New York regulates credit card use

Citibank Bans Credit Cards From Use in Web Gambling , New York Times, June 15, 2002
By MATT RICHTEL

"Citibank said yesterday that it had agreed to block use of its credit cards for Internet gambling transactions. The decision came after regulators from New York State told Citibank that it could face criminal prosecution for aiding in the promotion of online gambling, which is illegal in the state.
Citibank joins a handful of other major credit card issuers, including ProvidianBank, that have already said they will try to block use of their cards for Internet gambling. Citibank, with 33 million Visa and MasterCard holders, is the nation's largest credit card issuer."

Other interesting notes in the article:

1.) The crackdown by credit card companies on online gambling is threatening the viability of the industry, with many cojmpanies finding their profits cut and others going out of business.

2.) Citibank will pay $400,000 to non-profit agencies that counsel compulsive gamblers.

Question:

Would the states be as zealous at cracking down on this issue if they were not making their own money from lotteries?

Trading Privacy for Convenience?

Fingerprint IDs raise privacy issues CNN.com Law Center
June 2, 2002

"Conrad is one of the 2,000-plus customers of a Thriftway grocery store in West Seattle who signed up in a pilot program run by Oakland, California-based Indivos Corp. that links customers' fingerprints with their credit or debit cards, allowing them to buy groceries by simply running a finger over a scanner."

As much of the commentary in the article indicates, these are completely uncharted waters. It is not clear, for example, who owns the fingerprint, whether that information can be sold if the company changes hands. There are, as yet, no federal regulations on these issues.

"'With most of these applications there's an interesting starting point, and then there are new applications and pretty soon you have full force Big Brother watching over you,' said Marc Rotenberg, executive director of the Washington, D.C.-based Electronic Privacy Information Center, a public-interest research group."

Can't live without it?

Credit cards get creative to lure consistent chargers
By Jay MacDonald • Bankrate.com

Ready for a little money magic? Wave your wristwatch and presto, your car is all gassed up. Flip your key chain and voilà, that bag of burgers is heading home with you. Flash that doodad on your gym bag and kazam, next month's club fee is paid faster than a TaeBo kick.

No sleight of hand here. Credit card issuers are exploring these and even more exotic payment innovations in an effort to make their cards more appealing in today's go-go world.

"You can't use them anywhere"
Travellers to Japan could face credit crisis during World Cup TOKYO, May 23 (PNS): In Japan cash is king and football fans travelling here for the World Cup finals may run into trouble trying to pay with plastic.
Surprisingly for the world's second largest economy, most banks in Japan do not accept overseas bank cards, foreign exchange is largely limited to US dollars and outside big cities there are relatively few places where the major international credit cards are accepted.

Cyber Crime Pays

"War on cybercrime--we're losing"
By Greg Sandoval, Special to ZDNet News, May 14, 2002, 5:50 AM PT

"Why are hackers able to elude capture so easily?
The answer, according to security analysts and fraud investigators, is that the Internet has bred an elite class of criminals who are organized, well funded and far more technologically sophisticated than most law enforcement officials.
It's a world-class business," said Richard Power, editorial director of the Computer Security Institute, a private research firm that tracks electronic crime. "Al-Qaida and serious narcotic terrorists are using credit card fraud to finance their groups."

Useful advice to Protect yourself

• Use a credit card instead of a debit card.

• Use only one card to shop online.

• Keep the credit limit low.

• Shop at familiar Web sites.

• Make sure the site uses encryption technology.

• Choose passwords that aren't easy to guess.

National Debt Trends

"New Report Finds One-Quarter Of U.S. Households Are Wealth-Poor"
Consumer Federation of American, Monday May 13

Analysis of those who have less than $10,000 of assets. Data, analyzed by Professor Catherine P. Montalto, at Ohio State University, indicates:

"There are two types of wealth-poor households -- young debtors with negative economic assets, and the income-poor who have few assets but no or few consumer debts. A majority of young debtors are under 35 years of age. They have more education and higher incomes, and are less likely to be Black or Hispanic, than the income-poor. Young debtors are much more likely than the income-poor to spend more than their incomes and to be willing to take financial risks with their saving and investments."

As Albert Crenshaw argues in the Washington Post, ("For Many, Debt Closes Doors") this disparity in wealth accumulation cast doubts on the image of the 1990s as a decade in which everyone benefited economically.

You can't go anywhere without it

"Mastercard and Visa to be Accepted in Nagorno Karabagh" Artsakh Newsletter, March-April, 2002
Stepanakert, April 29. "The President of ArtsakhBank Kamo Nersesian announced that the bank will soon begin to accept MasterCard and Visa cards as a method of payment on the territory of the Nagorno Karabagh Republic.'

Credit Fraud

"Technology: 13,000 Credit Reports Stolen by Hackers"
NYT, May 17, 2002
By JOHN SCHWARTZ
"Hackers posing as employees of the Ford Motor Credit Company have in recent months harvested a trove of 13,000 credit reports--— a virtual one-stop shop for fraud and identity theft — with data on consumers in affluent neighborhoods across the country".
Ford tough?

Corporate Responsibility

Jamming Citigroup's PR Message
Jennifer Bauduy, TomPaine.com
May 15, 2002

In mid-April, Citigroup launched a $100 million global ad campaign titled "This is Citigroup." Using images of elderly people, and people from Hong Kong to Brazil, the ads portray a caring bank, committed to local communities. But environmental group Rainforest Action Network (RAN), which has waged a boycott against Citigroup for the past two years, says the bank completely ignores environmental and social concerns and is one of the biggest contributors to global warming. RAN recently launched a counter campaign featuring photos that document destructive Citigroup-funded projects.

This article, posted on Alternet, is an interview with RAN's Ilyse Hogue. His point is that Citigroup is hypocritical:

"A lot of people don't understand that the capital investment that's provided by Citibank is the fuel for the machine of destruction [around the world]. The oil companies, the logging companies, they can't function without the massive influx of investments that they receive from Citibank and other big banks."

Credit Card Fraud

Credit Card Theft Thrives Online as Global Market Losses
Grow, New York Times, May 13

"Thousands of stolen credit-card numbers are being offered
for sale every week over the Internet in membership-only
cyberbazaars."

Most striking in this developing market is how it resembles (or parodies) traditional marketing.

"It's straight out of Capitalism 101 — it's become a big industry," said one high-technology executive who surreptitiously monitors the Internet card markets, and who noted that the market price of credit cards fluctuates daily based on supply — which, he said, is copious. "There appears to be an endless supply of cards out there," he said.

Though the article makes one wonder about how bizarre capitalism has become in the former Soviet Union where these markets are most highly developed, it does not indicate a dramatic change in the risk of credit card purchase. While the odds of fraud are higher for online transactions, they are still only 1 in 400, as opposed to 1 in 1200 for offline transactions.

"Generally speaking, the Celent report found that the fraud rate on the Internet is 0.25 percent for Visa and MasterCard transactions, significantly higher than the 0.08 percent for Visa and 0.09 percent for MasterCard in the offline world."

The moral of the story (if there is one) is to check your credit card statements, and if you find purchases from Russia, do not assume a long lost relative.

"Bogus Credit Card Offer Tips", Internet Fraud Watch.
Things to look out for when being offered a credit card. If it looks too good to be true, it probably is. The Internet Fraud Watch is a service of the National Fraud Information Center (NFIC). "The NFIC was originally established in 1992 by the National Consumers League, the oldest nonprofit consumer organization in the United States, to fight the growing menace of telemarketing fraud by improving prevention and enforcement. "

College Students
"Sex, drugs and ... credit cards?" CNN/Money, May 8, 2002. Article suggests alarming (and declining) level of financial literacy among high school students. "According to a recent survey by the Jump$tart Coalition for Personal Financial Literacy, only 15 percent of high school seniors say they have had some sort of personal finance education in school. On average, the students surveyed by the coalition this year answered only half of all finance-related questions correctly. That's a failing grade by most standards."

Bankruptcy Legislation
"Card sharks", Editorial, Boston Globe, May 9, 2002
Editorial indicates that the only conflict holding up the bankruptcy bill in Congress is the House's refusal to accept the Senate proposal that anti-abortion groups not be allowed to declare bankruptcy to avoid paying fines. Editorial contends that the legislation is unfairly weighted towards the interests of the industry and notes how this was caused by massive, sustained donations by the industry to members of Congress.