Apple Pay Fraud Questions; Military Members Victimized by Arbitration

Wall Street Journal

Citigroup is among at least a dozen companies that have given in to activist shareholders' demands to nominate directors, a strategy known as proxy access. Calpers, one of the largest activist shareholders, describes the trend as a "sea change," while the New York City Comptroller said it's only a matter of time before most companies allow for proxy access.

New York Times

In their rush to be among the chosen few selected for the first wave of Apple Pay partners, banks may have loosened security standards a bit too much. If there is a security flaw with Apple Pay, banks are largely to blame, Andrew Ross Sorkin writes for the Times, echoing an American Banker article from earlier this month. Banks, which are responsible for the costs of any fraud associated with Apple Pay usage, are at fault all because they desperately wanted their cards to be their customers' default card on Apple Pay. Among the reasons: Apple provides little information to banks about users' personal information, such as full phone numbers and addresses, which could help banks catch fraud. Banks did little in the way of trying to convince Apple to give them more information, fearful of not being allowed to be one of the first banks to offer Apple Pay. Another reason: When a user was suspected of being a fraud victim, banks sent them to customer-care call centers, rather than fraud-prevention call centers. When asked about security problems over the past couple of weeks, Apple has thrown banks under the bus: "During setup, Apple Pay requires banks to verify each and every card and the bank then determines and approves whether a card can be added to Apple Pay."

The paper looks at mandatory arbitration, the controversial legal platform that is a new target of the Consumer Financial Protection Bureau, and how it affects members of the military. The article examines a couple of different sides to the argument, including that of service members who were deployed overseas. The article also points out the very narrow path that must be walked by USAA, the San Antonio, Texas, firm that serves members of the military. While USAA supported a bipartisan bill to let military members opt out of arbitration and file a lawsuit against lenders, USAA nevertheless uses mandatory arbitration in many of its financial-services contracts with members. Banks are trying to block legislation to allow military members to opt out of arbitration, out of the fear it would lead to carve-outs for many other groups, if not the total dismantling of the system of mandatory arbitration.