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"A new study from the Pew Charitable Trust has found that every one of the credit cards offered by the country's 12 largest credit card issuers are bad deals for consumers and have practices the Federal Reserve has defined as "unfair or deceptive." The Trusts' Health Group's Safe Credit Cards Project, titled STILL WAITING: "Unfair or Deceptive" Credit Card Practices Continue as Americans Wait for New Reforms to Take Effect also compared credit union card programs and found them sharply better. "Although credit unions control only a small portion of credit card outstandings, comparisons between credit union and bank product models illustrate options available to consumers and potential benchmarks for future regulatory rulemaking efforts," the organization said. The observed credit unions presented a distinct alternative to credit card pricing and other practices of the observed banks, the report said. "In July 2009, median advertised interest rates on cards from the 12 largest credit unions were between 9.90 and 13.75% annually, depending on a consumer's credit profile-approximately 20% lower than comparable bank rates," the report said. "Meanwhile, credit union penalties were generally less severe than those of banks." "

Recommend watching this Frontline report on the secret life of credit cards. Interesting: http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/ - Karl ------------------------------------------------------------------------------- Millions of Americans have already seen their credit card limits shrink, and millions more face the same fate as lenders prepare for tougher U.S. consumer protection rules. Since the financial crisis deepened a year ago, credit card companies have been closing millions of inactive accounts, cutting credit limits and raising interest rates to cushion themselves from record loan losses. This is just the beginning of the biggest shake-up in the credit card industry in at least 20 years, analysts said. Credit Suisse analyst Moshe Orenbuch estimated available credit card lines will be cut by about 20 percent, or $1.2 trillion, in coming months, and warned that "further cuts could result from the provisions of the new credit card law."

Millions of Americans have already seen their credit card limits shrink, and millions more face the same fate as lenders prepare for tougher U.S. consumer protection rules. Since the financial crisis deepened a year ago, credit card companies have been closing millions of inactive accounts, cutting credit limits and raising interest rates to cushion themselves from record loan losses. This is just the beginning of the biggest shake-up in the credit card industry in at least 20 years, analysts said. Credit Suisse analyst Moshe Orenbuch estimated available credit card lines will be cut by about 20 percent, or $1.2 trillion, in coming months, and warned that "further cuts could result from the provisions of the new credit card law."

Hundreds of credit union members are starting their holiday weekend off without their debit cards after a credit compromise forced the Winthrop Federal Credit Union to deactivate customers' cards. The credit union stayed open Friday until 6 p.m. to give cash to affected customers for the weekend. CARDS FROZEN AS A PRECAUTION Credit union officials say its card processer, Metavante, noticed suspicious activity on three of its MasterCard debit cards and notified the credit union about them. While it was not a security breach, the Winthrop Federal Credit Union decided to freeze a block of cards as a precaution, something that Metavante did not advise them to do. "We really know very little. We are working with the credit processor to identify the possible cards," said bank spokeswoman Cathleen Clark. "We always feel it's better to be safe than sorry." Because of the suspected credit compromise, the credit unions says it felt it was necessary to freeze the cards.

A consumer reporting agency that failed to properly screen prospective customers and, as a result, sold at least 318 credit reports to identity thieves, has agreed to settle Federal Trade Commission charges that it violated federal law. Under the settlement, the company and its principal must ensure that they provide credit reports only to legitimate businesses for lawful purposes, use a comprehensive information security program, and obtain independent audits every other year for 20 years. The settlement also imposes a $500,000 penalty but suspends payment due to the defendants' inability to pay. According to the FTC, the defendants use sensitive financial data from other consumer reporting agencies to create reports that landlords use to assess potential renters. These reports contain consumers' names, Social Security numbers, birth dates, bank and credit card account numbers, credit histories, and other personal information. The Commission alleges that the company failed to properly screen new customers. The company allegedly requested only publicly-available information from applicants seeking credit reports, and it did not request supporting documentation to establish that an applicant was actually a landlord renting property. As a result, identity thieves posing as property owners were given an account with unlimited online access to credit reports, and the account was used to access at least 318 reports containing sensitive personal information. The FTC charged the defendants with violating the Fair Credit Reporting Act (FCRA) by furnishing credit reports to persons who did not have a permissible purpose to obtain them, and by failing to maintain reasonable procedures to prevent such impermissible disclosures and to verify their customers' identities and how they intended to use the information. The agency also charged them with violating the FTC Act by failing to employ reasonable and appropriate security measures to protect sensitive consumer inform

Bank of America will pay Connecticut $350,000 as part of a settlement for a data breach by Countrywide Financial Corp., which the bank acquired last year, state officials said Thursday. The bank will also provide at least $25,000 to reimburse Connecticut residents forced to pay for freezing and unfreezing their credit reports because of the breach, Attorney General Richard Blumenthal said. The major credit bureaus, Experian, Equifax and TransUnion, charge about $10 to freeze and unfreeze credit reports. Affected consumers will receive about $60 for credit freezes and unfreezes for all three credit bureaus, Blumenthal said. Nearly 30,000 state residents were affected by the nationwide breach, which came to light last August after the FBI arrested a former Countrywide employee on charges of selling personal information, including Social Security numbers, for as many as 2 million loan applicants. To be reimbursed, consumers must send proof of payment for their credit freezes and unfreezes to Blumenthal's office, 110 Sherman St., Hartford, CT 06105, attn: Countrywide Credit Freeze.

Visa Inc. said recent alerts it sent to credit card issuers are not related to a new breach, countering reports that a second payment processor had been compromised. In a statement issued Friday, San Francisco-based Visa said the alerts "were part of an existing investigation and are not related to a new compromise event." Credit unions last week reported receiving alerts from Visa and MasterCard about credit and debit card accounts that were exposed in the breach of a payment processor. They reported that the compromise was unrelated to the breach announced by Heartland Payment Systems in January. Information about newly affected accounts was relayed to banks and credit unions Feb. 9, via Visa's Compromised Account Management System (CAMS). The system, which informs banks of compromised account numbers, gives issuers the ability to monitor, close, or block the compromised accounts. Visa's statement did not say what existing investigation the alerts are related to and a company spokesman said he couldn't provide that detail. "Visa has provided the affected accounts to financial institutions so they can take steps to protect consumers," the company said in its statement. "In addition, Visa is risk-scoring all transactions in real-time, helping card issuers better distinguish fraud transactions from legitimate ones." Rich Mogull, an independent consultant and founder of security consultancy Securosis LLC said it's impossible to draw any conclusions based on the Visa statement. "It doesn't say if the breach is public or not, so it may be older but not revealed yet," he wrote in an email. "In other words, it just adds to the confusion. I assume the full story will come out eventually, and since they don't identify the breach it's hard to really evaluate this at all." Heartland disclosed Jan. 20 that its systems were compromised by a hacker in 2008. The breach forced hundreds of banks and credit unions to replace thousands of credit and debit cards.

Up to 21,000 Floridians may have been affected by a data breach at Wyndham Hotels & Resorts last year, prompting Attorney General Bill McCollum to ask consumers to keep a close eye on their credit statements. According to a statement released today, Wyndham reported to the Attorney General's Office that it contacted affected consumers in December and notified them that unauthorized access to Wyndham systems had potentially compromised their personal data on their debit and credit cards. The data breach has since been disabled. McCollum encouraged consumers to report any suspicious activity on their accounts to law enforcement. Affected consumers are encouraged to take precautionary steps, including obtaining a free fraud alert from one of the credit reporting agencies. Anyone who believes they may be a victim of identity theft should also request that the national credit bureaus place a fraud alert on their credit reports. Consumers should notify banks and creditors involved of questionable charges or accounts, keep records of all telephone calls and follow up in writing with credit bureaus, banks and creditors.

The first sign that something was wrong seemed harmless: A new Dell credit card arrived in my mail one afternoon. More landed in the mailbox the next day. Macy's. Bloomingdale's. Crate and Barrel. Radio Shack. Then later: Visa Sony, Toys R Us and Lowe's cards turned up. I didn't request any of these cards. My first call to Dell revealed what I suspected. Someone had applied for a credit card using my name. I felt violated and vulnerable. Then, it hit me: I've become a statistic, a victim of identity theft. A thief had taken my name, my credit and my identity and managed to spend more than $8,000 (money that, I'm grateful, I didn't have to pay). I still don't know who the culprit was or how it happened. All I know is that if this happened to me - a Sun Sentinel consumer affairs and watchdog reporter - it can happen to anybody. Thieves move quickly Identity theft is the fastest growing crime in the United States, according to the Federal Trade Commission, which enforces identity theft laws. Experts estimate 10 million Americans become victims of identity fraud each year. Last year, businesses lost $56.6 billion to ID theft, the commission said. I've spent hours on the phone talking to fraud investigators, credit bureaus and bank staff as I've tried to sort out the mess that is now mine to clean up. I was exhausted every time a call ended. Individual investigations, conducted by fraud departments for each of the credit card companies that issued accounts in my name, took months to complete before concluding I was a victim of ID fraud. But there is a bright side to this story. I thought I knew how to protect myself. But what I've learned through this experience has taught me that you can never be too careful. I also learned some hard lessons along the way about how best to safeguard my personal information in the future - and respond, if my identity is targeted again.

A recent data breach study commissioned by the state of Maine sheds light on the losses banks experienced as a result of the data breaches at TJX and Hannaford Brother's supermarkets. The state's banks said they incurred $2.1 million in expenses related to data breaches since January 1, 2007. The Hannaford breach had the largest impact, affecting 71 financial institutions and incurring $1.6 million in expenses according to the Maine Data Breach Study. Hannaford is based in Scarborough, Maine. The TJX breach accounted for $485,000 in expenses. The report was issued by the Main Bureau of Financial Institutions in November 2008. It studied the impact of data security breaches on Maine banks and credit unions. Fifty credit unions and 25 banks headquartered in Maine responded to the survey. Financial institutions reported more than 18 million records breached last year, according to the Identity Theft Research Center. The San Diego-based nonprofit found that data breach reports across five industry sectors jumped to 656 last year, up 47% from 2007. About 12% of the reports came from financial-services firms, up from 7% in 2007. In Maine, the Hannaford breach resulted in more than $318,000 in gross fraud losses, according to data reported by 22 financial institutions. More than 700 accounts were used to buy items fraudulently, although five of the 22 institutions that suffered a fraud loss did not report the number of accounts, according to the report. The Hannaford breach cost some banks as much as $58,000 to reissue credit cards to customers. Investigation expenses cost nearly $30,000 for some banks. Communication to customers cost nearly $28,000, some banks and credit unions reported. Fraud losses of nearly $45,000 were tied to the TJX data breach. The losses were reported by six financial institutions. The expenses for reissuing credit cards cost some banks as much as $32,000. Investigation expenses were as high as $21,000 for some banks. Communication to custom

With the ink barely dry on headlines about what could be the biggest security breach in history (identity thieves hacked into payment processor Heartland Payment Services, possibly gaining access to the credit-card information of millions of consumers) signing up for a credit-monitoring service may have jumped a few notches on your to-do list. After all, paying $12 or so a month seems like a small price to pay for the peace of mind that -- through regular alerts about activity on your credit reports and other monitoring services -- you'll be protected from identity theft. Right? Think again.

Beyond PCI: Other Regulations to Look For in 2009 Just a few days ago, the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration announced the enactment of comprehensive new rules regarding card practices. These rules, which will not take effect until July 1, 2010, impose restrictions on a number of controversial issuer practices, including interest rate increases, late fees and double-cycle billing. Many industry observers predict that the rules will result in less credit being made available, and on stricter terms, than has been the case over the last several years. These rules may not be the end of the matter. Rep. Carolyn Maloney (D-NY), who in 2008 introduced the Credit Cardholders' Bill of Rights Act of 2008 (which sought to regulate many of the same practices as the then-proposed Fed rules), stated that she was disappointed in the delayed effectiveness of the Fed rules and promised to revive the Credit Cardholders' Bill of Rights in 2009 to, as she put it, "bridge the gap" between now and the effective date of the Fed rules.

Heartland Payment Systems Inc., which announced a breach of potentially millions of credit and debit cards last month, said it plans to vigorously defend itself against lawsuits filed as a result of the data breach. In a filing with the Securities and Exchange Commission, Heartland Chairman and CEO Robert Carr acknowledged the claims that cardholders, card issuers, the credit card brands, regulators, and others have asserted, or may assert, against the payment processor as a result of the breach and the impact it could have on the business. Several class action lawsuits have been filed against Heartland, claiming that the payment processor issued belated and inaccurate statements when it announced a security breach of its systems. Carr He said the company could not "reasonably estimate the potential impact of the breach on the day-to-day operations" of the business. "We intend to vigorously defend any such claims and we believe we have meritorious defenses to those claims that have been asserted to date," Carr said. "At this time we do not have information that would enable us to reasonably estimate the amount of losses we might incur in connection with such claims." The Princeton, N.J.-based payment processor announced Jan. 20 that its systems were breached last year when intruders installed malware to pilfer data crossing the company's network. Since then, Sherriff's authorities in Tallahassee, Fla. arrested three suspects for using stolen credit card numbers to make purchases at local Wal-Mart stores. The credit card numbers used by the trio were allegedly stolen from the Heartland processing center in New Jersey. Carr said the company's sales force was doing well despite the obvious challenges caused by the combination of the downturn in the economy and the data security breach. The payment processor's current customer base has responded positively, he said. "In the weeks since our announcement of the breach, we have installed more margin, and have a bit

Days after Visa seemingly confirmed that a data breach had taken place at a third payment processor, following on the recent breach disclosures by Heartland Payment Systems and RBS WorldPay, the credit card company now is saying that there was no new security incident after all. In actuality, Visa said in a statement issued Friday, alerts that it sent recently to banks and credit unions warning them about a compromise at a payment processor were related to the ongoing investigation of a previously known breach. However, Visa still didn't disclose the identity of the breached company, nor say why it is continuing to keep the name under wraps. Visa said that it had sent lists of credit and debit card numbers found to have been compromised as part of the investigation to financial institutions "so they can take steps to protect consumers." It added that it currently "is risk-scoring all transactions in real-time, helping card issuers better distinguish fraudulent transactions from legitimate ones." Visa's latest statement follows ones issued by both it and MasterCard International earlier this week in response to questions about breach notices that had been posted by several credit unions and banking associations. The notices made it clear that they weren't referring to the system intrusion disclosed by Heartland on January 20 and suggested that a new breach had occurred.

Canadians who travelled to the United States in 2008 are being advised to check their credit-card statements and watch for signs of identity theft after a massive security breach at a U. S.-based company that processes millions of credit cards. Canada's Privacy Commissioner said yesterday she was shocked to learn that New Jersey-based Heartland Payment Systems, which processes credit-card transactions for more than 250,000 businesses in the United States, had found "malicious software" in its operating system. "I'm amazed to see something this significant can still happen with the importance that not only privacy commissioners, but experts everywhere, are placing on security," Jennifer Stoddard said. "I was concerned to see this going on and the size of it." Tech experts say the hack could be one of the largest ever credit-or debit-card data breaches, and that Canadians should watch closely for signs of identity theft.

Six federal agencies issued a set of frequently asked questions (FAQs) today to help financial institutions, creditors, users of consumer reports, and issuers of credit cards and debit cards comply with federal regulations on identity theft and discrepancies in changes of address. The "Red Flags and Address Discrepancy Rules," which implement sections of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), were issued jointly on November 9, 2007, by the Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), Office of Thrift Supervision (OTS), and Federal Trade Commission (FTC). The rules require financial institutions and creditors to develop and implement written Identity Theft Prevention Programs and require issuers of credit cards and debit cards to assess the validity of notifications of changes of address. The rules also provide guidance for users of consumer reports regarding reasonable policies and procedures to employ when consumer reporting agencies send them notices of address discrepancy. The agencies' staff have jointly developed answers to these FAQs to provide guidance on numerous aspects of the rules, including which types of entities and accounts are covered; establishment and administration of an Identity Theft Prevention Program; address validation requirements applicable to card issuers; and the obligations of users of consumer reports upon receiving a notice of address discrepancy.

In all of 2008, 40 banking institutions failed - 25 banks and 15 credit unions. So far in 2009, 72 institutions have either been closed or taken over by regulators, including 7 banks just this past weekend. The Federal Deposit Insurance Corporation (FDIC)'s troubled bank list, now at 305, has more than doubled from last year's total, when 117 banks were listed. Which begs the questions: Where and why are all these institutions failing, and how many more closures will we see by year's end? Failures by the Numbers Analysis of this year's bank/credit union failures (see interactive map) reveals some interesting facts: * Total Failed Banks: 64 * Total Failed Credit Unions: 8 o Top States For Failures: o Georgia - 16 banks o Illinois - 12 banks o California - 8 banks, 3 credit unions o Florida - 3 banks * Largest Failure BankUnited, Coral Gables, FL., $12.8 billion in assets, * Total Cost to FDIC Insurance Fund: $13.553 billion

In an indication of the legal troubles that companies can find themselves in over data breaches these days, several banks and credit unions have begun suing Heartland Payment Systems Inc. over its recently disclosed data breach. In the six weeks since the potentially massive breach was disclosed, eight banks and credit unions have filed lawsuits against Heartland over its alleged failure to take adequate measures for protecting credit and debt cardholder data. Heartland said on Jan. 20 that unknown intruders had broken into its network sometime last year and accessed payment card data belonging to an undisclosed number of customers. The breach, thought to possibly be the biggest ever disclosed, has already affected over 500 financial institutions, including a handful in the Bahamas, Bermuda and Canada. The lawsuits seek compensation from Heartland for the costs that the financial institutions said they've had to bear in notifying affected customers about the breach and in reissuing new payment cards. The lawsuits also claim damages from Heartland for costs of the alleged fraud that the banks claimed have resulted from the breach.

Woonsocket-based CVS Caremark Corp., the largest U.S. drugstore chain, has agreed to pay $2.25 million to settle federal charges that company employees compromised customer privacy by throwing prescription records and drug bottles into open trash bins. The Federal Trade Commission said its investigation with the Health and Human Services Department followed media reports that trash bins behind CVS pharmacies contained pill bottles bearing patient names, credit-card and insurance information, and Social Security numbers. The company also did not have adequate policies for disposing of that information, and did not sufficiently train employees to dispose of the information properly, the agencies said. The items that were not properly discarded included pill bottles, medication instruction sheets, computer order forms, payroll information, job applications and credit-card and insurance information. Those labels and forms contained personal information including Social Security numbers and credit card and insurance information, and in some cases, driver's license numbers and account numbers. Names of the patients' doctors were also included. The settlement "will restore appropriate privacy protections to tens of millions of people across the country," FTC chairman William Kovacic said in a statement. "It also sends a strong message" that organizations "are required to secure consumers' private information," he said.

A defunct payment gateway has exposed as many as 19,000 credit card numbers, including up to 60 Australian numbers. The discovery by a local IT industry worker was made by mistake and appears to be caused by a known issue with the Google search engine, in which the pages of defunct web sites containing sensitive directories remain cached and available to anyone. The cached data, viewed by iTnews, includes 22,000 credit card numbers, including CVVs, expiry dates, names and addresses. Up to 19,000 of these numbers could be active. Most are customers in the US and Britain although some are Australian. The credit card numbers are for accounts held with Visa, Mastercard, American Express, Solo, Switch, Delta and Maestro/Cirrus. Within the address bars of the cached pages are URLs of companies, including UK retailers of laboratory supplies, sports and health goods, apparel, photo imaging and clothing.

Consumers and companies are vulnerable to hackers and identity thieves even after U.S. authorities arrested a man they said was a master hacker who stole 170 million credit and debit card numbers. Estimates on the total financial impact of breaches vary, but a study by Forrester Research put the cost at $90 to $305 per compromised record when considering the cost of upgrades, notifying customers and legal and marketing expenses. "Under our banking laws, it's the financial institutions that will be stuck paying for fraudulent use of credit cards. We have the consumers responsible for $50 and the rest winds up on the card issuer," said Joel Reidenberg, a professor at Fordham Law School who teaches privacy law. Banks in turn pass along costs to retailers as fines and fees. On Monday, three men were indicted on charges of stealing more than 130 million credit and debit card numbers in what U.S. authorities said they believed was the largest hacking and identify theft case ever prosecuted in the United States