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.

Bankrate.com » 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.

Bankrate.com » 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.

Follow me on Twitter: @allisonsross.

Bankrate.com » Credit Cards

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.

Bankrate.com » 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.

Bankrate.com » Credit Cards