National Arbitration Forum Exits Card Disputes

The St. Louis-based National Arbitration Forum has agreed to exit the credit card dispute area following the filing of a lawsuit last week by the Minnesota Attorney General. The NAF says it will voluntarily cease to administer consumer arbitration disputes as of July 24th. The firm cited mounting legal costs, a challenging economic climate, and increased legislative uncertainty surrounding the future of arbitration as the reasons for the exit. Last week, Minnesota Attorney General sued the NAF, alleging that it misrepresented its independence and hid from consumers and the public its extensive ties to the collection industry.
The lawsuit further alleges that the Forum pays commissions to executives whose job it is to convince creditors to put mandatory arbitration clauses in their customer agreements. The suit alleges that the Forum does this to generate arbitration filings in the Forum and therefore, revenue for itself. The NAF denies any wrongdoing. (CF Library 7/16/09)

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AmEx Wins an Email Marketing Award

American Express is the named “best-in-class” for email marketing campaigns by CA-based StrongMail Systems.
The “Q2 Email Breakthrough Report” provides email marketers with
a valuable resource and benchmark for evaluating their own campaigns.
Social media integration and leveraging video in email are two of the
technology-based trends identified in the report’s “Top 5 Trends to
Watch” feature, while design and promotional-related trends round out
the remaining three. American Express took top honors in the Financial Services category for the
“Platinum Entertainment Access” campaign. The “breakthrough” campaigns featured in this report were selected from
more than 100 email campaigns in Q209 for excellence in the following
areas: outstanding content and creative execution, application of
sophisticated email technology, use of innovative digital marketing
techniques, and a commitment to an exceptional user experience.

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GE Capital Finance Q2 Profits Slide 77%

GE reported that revenues for its capital finance segment declined 27% to $4.88 billion for the second quarter. Profit for the quarter declined 77% to $243 million. Overall, GECS revenues fell 29% to $13.4 billion, and industrial sales were down 7% to $26 billion. Overall, CE second-quarter declined 47%, as earnings from energy equipment somewhat offset declines in finance, health care and NBC Universal divisions. Profit from continuing operations was $2.9 billion and revenue from continuing operations was down 17% to $39.1 billion. GE noted that since January 2008, it has provided $155 billion of new financings to companies, infrastructure projects and municipalities and
extended $127 billion of credit to 50 million consumers. GE Capital has outstanding credit with more than 330,000 commercial customers and 145,000 small businesses; in 2009 GE added 16,000 new commercial customers and supported 23,000 new small businesses through its retail programs. For complete details on GE’s second quarter performance visit CardData (www.carddata.com).

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CARD LOSS INDEX

Spain and France lead debit and credit card theft with 1736 lost/stolen
cards and 742, respectively, for the second year running, a year posting
a 17% increase in lost and stolen cards abroad since the year previous.
Described as “top 10 card loss locations”, research shows the number 3
spot goes to the US with 579 lost/stolen cards; Thailand with 374; Italy
with 349; Australia with 304; Portugal with 181; Greece with 155; South
Africa with 151; and at tenth place, Germany with 150. These findings
are thanks to the CPP annual “Card Loss Index,” conducted online amongst
2,006 UK adults between June 19th and July 1st 2009, who is warning
travellers to keep cards safe as loss and theft can result in card
fraud. This is especially dangerous in America, Canada and Australia,
given the absence of Chip and PIN. CPP also recommends travelers don’t
carry multiple debit/credit cards; not to leave belongings unattended;
not to carry debit/credit cards loose in a bag or pocket; update bank
contact info; and check receipts against bank statements.

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85% of Americans Prefer Self-Service Kiosks

Eighty-five percent of global consumers and 79% of American respondents
are more likely to do business with companies offering multi-channel
self-service through mobile devices or self-service kiosks while
convenience and speed are increasingly valued. This research also found
73% seek retail staff to personally help them, 40% of Americans value
self-service when weighing a company’s image and 43% have increased
likelihood to use self-service throughout 2008. The global survey of
8,400 consumer attitudes, 500 of which were American, across 16
countries was commissioned by NCR Corporation from BuzzBack Market
Research, and demonstrates 50% of Americans are opting to use cash over
other payment options; 30% use ATMs more frequently; 40% pay bills just
before the due date; 30% pay bills electronically; and 53% ‘shop hop’
for the best price. Additional survey results show 72% of travelers are
more frequently searching for low cost flights, car rentals and hotel
options; 76% are likely to go with the travel company offering
flexibility of online, mobile and kiosk solutions; 44% are likely to go
with the company offering kiosk for self check in; and 39% welcome
kiosks for checking in and out of their hotel room.

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Citi NA Credit Card Charge-Offs Hit 10.25%

Citibank reported a $211 million second quarter loss for its North American cards
division as revenues declined 27% year-on-year to $2.4 billion. Global accounts
were down 9% to 55.8 million and in North America open accounts for Citi-branded
credit cards declined 17% to 25 million. Second quarter outstandings for North
America were down 2% to $81.9 billion, compared to the year ago quarter. Purchase
volume dropped 18% from 2Q/08 to $42.4 billion. Managed charge-offs hit 10.25% for
the second quarter, compared to 8.42% in the first quarter and 5.54% in the second
quarter of last year. Delinquency (90+ days) edged down to 2.71% for 2Q/09,
compared to 2.95% in the prior quarter and 1.96% one-year ago. Overall, the card
managed net interest margin increased to 10.51% from 8.12% in the second quarter of
2008. For complete details on Citi’s second quarter performance visit carddata.com.

CITI-BRANDED ACCOUNTS
2Q/08: 61.6 million
3Q/08: 61.1 million
4Q/08: 57.7 million
1Q/09: 57.2 million
2Q/09: 55.8 million
Source: CardData (www.carddata.com)

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BofA Posts a $1.6B Loss for Global Cards

Bank of America global credit cards posted a $1.6 billion loss in the second quarter compared to a $582 million profit for 2Q/08. Second quarter global cards revenues declined to $7.3 billion, compared to $7.5 billion in the prior quarter and for the second quarter of last year. Second quarter charge-offs rose sharply to 11.73%, compared to 8.62% for 1Q/09 and 5.96% one-year ago. However, the managed 30+ day delinquency ratio decreased to 7.64%, compared to 7.85% in the first quarter and 5.53% for 2Q/08. The managed 90+ day delinquency ratio increased to 4.21%, compared to 3.99% in the first quarter and 5.53% for 2Q/08. Global cards purchase volume declined 19.5% year-on-year to $51.9 billion for the second quarter. For complete details on Bank of America’s 2Q/09 performance, visit CardData (www.carddata.com).

BOFA CREDIT CARD NET INCOME
(Global Cards; Excludes Business Cards)
2Q/08: + $582 million
3Q/08: (-$373 million)
4Q/08: (-$204 million)
1Q/09: (-$1769 million)
2Q/09: (-$1618 million)
Source: CardData (www.carddata.com)

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O2 MONEY VISA

O2 and NatWest have teamed to issue two completely fee free pre-paid Visa cards. The new “O2 Money Visa” cards, to be available in mid-August, include the “Cash Manager Visa” and the “Load & Go Visa.” The “Load & Go Visa” is a cash management tool for consumers aged 13 and over. A letter will be sent to the parent or guardian of anyone under the age of 16, to inform them of the application for “Load & Go.” It cannot be used in certain retail outlets and websites, such as online gambling sites and real time text balance updates are provided to the
mobile phone every time the card is used. The “Cash Manager” can be loaded through regular or single online transfers. It is completely free of all fees and charges when used within the UK. Telefónica O2 UK Limited is a top communications company for consumers and businesses in the UK with 20.8 million mobile customers. NatWest was the first bank to offer customers the opportunity to activate their debit card from their mobile phone.

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80% of U.S. E-Households Use E-Banking

Recent research shows more than two million U.S. households adopted
online banking and bill payment during the last year while a total of
69.7 million households (80% of internet-connected American households)
now use online banking services and 64.4 million households pay at least
one bill online through either a bank or creditor website. Among survey
participants in the research, 41% of online bankers plan to pay more
bills through their financial institution’s website; 35% plan to pay
more bills through the creditor company’s website; 49% of consumers
using online bill pay are less likely to switch banks, up from 43% in
2008; 67% of those who use the service through their bank would
recommend their institution; and 38% would recommended the service
itself. The research is thanks to a recent Fiserv-sponsored “Consumer
Billing and Payment Trends” survey, reflecting the habits of the 88.2
million households in the United States with Internet access. The survey
also shows consumers benefit mostly from speed according to 79% of
respondents; 72% preferred the method for ease of use; 71% liked the
service for its cost savings; 71% liked the control it offers; while 58%
were most concerned with environmental impact.

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Consumer Expectations Runs Out of Gas

The latest barometer of consumer attitudes and spending went into the
toilet this month. Americans are apparently waking up to the notion that
the U.S. faces a lengthy, drawn-out recovery. The RBC “CASH (Consumer
Attitudes and Spending by Household) Index” dropped to 22.4 for July, an
11.9 point decline from the prior month. The Index is composed of four
sub-indices: “RBC Current Conditions Index”; “RBC Expectations Index”;
“RBC Investment Index”; and, “RBC Jobs Index.”
The “Current Conditions Index” for July declined to 23.3 from June’s
23.8. The “Expectations Index” plunged sharply, dropping 36.1 points to
4.8, compared to 40.9 in June. The “Investment Index” showed little
movement this month, standing at 30.9 for July. Despite the unemployment
rate reaching the highest level in 26 years, the “Jobs Index” for July
saw a minor uptick to 50.5, up 3.8 points from the 46.7 observed in June.

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BMO to Fuel ADS’ AIRMILES Program in Canada

Loyalty solution provider Alliance Data Systems and BMO Bank of Montreal
have enhanced the AIR MILES credit card program.
BMO AIR MILES MasterCard cardholders will now earn 1 reward mile for
every $20(CDN) spent, vs. previously every $40 spent, and will now earn
1.5 reward miles for every $20 spent when they shop at AIR MILES
Sponsors including Shell, National Car and Alamo. BMO Bank of Montreal
is eliminating the $35 annual fee previously payable by some BMO AIR
MILES MasterCard cardholdersAdditionally, BMO Gold AIR MILES MasterCard
cardholders will receive a 25% discount on flight redemptions,
(currently, Gold cardholders receive a 20% discount for flight
redemptions); and BMO Gold AIR MILES MasterCard cardholders will
continue to earn 2 times the reward miles earned at AIR MILES Sponsors
including Shell, National Car
and Alamo; The AIR MILES Reward Program is Canada’s premier coalition
loyalty
program, with approximately two-thirds of Canadian households actively
collecting
reward miles. AIR MILES collectors earn reward miles at more than 100
leading
brand-name sponsors representing thousands of retail and service
locations across Canada.
AIR MILES reward miles can be redeemed for more than 1200 different
rewards, such
as travel, movie passes, entertainment attractions, electronic
merchandise, and more.

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BMO MASTERCARD

BMO MasterCard is set to take on American Express and other no-fee
credit cards with the introduction of its no-fee “AIR MILES” MasterCard,
offering double reward miles earned. Hopefully to win a greater share of
Canadian AIR MILES Collectors’ loyalty, BMO has additionally enhanced
the benefits of its “Gold AIR MILES” MasterCard and will be modifying
its suite of credit card products to deliver lower costs with more
rewards, including the redemption for any AIR MILES flight from 20% to
25%. BMO is also eliminating its bronze and silver AIR MILES categories,
replacing them with one no-fee BMO AIR MILES MasterCard to double its
rewards program with 1 AIR MILES reward mile for every $20 spent on the
card for the 1.2 million existing customers and remove the $35 annual
fee for another 400,000 customers. The BMO “Preferred Rate MasterCard”
will offer a 17.5% annual interest rate with no annual fee.

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