FTC Reaches Settlement with Florida Fraudsters

The Federal Trade Commission has settled with Florida-based E-Credit Solutions, Inc., E-Credit, and Zentel Enterprises, Inc., over an advance-fee credit card scam, with the defendants ordered to pay more than $600,000 in redress to defrauded consumers. The defendants allegedly marketed an unsecured major credit card with a $4,000 credit limit. Consumers were required to pay $199.95 to receive the card, which wasn’t even a bank card, rather it was a catalog card that could only be used to purchase items from the defendants’ catalogs. Based on these alleged business practices, the Commission charged the defendants with engaging in unfair or deceptive practices in connection with the sale of advance-fee credit cards and with violating the FTC Act and the TSR by causing consumers’ bank accounts to be debited without their authorization.

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U.S. Bank to Issue Campus VISA Card

Spokane-based Gonzaga University has signed a deal for U.S. Bank to provides its multi-use identification card, which includes ATM access and general VISA POS usage, for 5,400 students and 800 faculty and staff members. Starting August 2003, the new card can also be used as a U.S. Bank ATM card on and off campus and at many Point-of-Sale (POS) terminals in the United States. U.S. Bank is one of the top student banking institutions in the nation, providing a comprehensive line of student banking products including campus ID card programs, student loans, Internet banking, U.S. Bank student checking and savings, and Visa Buxx(R) prepaid spending cards. The company operates 2,199 banking offices and 4,575 ATMs, and has assets of $195 billion.

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ID Theft Up 79%, Hits 7 Million Americans Last Year

During the past twelve months, 7 million U.S. adults have become victims of identity theft. This represents a 79% increase reported in a consumer survey concluded in February 2002. The latest study by Gartner Inc., for the twelve months ending June 2003, found that more than half of all documented identity theft is committed by criminals that have established relationships with their victims. The Gartner study says credit providers mistakenly write ID theft off as credit losses, causing a serious disconnect between the magnitude of identity theft that innocent consumers experience and the industry’s proper recognition of the crime. Gartner says this causes a disincentive to fix the problem with the urgency it requires. Gartner surveyed 2,445 U.S. households by mail during May for the study.

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FCNB Charge-Offs Top 25%, Payment Rate Drops to 4.77%

The deterioration of key credit performance metrics in the receivables of First Consumers National Bank card bonds have accelerated at an alarming pace during the past four months. The trust’s principal payment rate fell to 3.11% in June from 9.28% in February. The charge-off rate reached its current peak in June at 25.34%, and total delinquencies have increased to 18.36% from 13.63% in February 2003. The trust yield, which historically averaged above 30%, has also declined to its current level of approximately 21%, according to Standard & Poor’s Ratings Services, which lowered its ratings on all classes of First Consumers Master Trust’s series 1999-A and First Consumers Credit Card Master Note Trust’s series 2001-A.

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National Processing Transaction Volume Up 8%

Louisville-based National Processing reported that revenue for the second quarter was up 1% to $113.6 million and that net income declined 9% for 2Q/03 to $11.1 million. Merchant Card Services processed 1.0 billion transactions for the quarter, an 8% increase over comparable 2002 volume. Merchant Card Services dollar volume processed for the quarter was $42.2 billion, which represented a decrease of 2% from comparable 2002 volume. The dollar volume processed has trailed transaction growth primarily as a result of the Company’s initiative to exit merchant processing for airlines, which have a large average ticket per transaction. NAP says it is increasing its revenue guidance to a range of $435 to $455 million for the year, primarily as the result of the acquisition of Bridgeview Payment Solutions, which should add $10-$12 million of revenue in 2003. For complete details on National Processing’s second quarter performance visit CardData ([www.carddata.com][1]).

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

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Household’s Active Accounts Up 18% in 2Q/03

HSBC’s Household reported this morning that its VISA/MasterCard receivables increased by 8% and that charge volume grew by 3% in the second quarter. Household’s active accounts soared by 18% in the second quarter to end at 12,046,000. At the end of the second quarter Household had $16,610,531,000 in credit card loans compared to $15,373,368,000 one year ago and $16,195,385,000 in the first quarter of this year. Charge volume for 2Q/03 was $9,324,621,000, compared to $8,443,767,000, in 1Q/03 and $9,057,805,000 for 2Q/02. For complete details on Household’s second quarter performance visit CardData ([www.carddata.com][1])

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

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SEARS NATIONAL BANK

Sears Canada said it intends to submit an application to the
Office of the Superintendent of Financial Institutions for a federally regulated bank.
The company says the establishment of a bank will, among other
things, facilitate the offering of a wide variety of innovative MasterCard
products to customers. The Sears Card represents the single largest credit card franchise in
Canada. In 2002, the company introduced the Sears MasterCard. First rolled out in Ontario, the card is now being introduced in
British Columbia and Alberta. Sears Canada says a bank will bring greater regulatory certainty and harmonization across
Sears Canada’s national financial services operations.

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Providian Hires Two Top Guns for EVPs

Providian has hired John Botcheller, formerly with Citibank, as EVP of Finance, and has also hired John Hale, the partner in charge of KPMG’s Credit Risk Management Services, as EVP and Chief Enterprise Risk Officer. Mr. Botcheller will be responsible for accounting and financial planning at Providian. Mr. Hale’s responsibilities include the enterprise-wide risk and assurance functions of internal audit, credit review and enterprise risk management.

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Discover Renews Preferred Card Contract with Shopping Malls

Discover has signed a two-year renewal on its four-year, exclusive marketing sponsorship with The Mills Corporation to be the preferred card of 13 operating Landmark Mills shopping malls, plus St. Louis Mills and Cincinnati Mills, both scheduled to open within the next year. Additionally, the renewal will allow Discover Card to deepen customer relationships through special incentive offers and promotions, including Cashback Bonus(R) awards and the “Little Orange Gift Box” promotion. Using Mills centers, Discover Card will have an opportunity to raise brand awareness through a sustained marketing effort, as well as have the ability to interact with their Cardmembers at the point-of-sale. A highlight of this four year relationship took place in November 2001 when Mills announced the grand opening of Discover Mills, the first-ever naming rights deal for the shopping center industry.

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Global Payments Profits Up 17%

Atlanta-based Global Payments reported that revenue for the quarter ending May 31st grew 11% to $134.3 million. GPN also reports that normalized net income for the quarter grew 17% to $13.8 million. During the quarter the company committed to a plan to close three operating facilities and consolidate these and other functions into other existing locations. GPN says it is projecting revenues of $542 million to $562 million, or 5% to 9% growth, over the next twelve months. For complete details on Global Payments’ second quarter performance visit CardData ([www.carddata.com][1]).

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

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ADS Credit Services Revenues Up 27%

Dallas-based Alliance Data Systems reported that second quarter revenue increased 20% to $247.6 million and that net income increased 250% to $11.9 million for the second quarter. Transaction Services revenue increased 17% in the second quarter to $151.4 million. Marketing Services revenue increased 16% in the second quarter to $67.4 million. Credit Services revenue increased 27% in 2Q/03 to $98.0 million. ADS says total private label credit sales increased 13% due to the ramp-up of many new client programs. During the quarter ADS added private label cards for Eddie Bauer, Spiegel, Newport News, Stage Stores and American Home Furnishings. For complete details on Alliance Data Systems second quarter performance visit CardData ([www.carddata.com][1]).

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

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