This Week In Credit Card News: AmEx Raising Interest Rates, Mobile Payment Wars Intensify

Google Buys Softcard, Teams Up with Carriers on Mobile Payments

AT&T, Verizon and T-Mobile are selling their mobile wallet joint venture Softcard to Google for an undisclosed amount. They have agreed to pre-install Google Wallet on their Android smartphones starting this fall. [Gigaom]

American Express Raises Interest Rates on Some Credit Cards

American Express increased interest rates on some of its credit card accounts by an average of 2.5 percentage points in recent weeks, the company said. American Express had been charging a lower interest rate, as much as 3.25 percentage points, on its credit cards compared with rates its competitors charge for customers with similar credit scores. The rate increase was authorized after an analysis showed the difference. Customers affected will be notified and will have the option to keep the card at the higher interest rate or cancel their cards. [Associated Press]

Two Million Americans Were Victims of Medical Identity Theft in 2014

More than two million Americans were victims of medical identity theft in 2014. For consumers, medical identity theft can be more complicated and costly to resolve than credit card theft, since stolen medical data can sometimes include permanent information such as a consumer’s name, Social Security number and date of birth. 65% of victims surveyed said they paid more than $13,000 in out-of-pocket expenses as a result of the fraud, a significant increase from 36% in 2013. []

CFPB Wants Better, Faster Database Of Credit Card Agreements

To improve the Consumer Financial Protection Bureau’s public database of credit card agreements, the agency is planning to give banks a brief break from having to file those documents with the system. Under the CARD Act, certain banks are required to send their customer agreements on credit cards to the CFPB each quarter, which then posts the document to an online database that consumers can use to compare terms and conditions. The CFPB is proposing a one year suspension on credit card issuers’ obligations to manually submit the agreements, so that the Bureau can develop a new submission system. [Consumerist]

The $14 Billion Difference: How Visa, MasterCard, and American Express Make Money

There are key differences between how American Express and its monster rivals Visa and MasterCard bring in their revenue. Here’s a little primer on the two business models. [Motley Fool]

Big Fish Games Website Hacked, Users Credit Card Data Compromised

Casual gaming company Big Fish Games has reported that its website was compromised in the December to January period and the hackers may have stolen Big Fish customers’ personal and financial information like credit card and CVV numbers. Big Fish Games was founded in 2002, and has distributed more than 2.5 billion games to customers in as many as 150 countries. [TechWorm]

The Liability Shift and its Impact on Mobile Payments

This is going to be a major year for innovation in mobile payments, and credit card payments in general, as the fundamentals of credit card-based payments are being shaken by the “liability shift” that occurs later in the year. Essentially, the “liability shift” places the burden for fraudulent credit card charges in the hands of merchants and issuing banks that don’t implement new technology to accommodate chip-based credit cards that offer superior fraud protection versus magnetic stripes common in the United States. [Tech Republic] Weekly Credit Card Rate Report

Based on the 1,000+ cards in the Complete Credit Card Index, the average advertised APR for credit cards is 14.45%, identical to last year. Six months ago, the average was 14.49%. One year ago, the average was 14.50%. []

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This Week In Credit Card News: Samsung Takes On Apple Pay; New Cyber Security Features

In Challenge to Apple Pay, Samsung Buys Mobile Payment Company

Samsung is buying mobile-payment startup LoopPay as the Korean phone maker steps up to challenge Apple and its payment system on iPhones. Launched a year ago, LoopPay works by reproducing the signals from a credit card’s magnetic swipe as users tap a LoopPay device next to a retailer’s card reader. That means LoopPay should work with most retailers’ existing payment terminals. [Associated Press]

Visa, MasterCard to Roll Out New Cybersecurity Features

Visa and MasterCard are taking long-awaited next steps to ramp up security of customer data as concerns over cyberattacks on credit cards continue to mount. Visa said it would bring its Visa Token Service, which replaces cardholder information such as account numbers and expiration dates with a unique series of numbers that validates the customer’s identity, to device manufacturers beyond Apple. MasterCard said it plans to spend more than $20 million on its efforts to use a combination of biometrics, such as facial and voice recognition and fingerprint matching, to authenticate and verify transactions. [The Wall Street Journal]

Federal Government Will Accept Apple Pay in September

The United States federal government has given the mobile payment industry, and specifically Apple Pay, a major vote of confidence. Apple’s CEO Tim Cook announced at the cybersecurity summit that Apple Pay will be accepted as a payment method for federal government services. Beginning in September, federal payment cards are expected to support Apple Pay, including debit cards where veteran benefits and Social Security payments are issued. []

American Express Loses Legal Battle On Merchant Rules

American Express lost its legal battle against the United States Department of Justice related to its merchant rules. United States Judge Nicholas Garaufis found that the merchant rules of American Express violate antitrust law. In his ruling, the judge emphasized that the credit card company’s merchant rules “constitute an unlawful restraint on trade.” [Value Walk]

Visa Wants to Track Your Smartphone to Combat Fraud

Visa will introduce a feature this spring that will allow its cardholders to inform their banks where they are automatically, using the location function found in nearly every smartphone. Privacy experts are applauding the feature, saying that, if used correctly, it could protect cardholders and cut down on fraud taking place on credit cards. [Associated Press]

JetBlue to End Partnership with American Express

JetBlue Airways will soon be dropping American Express as its credit card provider in favor of MasterCard and Barclays, according to multiple media reports. This breakup comes just a week after American Express lost its contract with Costco. That partnership lasted for 16 years, and according to some sources, accounted for nearly 8% of American Express’ worldwide billed business. []

Russian National Charged in Largest Known Data Breach Extradited to the U.S

A Russian national has appeared in federal court in Newark after being extradited from the Netherlands to face charges that he conspired in the largest international hacking and data breach scheme ever prosecuted in the United States. Vladimir Drinkman, 34, of Syktyykar and Moscow, Russia, was charged for his alleged role in a data theft conspiracy that targeted major corporate networks, stole more than 160 million credit card numbers, and
caused hundreds of millions of dollars in losses. [Finextra]

How to Challenge & Win A Credit Card Dispute

The Fair Credit Billing Act mandates that you notify the creditor within 60 days of getting the statement with an incorrect charge, and the creditor must acknowledge receipt of the letter within 30 days. But you’ll probably start with a telephone call to the credit card company, and you should be armed with your receipt or other evidence of the error. Here are some strategies for disputing a charge with your credit card company. [Investopedia] Weekly Credit Card Rate Report

Based on the 1,000+ cards in the Complete Credit Card Index, the average advertised APR for credit cards is 14.45%, slightly higher than the 14.40% last week. Six months ago, the average was 14.47%. One year ago, the average was 14.48%. []

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Password Managers Could Limit Identity Theft

Password managers could be an answer to the growing fear of identity theft.

In general, consumers do a very poor job of creating secure passwords, whether it be for their bank information, credit cards, or even their email account. Most people use a password that is a memorable word and possibly a number or symbol. Hackers have now created tools that can break most passwords and gain access to a site in a matter of seconds.

In early January, a hacking tool called Idict proved it could break into many iCloud accounts in less than five seconds. This type of hacking tool has every word in the dictionary stored, and it tries all those words with and without numbers millions of times in a matter of seconds. This is known as a “brute force attack.”

Apple has since added safeguards to prevent this type of attack, but most other sites have not.

To defeat hackers, you should have a different strong password on each site you use, and it should be changed often. Passwords should have random upper and lower case letters as well as at least one number and symbol. If they are truly secure, you will probably not be able to remember many random passwords.

That is why you need a password manager.

A password manager remembers all the passwords for you. It sits on your computer and has a master password. When you visit a site a second time, it works with your browser to remember your password and automatically logs you in. It becomes a significant time saver in addition to the solid security it provides when you start using random passwords.

The best policy is to let the password manager generate a new random password for you. But if you insist on creating your own password, the programs will tell you how strong your password is.

LastPass, Dashlane and Qwertycards are some of the top password managers in a crowded field. LastPass and Dashlane are both free, but if you want them to sync your passwords between devices, you will pay $12 a year at LastPass and $40 a year at Dashlane. The main difference is that Dashlane can change all your passwords and generate new random passwords for all your accounts with one click, a feature that may be worth the extra money.

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It’s Time To Overhaul The Credit Reporting Industry

In an era dominated by customer reviews, viral social media rants, scandal-obsessed media and volatility-fueled financial reform it is amazing that credit bureaus have been able to get away with their shady tactics and opacity as long as they have. It is also imperative that we address this problem as soon as possible.

You see, credit reports are about as important to consumer life as they are misunderstood by most of us. But while the information on our major credit reports dictates everything from what we pay in insurance premiums to our eligibility for certain jobs, fewer than one in five people get a copy of their credit report each year. That’s especially important considering that 1 in 5 people reportedly have an error on one of their credit reports!

Given this infamous record of poor performance, it should come as no surprise that 28,469 credit reporting complaints were levied with the Consumer Financial Protection Bureau (CFPB) in 2014. This prodigious number of grievances was 43% more than the combined number of complaints submitted about credit cards and student loans. People clearly weren’t happy.

So, the question seems to be: Why has the credit reporting industry become so problematic, and how can we make the environment safer for consumers?

For starters, our collective lack of financial literacy has allowed the credit bureaus to devolve into the entities they are today. We have not been proactive in demanding access to our credit reports nor in discouraging mistakes on these files. Part of it’s on us.

The lion’s share of the blame, however, can be ascribed to a combination of the credit bureaus, their information “furnishers” and financial regulators.

“There is no incentive to do better,” says Eugene H. Spafford, executive director of the Center for Education and Research in Information Assurance and Security at Purdue University, “and improving accuracy would increase cost.”

On the other hand, Neil M. Richards, a professor at the Washington University School of Law believes that “mistakes are common because there is a lot of data about a lot of people, and many of those people have similar names. Sometimes data gets matched to the wrong person.”

We also have to consider the fact that credit bureaus really weren’t regulated all that closely until recently. In fact, it wasn’t until July 2012 that the CFPB began scrutinizing these companies – putting them under federal supervision for the first time.

But regardless of the reasons for credit bureau ineptitude, the question of how to improve the situation still remains. After all, the current situation clearly isn’t working too well.

There is no reason that credit bureaus should be able to take our data, mess it up and then charge us for the ability to review it when we inevitably have to police their performance ourselves. That’s like having to pay a vendor to do a job that you have absolutely no interest in performing in the first place.

“The solution we have currently – monitor your credit – is insufficient because consumers only have access to one free credit report per year under federal law,” says Richards. “And even if consumers check their credit regularly, this competes with other kinds of privacy self-management they are expected to keep up with. … We place too many demands on busy individuals, so it’s no surprise that everyone can’t keep up with everything they are expected to do.”

The answer is unlimited free access for all consumers and the companies they grant access to. The result would be a more transparent system that better promotes consumer performance and modernizes the personal finance landscape.

On-demand information about the contents of our credit reports and the state of our credit score would enable us to better track our household’s financial performance as well as advise friends and help foster a more informed landscape. After all, 73% of people who are given access to their medical records use it to monitor their health while 44% of people shared the information with others, according to a 2014 report from the Office of the National Coordinator for Health Information Technology.

Opening up consumer credit data to a wider corporate market would also spur progress in the space. Rather than having a few large companies dominate the market, the most innovative and successful companies – those behind the most predictive credit reports and scores – would ultimately garner the most business and thrive.

Trust me. While this might not be a topic many of you think about often (or ever), it is one that affects all of our lives in a major way. So, much like activists are pushing for things like improved access to medical records and net neutrality, we must overhaul the credit reporting space and make it serve us rather than the other way around.

Odysseas Papadimitriou is CEO of the credit card comparison website CardHub and the personal finance social network WalletHub. He previously worked as a senior director at Capital One.

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