Telemarketers Must Scrub Lists Monthly Next Year

As expected, the FTC has amended the “Do Not Call” rules to require telemarketers to purge numbers on the “Registry” from their call lists every month, instead of every quarter as the rule originally required. The new rule will become effective on January 1, 2005, as telemarketers will be required to “scrub” their lists against the “Registry” at least every 31 days. The FTC chose the interval “thirty-one (31),” as opposed to “thirty (30) days,” to provide sellers and telemarketers the maximum time allowable under the “Consolidated Appropriations Act of 2004” to simplify the process of scrubbing lists on a monthly basis. The FTC received 186 comments in response to the notice of proposed rulemaking from consumers, consumer groups, businesses, and trade associations. To date, consumers have registered 58.4 million phone numbers on the “Do Not Call Registry,” and according to the FTC, most telemarketers have been diligent in their efforts to scrub their lists and to meet the “Registry’s” requirements.

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Incurrent Reaches Profitability During 2003

Parsippany, NJ-based Incurrent reported yesterday that it had its first profitable year in 2003 since its founding in 1997. Testament of the company’s success appeared in the February 2004, Forbes Internet magazine, which recognized Incurrent as one of the nation’s top 25 fastest-growing privately-held technology companies. While other emerging companies were disappearing from the technology landscape almost on a daily basis, Incurrent not only survived the economic downturn, but pulled away from the pack by focusing on the basics, ultimately achieving profitability. Incurrent develops and operates advanced online products for financial institutions in the global payment card industry, including issuers of consumer, small business, purchasing card, corporate T&E, and private label cards.

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ABA Finds Card Delinquency Persistently High in Q4

Credit card delinquency, based on the number of accounts 30+ days past due, hit an all-time high of 4.43% in the fourth quarter. Based on total dollars outstanding, bank card delinquencies rose to 4.92%, compared to the previous quarter’s 4.66%, but below the record of 5.45% set in 1996. The news comes as all major closed-end consumer loan delinquencies decreased during the fourth quarter. According to the American Bankers Association’s latest “Consumer Credit Delinquency Bulletin,” it is a rare combination wherein credit card delinquencies increased as all other consumer lending delinquencies declined. The ABA blames weak job creation for keeping credit card delinquencies at persistently high levels. The ABA noted that the average length of unemployment remained near 20 weeks in the fourth quarter. Also energy costs rose and, on average, financial obligations remained above 18% of personal income.

4Q CREDIT CARD DELINQUENCY HISTORY
(based on total dollars outstanding)
2003: 4.92% 1999: 4.28% 1995: 4.45% 1991: 4.61% 1987: 3.65% 1983: 2.74%
2002: 4.63% 1998: 4.62% 1994: 3.20% 1990: 4.46% 1986: 4.80% 1982: 3.57%
2001: 4.67% 1997: 5.38% 1993: 3.64% 1989: 3.22% 1985: 3.88% 1981: 2.26%
2000: 4.25% 1996: 5.45% 1992: 4.11% 1988: 3.40% 1984: 2.85% 1980: 3.00%
Source: American Bankers Association Delinquency Bulletin

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BestBank Executives Barred from Banking

The FDIC yesterday issued prohibition orders against the two major principals of Century Financial Group, which operated the sub-prime credit card operations of the failed BestBank of Boulder, Colorado. Glenn Gallant and Douglas Baetz are prohibited from further participation in the banking industry without FDIC approval. The FDIC says its action is based on allegations that Gallant and Baetz engaged in reckless mismanagement of the credit card program that rendered the bank insolvent. In 1996, the President and CEO were paid at total of $1.3 million which ballooned to $9.5 million in 1998. Bank regulators questioned the generous amount of the executive bonuses and the negative effect the payments had on the bank’s capital structure in February and October 1996. However, despite repeated comments by the examiners, the bonuses, fueled by the rapid growth, continued until the bank failed in 1998. Under the “BestBank VISA” program consumers received a $600 credit limit in exchange for a $498 club membership fee and a $45 annual card fee. The program signed up 500,000 cardholders in its two year run and produced $240 million in credit card outstandings. The bank was seized by authorities in 1998 after BestBank’s bad debt topped $134 million. The failure cost depositors more than $200 million. (CF Library 7/27/98; 8/27/98; 6/2/03)

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SCM Microsystems Enters the Physical Access Control Market

SCM Microsystems announced plans to enter the physical access control market. To-date SCM has shipped several million smart card readers worldwide to major enterprises, financial institutions and government agencies, including more than 1.5 million units through systems integration partners for the U.S. Department of Defense Common Access Card program. The company holds more than 80 relevant patents and participates actively in standards initiatives guiding the changes taking place in the physical access control market. The new product line will support the latest technologies adopted by the physical access control market including contact and contactless smart cards, and it will position companies for fingerprint biometrics going forward. SCM will market the terminals to both government and corporate customers through its existing channel partners, the top-tier OEMs and systems integrators serving the physical access control, smart card and security sectors.

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MC ELECTRONIC BUSINESSCARD

Hypo Alpe-Adria Bank is launching an unembossed business card with a zero floor limit for Crotia’s 58,000 small and medium businesses. The new “MasterCard Electronic BusinessCard” is designed to curb fraud and control exposure in relatively high-risk markets. This is the first time MasterCard has combined its “MasterCard Electronic” card with a business card program. Besides being 100% issuer authorized with a €0 floor limit, the “MasterCard Electronic” card can only be used for face-to-face transactions at a merchant terminal. The card can be used cross-border with a “local-use-only” option. There is also an optional ATM access feature. Additionally, MasterCard offers a unique brand, card design, and BIN range. MasterCard Europe says this is the first “MasterCard Electronic” program to be introduced in Croatia. The Croatian Ministry of Economy, Work and Entrepreneurship and the Croatian Chamber of Commerce says the number of small and medium enterprise in the country has grown from 38,000 to more than 58,000 enterprises between 1993 to 2003.

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NEC Develops the Most Accurate Facial Recognition Technology

NEC announced the development of a novel 3D face recognition algorithm that produces the most accurate personal identification system. The algorithm uses “Geodesic Illumination Basis” descriptors as registered data, which is calculated from 3D facial data, enabling optimal description of various pose and illumination changes. The new algorithm realizes the world’s most accurate personal identification matching rate of 96.5%, even under very severe environmental conditions that cause changes in illumination and pose. Facial recognition technology is already being used in ATM applications. Interest in facial biometrics is also growing on a global scale due to increasing security concerns and unstable social conditions.

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Paymentech Launches a Suite of E-Check Products

Dallas-based Paymentech has introduced the “eCheckSelect” product suite which offers a variety of processing options, including ACH transaction origination, consumer authentication, data validation, and check authorization services. Paymentech’s eCheckSelect suite of solutions gives merchants a single resource for every kind of payment they choose to accept. Paymentech, L.P. processes more payment transactions than any other company in North America and more than half of all Internet transactions for retailers accepting U.S. and international payments via traditional point of sale, Internet, catalog and recurring payments.

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CPI Card Group Moves Plant to Las Vegas

CPI Card Group has relocated their Los Angeles manufacturing plant to North Las Vegas in the Cheyenne Technology Corridor. The new plant operates 24 hours a day, seven days a week, and is scheduled to be fully operational by May. The facility will house over $10 million worth of state-of-the-art equipment and have the capacity to produce 900 million cards annually. CPI Card Group, a world leader in plastic card manufacturing for over 20 years, offers a single source for plastic cards-from foil cards and holograms, to translucent and smart cards-with services that include card design, manufacturing, personalization, fulfillment and mailing.

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CreditCall Offers an EMV-Based ID Application

CreditCall Communications has introduced a new application that enables customers of banks and building societies to be identified by the microchip and PIN number, instead of signature alone. The application is based on CreditCall’s EMV transaction processing software. The new system uses the new EMV cards to enable the authentication of the card holder by verifying their PIN, and is integrated with the system the
teller would normally use to enable transactions. A complete transaction need not necessarily be performed i.e. a PIN can be verified without a financial transaction being conducted, and the method is far less intrusive
and quicker than staff asking for personal information as a means of verifying the individual. Typically, the user would pass their card to the bank teller and enter their PIN on the PINpad situated on the customer’s
side of the desk position – an operation that can be completed in seconds. The bank teller gets an instant indication that the cardholder is legitimate – if not, the teller can withhold the card whilst enquiries are
made. CreditCall is a specialist cashless payment solutions provider.

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Cyota Uncovers a New Phishing Attack Strategy

Cyota’s “Anti-Fraud Command Center” has recently discovered that fraudsters conducting phishing attacks against financial institutions are now launching multiple spoofed sites simultaneously. As part of Cyota’s 24×7 Anti-Fraud Command Center services, it constantly monitors and analyzes fraudulent emails and other types of fraud. The Center currently works with some of the world’s largest banks and issuers, some of which have already experienced the multiple site trend first hand. Cyota is the leading provider of security and anti-fraud solutions for financial institutions.

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Chase Leads NACHA Originators for 2003

NACHA released its “Top 50” lists of the largest originating and receiving financial institutions of ACH payments for 2003. The financial institutions in the “Top 50” of originating institutions accounted for more than 91.6% of all inter-bank ACH payments last year. On the receiving side, the top financial institutions accounted for 54.9% of all inter-bank ACH payments in 2003. J.P. Morgan Chase led the top originators with more than one billion transactions. Bank of America led the top receivers with more than 576 million transactions last year.

The NACHA TOP 5 Originators
Rank Company Debits Credits Total Change
1 J.P. Morgan Chase 553,258,768 459,851,399 1,013,110,167 18.1%
2 Bank One 566,620,670 192,929,077 759,549,747 11.5%
3 Wells Fargo 310,559,037 278,178,474 588,737,511 15.0%
4 Wachovia 190,361,816 216,884,271 407,246,087 -5.4%
5 Bank of America 145,883,669 252,606,723 398,490,392 15.0%

The NACHA TOP 5 Receivers
Rank Company Debits Credits Total Change
1 Bank of America 277,297,046 299,502,672 576,799,718 13.6%
2 Wells Fargo 188,395,094 185,711,678 374,106,772 13.2%
3 Wachovia 133,214,160 154,896,969 288,111,129 13.9%
4 Bank One 96,341,598 115,111,896 211,453,494 6.7%
5 Washington Mutual 96,394,447 98,830,156 195,224,603 23.6%

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