Community banks reissue 4M cards

Community banks have reissued more than 4 million debit and credit cards after the card breaches at Target and Neiman Marcus, an effort that has kept fraud on customer accounts to a minimum.

The Independent Community Bankers of America said Wednesday that only 1 percent of community bank customers have reported fraud on their accounts following the notorious hacks, while the banks swallowed $ 40 million to reissue the cards.

The ICBA doesn’t expect the cost of card reissuance to go up significantly going forward, but a material increase in fraud costs is still possible because some consumers may have yet to report it on their accounts, says Viveca Ware, an ICBA staff expert.

Last month, JPMorgan Chase CEO Jamie Dimon said his company had replaced 2 million debit and credit cards as a result of the security breaches, but warned in an investor call that “this story is not over, unfortunately.”

The response by banks comes after Target announced in December that it suffered a data breach from the day after Thanksgiving until Dec. 15 that exposed 40 million credit card and debit card accounts. Hackers also got the personal information of up to 70 million individuals.

Neiman Marcus disclosed in January that 1.1 million card accounts had been compromised in a data breach at its stores. Michaels and White Lodging have followed with their own disclosures of data hacks.

Last week, retailers and banks, represented by their subsequent trade groups, agreed to a partnership to figure out ways to better protect consumer data from breaches. They are working together to find safer ways to share consumer information, to identify technologies that reduce cyberattack risks and involve all parties in the payment process to combat security threats.

The collaboration comes after both sides took turns blaming each other for security risks in front of Congress.

Has your community bank reissued your card?

Follow me on Twitter: @JannaHerron. » Credit Cards

Chase offers chip-and-PIN

JPMorgan Chase will be offering to chip-and-PIN credit cards later this year as a part of a company effort to reduce card fraud. Company CEO Eileen Serra announced the change on Tuesday at Chase’s investor conference.

EMV chip cards (for Europay, MasterCard and Visa) contain a tiny computer chip that encrypts transaction data uniquely each time it is used. This makes it nearly impossible for fraudsters to create counterfeit cards. Chip cards are also widely used abroad.

Chip cards come in two varieties: one that requires a PIN to complete a transaction and one that only requires a signature. The difference is similar to how many debit card purchases require a PIN while credit card transactions often need only a signature to complete the transaction in the U.S.

Chip cards with PINs, or chip-and-PIN cards, are more protected if the card is lost or stolen and someone tries to use it fraudulently. That’s because it’s easier to forge a signature than to guess someone’s PIN.

Currently, Chase offers EMV chip-and-signature versions of the following credit cards:

  • British Airways Visa Signature Card
  • Chase Sapphire Preferred Card
  • Hyatt Credit Card
  • J.P. Morgan Palladium Card
  • J.P. Morgan Select Visa Signature Card
  • Marriott Rewards Premier Credit Card
  • The Ritz-Carlton Rewards Credit Card

Several other U.S. issuers offer chip-and-PIN cards for some of their credit cards. Bank of America and several credit unions offer chip-and-PIN cards, while Citi and Wells Fargo offer the option of entering a PIN if the retailer supports it. U.S. Bank offers only chip-and-signature cards.

Chase’s announcement comes after a major card hack at Target over the holidays. Fraudsters picked up data from 40 million debit cards and credit cards, along with personal information from up to 70 million individuals. Neiman Marcus, Michaels and White Lodging — which manages major hotel chains — also disclosed card breaches in the last two months.

Will you get a Chase chip-and-PIN card? Do you want one?

Follow me on Twitter: @JannaHerron. » Credit Cards

Dealing with financial infidelity

Consumers have their own credit history. Couples will see joint accounts and authorized users on individual accounts show up on both credit reports, but they don’t have joint credit reports. The potential to hide finances from your partner creates the possibility of “financial infidelity.”

The National Endowment for Financial Education released survey results on Valentine’s Day about couples suggesting that financial infidelity is just as significant among couples as emotional and sexual infidelity. “According to the new survey, 1 in 3 couples who combine their finances admit to lying to their partner about money. The survey also finds that 76 percent of financial deceptions have an effect on the relationship.”

“People commit financial infidelity because although they are sharing everything with their partner or spouse, they believe that certain parts of their financial situation still should remain private,” says Patricia Seaman, senior director with NEFE. “Additionally, people are afraid of what their partner is going to say, how they will be judged or they may be embarrassed.”

So what does NEFE say about identifying the problem and working toward a solution?

Warning signs. Red flags that financial infidelity may be an issue in a relationship may be as simple as coming across a receipt or a piece of paper indicating a purchase that you don’t recognize, or not seeing copies of every bill each month. “Another significant indicator may be that your partner or spouse is defensive or withdrawn when the topic of money is brought up,” Seaman says.

Approaching your partner. Confronting your partner is a tough thing to face. According to Seaman, you must accept that it will be stressful. She says the best way to approach the situation is to first know what you want out of the conversation before you have it, and not to approach your partner by saying “we have to talk.” You also must be careful not to sabotage your partner by inviting them to a dinner or movie night and then hitting them with the topic by surprise.

Getting on the same page. Seaman says in order to rebuild trust, you must explain to your partner the following: “I’ve done some spending you don’t know about, and I want to make sure we get on the same page and create goals today that we can stick to.”

Rebuilding trust after financial infidelity occurs. After you or your partner has come clean about committing financial infidelity, you must accept that it will take time to rebuild the trust you once had. “It will take sustained transparency in all communication, and it takes a commitment from both to stick to the goals that you’ve set together,” says Seaman.

Have you experienced financial infidelity? Did you work through it? If so, what got you through it?

Follow me on Twitter: @drdonsays. » Credit Cards

AmEx debuts card for busy moms

American Express has introduced a new credit card targeting busy moms.

The new Amex EveryDay credit card earns two rewards points for every dollar spent at U.S. supermarkets, up to $ 6,000 a year. All other purchases get one point per dollar. The card also rewards frequent users. Cardholders that make 20 or more purchases in a billing period receive 20 percent extra points.

The issuer is hoping to appeal to mothers, who are on the go, managing many different tasks during the day, says David Rabkin, senior vice president of consumer lending at American Express. Rabkin says the company wanted to reward this multi-tasking mom for how often she shopped, rather than how much she spent.

“We found that these consumers shopped consistently at five stores within 20 minutes of their home, but the stores didn’t all fit into one category,” he says. “The goal is not to ask people to spend more than they usually do, but to spend what they normally do and pull out our card.”

The card works with the issuer’s mobile app so cardholders can keep count of their purchases every month to help them earn the bonus rewards points.

There is no annual fee and no interest on purchases or balance transfer for the first 15 months. After that, the annual percentage rate ranges between 12.99 percent and 21.99 percent, depending on the cardholder’s credit risk.

American Express debuted the new credit card, which is clear and modern-looking, Sunday evening during the Academy Awards Show with a commercial featuring Tina Fey, who Rabkin says is “the ultimate multi-tasker.”

Does this sound like a card that would fit your lifestyle? Why or why not?

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Retailers and banks band together

After tossing blame at each other last week in front of Congress, merchants and banks are now working together to fight fraud.

Industry trade groups representing retailers, restaurants, hotels and banks said last week that they are forming a partnership to explore solutions that better protect consumer information from hackers. The trade associations will form working groups to address three principles:

  • Finding ways to share consumer information in the most secure manner possible.
  • Identifying technologies that reduce risk to cyberattacks.
  • Create partnerships among all parties involved in the payment process to combat security threats.

The news of the collaboration comes after the same trade groups pointed fingers at each other last week while testifying before the Senate on data security. The retailers blamed security holes on banks’ unwillingness to issue more secure credit cards, while the banks said retailers should bear the burden of breach costs if it happens on their systems.

The interest in cybersecurity comes after a rash of data breaches from retailers and hotels in the past three months. The largest breach occurred at Target over the holidays and compromised 40 million debit card and credit card accounts and personal data of up to 70 million people. Neiman Marcus, Michaels and White Lodging — which manages several major hotel chains — disclosed that they had suffered breaches of their own recently, too, albeit on a smaller scale.

Have you been a victim of one of these breaches? What do you think should be done to improve data security?

Follow me on Twitter: @JannaHerron. » Credit Cards

Sally Beauty: We had failed hack

The national beauty products retailer Sally Beauty Supply said on Thursday it detected an attempted data breach, but no credit card information or personal data was compromised.

The company put out a statement after several reports that it suffered a card breach. Sally Beauty said it consulted with a “top-tier security firm” during its investigation and found “no reason to believe there has been any loss of credit card or consumer data.” The company’s investigation is ongoing.

The news comes after the high-profile Target data breach over the holidays followed by smaller security hacks at Neiman Marcus, Michaels and White Lodging, which manages major hotel chains. The Target breach exposed 40 million credit card and debit card accounts and personal information of up to 70 million individuals.

The recent spate of breaches has prompted retailers and banks to come together to work on a host of security solutions, including the adoption of EMV (Eurocard, MasterCard and Visa) chip cards that are nearly impossible to counterfeit.

Are you worried about these security breaches at retailers? Or, has it become too commonplace now?

Follow me on Twitter: @JannaHerron. » Credit Cards

BofA to pay $772 million over credit cards

Bank of America has agreed to shell out $ 772 million to settle allegations over how the megabank sold add-on products to its credit card customers.

The company’s agreement with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency does not include any admissions of wrongdoing, according to the consent order released by the CFPB. The settlement had been widely expected. In its August quarterly report, Bank of America acknowledged that it was in “discussions with regulatory authorities” over concerns about the sale and marketing of certain optional credit card products, and that it may have to pay restitution and penalties.

Bank of America must pay $ 727 million to affected consumers as well as $ 20 million to the CFPB’s civil penalty fund and $ 25 million in penalties to the OCC, according to a press release from the CFPB.

But a press release from Bank of America says it is refunding about $ 738 million to customers in addition to the $ 45 million in penalties to regulators. It says it has “already issued refund payments to the majority of affected customers.”

A Bank of America spokeswoman stressed that the company stopped offering these products well over a year ago. “We are committed to ensuring that our products and services are marketed and billed responsibly, including those marketed and billed by vendors,” she said in an email.

This is the fifth settlement that the CFPB has made with a major bank over credit card add-on product offerings.

“We have consistently warned companies about illegal practices related to credit card add-on products,” CFPB Director Richard Cordray said in the release. “Bank of America both deceived consumers and unfairly billed consumers for services not performed.”

The CFPB alleges that Bank of America enrolled consumers in identity protection credit card add-on products that promised to monitor customer credit and alert consumers to potentially fraudulent activity. But in some cases, the company didn’t have the necessary authorization to perform those credit monitoring services, so it was charging some customers for services it wasn’t providing, the CFPB says.

The CFPB also says Bank of America made misleading statements about some of its products, known as “Credit Protection Plus” and “Credit Protection Deluxe.”

Read Bankrate’s 2012 blog post about Bank of America’s decision to dump its add-on products.

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CFPB wants free credit scores

The head of the federal consumer watchdog encouraged credit card companies to disclose credit scores to consumers for free.

Richard Cordray, the director of the Consumer Financial Protection Bureau, or CFPB, said in a speech Thursday that more consumers would understand their creditworthiness better if they were exposed more often to their own credit scores.

One way to do that would be for credit card companies to provide credit scores to their cardholders on monthly statements or online. Two-thirds of Americans carry credit cards, he said.

Discover, Barclaycard and First National Bank of Omaha all are giving consumers a free peek at their FICO credit score on their monthly statements through FICO’s open access program. These scores also come with factors that are hurting the consumer’s credit score, helping to inform consumers about the financial behaviors that can be detrimental to their creditworthiness.

The open access program from FICO is available to all U.S. issuers, but the three banks are the only ones so far taking advantage of it.

Director Cordray also revealed the top three credit reporting complaints that the CFPB received from October 22, 2012 to the first of this month.

  • Incorrect information on a credit report.
  • Frustration with the credit reporting bureau’s investigation into a dispute.
  • Difficulty obtaining a credit report or score.

Cordray reminded consumers that they can file a complaint with the CFPB online if they are unsatisfied with the response from a credit bureau. Consumers are also entitled to free credit reports every 12 months from each major bureau — Equifax, Experian and TransUnion.

Lastly, Cordray said the CFPB issued a bulletin to all companies that provide data to the credit bureaus — called furnishers — on how to conduct dispute investigations. The bulletin says furnishers must notify all credit bureaus when they find errors in a report. It also warns against simply deleting disputed items from a consumer’s credit file because an investigation may reveal deficiencies in the furnisher’s reporting process.

Cordray spoke at the meeting of the Consumer Advisory Board in Washington, D.C.

Do you know what your credit score is? When was the last time you looked at your credit report?

Follow me on Twitter: @JannaHerron. » Credit Cards

Isis, AmEx offer cab cashback

American Express cardholders who “tap and pay” New York cabbies with their Isis Mobile Wallet will get 50 percent back on their taxi fare.

The new offer from Isis announced Wednesday runs through June 1 of this year, and AmEx cardholders can get up to $ 100 cash back from the NYC Yellow Medallion Taxicab rides in the Big Apple. (AmEx cardholders already have the option to pay NYC cabs with their rewards points.) The offer is part of a slew of promotions that Isis is offering to “demonstrate the value of mobile wallets,” according to the company.

Here are the other offers from Isis:

  • Wells Fargo cardholders get $ 20 off the first time they “tap to pay” and another 20 percent back on all purchases made with the Isis Mobile Wallet, up to $ 100 in statement credits each month.
  • Isis Mobile Wallet users get $ 10 off any Toys R Us purchase of $ 50 or more.
  • American Express Serve cardholders receive $ 1 back every time they “tap to pay” with the Isis Mobile Wallet.
  • Isis Mobile Wallet users get a free 12-ounce smoothie or juice every time they “tap to pay” at Jamba Juice.
  • Isis Mobile Wallet users get their first three Coke drinks free when they “tap to pay” with My Coke Rewards at participating vending machines.

The Isis Mobile Wallet stores virtual versions of participating prepaid, debit or credit cards, along with coupons and store loyalty cards. Consumers simply tap their phone at checkout terminals equipped to take contactless payments, eliminating the need to pull out their payment cards to complete a transaction.

The mobile wallet went national in November 2013 after a limited rollout in Salt Lake City and Austin, Texas, lasted for more than a year.

Have you tried a mobile wallet? Do you think mobile wallets will catch on?

Follow me on Twitter: @JannaHerron. » Credit Cards