Credit

A U.S. District Court judge in Chicago last week approved a preliminary settlement of a class-action lawsuit against TransUnion that claimed the Chicago-based credit bureau violated the Fair Credit Reporting Act when it sold marketing lists. TransUnion will provide affected consumers with nine months of free credit reports. The class includes U.S. consumers who had bank- and retailer-issued credit cards between Jan. 1, 1987, and May 28, 2008.

To grow its Zip contactless payment platform, Discover Network has in place the chip orders, the merchant acquirer programs, terminal hardware deals and, of course, the user base.

The good news is that credit-card issuers are pretty good at resolving fraud claims. The bad news, according to a report from Javelin Strategy & Research on the 25 top card issuers, is that preventing and detecting fraud leaves much to be desired.

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Visa Inc. is taking a different approach to sponsoring this year's Summer Olympic Games in Beijing, trying to show such investments pay off for banks in a tangible way.

Direct mail solicitations from card issuers declined in the first quarter as economic concerns prompted banks to curtail offers to subprime borrowers, according to data from Synovate, the New York market research unit of Aegis Group PLC.

Citigroup Inc. has introduced a reward program that offers cardholders points worth 10% of eligible purchases.

The saying goes, "If something's not working, try something else." And clearly, when it comes to the financial services and retail industries' response to phishing, something's not working. Unique phishing attacks reported to the Anti-Phishing Working Group hover around 25,000 per month, with spikes as high as 38,000 in the last year. Somewhere around 150 brands are targeted each month. And Gartner estimates that 3.3 percent of the 124 million consumers who received a phishing email last year lost money because of the attack. Why aren't industry efforts—from consumer education, to diligent takedown, to spam filtering—putting a dent in the problem? "Because we haven't addressed it at the Internet level; it's like Band Aids," says Gartner analyst Avivah Litan.

During the first quarter, U.S. households received an estimated 1.13 billion credit card offers in the mail, down 18% from 1.37 billion during the first quarter of 2007, according to the latest Synovate Mail Monitor report, released Wednesday. The eight U.S. card issuers Synovate tracks decreased mailings in the first quarter by an average of 54% compared with the same period last year. Washington Mutual Inc. decreased mailings by 39%, and Citigroup decreased mailings by 36%, the report says. "All issuers have been cutting back on sending mail to lower-income and subprime households," Andrew Davidson, Synovate's financial services group vice president of competitive tracking services, tells CardLine. "That peaked in 2005." However, Synovate's findings indicate some glimmers of issuer optimism, Davidson says. In the first quarter, American Express Co. increased mailings by 36%, and JPMorgan Chase & Co. increased its mailings by 7% compared with the first quarter of 2007. And compared with the fourth quarter last year, WaMu's mailings were up 149%, Citi's were up 24% and Discover Financial Services' were up 15%. "That's an encouraging sign for the card industry because it suggests they have a more-confident outlook going forward," Davidson says. He adds that the Federal Reserve's cuts to the prime interest rate late last year and early this year finally seem to be trickling down to cardholders in the form of lower introductory and fixed annual percentage rates. During the first quarter, the average rate was 12.2%, down from 12.9% in the first quarter of 2007, according to Synovate.

Consumer confidence in the U.S. economy and their own financial well-being in May fell to its lowest level since June 1980, according to the Reuters/University of Michigan Surveys of Consumers, released today. The May Index of Consumer Sentiment score was 59.8, falling from 62.6 in April and from 88.3 in May 2007. The June 1980 score was 58.7. Consumer purchasing power has been diminished by smaller income gains, fewer jobs, higher prices of necessities, falling home prices, tighter credit standards and record levels of outstanding debt, Richard Curtin, director of the surveys, said in a statement. "For consumers to increase their savings as well as cope with the higher costs of food and fuel will require a prolonged shift in budgets away from discretionary spending," he said. The Reuters survey suggests that consumers' purchasing plans for vehicles and household durables-furniture, appliances and home electronics-were the least favorable since the early 1980s. The U.S. Bureau of Economic Analysis today reported that real personal consumption expenditures increased 0.70% in the first quarter, compared with first-quarter 2007's increase of 2.56%. This metric is expected to be at or below 1% for the rest of the year, Curtin said. Nine in 10 consumers surveyed by Reuters thought the economy was in recession during May. Gross domestic product grew at a seasonally adjusted annual rate of 0.9% in the first quarter, an improvement from an earlier estimate of 0.6%, the bureau reports. First-quarter 2007 GDP growth was 0.6%, followed by 2.8%, 4.9% and 0.6% in the second, third and fourth quarters, respectively.

EdoInteractive, which combines the popularity of prepaid cards, social networking and mobile services among the Generation Y set, launched this week. CEO Ed Braswell tells CardLine he came up with the concept for the company and its products when his teenage daughter received several closed-loop retailer gift cards for her birthday and he noticed she also uses social networking Web sites and text messaging to connect with her friends. EdoInteractive offers a MasterCard prepaid card called Facecard, issued and processed by undisclosed partners, and a marketing platform merchants can use to target promotions via social networking among cardholders. Cardholders and their parents and friends may load funds onto the prepaid card. Cardholders also may transfer funds between their accounts. The service launched this week in the Nashville area with an undisclosed number of merchants. It also will be offered to students at 52 universities, including the University of Tennessee, University of Georgia, University of North Carolina and University of Texas, says Braswell. The company is using messages and electronic invitations on sites such as Facebook to promote discounts at events, including the Bonnaroo music and arts festival in Tennessee and the Country Music Awards Fan Fest.

The Center for Financial Services Innovation announced Wednesday that it has invested in iSend, an international payments company, and Progress Financial Corp., a lending company focused on Hispanic immigrants. The Chicago-based center, which is a nonprofit affiliate of the Chicago-based ShoreBank Corp., made the investments through Catalyst Fund LP, a limited equity partnership it created to invest in financial-services companies that serve the underbanked, the center says in a statement. Center spokesperson Lori Bonhma would not say how much it invested in each company. Progress Financial, which is based in Mountain View, Calif., makes unsecured loans between $500 and $5,000 to underbanked Hispanic immigrants, according to its Web site. It has four locations in California and has plans to expand across the country. Watertown, Conn.-based ISend enables immigrants living in the United States to pay for goods and services in their home counties. Consumers who use its service can pay utility bills and mobile-phone bills in Mexico, Brazil, Guatemala, Honduras and El Salvador, by visiting an iSend store, according the company's Web site. Consumers also can make mortgage payments in Mexico, Brazil and Guatemala, the company says on its site.