Law and regulation

WASHINGTON — Just days after the surprise passage of an amendment to regulate interchange, bankers are bracing for the possible addition of an even stronger measure that would hold them to the interest rate limit in the cardholder's state.

The U.S. Department of Justice has indicted a former supervisor at collection agency GC Services on charges she tampered with checks sent by consumers, directed them to a personal bank account and forged electronic records.

The Reserve Bank of India should set the maximum annual interest rates banks may charge their credit cardholders, a parliamentary committee is suggesting in a new report.

One of the roughly 140 proposed amendments to the financial reform legislation could have serious implications for credit card issuers, but so far the proposal does not seem to have much of a toehold.

Senate Majority Whip Dick Durbin, D-Ill. on May 6 introduced three interchange-related amendments to the Senate’s financial-reform bill, prompting swift criticism from the payments industry.

A lawsuit filed by New York Attorney General Andrew Cuomo's office claims attorney John P. Nicolia sold a collection agency the use of his name and his law firm's name in 2008 and 2009, which the agency then used to threaten bogus legal action against consumers across the U.S. Nicolia, of Williamsville, N.Y., received a total of $141,000 for selling his name, according to Cuomo's office.

Major U.S. banks’ credit card-issuing units brought in billions in interest income during the fourth quarter of 2009, led by JPMorgan Chase & Co.’s Chase Bank USA, which earned $8.43 billion in credit card interest income during the period. Credit card interest income accounted for 87% of the unit’s total interest income of $9.7 billion, which also includes commercial, industrial, installment and some student loans. Mortgage loans are handled by another business unit.

Vermont merchants are a step closer to being able to set minimum purchase amounts for card payments after the state's Senate passed a bill Tuesday giving retailers more control over card acceptance.

The Federal Trade Commission has closed a mortgage foreclosure operation that promoted bogus loan modification and foreclosure relief services, officials announced today. The FTC also imposed a $12 million judgment against the operation.

Four witnesses testifying April 28 before the U.S. House Judiciary Committee on credit card interchange regulation agreed on one thing: A handful of the largest banks benefit most from interchange. And the potential effect of interchange-rate regulation on smaller community banks and credit unions, which struggle to compete against the giants, is murky.

The U.S. House Judiciary Committee is resurrecting discussion about credit card interchange regulation with a hearing scheduled for April 28 on Capitol Hill. The hearing before the full committee will focus on the “Credit Card Fair Fee Act,” which committee member John Conyers, D-Mich., introduced in 2008 and 2009.

The Single Euro Payments Area, an initiative the European banking industry launched in 2002 to link European Union and other euro-based countries’ separate national payment systems into a standardized system, remains a work in progress. And not everyone believes the European Payments Council, which is responsible for the initiative that has seen several delays already, can complete the task by December 2012, as the European Commission has proposed.

Federal Trade Commission officials testified yesterday before the U.S. Senate Committee on Commerce, Science, and Transportation that the FTC will continue its stepped-up efforts to protect financially strapped consumers from deceptive and abusive debt relief scams.

A nationwide specialty consumer reporting agency that provides casinos credit reports used to assess customers’ eligibility for credit and check cashing will pay $150,000 to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act (FCRA), FTC officials said today.

A federal court today banned eight companies and their principals from selling credit repair and mortgage relief services and ordered them to pay more than $7.5 million for deceiving consumers throughout the United States.

Companies offering smartphone-enabled point-of-sale hardware and software applications are unlikely to capture business from providers of traditional wireless-payment terminals. The more likely outcome is that the two types of wireless devices will compliment each other, with the smartphone-enabled card acceptance attracting small mobile merchants that have avoided purchasing wireless terminals because of the cost, observers say.

Consumers should be allowed to use credit cards to pay for insurance products, Lee Doo-hyung, the new chairman of the Credit Finance Association of Korea, said at his inauguration conference this week.

MasterCard Canada says it plans to adopt the code of conduct for Canada’s debit and credit card industry that the country’s finance minister approved April 16. However, Visa Canada and Moneris Solutions Corp., Canada’s largest payments processor, say they need more time to study the code to determine how it affects their businesses.

An Internet-based payday lender that sold high-interest loans to consumers in Massachusetts at up to 600% interest will no longer be able to do business in the state under a settlement filed by the state's attorney general's office.

Collection law firm Friedman & Wexler LLC, Chicago, is being sued by HSBC Finance Corp. for more than $400,000 in funds that were intended to be held in trust for the bank - but are missing. HSBC hired the firm in 2005 to help it collect outstanding consumer loans. The bank paid the firm 25% of the amount collected.