MasterCard Bans Use Of |900' Phone Numbers
NEW YORK -- Hoping to clean up the image of secured credit cards, MasterCard International has outlawed the use of "900" numbers by members who issue its cards.
The New York-based card association said too many shady and illegitimate operations were encouraging consumers to call 900 numbers and other pay-per-call systems to obtain its credit cards.
While the ban applies to the marketing of all MasterCard products, it is specifically aimed at the secured card business -- the market where 900 numbers are used most often.
"I think it's a very good policy and one that's long overdue," said C. Jack Bean, chairman of Surety Capital Corp., a lending company based in Hurst, Tex., that began marketing secured credit cards in September.
"Many of those ads [with 900 numbers] are running along with ours, and most of them are shams. It makes us look like thieves," Mr. Bean said.
Visa Schedules a First Step
Mr. Bean said he would like Visa U.S.A. to outlaw 900 numbers, too, since Surety offers only Visa cards. Beginning next May, a spokesman said, Visa will not allow issuers to charge consumers for use of a 900 number to inquire about obtaining its card.
Secured credit cards were designed for consumers who have short or less-than-stellar credit histories. Holders of secured cards must make deposits at card-issuing banks to act as collateral.
Sprucing up consumers' perceptions of the secured business is important today because many big credit card issuers, including Citicorp, are exploring the market.
"We want to clean up the market from both a brand image perspective and a product perspective," said Dan Ciporin, a MasterCard vice president. "Secured cards have a bad image because of the abuses that are involved."
Bogus Applications Rampant
Until recently, the secured card market has been dominated by a handful of obscure institutions. Many rely heavily on the revenue they reap from consumers who call 900 numbers to request applications. Such applications are often bogus, or require huge fees.
According to Mr. Ciporin, just 10% of all 900 numbers in the nation are run by consumer credit firms. However, they account for a disproportionate 50% of all complaints about 900 numbers sent to the Federal Trade Commission.
The prohibition on 900 numbers strengthens steps taken by MasterCard in August to restrict abuses in the marketing of secured cards. Among other things, the card association requires issuers who use 900 numbers to disclose the cost of the phone calls in their solicitations.
Secured cards have become increasingly popular as banks intensify their search for cardholders in a slow-growing market. Most consumers who qualify for conventional credit cards are believed to already own at least one card from MasterCard or Visa.