FTC Settles Lawsuit with OR Processors

The marketers of a debit and credit card processing services operation have agreed to judgments of more than $26 million to settle FTC charges that they deceived small businesses throughout the country. OR-based Merchant Processing, Direct Merchant Processing, Vequity Financial Group, and PPI Services are also banned from marketing card processing goods or services for sale or lease. The FTC says the defendants’ operation falsely promised that it would save merchants hundreds to thousands of dollars a year in processing fees by offering lower rates than the merchants’ current credit card processing service. The defendants also falsely represented that they would buy out merchants’ equipment leases if the merchants accepted the offer, failed to disclose fees, and concealed pages of fine print until after merchants had signed contracts.

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Debt Settlement Reports Record Settlements

AZ-based Debt Settlement USA has negotiated 739 settlements totaling $4,323,000 for consumers during April. According to the Federal Reserve’s March consumer credit report, credit card debt increased 6.7% and non-revolving debt, such as loans for cars, boats and education, increased 4.6% during the first quarter of 2008. Total consumer credit outstanding in the U.S. at the end of March was $2.558 trillion. Currently, charge-off and delinquency rates are rising and bankruptcy filings increased by 38% from 2006 to 2007, according to Standard & Poor’s Credit Card Quality Indexes.

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Citi Adds More Weight to its Diamond Cards

Citi has introduces its enhanced “Diamond Preferred” suite of cards to provide privileges and benefits for no annual fee. In addition to standard Citi card security benefits, such features included with the “Diamond Preferred” suite include concierge service, exclusive money-saving discounts, a free annual account summary, access to guaranteed dining reservations, golf tee times and VIP access to various events. Additionally, cardholders are rewarded 6,000 bonus “ThankYou Points” after making $100 in purchases within the first 3 months of membership and are given access to an introductory promotion offering 5 “ThankYou Points” for every $1 spent during the first 12 months and 1 point for every $1 spent thereafter. Citi provides financial products and services to 200 million customers in more than 100 countries.

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First Data Revenues Climb 16% in 1Q/08

First Data reported first quarter consolidated revenues of $2.13 billion, a 16% increase as EBITDA rose 8% to $586 million, over 1Q/07. Effective January 1st, FDC revised its segment reporting structure into Merchant Services, Financial Services, International, Prepaid Services and Integrated Payment Systems. Merchant Services generated revenues of $926 million, a 10% gain over the prior year quarter. Financial Services revenue inched up by 1% to $706 million. International revenues rose 23% to $445 million. International revenue growth on a constant currency basis, excluding acquisitions and divestitures, was 5%, negatively impacted by price compression and lost contracts primarily in its Western European and Asia Pacific businesses. Prepaid Services was flat at $46 million. Integrated Payment Systems soared 139% to $45 million, compared to the year ago quarter. On April 28th FDC reached an agreement to acquire prepaid card specialist InComm for $980 million, plus contingent future payments of up to $250 million over a three year performance period. The acquisition is expected to close in the second half of this year. For complete details on First Data’s first quarter performance visit CardData ([www.carddata.com][1]) (CF Library 4/28/08)

[1]: http://www.carddata.com

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LifeLock Sued; Puts Google Exec on Board

Identity protector LifeLock has had a third class action lawsuit filed in West Virginia alleging false and misleading information. The lawsuits contend that LifeLock and its multi-million-dollar advertising campaign provided false and misleading information about the limited level of identity protection the company provides, and failed to warn them about the potential adverse impact the company’s services could have on their credit profiles. The complaints also allege that the CEO has himself been a victim of identity theft by multiple offenders while a customer of LifeLock’s services. The West Virginia action seeks to recover the money subscribers have paid to LifeLock and to prohibit the company from continuing to promote its services through a deceptive marketing campaign. Marks & Klein plans to file similar actions on behalf of consumers in other states. Founded in 2005, LifeLock presently has approximately 1 million subscribers across the United States. LifeLock has also selected George Reyes,currently with Google, to serve on its board of directors. In his role with Google, Reyes helped negotiate the organization’s innovative IPO. An experienced leader, Reyes’ business acumen has come from financial posts with ONI Systems and Sun Microsystems. Reyes is also currently a director of Symantec Corporation. Reyes earned his MBA from Santa Clara University and his bachelor’s degree in accounting from the University of South Florida.

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MEI’s Bill Acceptors Win an Award

PA-based MEI’s bill acceptors have won the top awards at the “KioskCom Excellence Awards.” School-Link Technologies received the KioskCom Excellence Award for “Best Food Service Deployment” for its prepayment kiosk for K-12 school cafeterias which operates like a “reverse ATM” accepting dollar bills and coins, which are immediately credited the student’s account. Precision Dynamics Corporation’s PDC Smart Kiosk won the “Best Travel/Hospitality Deployment” category. The freestanding kiosk lets guests load money onto their RFID wristband using cash, credit or debit to pay for food, promotions, memorabilia and such. MEI holds the world’s largest installed base of unattended payment systems, handling over 2 billion transactions per week in more than 100 countries.

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TJX and MasterCard Complete Settlement

The TJX Companies have completed the settlement to MasterCard of $24 million in alternative recovery payments in response to 2007’s card data breaches. Financial institutions representing 99.5% of the affected MasterCard accounts accepted the alternative recovery offer. Each accepting issuer released and indemnified TJX and its acquiring banks with respect to any claims of such issuers, their affiliated issuers and their sponsored issuers as MasterCard issuers with respect to the intrusions, including any claims in the putative financial institution class actions in federal and state courts. TJX operates 857 T.J. Maxx, 786 Marshalls, 295 HomeGoods, and 130 A.J. Wright stores, as well as 34 Bob’s Stores in the U.S. (CF Library 4/3/08)

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Elavon & Bank of the West Expand Deal

CA-based Bank of the West has extended its marketing alliance agreement with card processor Elavon. Bank of the West markets Elavon’s merchant processing services to business customers throughout its 19-state banking network of more than 700 commercial office and retail branch locations. Bank of the West is the fourth-largest commercial bank based in the western United States with $62 billion in assets. Elavon provides end-to-end payment processing services to more than one million merchants in the United States, Europe, Canada and Puerto Rico and provide solutions that include credit and debit card processing, electronic check services, gift cards, dynamic currency conversion, multi-currency support, and cross-border acquiring.

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Dress Barn Renews its ADS Contract

Alliance Data Systems has signed a multi-year contract extension with retailer Dress Barn to continue providing private label credit card services. Under terms of the agreement, Alliance Data will continue providing private label credit card services including account acquisition and activation; receivables funding; card authorization; private label credit card issuance; statement generation; remittance processing; customer service functions; and marketing services. Alliance Data is a provider of marketing, loyalty and transaction services, managing over 120 million consumer relationships

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AmEx Intros a Spring Gift Card Promo

American Express is offering free $25 “Spring Fling” gift cards when customers purchase two American Express gift cards. Shoppers can take advantage of this promotion by purchasing any two American Express Gift Cards or themed Gift Cards at American Express Travel Service offices and at participating retailers, completing a rebate form found at the in-store display and mailing it to the address noted on the rebate form. All rebate forms must be received by July 22, 2008, with a limit of two Spring Fling Cards per household. Participating retailers include: CVS, Walgreens, Safeway, Kroger, Rite Aid, Ahold, Albertsons / Supervalu, A&P, Wawa, Winn Dixie, Longs Drugs, Stater Brothers, Pathmark, Shop Rite / Wakefern, Bi-Lo, Wegman’s, AAFES, King Kullen, Kings, Quick Chek, Price Chopper, Raley’s, Lowes, Harmons, Bashas, and Big Y. The American Express Spring Fling Card can be redeemed for three months after the date of issue at U.S. locations of participating entertainment retailers: Best Buy, Borders, Fandango and SpaFinder.

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