MBNA 401k Savings Plan Draws a Lawsuit

Wolf Haldenstein Adler Freeman and Herz has filed a class action lawsuit against MBNA’s 401k savings plan for allegedly including artificially-inflated MBNA stock in the plan. The complaint alleges that during the class period, defendants breached their fiduciary duties owed to plan participants and beneficiaries, failed to act in the interests of plan participants and beneficiaries and with reasonable care, skill, or diligence in offering MBNA Stock as an investment option. Wolf Haldenstein has extensive experience in the prosecution of ERISA and securities class actions and derivative litigation in state and federal trial and appellate courts across the country.

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MicroBilt to Sell myFICO.com to Lenders

Georgia-based MicroBilt has inked a deal to resell Fair Isaac’s consumer products, including “myFICO,” to U.S. lenders for use in marketing, acquisition and customer retention programs. MicroBilt will offer its Protection Packages as group programs to credit unions, banks, financial intermediaries and dealers to complement the products and services afforded to their customers and members. MicroBilt, a division of Bristol Investments, Ltd., provides credit bureau data access and retrieval, providing credit, collection and data sources. Fair Issac provides consumers with FICO scores, the standard measure of credit risk.

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Black Market Prepares for a Card Gold Rush

The recent CardSystems Solutions security breach that may have affected as many as 40 million credit card accounts worldwide will undoubtedly create a gold rush for the criminal element. On the black market stolen credit card information currently fetchs $42 for a basic VISA or MasterCard, $50 for a Discover card, $70 for a platinum VISA or MasterCard, and $85 for an American Express card. Cards with very high credit limits can command a fee equal to 5% of the available credit. The rates paid also reflect the amount of information provided. Cards with PINs or mother’s maiden names can command top prices. TheDenverChannel.com recently reported that some of the accounts in the CardSystems Solutions breach have already being sold on a Russian Web site and that some consumers have already found fraudulent charges on their statements. Web sites such as iaaca.com and carderportal.org specialize in trading stolen credit card information.

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Advantage Credit Offers CreditXpert Detective

Pensacola, Florida-based Advantage Credit has added “CreditXpert Detective” to its suite of credit reporting tools. CreditXpert Detective scans an individual’s credit data to reveal potential inaccuracies and recommend specific updates that will most significantly improve the individual’s credit score. CreditXpert Inc. tools help lenders improve loan origination and customer relationships and help consumers understand, manage and improve their credit. Advantage Credit is a provider of credit reporting and loan origination services and a wholly owned subsidiary of Advantage Plaza, Inc.

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MS 2Q/05

Morgan Stanley reported that credit card outstandings for its British MasterCards during the second quarter rose 2.9% year-over-year but declined 6.4% sequentially. The number of accounts for its “Classic,” “Gold,” “Platinum,” and “buy & fly!” cards rose 17% to 1.4 million, compared to one-year ago. For the quarter ending May 31st, Morgan Stanley, which issues the “Discover Card” in the USA, posted $2.479 billion in managed card loans, compared to $2.648 billion in prior quarter, and compared to $2.409 billion for the second quarter of 2004. Last year, Morgan Stanley added the “buy and fly! MasterCard” which earns one point for every GBP10 of purchases with bonus points earned for purchases made at participating U.K. retail merchant partners. Points can be redeemed for travel on 17 airlines. MS introduced its first credit card in the U.K. in 1999. For complete details on Morgan Stanley’s latest performance, visit CardData (www.carddata.com).

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Fair Isaac and HP Integrate Platforms

Fair Isaac and HP have agreed to integrate Fair Issac’s end-to-end customer lifecycle management solutions on HP infrastructure enabling financial institutions to manage customer performance at various stages of maturity. Financial services providers will be able to access the industry-standard fraud detection capabilities of Fair Isaac’s Falcon Fraud Manager, which is used to protect more than 450 million active payment card accounts worldwide. The relationship also includes Falcon One(TM) system, Fair Isaac’s new solution for managing multiple types of fraud across the enterprise using a single solution. Fair Isaac helps thousands of companies in over 60 countries manage credit risk.

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UK Cards Compromised by an India Call Center

A British reporter was able to purchase credit card information on 1,000 U.K. cardholders in India for $5,000. The Sun newspaper reporter says the information was supplied by Delhi call center staff working for major British credit card issuers. The Sun says the information was provided on a CD and included names, dates of birth, telephone numbers, addresses, passwords, answers to security questions, as well as the CVV/CVC security code. The reporter said the supplier usually charges about $7500 for information on 1,000 accounts and said he could supply 2,000 accounts per month.

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VISA and NFIB Name 05 Youth Entrepreneurs

The National Federation of Independent Business and VISA USA this week announced the winners of its “Youth Entrepreneur of the Year” award. In recognition of his entrepreneurial achievements and spirit, Mr. Jensen has been awarded a $10,000 educational scholarship. Mr. Jensen is the founder and sole proprietor of Maille Time, a chain maille apparel company. Additionally, four high school seniors were named as NFIB/Visa Free Enterprise Scholars Award and receive a $5,000 scholarship. The Northeast regional winner, Simon Tao has been playing the piano since the age of six and now has his own “Private Piano Lesson” business. The Central regional winner, Vellore Arthi started a Beanie Baby accessory company in the fifth grade and now makes and sells hand-painted magnets and thumbtacks. The Southeast regional winner, Joshua Sommer worked closely with his mother on the successful launch of her business, formulating business plans and managing the computer and database infrastructure and the Western regional winner, Jacqueline Laird whose interest in health and nutrition helped her founded Project ECHO, a volunteer organization which teaches elementary school students about healthy and balanced lifestyles. For the second straight year, Visa USA has donated $100,000 in scholarship money to the NFIB Young Entrepreneur Foundation.

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Sub-Prime Metrics Drive Average Losses Dow

While some issuers such as Discover are reporting near-record lows in delinquencies and charge-offs, average charge-offs among prime-focused portfolios have dropped a mere 20 basis points over year ago levels. However, the industry average among all portfolios has dropped has 115 basis points since last May, driven by sharply lower charge-offs in the sub-prime segment. After sinking to a 4.12% average in February, prime portfolio charge-offs have been heading upward driven by a surge in bankruptcy filings that began in March. Sub-prime portfolios have also been impacted by rising bankruptcy filings, but the improvement in sub-prime metrics has been so strong over the past year that it has driven average losses down. For example, Providian recently reported its managed charge-offs declined 389 basis points between May 2004 and May 2005 and that delinquency declined 180 basis points over the same period.(CF Library 6/16/05)

MANAGED CHARGE-OFFS
MONTH PRIME AVG
May 2004: 4.64% 6.98%
Jun 2004: 4.41% 7.03%
Jul 2004: 4.31% 6.65%
Aug 2004: 4.20% 6.43%
Sep 2004: 4.20% 6.38%
Oct 2004: 4.23% 6.31%
Nov 2004: 4.34% 6.27%
Dec 2004: 4.38% 6.22%
Jan 2005: 4.37% 6.18%
Feb 2005: 4.12% 6.03%
Mar 2005: 4.32% 5.98%
Apr 2005: 4.33% 5.90%
May 2005: 4.44% 5.83%
Source: CardData (www.carddata.com)

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Q Comm to Restate Annual and Q1 Reports

UT-based Q Comm International, a specialist in prepaid transaction processing and electronic POS distribution solutions, says it will restate financial information in its 2004 annual report and first quarter earnings report. The Company is changing its revenue recognition policy on sales of consigned PINs. Q Comm expects the impact of this change to reduce 2004 revenue to between $18 and $20 million from $41 million and reduce first quarter 2005 revenue to between $9 and $10 million from $15 million. The Company also announced this week that its former CFO, who left Q Comm three weeks ago, acted without authorization in advancing $1.5 million to a supplier and it may have to take a $925,000 charge if no recovery is made.

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Asia-Pacific Quantifies Security Breach Impact

As many as 500,000 credit card accounts in the Asia-Pacific region may have been exposed to potential fraud as a result of the security gap at CardSystems Solutions that took place between November 2004 and May 2005. Published reports claim 67,000 Japanese accounts and 50,000 Australian accounts were compromised. The U.S. breach reportedly took place following the installation of new data mining software which enabled a rogue computer program to extract files. (CF Library 6/20/05)

ASIA-PACIFIC BREACH IMPACT
Japan: 67,000
Australia: 50,000
Singapore: 20,000
Hong Kong: 19,000
Taiwan: 16,000
New Zealand: 13,000
China: 9,000
Source: Published Reports

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