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News Scan Oct 2016

Credit Card News, Economy News, Banking Industry News - Mar 2015
  • Former employee of the Office of the Comptroller of the Currency downloads 10,000 records and cannot replace them.
  • In what is described as a “major information security incident,” a former employee of the Office of the Comptroller of the Currency (OCC) downloaded more than 10,000 records onto two thumb drives just before his retirement in November 2015.
  • When contacted by OCC, the former employee said he "was unable to locate or return the thumb drives to the agency."
  • The motive behind the breach is not clear and there are no reports of misuse of the encrypted information so far.
  • According to cybercrime expert Shane Shook, "The risk would be if the information somehow gets released to unauthorized sources" like WikiLeaks.
  • Millennials in the U.S. don't have credit cards because they simply can't qualify for them, new research shows.
  • Over 30 per cent of millennials have applied for credit cards, outranking Gen X'ers and baby boomers.
  • However, consumer data firm ID Analytics found that many of those under 30 don't have strong enough credit to get approved.
  • That's partly because they can't build up their credit through modern expenses like cell phone bills. And, of course, they can't get credit cards without a strong score.
  • In the fight against fraud, community financial institutions (FIs) are tasked with finding a balance between stopping card fraud and allowing valid cardholder activity. Although cardholders want their FIs to have fraud prevention strategies in place, they do not want to be inconvenienced by unwarranted declines.
  • In fact, there has been a recent spike in thieves focusing their attention on cardholders likely to have higher credit limits. By replicating the transactions these affluent cardholders make, fraudsters can often go largely undetected and live a life of luxury — on the real cardholder’s dime.
  • Fraudsters have discovered they can target high-dollar credit limits by tracking cards tied to data breaches. For example, cardholders who fell victim to recent breaches at luxury hotels are prime targets for fraudsters.
  • Rocky Mountain Credit Union President and CEO Ed Stofko says the information technology staff found a security issue with the website customers used to upload documents while applying for a mortgage.
  • An outside investigation determined it was unlikely that the documents were accessed by an unauthorized person, but the credit union is offering affected members a free one-year membership to credit monitoring and identity theft protection services.
  • The credit union says the security flaw has been repaired.
  • The Office of the Comptroller of the Currency earlier this month sent formal letters to large and regional banks seeking information about sales practices and incentive-compensation structures following the Wells Fargo & Co. scandal, people familiar with the requests said.
  • Wells Fargo opened as many as 2 million accounts using unauthorized or fictitious customer information. That has sparked a slew of federal and state investigations, including by the Justice Department, and led to its CEO resigning earlier this month.
  • Regional banks under the OCC’s supervision including Santander USA, the 29th largest U.S. bank by assets, also received a letter on the topic.
  • Some of these banks also fielded questions from the Federal Reserve about similar topics prior to Fed Chairwoman Janet Yellen’s testimony at a contentious House Financial Services committee hearing on bank regulation.
  • J.P. Morgan Chief Financial Officer Marianne Lake said on an earnings call with media on Oct. 14 that the bank has identified a few instances of problems with its employees’ sales tactics but they weren’t “systemic.”

Report: Wells Fargo faces Calif. criminal probe

Source: USA Today Category: Banking Industry
  • Wells Fargo (WFC) is being probed over allegations of criminal identity theft by the California Department of Justice, according to a report from the Los Angeles Times.
  • The bank was served with a search warrant on Oct. 5 from the office of California Atty. Gen. Kamala Harris, The Los Angeles Times reports. This adds California's Department of Justice to the pile-on of state regulators investigating the bank.
  • Harris' department is seeking information associated with the upwards of two million accounts that were allegedly opened by Wells Fargo employees without consumers' consent or knowledge.
  • California's Department of Justice is pursuing two violations, that of impersonation and other of improperly using personal information, the Los Angeles Times says. Both can be charged as felonies, the Los Angeles Times says.
  • Goldman Sachs, the huge Wall Street investment bank, is entering the consumer personal lending marketthrough the introduction of a new online platform called "Marcus by Goldman Sachs." Loans will feature terms ranging from 24 to 72 months, with fixed APRs ranging from 5.99% to 22.99%.
  • The move marks a major step forward in Goldman Sachs's long road into "bread-and-butter" banking. It is also a rare example in the banking industry of a company that has developed an online loan operation from scratch.
  • But how might Goldman Sachs' decision to wade into consumer lending impact credit unions? Voices from the industry offered a variety of reactions, but the general theme was the same: concerns over a new competitor, but confidence that members trust credit unions more than Wall Street banks.
  • It is discovered a very powerful Android Trojan that exploits the selfie mania that has taken the world by storm.
  • Initially, the malware asks for credit card information and after verifying, it asks for more information including the card’s 4-digit number printed on its back. It then asks for personal details like age, birthday and mailing address. After this step, the malware asks for a picture of the user holding ID card. The picture is required with both the front and back sides of the ID card. Once all the correct information is obtained, the cyber-crooks access the user’s online accounts. During the process, the malware executes a code in the background that asks users for payment and personal information for “verification purposes.”
  • This malware lures the user into installing it on the mobile by using the disguise of a video codec or plugin from third-party websites.
  • To help reduce false credit card declines while traveling, U.S. Bank is enabling geolocation features for select credit cards.
  • This is an opt-in service where users can allow the locations of their smartphones to be detected through their financial institution’s mobile app. If users travel outside of their usual shopping area, this location verification will help banks approve credit card transactions that would otherwise look suspicious.
  • There are different ways to access this feature if you have a U.S. Bank credit card. If you have a U.S. Bank FlexPerks Visa Credit Card, you can select this option in your FlexPerks mobile app.
  • If you are using co-branded credit cards from U.S. Bank, you will need to select this option through the app that corresponds to your branded card. The financial institution says the feature will be available on the main U.S. Bank mobile app in the future.
  • The technology was originally developed by Visa last year, and at the time, Visa said it could reduce unnecessary card declines by up to 30%.

Payments: A fast follower’s dilemma

Source: cuna Category: Credit Card News
  • BCX’s (Bank Customer Experience) Summit addressed the challenge of balancing simplicity and security in electronic transactions.
  • The North American financial services market has a lot of fast followers, he said, but not many true innovators.
  • It was discussed that most credit unions don’t need to be on technology’s bleeding edge, and should instead monitor the market and be prepared with a plan for prompt action when a new solution shows signs of traction.
  • The North American financial services market has a lot of fast followers, but not many true innovators. “No one wants to be first and put their brand at risk,” whether through fraud or a bad customer experience”, said Bud Yanak, head of product for Fujitsu’s biometric identity arm Frontech.
  • Most credit unions lack the research and development budgets to place the numerous bets on aspiring technologies necessary to yield the few winners.
  • Consumer Financial Protection Bureau (CFPB) took action against Navy Federal Credit Union for making false threats about debt collection to its members, which include active-duty military, retired service members, and their families.
  • The credit union also unfairly restricted account access when members had a delinquent loan. Navy Federal Credit Union is correcting its debt collection practices and will pay roughly $23 million in redress to victims along with a civil money penalty of $5.5 million
  • The credit union also cut off members’ electronic access to their accounts and bank cards if they did not pay overdue loans. Hundreds of thousands of consumers were affected by these practices, which occurred between January 2013 and July 2015.
  • Pursuant to the Dodd-Frank Act, the CFPB has the authority to take action against institutions or individuals engaging in unfair or deceptive acts or practices or that otherwise violate federal consumer financial laws. Under the terms of the order
  • According to a study by FICO, one in five Millennials aged 18-24 say they use credit unions as their primary financial institution. But this drops to only 10% for older Millennials, those ages 25-34. There are roughly 6,000 credit unions in the US today, collectively holding over $1.3 trillion in assets.
  • “Millennials ages 18 to 24 years old are noticing the value that credit unions provide as an alternative to large banks,” said Joshua Schnoll senior director at FICO. “In particular, this age group is attracted to low and transparent fee structures and better interest rates.”.
  • For the second year in a row, FICO’s study showed the number one reason that consumers leave their primary financial institution is the perception of high fees. Of those consumers who have switched institutions, 49% listed high fees as the top reason.
  • The tech giant IBM conducted and released two studies, “Leading the Pack in Blockchain Banking: Trailblazers Set the Pace” and “Blockchain Rewires Financial Markets: Trailblazers Take the Lead,” which surveyed 200 global banks and financial institutions.
  • Because Blockchain is a distributed database (as opposed to one that is stored in a central system) and effective against tampering, it is the ideal transacting platform for banks and financial institutions.
  • Eight banks including HSBC and State Street successfully tested out Blockchain in bond transactions earlier this year.
  • UBS and Santander have been trying out the technology for cross-border payments, while Bank of America announced Tuesday a partnership with Microsoft to experiment with the system.
  • Merchants need special credit card machines capable of reading a microchip credit card. One year after the U.S. reached a milestone in its switch to credit cards that require a dip instead of a swipe, the ability to use such cards has dramatically increased.
  • But potential headaches loom heading into the holiday season, with some shoppers complaining that checking out with a chip takes too long and stores continuing to encounter delays getting chip-reading terminals up and running.
  • Since then, the pace of adoption has dramatically accelerated. As of July, 88% of MasterCard consumer credit cards in the U.S. were chip-enabled, a 105% uptick since October, while 2 million merchant locations were able to handle EMV transactions.