a bank or credit card company. If the consumer expresses an interest in the rate reduction offer, the telemarketer sometimes conducts a purported “audit” to determine whether the consumer qualifies. Consumers provide their financial and personal information, and are then put on hold while the “audit” is completed. According to the FTC, the “audit” typically is used only to determine whether consumers have enough credit available on their credit cards to pay the company’s fee.
The charges filed against the operations include both charges for making false claims and also for violating telemarketing laws, but it seems that the false claims/fraud stuff is the much bigger deal. Instead, however, the FTC seems to focus the publicity aspect on its “fight against robocalls.” I realize that may generate publicity, but isn’t the fraud aspect the bigger deal?
Related articles
- FTC Hangs Up On “Rachel From Cardholder Services” (consumerist.com)
- FTC shuts down 5 robocall operations (newsnet5.com)
- FTC files suit against “Rachel from Cardholder Services” (networkworld.com)
- FTC cuts off ‘Rachel from Cardholder Services’ (csmonitor.com)
- FTC Cracking Down On Robocalls (stlouis.cbslocal.com)
- The FTC Continues Its Crackdown On Robocall Scams (fastcompany.com)
- FTC Leads Joint Law Enforcement Effort Against Companies That Allegedly Made Deceptive “Cardholder Services” Robocalls (ftc.gov)
- FTC Accuses Companies of Deceptive Robocalls (techdailydose.nationaljournal.com)
- FTC hangs up on robocalls from ‘Rachel’ (latimes.com)
- FTC Whacks “Rachel From Card Holder Services” (yro.slashdot.org)
Congress Blog – The Hill’s Congress Blog
Posted by Michael B. Calyn in Government on October 2, 2012
Time to reform credit card swipe fees
By Rep. Peter Welch (D-Vt.) - 10/01/12 01:15 PM ET
Just one year ago, Congress took long overdue action to reform out-of-control debit card swipe fees charged to businesses every time a customer uses a debit card. The action was a step in the right direction and a big win for small businesses and consumers. But it was just a first step. We ought to look at credit card swipe fees too.
I first got involved with this issue almost five years ago because I kept hearing from Vermont country stores and small businesses about excessive swipe fees they are forced to pay just to accept debit and credit cards. In many cases, they told me they were losing money on some transactions due to these fees. So I dug into the issue.
What I found was astonishing. I never realized just how little merchants could do to change swipe fees or their terms of card acceptance. The dominant credit card companies, who together control 80 percent of the market, set the fees charged by the banks that issue their cards. The merchants can’t negotiate. They have no choice but to accept the fees or refuse customers paying with plastic. From a business perspective, that’s really no choice at all.
Kathy Miller, owner of the Elmore Store in Elmore, Vermont came to Washington, D.C. to testify before the House Financial Services Committee on legislation I introduced. One of Kathy’s primary frustrations was that her customers had no idea how much it cost her when they used a card to pay at her country store. There was little she could do to inform them of those costs or encourage them to use a different form of payment.
On average, swipe fees total roughly two to three percent of any purchase – the same or higher than the profit margins in many retail industries. Handing over these fees to the banks and credit card companies makes it difficult for local retailers to keep their prices down or put money back into their businesses.
And there is no justification for the fees to be this high. According to the Federal Reserve, the cost of processing a non-cash transaction is on average four cents. Yet, the fees paid by American businesses are the highest in the industrialized world. And they keep going up despite improvements in technology that makes non-cash transactions more efficient.
A year ago we made progress when we successfully implemented rules to crack down on debit card swipe fees. But there’s more work to do.Credit card companies still remain largely unregulated and able to set credit card swipe fees as they see fit. The big banks and credit card companies continue to wield their monopoly power, rigging the system to exploit small businesses and consumers.
One way they do that is by making things too confusing for most Main Street businesses to understand. Small businesses often don’t know what they are paying or why they are paying it. The bank statement a local retailer receives at the end of the month has so many different rates and fees it may as well be in a different language. For example, Visa has over 70 swipe fee categories while MasterCard has over 240 different rates.
Credit card fees are still growing and are largely unpredictable. As the United States begins to embrace new technologies, such as mobile payments, it is critical for America’s entrepreneurs that we not perpetuate a broken payments system that harms small businesses and their customers.
We shouldn’t let credit card giants own our future and hurt local businesses and their customers. The beauty of the American system is that we make everyone compete so that the little guy – consumer or small business – gets the benefit of that. That ought to start happening in credit cards too. The credit card industry shouldn’t get a free pass. We need to make them compete in an open, transparent way. If we do, we will all win.
Welch is a member of the House Agriculture Committee and the House Oversight and Government Reform Committee.
Congress Blog – The Hill’s Congress Blog.
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- Time to reform credit card swipe fees (thehill.com)
- Soaring Student Loan Debt Inspires New Debit and Credit Card Marketing Strategies (credit-land.com)
- Stealing? There’s an App for That! (credit-land.com)
- Debit Card Market Penetration (cardhub.com)
- Can I use my debit card like a credit card? (cardhub.com)
- Credit Cards Aren’t Dead Yet, But With Swipely They Are Being Reinvented (bostinno.com)
- Free Checking Nearly Extinct Thanks To Dodd-Frank; Will Credit Card Rewards Follow? (openmarket.org)
- Happy anniversary, swipe fee reform (politico.com)
- Group: Swipe Reform Saves $18M a Day (abcnews.go.com)
- New Code for Credit Cards (ireport.cnn.com)
FBI arrests dozens in credit card fraud sting – The Hill’s Hillicon Valley
Posted by Michael B. Calyn in Banking, Cyber Security, Fraud on June 27, 2012
FBI arrests dozens in credit card fraud sting
By Brendan Sasso - 06/26/12 04:20 PM ET
Police around the world arrested 24 people in a massive crackdown on online fraudsters, the Justice Department announced Tuesday.
The sting, codenamed “Operation Card Shop,” led the FBI to arrest 11 people in California, New York and five other states. Officials in seven foreign countries, including the United Kingdom and Bosnia, nabbed another 13 people in the operation.
The authorities accuse the defendants of stealing credit card numbers and other personal financial information.
According to court documents, the FBI set up an undercover website called “Carder Profit” in 2010, which pretended to be a forum for fraudsters to buy and sell financial information and exchange tips about hacking.
The site was designed to allow the FBI to monitor and record all of its discussion threads and private messages.
To make the site seem safe from police, new users could only access it if they were recommended by two existing users.
The FBI monitored the site and its users’ communications for two years.
The United States shared the evidence it collected with the foreign authorities for Tuesday’s coordinated crackdown.
The U.S. Attorney’s Office for the Southern District of New York said the operation was the “largest coordinated international law enforcement action in history aimed at ‘carding’ crimes” — offenses in which criminals traffic stolen credit cards on the Internet.
Officials claimed the sting protected more than 400,00 victims and prevented the theft of more than $205 million.
FBI arrests dozens in credit card fraud sting – The Hill’s Hillicon Valley.
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- FBI Announces 24 Arrests in Credit Card Fraud Probe Dubbed “Operation Card Shop” (creditcardprocessing.net)
- Dozens Said to Be Arrested in FBI Sting Operation Into Credit Card Fraud (forbes.com)
- Two Dozen Arrested in Global Credit Card Fraud Sting – Businessweek (businessweek.com)
- FBI Smashes Global Credit Card Fraud Ring (blogs.voanews.com)
- FBI hauls in 24 credit card hackers in online sting (arstechnica.com)
- FBI Nabs 24 in Credit Card Fraud Scheme (theepochtimes.com)
- F.B.I. Says 24 Are Arrested in Credit Card Theft (nytimes.com)
- FBI nabs 24 in credit card sting (guardian.co.uk)
- FBI cyber-crime sting snares 24 (bbc.co.uk)
- FBI busts 2 dozen in massive online fraud ring- Cyber bank robbers attempt billion-dollar heist (foxnews.com)
Debit Cards on Campus – NYTimes.com
Posted by Michael B. Calyn in Banking on June 25, 2012
Debit Cards on Campus
Published: June 19, 2012
Given the history of shady dealings between banks and colleges, Congress needs to take a hard look at the increasingly common practice of schools contracting with banks to disburse financial aid dollars to students.
In 2008, Congress finally barred student lenders from offering schools kickbacks to steer student business their way. The next year, it required credit card companies marketing to young people — and often paying schools or alumni associations for access — to ensure that applicants had the means to pay before issuing cards.
Debit cards have received less federal oversight. And,according to a study by the United States Public Interest Research Group Education Fund, an advocacy organization, nearly 900 colleges and universities have card relationships with banks or other financial institutions, some of which manage student aid disbursements by turning student IDs into debit cards. Some schools save money by outsourcing administrative costs. Others receive payments from the banks.
Lawmakers are now pressing for answers about these practices. Citing the study, Senator Richard Durbin, a Democrat of Illinois, along with Senator Jack Reed, a Democrat of Rhode Island, and Representative Peter Welch, a Democrat of Vermont, sent letters to 15 financial institutions asking each to provide information on campus card fees.
Senator Durbin and Representative George Miller, a Democrat of California, have askedthe inspector general of the Department of Education to determine whether the arrangements hurt students or violate federal regulations. They criticized the banks for what they described as “aggressive and misleading marketing” to students and for charging hidden fees that could lead students to quickly deplete their aid accounts.
The study pointed to some fees charged by the biggest player in the field, Higher One, which has contracts with 520 campuses. Student account holders are charged $29 the first time they overdraw and $38 after that, 50 cents for making a debit card purchase with a PIN and $2.50 for using another bank’s A.T.M. to withdraw cash.
According to the study, some students mistakenly believe that they must keep their aid with the issuing bank. Others, it says, have to wait longer for funds if they want them disbursed through their own banks.
It says that some of the banking arrangements might well benefit students, but it decries a lack of transparency in the contracts between colleges and the banks.
Unfortunately, high banking fees are a fact of life these days for all consumers. But school administrators should be doing more to protect students. Before they cut a deal with any bank — for campus access of any type — lower fees for students should be on the top of their list of requirements. If the colleges can’t or won’t protect students, the regulators and Congress will have to, once again, step in.
Debit Cards on Campus – NYTimes.com.
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- Does your debit card help improve your credit? (cardhub.com)
- Types of Debit Cards (cardhub.com)
- College deals for student ID debit cards draw criticism (usatoday.com)
- How Banks Skim Millions in Fees From Student Aid Using Debit-Card-Linked Student IDs | Common Dreams (theaveragejoenewsblogg.com)
- Susan Tompor: Debit fees follow students to college (goerie.com)
- Student Credit Cards vs. Debit Cards (comparecards.com)
- Susan Tompor: Avoiding debit card fees (robertselizabeth.typepad.com)
- U.S. PIRG – The Campus Debit Card Trap Are Bank Partnerships Fair To Students? (bespacific.com)
- These Debit Cards Are Bad News (fool.com)
JPMorgan steers low-end clients to prepaid cards | Reuters
Posted by Michael B. Calyn in Banking on May 27, 2012
JPMorgan steers low-end clients to prepaid cards
By David Henry
NEW YORK | Tue May 8, 2012 7:45pm EDT
(Reuters) – JPMorgan Chase & Co is seeking to move its least profitable checking customers into new prepaid debit card accounts to boost earnings in a business crimped by new regulations.
The cards work like checking accounts except that customers cannot write checks and overdrafts, and instead they pay with a swipe or by entering the card number on a website.
A loophole in the 2010 Dodd-Frank financial reform law allows banks to charge merchants higher fees for processing payments made with this type of debit card.
Chase said on Tuesday it will market the cards – with a relatively low $4.95 monthly fee – mainly to people who frequently overdraw their accounts, keep low balances, or do not qualify for a checking account at all. It is not adding extra fees for deposits or withdrawals at its ATMs or branches.
The move could pressure other debit card issuers to reduce fees and could prove to be a low-cost way for the industry to provide basic financial services to people who live paycheck-to-paycheck.
These customers have become a millstone for banks across the country after new U.S. regulations limited overdraft fees that banks can charge. A prepaid debit card cannot usually be overdrawn.
Chase, the bank’s retail arm, hopes the prepaid debit card will help it avoid the negative publicity that overdraft fees can garner. Many consumer advocates view those fees as a stealth tax on the poor.
Prepaid debit cards can carry high fees as well, but JPMorgan Chase says its card is among the cheapest available for the average consumer.
Many banks are going the same route as JPMorgan Chase and moving unprofitable customers into prepaid debit cards. The product generates fees and also lowers the cost of maintaining the account, said Todd Maclin, who heads Chase’s consumer and business banking unit.
“When we get out of the overdraft business, we also get out of the check business, which means we get out of the paper business, which means we also get out of a lot of processing, which means we save a lot of money,” Maclin said in an interview.
Between new regulations on fees and low returns on customer deposits as interest rates have dropped, JPMorgan Chase estimates that about 10 percent of its accounts do not generate enough revenue to cover their incremental costs, such as check processing and deposit insurance.
Chase, the third-largest U.S. consumer bank, aims to spend less on those customers while spending more to attract high net-worth individuals who will more than pay their way with purchases of investment and savings products.
Maclin said the bank will seek out the roughly 10 percent of customers who do not qualify for free checking and pay fees of about $12 a month. “We are going to call all of them and tell them that we have a product that costs $4.95 a month and you can do almost everything but write checks,” he said.
This soft approach is a reversal from when banks would try to force customers to change their ways by charging new fees.
It follows the outrage Bank of America Corp met last fall when it tried impose a $5 monthly fee for debit cards that had been free with checking accounts. Bankers are also wary of doing anything that would stoke public anger over the role of banks in the financial crisis.
BREAKTHROUGH OR FLOP?
JPMorgan Chase announced its prepaid debit card plans at an investor conference on Tuesday. Responding to a question at the conference, Maclin said he accepts the fact that cards will likely reduce the bank’s revenue from checking account fees. But it is a trade he is ready to make because the bank’s cost to serve many of those accounts exceed the revenue, he said.
Adam Rust, research director of advocacy group Reinvestment Partners in Durham, North Carolina, who has been critical of the prepaid card industry, said the new Chase card “provides important services at a low price.”
“This is good competition and there is lots of access to ATMs,” he added.
JPMorgan Chief Executive Jamie Dimon said in his annual letter to shareholders in April that the product “could be a breakthrough product for consumers in terms of pricing transparency, convenience and simplicity.”
“The management team doesn’t want me to get too excited in case it doesn’t work,” he added. He did not mention the prepaid debit card by name in the letter, but a person familiar with the matter confirmed he was referring to the product.
The cards have been offered in a pilot program in two states for a few weeks, and will be available in Chase’s 5,500 branches in 23 states by the end of summer.
Prepaid debit cards give banks a way around rules linked to a provision of Dodd-Frank known as the Durbin amendment, which limits fees charged to merchants for processing conventional debit cards to about 0.25 percent of the transaction value.
There are no limits for prepaid debit cards, which typically charge merchants about 1.70 percent, said David Robertson, publisher of the Nilson Report. For credit cards, the rate is about 2.05 percent.
Big banks are muscling in on a product that before Dodd-Frank was largely offered to low-income consumers by specialty companies, such as Green Dot Corp, NetSpend Holdings Inc and Meta Financial Group.
Banks such as Minneapolis-based U.S. Bancorp and Birmingham, Alabama-based Regions Financial Corp are also using the card to attract customers that might otherwise use check cashing services.
In June, American Express started offering prepaid cards in a bid to expand its payments business beyond the wealthy, its traditional customer base. American Express, like Chase, says that its cards are low-cost compared to others.
Fees for prepaid debit cards vary widely, and can be levied for putting money on the cards, making payments, and withdrawing cash from an ATM, among other things. According to website NerdWallet (www.nerdwallet.com/prepaid/), in one common scenario for how consumers add money and take money from their cards, yearly fees range from $37 to more than $400.
The Chase card and the U.S. Bancorp card are among the least expensive prepaid debit cards for consumers. Unlike many other cards, their monthly fees are low and they do not charge extra for typical checking account services, such as accepting cash and check deposits or using ATMs, said Anisha Sekar, vice president of credit at NerdWallet.
While deposits are free with the Chase and U.S. Bancorp cards, on other cards it can cost as much as $4.95 to add money.
JPMorgan steers low-end clients to prepaid cards | Reuters.
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- Consumer bureau checks out prepaid debit cards – The Hill’s On The Money (mbcalyn.com)
- Prepaid Debit Cards Are a Great Way for Banks to Soak the Poor [Banksters] (gawker.com)
- JPMorgan Chase Is Joining the Prepaid Debit Card Market (creditcardprocessing.net)
- Comparing Checking Account and Prepaid Debit Card Fees (bucks.blogs.nytimes.com)
- CFPB Introducing New Prepaid Debit Card Rules (bargaineering.com)
- New Rules for Prepaid Debit Cards (dealbook.nytimes.com)
- ConsumerWatch: Regulations Eyed For Prepaid Debit Cards (sanfrancisco.cbslocal.com)
- Is a prepaid debit card a good deal? (wxyz.com)
- Prepaid Debit Cards vs. Secured Credit Cards (comparecards.com)
- Consumer protections considered for prepaid debit cards (usatoday.com)
Consumer Watchdog Plans Limits for Prepaid Debit Cards – NYTimes.com
Posted by Michael B. Calyn in Banking on May 23, 2012
MAY 23, 2012
New Rules for Prepaid Debit Cards
BY BEN PROTESS AND JESSICA SILVER-GREENBERG
Joshua Roberts/Bloomberg NewsRichard Cordray, director of the Consumer Financial Protection Bureau.
The nation’s consumer financial watchdog is preparing restrictions on prepaid debit cards, a largely unregulated product that is flourishing even amid concerns about high fees and poor disclosures.
On Wednesday, the Consumer Financial Protection Bureau is expected to introduce a preliminary rule for prepaid products — the first of its kind. The bureau, which is expected to complete an overhaul in the next year, will also hold a hearing on Wednesday in Durham, N.C., that will feature testimony from consumer advocates and some of the card industry’s biggest players.
Until now, prepaid cards have escaped the regulations passed after the financial crisis. As new rules have targeted credit cards and traditional debit cards, a number of banks barreled into the prepaid market.
While the consumer bureau’s new effort would not rein in most fees that come with the cards, like a $5 monthly maintenance fee, it would require companies to reimburse consumers for unauthorized charges.
Card providers argue that they offer a competitive price and help consumers control their spending. But some federal regulators and consumer advocates worry that companies are steering low-income consumers into a relatively expensive product rather than plain vanilla checking accounts.
“The people who use prepaid cards are, in many instances, the most vulnerable among us,” Richard Cordray, the consumer bureau’s director, said in a statement, adding that “right now prepaid cards have far fewer regulatory protections” than traditional banking products.
David Newville, policy manager with the Center for Financial Services Innovation, said the proposed regulations would provide much needed transparency.
They are “what we would like to see,” he said.
The new oversight would coincide with a boom in the prepaid business. In 2009, borrowers had roughly $29 billion worth of prepaid cards, according to the Mercator Advisory Group, which provides research for the payments industry. By 2013, the volume of money on prepaid cards is expected to swell to $90 billion.
As big banks clamor for customers, they are muscling their way into the market, which until a few years ago was largely the terrain of less traditional financial firms like Green Dot and NetSpend. They also would be subject to the new rule.
In March, Wells Fargo introduced a reloadable prepaid card. And, Regions Financial, based in Birmingham, Ala., unveiled a prepaid card aimed at borrowers who typically do not have a traditional bank account.
JPMorgan announced earlier this month that it would start offering prepaid cards. Branded as “Liquid,” the card carries a $4.95 monthly maintenance fee but does not charge customers to add money.
The banks were drawn, in part, because prepaid cards were largely untouched by the Dodd-Frank regulatory overhaul law and other recent crackdowns that have siphoned billions of dollars in income from debit and credit card fees.
The law exempted prepaid cards from the so-called Durbin Amendment, allowing banks to impose high fees on merchants when consumers make a purchase with a prepaid card.
Advocacy groups have questioned whether card issuers clearly explain to cardholders the fees that come with the product, including charges to activate the card, load money on it, check a balance at cash machines and speak to customer service.
Some consumer advocates say the fees erode the money loaded onto the cards. Wells Fargo, for example, charges $3 for customers to withdraw money using a bank teller and $5 to replace a lost card.
A study by Pew, a nonprofit research group, also indicated that some customers were unaware their prepaid cards are not necessarily protected by the Federal Deposit Insurance Corporation. The bureau’s new proposal would not address that issue.
But under the bureau’s so-called advanced notice of proposed rulemaking, the agency is seeking to apply a longstanding federal rule for debit and gift cards to prepaid products. The rule, known as Regulation E, requires companies to reimburse customers for unauthorized transactions that pop up when a prepaid card is lost or stolen.
Consumer advocates including Adam Rust of Reinvestment Partners cheered the bureau’s plan.
“This is why we have a C.F.P.B.,” said Mr. Rust, who will join Visa and NetSpend executives among panelists at Wednesday’s hearing. “We don’t have basic protections in place for these cards.”
Consumer Watchdog Plans Limits for Prepaid Debit Cards – NYTimes.com.
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- Is a prepaid debit card a good deal? (wxyz.com)
- Prepaid Debit Cards vs. Secured Credit Cards (comparecards.com)
- Zynga, Amex launch prepaid debit card with in-game rewards (gamasutra.com)
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- Review: American Express & Zynga’s Farmville Prepaid Card (cardhub.com)
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Consumer bureau checks out prepaid debit cards – The Hill’s On The Money
Posted by Michael B. Calyn in Banking, Finance on May 23, 2012
Consumer bureau checks out prepaid debit cards
By Peter Schroeder - 05/23/12 12:01 AM ET
The Consumer Financial Protection Bureau (CFPB) is planning a long, hard look at a growing sector of the consumer market: prepaid debit cards.
The consumer agency announced Wednesday that it was launching a new initiative exploring the pros and cons of prepaid cards, including ways to make fees more transparent and offer better cardholder protection.
“The people who use prepaid cards are, in many instances, the most vulnerable among us,” said CFPB Director Richard Cordray. “All consumers need, and deserve, products which are safe and whose costs and risks are clear upfront. Yet right now prepaid cards have far fewer regulatory protections than bank accounts or debit or credit cards.
Citing studies showing nearly 10 percent of households use the cards and that the industry is expected to grow 42 percent per year through 2014, the CFPB is looking for public input on what works and doesn’t for these cards. The bureau noted that despite their popularity, the card remain “largely unregulated at the federal level.”
In particular, the CFPB is looking into how fees could be better disclosed for the cards, noting that the terms of many cards are hidden inside the packaging, making it difficult if not impossible for consumers to compare and get the best deal.
It also look into how consumers are impacted by the fact that, unlike debit and credit cards, prepaid cards are not required to offer protection for unauthorized transactions. Noting that many prepaid cards do offer such protection, there is no industry standard.
And the bureau is also interested in how consumers could benefit from various features that could be tied to the cards, such as savings accounts, overdraft protection, or the ability to build credit while using the cards.
The new initiative comes as the CFPB is prepared to hold a field hearing in Durham, N.C., to discuss the cards with experts, industry representatives and consumers.
Consumer bureau checks out prepaid debit cards – The Hill’s On The Money.
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- Zynga, Amex launch prepaid debit card with in-game rewards (gamasutra.com)
- CFPB Looks To Make Rules For Prepaid Cards (huffingtonpost.com)
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- Prepaid cards: The safe way to take money abroad (confused.com)
Used Xboxes can be hacked for credit card information, researcher says | The Verge
Posted by Michael B. Calyn in Entertainment, Privacy, Security, Social, Society on April 5, 2012
Used Xboxes can be hacked for credit card information, researcher says
Adi Robertson March 30
Restoring an Xbox 360 console to factory settings before selling it apparently isn’t enough to remove your personal information. In an interview with Kotaku , Drexel University researcher Ashley Podhradsky said that her team had successfully retrieved credit card data from a refurbished Xbox using simple modding tools. The software gave them access to the console’s files and folders, letting them extract information that hadn’t been wiped even by the Microsoft-authorized reseller. The process was published in the August 2011 Proceedings of the America’s Conference on Information Systems.
Podhradsky says that Microsoft “does a great job of protecting their proprietary information. But they don’t do a great job of protecting the user’s data.” In particular, she singles out what she sees as a long history of misleading information. “When you go and reformat your computer, like a Windows system, it tells you that all of your data will be erased. In actuality that’s not accurate — the data is still available.” Fortunately, it is possible to sanitize an Xbox hard drive by hooking it to your computer and running a program like Darik’s Boot & Nuke , she says. Podhradsky does not appear to have published research on other consoles, though, so PlayStation 3 or Wii users might want to wait before calling out Microsoft for poor security.
Used Xboxes can be hacked for credit card information, researcher says | The Verge.
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Hackers Can Steal Credit Card Information From Your Old Xbox, Experts Tell Us
Posted by Michael B. Calyn in Cyber Security on March 31, 2012
You might not want to sell or give away your Xbox 360 any time soon. Not without taking a hammer to the hard drive.
Even restoring your console to factory settings won’t remove some of the data it stores, according to an ongoing study from researchers at Drexel University. And with a handful of common tools, hackers and modders can dig into a system’s hard drive and excavate your credit card number or other personal information.
Speaking to Kotaku in a phone interview today, researcher Ashley Podhradsky said Xbox publisher Microsoft is doing a “disservice” to its customers by not doing a better job of keeping personal data protected.
“Microsoft does a great job of protecting their proprietary information,” she said. “But they don’t do a great job of protecting the user’s data.”
Podhradsky, along with colleagues Rob D’Ovidio and Cindy Casey at Drexel and Pat Engebretson at Dakota State University, bought a refurbished Xbox 360 from a Microsoft-authorized retailer last year. They downloaded a basic modding tool and used it to crack open the gaming console, giving them access to its files and folders. After some work, they were able to identify and extract the original owner’s credit card information.
We reached out to Microsoft for comment on this issue, but as of press time, they have not yet responded.
Podhradsky isn’t even a gamer, she says. For seasoned modders and hackers, the process might be even easier.
“A lot of them already know how to do all this,” she said. “Anyone can freely download a lot of this software, essentially pick up a discarded game console, and have someone’s identity.”
So what should you do if you want to get rid of your Xbox 360 but you don’t want your personal information compromised? Podhradsky recommends detaching your 360′s hard drive, hooking it up to your computer, and using a sanitization program like Darik’s Boot & Nuke to wipe everything out. Just reformatting the system isn’t enough.
“I think Microsoft has a longstanding pattern of this,” Podhradsky said. “When you go and reformat your computer, like a Windows system, it tells you that all of your data will be erased. In actuality that’s not accurate—the data is still available… so when Microsoft tells you that you’re resetting something, it’s not accurate.
“There’s a lot more that needs to be done.”
Hackers Can Steal Credit Card Information From Your Old Xbox, Experts Tell Us.
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Surviving the cashless cataclysm | ExtremeTech
Posted by Michael B. Calyn in Banking on March 21, 2012
Surviving the cashless cataclysm
By Sebastian Anthony on March 21, 2012
In Sweden, just 3% of the economy is powered by coins and paper money. Public buses don’t accept cash, churches have installed card readers to take donations, and there are even some bank branches that refuse to take your money, opting instead to deal with electronic transfers only.
The European average is 9%, and in the US, the credit card motherland, the percentage is still more than twice that of Sweden: 7%. If you stop and think about it, though, none of these figures are particularly surprising. With the rise of credit cards and store cards (and card readers everywhere), PayPal, online shopping, iTunes, Netflix, and app stores, cash is feeling more outmoded by the day. When was the last time you used an ATM, anyway?
The trend is very clear: Cash is on its way out. It might take another 10 or 20 years for Sweden to get there, and longer for the US and other economies, but eventually so few businesses will accept cash that it will be relegated to jangling jars and cruddy sofa crevices. Governments will have no choice but to halt the fresh minting of coins and printing of bills, and eventually non-electronic money will dry up all together.
Change
This will mark one of the most significant paradigm shifts in modern history. At some point in the future, probably within our life times, you will wake up and your cash will be worthless. After centuries of use, we will no longer have a fungible currency. Gone are the gold sovereigns and silver dollars and nickel-alloy pennies — it’ll all be encrypted, digital bytes, stored in programs like Google Wallet. Instead of handing the shop attendant some cash, you will swipe your phone across a card reader; if you need to lend your friend some money, you’ll just key in a number, bump your smartphones together, and NFC will take care of the technicalities.
I think this will all happen naturally and fairly painlessly. Just 50 years ago, cash (and gold bullion and shares and bonds) would have represented the entire economy — and now Sweden’s on the cusp of killing cash off entirely. It’s just a matter of convenience — and if consumerism has taught us anything it’s that convenience is king. When we’re fast moving towards a world where your smartphone replaces just about everything in your wallet — from cash to tickets to ID — how can clunky coins and grubby banknotes really compete?
Sentimentalists will mourn the demise of bills and coins with national figureheads emblazoned on them, I’m sure, and there will also be an issue with older people, who in general haven’t made the leap to electronic money and would be lost at sea if cash was no longer accepted anywhere. Beyond that, though, there’s a far more pressing question that governments (and societies) will have to answer: Will we let private corporations track, collate, and cross-reference every single one of our transactions?
You see, in a cashless society every single payment is digital, which means that every transaction must be confirmed by the bank or institution that governs your money. In turn this means that every move you make will be recorded in a huge database. Your bank will know where you get coffee in the morning, the route you take to work, and if there’s a vending machine at your office it might even know where you work. Likewise, your bank will know that you like to buy things on Amazon while you’re at work, that you enjoy watching X-rated movies when you’re on the road, and that you always leave it until the last moment to buy your wife a birthday present.
At this point it’s commonplace for self-respecting libertarians to leap up and decry the awful, privacy annihilation that I’ve just described. How could you live in a world where the Rockefellers can track your every move?! they cry. Well, get this, every credit card company, bank, and sizable corporationalready tracks your transactions.
Have you ever had a call from your bank, asking if a purchase you just made was fraudulent or not? Banks employ incredibly complex software (on beefy computers) to analyze billions of transactions — ostensibly to detect fraud (which costs banks millions of dollars a year), but of course other patterns can be detected as well. Just as one example, BillShrink has worked with 2,000 banks to analyze your buying habits, and then to provide targeted coupons on your monthly statement. Obviously it’s rather cool to automatically receive a $5 voucher for McDonald’s if your bank detects that you spend $100 under the greasy shadow of the Golden Arches every month, but it’s a little bit creepy too. It is, after all, exactly the same as Google or Facebook’s targeted advertising — but possibly even more accurate.
The fact is, cash is anonymous — and humans love anonymity. It’s not that we require it all the time, but a free society demands that the option is there. Whether you’re paying for something embarrassing, like a prostitute, or privately funneling money to a charity, it’s nice to have theoption of paying with a currency that cannot be directly tracked back to you.
On the flip side, though, corruption, tax avoidance, and many other crimes are all linked to the fact that cash is very hard to track. Taking Sweden as an example again, in 2008 there were 110 bank robberies; in 2011, there was just 16, the lowest since records began 30 years ago. In Italy, where cash is alive and kicking and graft and tax evasion are rife, the Prime Minister recently announced that he plans to limit cash payments to 1000 euros ($1300), down from 2500 euros. It is not a coincidence that Italy and Greece, two of the most volatile economies in Europe, both have strong cash cultures.
It would seem that you can’t have your cake and eat it too. Money is either accounted for by a central authority (electronic transactions), or it isn’t (cash). You are either protected (and snooped on) by the auspices of governments and mega corporations, or you’re not. There is another option, however.
Saved by technology, again
The important thing to remember is that untraceable, anonymous cash isn’t dead yet. Bills and coins might be on the way out, but that doesn’t mean that they can’t be replaced by an electronic equivalent. If Bitcoin has proved anything it’s that you don’t need a central authority to manage electronic trades — and just look at iTunes gift cards and pre-paid Visa and MasterCard credit cards; they’re not quite as anonymous as cash, but they’re close.
Bitcoin has failed because it doesn’t have the backing of a central bank, but there’s nothing to prevent national governments from issuing irreversible, cryptographic cash that could then be stored on “credit chips” (i.e. your smartphone, or even a coin-sized piece of solid-state memory). This digital cash would act just like its physical counterpart: You could deposit it in your bank, pay for groceries, or even lose it down the back of your sofa. You could pay people by physically giving them a credit chip, or by transferring them via smartphone. Digital cash would still have the same issues as normal cash — graft, tax evasion, robbery — but that’s the price we pay for freedom.
The benefits of a purely digital economy are massive. If you think about it, dealing with physical cash is incredibly difficult. You need cash registers (which aren’t cheap); you have to constantly monitor employees for theft; you need a safe to keep the money in between collections, and collections themselves are expensive too. A wholeindustry revolves around the safe handling, transportation, and counting of coins and bills. With digital currency, all of those difficulties disappear. With PayPal, you can set up an online business in minutes. With Square, your iPhone or Android smartphone becomes a point of sale.
And then there’s the analytics! If you think you have problems managing your money, imagine if you could plug your credit chip into your computer at the end of the month and find out exactly how you spent (and wasted) money. You wouldn’t have to give up this info to a third party — but if you did, there would be even more advantages. Imagine a group buying website (like Groupon) that analyzes your credit chip and matches you to 10 other local Coke drinkers; instead of each buying a 12-pack from the supermarket, you could club together and buy a case from the wholesaler.
Remain vigilant
Anonymous, digital cash isn’t a given, though. We will probably have to fight for it. Conspiracy theorists are exceptionally talented at conflating fact and fiction, but they’re not wrong when they say that totalitarian governments and megacorps really want monitor our every move. The demise of physical cash is the perfect opportunity for governments, under the sway of powerful lobby groups, to transition to trackable currencies that are governed by a central computer. This will probably be one of the biggest hurdles that we will face in the twenty-first century.
Swedes, when the referendum to abolish paper money finally rolls around, be sure to vote for the creation of a digital, anonymous equivalent. The rest of the world will watch and take its cues from you.
Surviving the cashless cataclysm | ExtremeTech.
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