Linda Punch

When CompuCredit Corp. last year acquired two payday lending chains, it startled many industry observers. After all, some consider payday lenders in the same league as pawnshops, loan sharks and other types of predatory lenders. That is not an image most issuers would care to cultivate.

The Comptroller of the Currency has put card issuers on notice that they must clearly disclose penalty fees and risk-based pricing. But consumer advocates say the OCC is doing too little, too late.

It's been a long time coming, but the U.S. economy finally showed signs of life this year.

Despite a host of high-tech anti-fraud measures, the battle against fraud continues as crooks poke and prod for the card industry's weak spots. CCM reviews the latest fraud trends and what's being done to counter them.

Welcome to the world of the unbanked, and their first cousins, the underbanked. These so-called no-hit or thin-file consumers fall into that shadowy area of credit risk between prime and subprime. Their problems are not that they have bad credit histories. It's that they often have no credit histories at all. Yet they offer opportunities for new revenue streams to a credit card industry that has pretty much exhausted other market segments.

Over the years, the card industry has spent millions of dollars promoting its products. Whether it be MasterCard International's heart-tugging "Priceless" campaign or Visa's patriotic mini-tributes to the Olympic Games, the goals were the same: to win the hearts and minds of American consumers.

For decades, finding an older American mired in debt was the exception, not the rule. Since the 1960s, millions of Americans 65 and older have owned homes, enjoyed steady income from Social Security, stocks, bonds and pension plans, and have had good health insurance.

The introduction of credit cards in many countries is leaving consumers drowning in oceans of bad debt. What to do?

High chargeback rates pose one of the greatest obstacles to the growth of e-commerce. But with the aid of a broad range of anti-fraud measures, online retailers finally are experiencing a dramatic decrease in chargebacks.

Executives in the card industry continued to pull down hefty salaries in 2003. But there are signs that boards of directors are beginning to scale back compensation packages.

Visa, MasterCard and American Express grew in 2003 but Discover Financial Services took its share of lumps. It watched profits dwindle as it tried to compete in a market place where ultra-low interest rates were the norm. And it saw losses climb as record levels of bankruptcy filings and unemployment took a toll on the credit quality of its portfolio.

The year 2003 may not have been a spectacular one for MasterCard International, but it was far from a bust. Despite a sluggish economy and geopolitical instability, the association put in a solid performance. Indeed, it managed to post double-digit gains in key categories, including some traditionally dominated by cash and checks.

Alarmed by the sharp increase in identity theft, lawmakers and regulators are turning their attention to the database-security measures of financial institutions and merchants.

U.S. card-industry firms began moving call centers to India and other nations several years ago to cut costs. But now, familiar and not-so-familiar problems are appearing. Is an offshore back office still worth the effort?

Call it cautious optimism, a mildly positive outlook for a stagnant U.S. economy finally beginning to stir. That pretty much describes many economists' expectations for 2004.

The subprime market has gone through a series of upheavals over the last two years. Just what does the new subprime cardholder look like and how will the changes affect collections?

Citigroup's plans to buy the card business of Sears, Roebuck and Co. turned heads in the card industry. What impact will the deal have on the beleaguered retailer and the largest bank card issuer?

A slew of lawsuits, bills and new regulations is keeping card industry lawyers and lobbyists hopping. How will the industry's operating practices be affected?

In an environment of soaring consumer debt loads, credit-counseling services are booming. But the questionable practices of some upstart organizations are prompting lawmakers to impose restrictions on what has been an unregulated market.

It's easy to see why online merchants feel they are waging a lonely, uphill battle against card fraud. They've grown accustomed to law-enforcement agencies that turn a deaf ear to their pleas for help unless fraud losses number in the six figures. And they've struggled to curb fraud in card systems that seem to protect every party but e-merchants.