FTC’s Operation No Credit Seized Homes

The FTC announced that it completed its actions against Jubilee Financial Services, a provider of debt negotiation services, including forfeiture of personal residences, and a ban from advertising, marketing, or providing debt negotiation services. The FTC’s original complaint alleged that Jubilee Financial Services, Inc., related company Jabez Financial Group, Inc., and others lured consumers with false promises that consumers who enrolled in their debt negotiation program would be able to pay their debts at a substantially reduced rate and that consumers would stop receiving collection calls from creditors. According to the FTC, consumers who enrolled in the defendants’ program and paid substantial fees continued to receive phone calls and collection letters from creditors because the defendants did not negotiate substantial debt reductions for consumers. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to (Jubilee Financial3-01/26/05) help consumers spot, stop, and avoid them.

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Metris Posts First Profitable Year Since 01

After a wild ride over the past ten years, Metris Companies (Direct Merchants Credit Card Bank) returned to profitability in 2004. The sub-prime issuer squeezed out a $700,000 profit in the fourth quarter, but ended 2004 with a full-year profit of $33.7 million. The weak profit in the fourth quarter was due to financing transactions executed during the quarter coupled with increased marketing expenses. New account originations for the quarter were 208,000 compared to 118,000 in the previous quarter, and 76,000 in 4Q/03. However, gross active accounts declined from 2.5 million one-year ago to 2.2 million at year end 2004. At the end of the fourth quarter, Metris had $6.6 billion in managed credit card loans compared to $8.1 billion at the end of 4Q/03. The managed net charge-off rate for the fourth quarter was 15.5%, compared to 14.6% in the previous quarter, and 21.7% for the fourth quarter of 2003. The managed delinquency rate was 9.1% as of December 31st, compared to 9.7% for the prior quarter, and 11.1% for the fourth quarter of 2003. For complete details on Metris’ fourth quarter results visit CardData ([www.carddata.com][1])

METRIS NET INCOME HISTORICAL
1995: +$ 4.6 million
1996: +$ 20.0 million
1997: +$ 38.0 million
1998: +$ 57.3 million
1999: +$115.4 million
2000: +$195.2 million
2001: +$245.8 million
2002: -$ 1.6 million
2003: -$147.7 million
2004: +$ 33.7 million
Source: CardData (www.carddata.com)

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

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PSCU Adds 3 CA CUs and 26,000 Card Accounts

FL-based PSCU Financial Services has signed three new member-owners from California including San Mateo CU (17,500 card accounts), Santa Ana FCU (5,500 card accounts), and West One FCU (3,000 card accounts). Under the terms of the agreement with San Mateo Credit Union, PSCU Financial Services will service more than 17,500 credit card accounts for the credit union, which has total assets of more than $550 million and more than 56,000 members. PSCU Financial Services is the nation’s largest Credit Union Service Organization (CUSO). As a non-profit cooperative, the company is owned by more than 500 member credit unions nationwide, representing more than 8 million cardholder accounts and more than 225,000 online bill payment subscribers.

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Western Union Profit Tops $1B in 04 for FDC

First Data reported this morning that fourth quarter revenue increased 20% to $2.7 billion, and net income rose 17% to $465 million. FDC says the growth was driven by strong activity in its Western Union money transfer business which delivered $1.1 billion in operating profit last year. However, the operating profit for its Payment Services segment fell 6% to $303 million during the fourth quarter on revenues that grew 10% to $1.06 billion. Western Union, part of Payment Services, posted a 15% gain in revenue for the fourth quarter to $908 million. Revenue for the Merchant Services segment was up 50% to $1.12 billion with operating profit of $350 million, a 55% gain over the year ago quarter. The growth in Merchant Services was attributed to nine new bank relationships, which expanded the sales force by 18% in 2004, generating 458,000 new merchants last year. During the quarter, First Data sold a merchant portfolio to iPayment for $130 million in cash. Card Issuing Services’ revenue was $609 million and operating profit was $122 million, a 14% and 41% gain, respectively. The profit gain was due primarily to the acquisition of Concord. As of December 31st, accounts on file were 406 million. There were 135 million cards carrying the “STAR” logo at year-end. For complete details on FDC’s fourth quarter performance visit CardData ([www.carddata.com][1]).

FDC NET INCOME
4Q/03: $401.6 million
1Q/04: $483.5 million
2Q/04: $466.0 million
3Q/04: $460.6 million
4Q/04: $465.1 million
Source: CardData (www.carddata.com)

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

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Internet-Related Fraud Not Widespread

A new report has found that identity theft and fraud are more frequently committed offline than online. The research says that Internet-related fraud problems are actually less severe, less costly and not as widespread as previously thought. The “2005 Identity Fraud Survey Report from the Better Business Bureau and Javelin Strategy & Research, concludes that those who access accounts online can provide earlier detection of crime than those who rely only upon mailed monthly paper statements. (Average $551 in losses when detected online vs. average $4,543 when detected from paper statements). The most frequently reported source of information used to commit fraud was a lost or stolen wallet or checkbook. Computer crimes accounted for just 11.6% of all known-cause identity fraud in 2004; and half of these digitally-driven crimes stem from spyware. The annual dollar volume of identity fraud is now $52.6 billion annually. The number of identity fraud victims dropped from 10.1 million to 9.3 million in 2004 versus 2003.

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Genpass to Process MBI’s Employer Cards

Genpass has inked a long-term agreement to process debit card transactions for MBI’s FSAs, HRAs, HSAs, DCAs, Transit/Parking Accounts, and related products. MBI’s solutions enable employees to electronically access funds in their FSA, HRA, HSA, Transit/Parking Accounts and Dependent Care Accounts with a single, nationally accepted debit card. Through MBI’s clients, including leading third party administrators (TPAs) and health plans, MBI serves more than 16,000 employers and their employees. Genpass, Inc., manager and operator of the MoneyPass(R), EFT network through its Irving, Texas-based subsidiary Genpass Technologies(R), LLC, is also a leading provider of PayCards.

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Equifax Personal Solutions Gets a Head

Equifax has promoted Vincent Corica to group executive for Equifax’s Personal Solutions business which now has 7.8 million members. Corica was previously senior vice president, U.S. Sales for Equifax, where he had overall responsibility for revenue growth and customer relationships for Equifax’s U.S.-based accounts. Prior to joining Equifax in 2002, Corica served as Senior Vice President of the Americas for MCI. Earlier, he had been with GE Consulting and AT&T Communications. He served in the United States Army from 1969 until 1978, attained the rank of Captain and was decorated for heroism in Vietnam. Equifax Inc. is a global leader in turning information into intelligence.

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Edgar Dunn Names a San Fran Director

Edgar, Dunn & Company, has promoted Pascal Burg to director in its San Francisco office. Mr. Burg has worked in EDC’s London, Sydney and San Francisco offices and has over eight years of consulting experience in business strategy for financial services clients in multiple European, Asian and North American countries with over four years of line management experience within the UK financial services industry. Mr. Burg received his MBA from Lancaster University in the United Kingdom and his Business Degree from Ecole Superieure de Commerce de Lyon in France. Edgar, Dunn & Company (EDC) is an independent global financial services and payments consultancy.

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The Smart Payment Alliance is Formed

Four smart card manufacturers have teamed to form a non-profit association dedicated to fostering and facilitating the usage of smart cards to make payments. The Smart Payment Alliance was created by Axalto, Gemplus, Giesecke & Devrient, and Oberthur Card Systems. The strategy of SPA is to position itself as a partner of EMVCo and to bolster VISA and MasterCard actions on EMV specifications and their implementation. The SPA will also devise joint industry specifications for value-added applications, which is not covered by the payment associations. The four manufacturers also encouraged card vendors, terminal vendors, and payment associations to join the association.

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Fair Isaac’s Revenue Up 15%+ in Q4

Fair Isaac reported revenues of $195.5 million for the quarter ending December 31st, a 15.5% gain over 4Q/03. However, net income for the quarter totaled $27.9 million, compared with net income of $28.8 million for the year ago quarter. The slightly reduced earnings were due to expenses related to the acquisition of London Bridge Software. Strategy Machine Solutions revenues increased 14% to $117.8 million, primarily due to revenues generated by its collections and recovery solutions and mortgage banking solutions associated with the acquisition of London Bridge, and increased revenues from its fraud solutions products. Scoring Solutions revenues increased 12% to $39.4 million, primarily due to an increase in revenues derived from risk scoring services at the credit reporting agencies. Professional Services revenues increased 31% to $29.5 million, due to the acquisition of London Bridge and Braun Consulting. Analytic Software Tools revenues increased 7% to $8.8 million, due to revenues generated by sales from the Enterprise Decision Management suite of products. For complete details on Fair Isaac’s latest results visit CardData ([www.carddata.com][1])

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

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VISA Develops the Global CCE Index

VISA International announced the first standardized metric to track business and government spending globally, the “Commercial Consumption Expenditure”. Last year, VISA developed the U.S.-specific CCE index which draws upon government data in methods similar to the Personal Consumption Expenditure index. Global CCE is estimated using four key data elements: the amount of business-to-business purchases to acquire goods and services used in production; wholesale and retail purchases of final goods; some business capital expenditures; and government spending on goods and services. Using CCE, VISA International estimates that total business and government spending in 2004 amounted to US$54.8 trillion, compared to US$41.5 trillion five years ago, a 32% increase. For 2005, global CCE is predicted to be US$58.5 trillion, a 6.7% increase over 2004. VISA will provide an updated global CCE forecast annually.

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Lynk Partners with New Edge Networks

Vancouver-based New Edge Networks has signed an agreement with Lynk Systems to provide national broadband DSL access for multi-location networks. New Edge Networks will provide direct high-speed connections to all Lynk processing centers for redundant access by its merchant customers. New Edge Networks is the first national carrier to
receive compliance statements that broadband networks it builds for
business customers are compliant with credit card data security
requirements of American Express, Discover Card, and MasterCard. The
company is awaiting validation of compliance from VISA USA.

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