This Week In Credit Card News: Beware Of This New IRS Scam; How Big Is Starbucks’ Rewards Program?

20 Million Reasons Why Starbucks’ Rewards Program Is So Powerful

Starbucks loaded around $1.6 billion on gift cards this past holiday season, and the company estimates that one in seven Americans received one as a gift. Like any savvy business, Starbucks doesn’t leave that money sitting in the till to make change. It reinvests it, preferring to earn interest on high-grade corporate bonds, Treasury notes, and certificates of deposit. Starbucks currently has $1.2 billion in deposits on its books, according to a study by The Wall Street Journal—more than many financial institutions have. On breakage income alone, or income resulting from lost or unused gift cards, Starbucks earned $39.3 million last year. That income is equivalent to the estimated operating profit from 320 company-owned stores. With $5 billion in card transactions every year, Starbucks would be able to earn $50 million in interest income with a 1% interest rate. Combined with the breakage income, that would be about $90 million, or the equivalent of about 700 company-owned stores. [The Motley Fool]

IRS Scammers Demand Tax Payments on Gift Cards

The Treasury Inspector General for Tax Administration warned Tuesday about a new twist in the IRS impersonation scam, with fraudsters pretending to be Internal Revenue Service employees demanding taxpayers send them tax payments not only on iTunes gift cards, but on other types of gift cards as well. [Accounting Today]

Home Depot Files Antitrust Lawsuit Against Visa, MasterCard

Home Depot filed an antitrust lawsuit against Visa and MasterCard reigniting claims from a decade ago that merchants pay too much for debit and credit card transactions and adding new contentions about the effectiveness of chip-based cards to reduce fraud. The do-it-yourself retailer also contends that Visa and MasterCard colluded to prevent the adoption of new chip-based cards that require consumers to enter a personal identification number, or PIN, to authorize a transaction. [The Wall Street Journal]

Federal Court Rules Fourth Amendment Does Not Apply To Police Scanning Credit Cards

A federal appellate court ruled last week that law enforcement agencies can scan debit, gift and credit cards without running afoul of the Fourth Amendment’s protection against unreasonable searches. [Forbes]

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This Week In Credit Card News: Dangers Of CoSigning On A Credit Card; Plastic Money Comes To England

1 in 3 Cosigners for Auto Loans or Credit Cards Get Stuck With the Bill

About 17% of Americans have, at one time or another, cosigned on a loan or credit card for someone else. Most often the cosigner is an adult over the age of 50 helping a child or stepchild get an auto loan. The bad news is that 38% of cosigners had to pay some or all the loan or credit card bill because the primary borrower failed to pay. The cost to a cosigner extends beyond the unpaid debt itself. 28% of cosigners experienced a drop in their credit scores because the person for whom they cosigned paid late or not at all. [24/7 Wall Street]

England to Launch New Plastic Money with Enhanced Security

“Paper or plastic?” Who would have thought that question would ever apply to currency? In three months, the Bank of England will launch a new £5 note made from thin, flexible plastic, said to be more secure and more durable than traditional paper money. The “New Fiver,” as it has been coined, is printed on polymer, which is naturally resistant to dirt and moisture. This is said to make the note last 2.5 times longer than the current £5 note, making it more environmentally friendly. The longer a note can stay in circulation, the fewer notes the bank has to print. []

Sanders Goldmine: 3 Million Credit Cards on File

Bernie Sanders will leave behind a trove of 2.5 million credit card numbers for the party’s donation system. The Vermont senator has helped amass a mountain of digital data the Democratic party can use in subsequent elections. A nonprofit called ActBlue has served as the donation platform for Sanders and other Democrats running for office, and it has data on each of the 2.5 million donors who have given money to Sanders’ presidential campaign. ActBlue now has 3 million credit cards on file. What that means is it’s easier for people to donate again thanks to single-click donating. [News Max]

Card Readers Allow Oklahoma Highway Patrol to Seize Suspects’ Money

State police in Oklahoma have begun using a device that can seize money on prepaid cards. Electronic Recovery and Access to Data (ERAD) card readers can also document and check the balance on prepaid, debit, or credit cards, and freeze funds. Developed in 2012, the card readers have allowed state and local police to seize more than $1 million during field tests If you are suspected of criminal activity, the Oklahoma Highway Patrol can use ERAD to scan your cards and take money from prepaid cards without a warrant or arrest. [Popular Science]

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This Week In Credit Card News: Responding To A Data Breach; Dangers Of Using A Business Debit Card

The First 48 Hours: How to Respond to a Data Breach

The first few hours after a breach are critical in asserting control of the situation and businesses must have a comprehensive incident response plan in place that enables them to react immediately should the worst happen. Before drafting a plan, companies must first thoroughly understand the different types of personal and regulated data they collect, how it’s protected, where it’s stored and who has access, as this will influence the response required. The action guide can then be created, which must include detailed descriptions of the roles and responsibilities of specific individuals and departments, and timelines. [Info Security]

Why You Shouldn’t Use a Business Debit Card

Ditch your business debit card and use a credit card instead. That’s not legal advice; it’s just common sense, and here is why. When it comes to liability for fraudulent card purchases, there are two federal laws you need to be aware of. One is the Electronic Funds Act, spelled out in Regulation E (or “Reg E”), while the other is the Truth in Lending Act, or “Reg Z.” Reg E covers debit cards used by consumers for consumer purchases. It does not cover business debit cards. Under Reg E, if your consumer debit card (not your business debit card) is used fraudulently, your responsibility for fraudulent purchases starts at $50 but can go higher. Regulation Z covers credit card purchases. It also applies primarily to consumer transactions. In fact, it specifically says that it does not apply to “extensions of credit primarily for business, commercial or agricultural purposes.” Unauthorized use of business credit cards is generally covered by Reg Z, which caps the maximum liability for fraudulent purchases at $50. [Nav]

Bank of America Revives Sale of Credit Card Issuer MBNA

Bank of America has relaunched the sale of one of the U.K.’s biggest credit card companies MBNA, according to people familiar with the matter. The card business, which has about five million customers and a loan book of around £7 billion ($10.2 billion), is being shopped to a number of potential buyers including Lloyds Banking Group PLC. Bank of America decided to sell the U.K. MBNA cards business in 2011 as it ditched several international credit card businesses to bolster its balance sheet. But the sale of the U.K. business was axed a year later. [The Wall Street Journal]

Forget about Debit Cards–Here Come Debit Rings

Visa said that it will give out rings that work like prepaid debit cards to the 45 Olympic athletes it’s sponsoring. The technology is being tested by the athletes in the hopes that it can be deployed to the general public at a later date. The new ring comes in white or black ceramic, doesn’t require a battery or charging and can be submerged in water to up to 50 meters (164 feet). The ring has a secure microchip and works when the wearer hovers it over the sensor on a card reader. The rings worn by the athletes will have prepaid money on them but they can be reloaded. [CNN Money]

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This Week In Credit Card News: Thieves Steal $12 Million With Fake Cards; Free Credit Scores For All

Ocean’s 100: Thieves Steal $12.7 Million from ATMs in Just Three Hours

A few days ago, 100 coordinated thieves stole no less than $12.7 million from ATMs in Japan. The entire thing took just three hours, and no suspects have been apprehended. The operation was orchestrated by an organized crime ring. 100 people targeted 1,400 ATMs and used fake credit cards that contained details stolen from an unidentified South African bank. Thieves stole precisely 100,000 yen per withdrawal. That means each card was used only for a single transaction worth around $914, but the grand total was just under $13 million. [BGR]

Discover Now Offers Free Credit Scores to All Consumers

Discover launched a new website that allows consumers to look at their free credit score online. Known as the Discover Scorecard, this program provides a free FICO credit score, along with basic information about the person’s credit history. Discover has been providing free FICO scores on credit card statements since November 2013, but this new program does not require users to be a Discover cardholder. By entering some basic personal information, users can gain access to important details about their credit. FICO scores are used by 90% of the top lenders in the United States, so having access to these scores gives consumers a good idea of whether they qualify for a loan or line of credit. []

Balance Due: Credit Card Debt Nears $1 Trillion as Banks Push Plastic

U.S. credit card balances are on track to hit $1 trillion this year, as banks aggressively push their plastic and consumers grow more comfortable carrying debt. That sum would come close to the all-time peak of $1.02 trillion set in July 2008, just before the financial crisis intensified, and could signal an easing of frugal habits ingrained by the recession. In addition, lenders have signed up millions of consumers for subprime credit cards who previously weren’t able to get credit. [The Wall Street Journal]

Americans are Pretty Clueless on Credit Cards and Scores

Financial education isn’t standardized in the United States, leading many Americans to rely on loved ones or the news media for guidance. They manage their money through trial and error. As a result, they have significant blind spots about basic concepts. The survey of more than 2,000 adults shows that most Americans don’t understand the effects that common actions have on their credit scores, largely underestimate how many credit scores they have, and don’t understand how credit card interest works. [USA Today]

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This Week In Credit Card News: Who Is Stealing Your Data; Companies Unprepared For Cyber Attacks

You Won’t Believe Who is Responsible for 50% of Hacks

According to Verizon’s 2015 Data Breach Investigations Report, about 50% of all security incidents–any event that compromises the confidentiality, integrity or availability of an information asset—are caused by people inside an organization. And while 30% of all cases are due to worker negligence like delivering sensitive information to the wrong recipient or the insecure disposal of personal and medical data, roughly 20% are considered insider misuse events, where employees could be stealing and/or profiting from company-owned or protected information. [CNBC]

Most Organizations Unprepared for Cyber Attacks

Nearly 80% of organizations remain unprepared and without a formal plan to respond to cyber security incidents, a report has revealed. There has been little improvement in preparedness in the past three years. It shows that on average, only 23% of organizations have the capability to respond effectively to critical security incidents. [Computer Weekly]

Chase Changes Overdraft Policy: No Credit Cards for Backup Funding

Linking a checking account to a credit card to provide a cushion in case of an overdraft is a time-honored tradition in consumer banking, but Chase is taking a new approach. Starting Aug. 20, a Chase credit card can no longer be used to provide overdraft protection for a personal checking account. So what happens if Chase checking account holders overdraw their accounts and don’t have a Chase savings account? It means they might have more declined transactions and might incur insufficient funds and returned item fees. [Chicago Tribune]

Fitbit Bets on Mobile Payments with Acquisition of Coin

Fitbit, the fitness company perhaps best known for its bevy of activity-tracking smartbands and phone apps, is making an unlikely acquisition. It announced the purchase of Coin, the payments developer of the credit card-emulating Coin card. Fitbit’s not investing in Coin’s current product offering, Coin 2.0, but instead bringing the company’s near-field communication, mobile, and wireless talent on board for as-yet unspecified future projects. [Digital Trends]

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