LowCards.com Weekly Credit Card Update–May 15, 2015
Hackers Target Starbucks Mobile Users, Steal From Linked Credit Cards Without Knowing Account Number
Credit card hackers are targeting Starbucks gift card and mobile payment users around the country–and stealing from consumers’ credit cards–with a new scam so ingenious they don’t even need to know the account number of the card they are hacking. Criminals are using Starbucks accounts to access consumers’ linked credit cards. Taking advantage of the Starbucks auto-reload function, they can steal hundreds of dollars in a matter of minutes. Because the crime is so simple, can escalate quickly, and the consumer protections controlling the transaction are unclear, I recommend all Starbucks consumers immediately disable auto-reload on the Starbucks mobile payments and gift cards. Story by Bob Sullivan for BobSullivan.net.
Credit Card Firms Reap Rewards of Consumer Brand Loyalty
Stuck with slow growth prospects in a saturated market, banks that issue credit cards are increasingly churning out cards that are aimed at creditworthy customers loyal to a store, airline or hotel. Known as co-branded credit cards, these cards fell out of favor after the financial crisis, as issuers pulled back credit generally in the recession. Now, issuers are battling for these blocks of customers, which are prized for their loyalty even though they aren’t always as lucrative for the banks. Merchants, meanwhile, are capitalizing on the competition for their customers by extracting better terms, often including a percentage of the profits. Banks are eager to expand their credit card loan portfolios, which remain one of their most profitable businesses as other profit centers have been dented by low interest rates, uneven loan demand and rising compliance costs, industry executives say. Story by Robin Sidel for The Wall Street Journal.
Sally Beauty Confirms Data Breach
Sally Beauty confirmed Thursday that there was an “illegal intrusion” into its payment card systems, marking the company’s second data breach in just over a year. The Denton, Texas-based hair and beauty products retailer said there was “sufficient evidence” to confirm the breach, but that it would not “speculate on the scope.” Sally Beauty says data breach affected fewer than 25,000 credit cards. The company said earlier this month that it was investigating reports of unusual activity involving payment cards used at its stores. Sally Beauty said it was working with law enforcement, its credit card processor and a third-party forensics expert. In a statement Thursday, the company said the forensic investigation is still ongoing. The company said customers would not be responsible for any fraudulent charges that are promptly reported. Story by Samantha Masunaga for the Los Angeles Times.
Credit Cards With 2% Rebates, While (or if) They Last
For years, the holy grail for many seekers of credit card rewards has been a guaranteed 2 percent back on every dollar they spend. The problem for start-ups and for financial services companies both large and small is that it’s difficult to make the product profitable. The fees that merchants pay to accept cards won’t cover all of those rewards. And it’s intensely annoying for consumers who have moved all their spending to find out a year later that their issuer is cutting the reward because it couldn’t make the numbers work. Still, a handful of grown-up operators like Fidelity (through a partner), Barclays, Capital One and Citigroup now have cards that offer this level of generosity. Are they the ones that have finally figured out how to make money on these cards–and make them last? Story by Ron Lieber for The New York Times.
Data Breaches Will Cost Over $2 Trillion by 2019
A new report predicts that data breaches will cost the global economy $2.1 trillion by 2019, almost four times more than this year. The research indicates that sophisticated hacking tools will play a major role in this growth. The report, entitled The Future of Cybercrime & Security, estimates a decline in the number of casual hacks experienced globally. The firm believes that upcoming malware creation and the “increasing professionalism of cybercrime” will result in more successful attacks, even if limited in number. Currently, the average cost of data breach is estimated to be $3.5 million per company. Juniper predicts that average to exceed $150 million per breach by 2020, which is just shy of the $162 million Target data breach in 2013. Story by Bill Hardekopf for LowCards.com.
Overdraft Fees Continue to Weigh on Bank Customers
Some checking account practices have become more consumer-friendly, but significant issues persist with banks’ overdraft policies, according to a report released Tuesday. More banks are providing concise disclosures about their checking account fees and terms, according to Pew Charitable Trusts, a nonprofit public-policy organization. But many consumers don’t fully understand the rules, and banks have policies that can increase the overdraft fees people incur when they make automated-teller-machine withdrawals or debit card purchases that exceed their account balance, the report says. Story by AnnaMaria Andriotis for The Wall Street Journal.
Chase Is Phasing Out Debit Cards That Use Magnetic Strip
Chase on Wednesday said it would begin replacing customers’ debit cards with those equipped with microchip technology. The chip-embedded cards will eventually phase out cards with a magnetic strip on the back. Cards with chips, touted as being more secure, are already widely accepted in other parts of the world. For the time being, new Chase cards will be issued with both a chip and a magnetic strip as merchants adapt to the new technology. Some credit cards have already been reissued with the upgrade, and customers can request a new card if they want to have it sooner. Chip cards create a unique code for each transaction, making customers’ personal information harder to steal. The card is inserted into a slot, rather than swiped, and the transaction is authenticated with a four-digit PIN or the customer’s signature. Story by Jenny Che for The Huffington Post.
UK Card Transactions Top 1 Billion per Month as Debit Card Use Soars
UK consumers are spending more on their payment cards than ever before, with over a billion transactions in February, according to newly-released figures provided by the UK Cards Association. Consumers spent £49.6 billion via card in February, with debit cards continuing to outstrip credit cards. Debit card spending reached £35.2 billion, up 7.7% on the previous year. At the same time credit card spending also grew, but at the lower rate of 5.6% to £14.4 billion. Card spending online, published for the first time last month, accounted for 24.4% of total card expenditure and 11.3% of transactions. The average transaction online was for £103.62, more than double the average for all settings of £46.92. Story by Elliott Holley for Banking Technology.
LowCards.com Weekly Credit Card Rate Report
Based on the 1,000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.50 percent, slightly higher than last week’s average of 14.48 percent. Six months ago, the average was 14.50 percent. One year ago, the average was 14.49 percent.