Pennsylvania Sues Cross Country & ACS

The Pennsylvania Attorney General has filed a civil lawsuit against DE-based Cross Country Bank and PA-based Applied Card Systems. This is the seventh lawsuit filed by a state Attorney General. Cross Country currently faces lawsuits in New York, Texas, West Virginia, Minnesota, Wisconsin and New Hampshire over its credit card program. Pennsylvania claims that hundreds of consumers with impaired credit were targeted for pre-approved credit cards that were deceptively marketed. Cross Country and ACS are also accused of improperly disclosing charges and fees, and engaging in abusive and illegal debt collection tactics when cardholders defaulted on their accounts. Pennsylvania says its investigation involved complaints from more than 400 consumers throughout Pennsylvania. The lawsuit asks the court to require the defendants to pay restitution to cardholders; pay civil penalties of $1,000 per violation, and $3,000 for each violation involving a consumer age 60 or older; forfeit their right to conduct business in the state until all restitution and fines are paid; and, disgorge all profits derived from the alleged illegal business practices.


Bankruptcies Show a Slow Recovering Economy

While bankruptcies are running about 3% lower than last year, there is still a significant impact on the card industry. In March, bankruptcies topped 150,000, a factor noted in MBNA’s charge-off figures for May. MBNA reported last week that its charge-off rate edged up by 18 basis points in May due to the March filings. According to the Administrative Office of the U.S. Courts, a record number of filings took place in the quarter ending June 30, 2003, when 440,257 filings were made. So far, 282,052 filings have been made in the second quarter of this year, about 158,000 short of the all-time record.


Monthly Filings Historical
Jun 03: 130,242
Jul 03: 138,400
Aug 03: 138,266
Sep 03: 127,079
Oct 03: 148,044
Nov 03: 131,921
Dec 03: 113,383
Jan 04: 114,737
Feb 04: 124,719
Mar 04: 152,567
Apr 04: 145,543
May 04: 136,509
Source: CardData (



Australian Charge Volume Takes a Breather

Consumer purchase volume on credit cards slowed during April to a 13% annual growth rate, as balances grew 12.6%, and credit lines edged up 12.0% per annum. During April, Australians charged A$11.2 billion in purchases on credit cards compared to A$9.9 billion one-year ago. At the end of the April, consumers owed A$26.9 billion on credit cards versus $23.9 billion for April 2003. The ratio of credit card balances to card credit limits increased slightly during April, from 37.4% to 37.5%, compared to one-year ago, according to data released by the Reserve Bank of Australia. One-year ago, consumers owed A$23.9 billion with total credit lines of A$64.0 billion. Card credit limits reached A$71.7 billion at the end of April.


Pago Tackles Chargeback and Fraud for CNP Transactions

Cologne-based Pago has launched “Pago Fraud Screening” to minimize fraud risk and charge-backs associated with online credit card transactions.
Both credit card data and the other customer information are analyzed in real-time and the fraud risk is assessed using the five-tier “ebitGuard” system. The five tiers include: the transaction is checked against fraud detection rules specific to the shop’s business processes and/or industry; neural networks detect fraudulent behavior and fraud patterns; the credit card number is compared to negative lists of the card organizations and merchant-specific databases; pattern detection engines that detect specific fraud patterns are utilized; and, charge-back and other historical data are used as feedback for ongoing development of rules and models. Pago eTransaction Services GmbH was founded January 1999 and is jointly-owned by Deutsche Bank and Beisheim Holding Schweiz.


Rewards Network Tops 10K Participating Hotels

Chicago-based Rewards Network has added 3,000 new hotel properties to its credit card-based loyalty and rewards program. Rewards Network members now have a choice of more than 10,000 hotels and resorts nationwide. The Company also introduced this week the “US Airways Dividend Miles Dining & Hotels.” Under the program, “Dividend Miles” members earn five miles per U.S. dollar spent on room rates, and through September 30, an additional five miles for a total of 10 miles per U.S. dollar spent on room rates for every qualifying stay at select bonus hotels. Rewards Network has 3.4 million active members and more than 10,000 restaurants participating in its rewards programs.


Broad Loyalty Patent Issued to SCTN

Canadian-based Smart Chip Technologies last week announced that the Canadian Intellectual Property Office has issued a patent for “Method and System for Allocating and Redeeming Incentive Credits between a Portable Device and a Base Device,” which is an expanded version of the patents owned in the United States, Mexico, Australia, and Japan. The broad SCTN patents cover the business process of allocating, storing, and redeeming any type of loyalty, rewards, or incentives between devices such as smart cards, mobile phones, merchant point-of-sale terminals, ATMs, PCs, satellites, or mainframe computers.The Company says the patent not only adds value to our end-to-end loyalty solution, but licensing Smart Chip Technologies” patent will also provide protection for its Canadian customers from other industry patents. John R. Thompson of Stoel Rives” Intellectual Property practice group is SCTN counsel for patent filings in North America and the Asia Pacific regions, working with the Canadian intellectual property legal firm of Gowling Lafleur Henderson LLP.