Fair Isaac Responds to FICO Score Abuse

After reports of individuals renting out credit card accounts to help others artificially boost their credit scores, Fair Isaac announced today it will adjust its “FICO” scoring formula. The adjustment removes authorized user accounts from consideration by the scoring model in “FICO 08,” the newest version of the “Classic FICO” credit score which the Company expects to become available to lenders starting in September. Fair Isaac says the action is intended to protect lenders and “FICO” scores from abuse of authorized user credit card accounts by a new kind of credit repair service that sells consumer credit card histories to credit applicants in order to purposefully misrepresent the applicants’ own credit history to lenders and other businesses. Last month, Fair Isaac announced key innovations to the “Classic FICO” credit risk scoring model that will significantly enhance its predictive power, without changing important features such as scoring range, score reason codes, minimum scoring criteria, inquiry treatment, and related model parameters. The Company reported that since the “FICO” introduction in 1989, it has delivered more than 100 billion credit scores. (CF Library 5/17/07)

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ABS 1Q/07

Charge-offs for credit card-backed bonds in the U.K. hit a new peak during the first quarter to 7.8%, compared to 6.70% one-year ago and 7.2% for the prior quarter. Delinquencies also rose from 3.6% for the fourth quarter to 3.9% for the first quarter. According to FitchRatings, the sharp rise in delinquencies recorded by the Pillar trust was the driving factor behind the quarterly spike in delinquency. The increase in charge-offs continued to be a key contributor to the reduction in excess spreads for several series. However, the monthly payment rate rose from 16.2% at the end of 4Q/06, to 17.9% for 1Q/07. The yield also increased from 18.4% at the end of December to 20.2% for the first quarter.

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Smart SMS Lands a New Marketing Director

Los Angeles-based Smart SMS Corp has appointed Eric Robinson, founder of Grooveline Magazine, as Director of Marketing and Promotions. Robinson served as Chief Operations Officer at Grooveline Magazine and as Vice-President of Crimson Multi-Media where he was in charge of developing promotional campaigns and launching new publications. He was consulted to break recording artists in the urban and college markets and oversaw extensive college marketing campaigns for new drinks during Grooveline’s relationship with Pepsi America/ Delta Beverage Group. He was recruited to oversee the development of the Smart SMS and Columbia Card brands and offer clients marketing support to ensure successful campaigns. Robinson graduated with a B.A. in Liberal Arts with a concentration in history from Grambling State University. Smart SMS Corp. is a mobile entertainment marketing and distribution company that specializes in market branding via text and MMS for television shows, celebrities, musicians, entertainers, athletes, and major brands, as well as fundraising programs.

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U.K. Charge-Offs Hit Another New Record

Charge-offs for credit card-backed bonds in the U.K. hit a new peak during the first quarter to 7.8%, compared to 6.70% one-year ago and 7.2% for the prior quarter. Delinquencies also rose from 3.6% for the fourth quarter to 3.9% for the first quarter. According to FitchRatings, the sharp rise in delinquencies recorded by the Pillar trust was the driving factor behind the quarterly spike in delinquency. The increase in charge-offs continued to be a key contributor to the reduction in excess spreads for several series. However, the monthly payment rate rose from 16.2% at the end of 4Q/06, to 17.9% for 1Q/07. The yield also increased from 18.4% at the end of December to 20.2% for the first quarter.

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UMB and PULSE Expand Their Relationship

Kansas City-based UMB Financial has extended its long-term association with PULSE EFT. UMB has been a PULSE participant since 2003. The agreement with PULSE gives UMB the opportunity to have a voice in the network through a seat on the “PULSE Financial Institution Oversight Committee.” Created in 2005, the committee advises the organization on key issues relative to the network. In April BancorpSouth selected PULSE as its sole PIN debit network provider for its 325,000 debit cardholders in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas. Discover Financial Services operates the PULSE ATM/debit network, which serves over 4,400 financial institutions and includes nearly 260,000 ATMs. (CF Library 4/30/07)

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Merchant Risk Council Tops 7,800 Members

Seattle-based The Merchant Risk Council announced that AmbironTrustWave, Chase Paymentech, EFD, iovation and VISA USA have joined its Board. The six-year old association is dedicated to preventing fraud and promoting secure commerce. The new Board members include: Mike Duffy — President and CEO, Chase Paymentech; Jon Karl — VP/Business Development and Founder, iovation; Mike Petitti — SVP of Marketing, AmbironTrustWave; Keith Roberts — VP/Global Software Product Management, EFD/eFunds; and Gerry Sweeney — SVP/Cross Platform Products and Services, VISA USA. The Merchant Risk Council consists of more than 7,800 members, including merchants, vendors, financial institutions and law enforcement agencies. The MRC hosts two annual events: “MRC Platinum Merchants Meeting” and “MRC Annual Conference.”

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Edgar Dunn & Co. Hires Mitchell Muroff

Edgar, Dunn & Company has hired Mitchell Muroff, e-commerce payment risk management specialist, as Manager in its San Francisco office. Muroff will provide EDC clients with strategic and operational consulting in all aspects of global payment processing with an emphasis on the development of efficient, reliable and scalable approaches to the management of e-commerce payment operations and fraud/abuse risks. Muroff has managed payment operations and fraud risks for transactions conducted by more than 320 million consumers representing $7 billion USD in value across 40 business lines in 14 countries. His accomplishments include leading the worldwide launch of online shopping capabilities for Microsoft Corporation; building a risk management team and system for Ingenio; directing global payment and risk management operations for Yahoo!, Inc.; and leading the global payment and risk management strategy for WebEx Communications. Muroff holds an MBA in General Management and Marketing from The University of Washington and a BA degree in Finance and Economics from The University of Western Ontario. He is affiliated with several industry organizations including Merchant Risk Council, NACHA, and Bay Pay. Edgar, Dunn & Company (EDC) is an independent global financial services and payments consultancy.

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Guardian Life Offers the Benny MasterCard

The Guardian Life Insurance Company of America has introduced a debit card and web tools as part of its “FlexPlan” Flexible Spending Account program. Clients can pay for eligible healthcare expenses with the Benny Pre-paid MasterCard card. Guardian’s FlexPlan offers employees point of service access to money they set aside in their FSA, minimizing steps of substantiating claims with receipts and waiting for FSA reimbursements via mail. Clients can pay for co- payments, deductibles, prescriptions, eyeglasses and other eligible healthcare expenses. According to a report issued by Celent, LLC, debit cards linked to flexible-spending accounts (FSAs) are a hot growth market in the benefits administration marketplace with 6 million cards in circulation in 2006, up 50% from the previous year and that FSA debit cards increase the average deposit employees place in their account by as much as 30%. Evolution Benefits is the provider of the Benny Prepaid Benefits Card, a special-purpose MasterCard or VISA card that provides an easy, automatic way to pay for qualified health care expenses. The Benny Prepaid Benefits Card allows for electronic access of pre-tax amounts set aside in employee benefits accounts such as Flexible Spending Accounts (FSAs), Health Reimbursement Accounts (HRAs), Health Savings Accounts (HSAs), and Qualified Transportation Accounts (QTA) The Guardian Life Insurance Company of America is one of the largest mutual life insurance companies in the United States with $39.5 billion in assets.

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RapidAdvance Hires a Former Delta Card Exec

MD-based RapidAdvance has hired Laurie LeBoeuf, previously SVP of Risk and Operations for Delta Card Services as the company’s Vice-President of Operations. While at Delta Card Services, a major ISO/service provider, LeBoeuf led a department of 125 employees in dramatically improving the performance of the company’s high-risk card portfolio. Previously, as AVP of Merchant Business for Intrust Bank in Wichita, Kansas, she was instrumental in establishing an MSP/ISO relationship for the bank. LeBoeuf has taken an active role with various associations and committees throughout the payments ecosystem. She has worked hands-on with both VISA and MasterCard to pilot and implement rules and regulations industry-wide. Laurie has held the position of National Director of the Merchant Acquirers committee and has recently accepted the role of chairing the Risk and Fraud Committee for the Electronic Transactions Association. RapidAdvance provides working capital to small and medium-sized merchants.

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Discover Spins-Off June 30th; Names Board

The Morgan Stanley Board has set June 30th as the date for the Discover Financial Services spin-off. After the distribution, which involves stockholders of record as of the close of business on June 18th, Discover will be an independent, public company trading on the NYSE under the symbol “DFS.” Morgan Stanley also announced Discover’s board of directors. Dennis Dammerman, who retired in 2005 as Vice Chairman of the Board and Executive Officer of General Electric Company and Director, Chairman and CEO of GE Capital Services, will serve as Non-Executive Chairman of the Discover Board. David Nelms, who has led Discover Financial Services since 1998, also will serve on the Board of Directors. Other Board members include: Jeffrey Aronin, President and CEO of Ovation Pharmaceuticals; Mary Bush, President of Bush International; Robert Devlin, Chairman of Curragh Capital Partners; David Komansky, Chairman Emeritus of Merrill Lynch; Philip Laskawy, former Chairman and CEO of Ernst & Young; Michael Rankowitz, senior advisor to Morgan Stanley; Lawrence Weinbach, Partner at Yankee Hill Capital Management.

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PDS May Volume Soars 20% Sequentially

Payment Data Systems has announced the company’s credit card transaction processing performance for May 2007. increased 20% in May over the previous month and was 108% over May 2006. The associated transaction volume was 12% higher than April’s numbers and 65% higher than May 2006. Payment Data Systems, Inc. is an integrated payment solutions provider to merchants and billers and the owner of the electronic bill payment portal, http://www.billx.com, which has the ability to transmit payments to thousands of national billers.

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ePage Merchants Offer SAF-T-PAY

SAF-T-PAY Inc. has entered into a new partnership with e-commerce provider ePages. SAF-T-Pay will now be available to all of the 30,000-plus ePage merchants, providing their online shoppers with SAF-T-PAY as a viable and secure payment alternative. SAF-T-PAY’s unique model allows e-banking customers and online shoppers to make e-commerce purchases worldwide directly through their local bank. Utilizing their banking and merchant partners, SAF-T-PAY enables international online-commerce transactions to be cleared through the customer’s existing bank, offering them, for the first time, a completely secure and convenient way to shop globally, but pay locally. SAF-T-PAY – The Safe Internet Payment System – is a secure e-payment system that allows all online bank customers to make online purchases worldwide directly through their local bank. ePages is a provider of e-Commerce solutions for medium sized companies and hosting providers.

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