LowCards.com Weekly Credit Card Update–October 14, 2016
Goldman Targets Credit Card Borrowers with New Lending Business
Goldman Sachs has launched a new online lending business that targets borrowers saddled with credit-card debt. The business, called Marcus, represents Goldman’s first major foray into consumer lending as it tries to earn more from the $124 billion in deposits it has on its balance sheet. Marcus, which kicked off on Thursday, will offer uncollateralized personal loans of up to $30,000 to borrowers who meet certain credit requirements, according to a press release. The business will focus on customers who want to manage their credit card debt. Story by Olivia Oran for Reuters.
Wells Fargo Chief Abruptly Steps Down
The scandal engulfing Wells Fargo toppled its chairman and chief executive on Wednesday, as John G. Stumpf announced his departure from the company, effective immediately. The move was a swift and stunning fall for an executive whose bank made it through the 2008 financial crisis relatively unscathed, only to be undone by a sham-account sales scandal that pervaded its community banking division and percolated under the surface for years. Wells Fargo’s transgressions were unusually blatant and straightforward, which contributed to the still-mounting public outcry. This time, there were no exotic financial instruments, complicated trades or complex mortgage trickery. The bank’s misdeeds were fundamentally simple: Under intense pressure to meet aggressive sales goals, employees created sham accounts using the names – and sometimes, the actual money – of the bank’s real customers. And in some cases the customers did not discover the activity until they started accumulating fees. Story by Michael Corkery and Stacy Cowley for The New York Times.
Morgan Stanley Backs PayPal Co-Founder’s Lending Startup Affirm
Affirm, the online lending startup founded by PayPal co-founder Max Levchin, has raised $100 million in debt from financial services giant Morgan Stanley. The credit line comes with the news that Affirm has tripled the volume of its loans in the past year, which amounts to hundreds of millions worth of loans. Levchin is taking a slightly different approach to borrowing online, rethinking the way shoppers-particularly millennials-borrow money by letting them obtain a micro-loan at a point of sale instead of using a credit card. The company’s backers include Founders Fund, Lightspeed Venture Partners, Spark Capital, Khosla Ventures, Andreessen Horowitz, and Jefferies. Story by Leena Rao for Fortune.
Banks Still Racking Up Overdraft Fees, Critics Say
Five years after Wells Fargo was slapped with a $203 million judgment involving overdraft fees for debit-card purchases, many banks still engage in similar practices. Almost half of the nation’s 20 largest banks hit customers with similar charges for online bill payments and other kinds of transactions, according to an analysis by a banking research firm. Critics say the overdraft policies help banks make billions of dollars a year. The banks’ practice involves processing the largest charges received first, rather than in chronological order. Story by Kery Murakami for CHNI Newspapers.
Vera Bradley Notifies Customers it was Hacked
Another retailer reports a cyber attack that may have compromised consumers’ credit and debit card information. Vera Bradley, an upscale handbag and fashion retailer, said hackers apparently penetrated the company’s payment card network at its stores between July 25 and September 23. Cards used at store locations during that time may have been compromised. Cards used for online payments were not affected. Vera Bradley said the investigation showed that hackers made unauthorized access to the company’s payment processing system and installed malware that specifically looks for credit and debit card information. The program is designed to grab the data on the card’s magnetic strip, potentially containing the card number, cardholder’s name, expiration date, and internal verification code. The company said it believes that is the extent of the breach and that no other customer data was put at risk. Story by Mark Huffman for Consumer Affairs.
Navy Federal Credit Union Fined $28.5 Million Over Debt Collection Issues
The Consumer Financial Protection Bureau ordered the Navy Federal Credit Union to pay $28.5 million in fines and restitution to settle civil charges. Navy Federal had been accused of making “false threats” about debt collection to its customers. The CFPB said the credit union, which primarily serves active-duty and retired military members, sent letters that threatened legal action and garnished wages if bills were not paid, but these threats were rarely carried out. The letters in question were sent from January 2013 through July 2015 to 193,000 customers, but the bank only filed 5,000 debt collection lawsuits. Many of the letters contained false threats and said customers would “find it difficult, if not impossible, to obtain additional credit” because of their “unsatisfactory” credit rating. 115 customers even received a letter that threatened to contact the member’s commanding officers if delinquent payments were not made. Story by John Oldshue for LowCards.com.
Unbanked Hispanics Pay Steep Fees for Alternative Financial Services
Recent data by the Federal Deposit Insurance Corporation reveals that approximately 16% of Hispanic households don’t have bank accounts. Using prepaid cards as an alternative could cost them up to $489 a year, according to a NerdWallet study. Fees from payday loans and money orders can further drive up the cost of being unbanked. Without bank accounts, Hispanics are left vulnerable to high-interest debt traps and miss out on credit-building opportunities. Story by Melissa Lambarena for the Christian Science Monitor.
European Mobile Payments Triple
Consumer adoption of digital payments has shifted dramatically in Europe over the past year, according to a new survey that found the proportion who regularly use a mobile device to make everyday payments has tripled. The survey across 19 European countries found that 54% of consumers now use a mobile device to make payments for a range of activities. This compares to just 18% last year. Almost three-quarters (74%) of UK consumers regularly use their mobile device to manage their money or make a payment in person, online or in-app. And more than half (59%) of these UK consumers use their mobile devices to transfer money to friends and family, while 45% use them to buy takeaway meals. Story for Warc.
Visa is Breaking into Accounts Payable
Payment automation technology firm MineralTree announced a strategic alliance with Visa that will give more of MineralTree’s clients access to Visa Payables Solutions. The move will help MineralTree’s clients, which are largely middle-market businesses, more easily automate accounts payable and invoicing processes. The partnership will allow clients access to virtual Visa credit cards for accounts payable payments, bank and credit card account integration, synchronization with accounting platforms, and data and security features. For small and medium-sized businesses, electronic invoicing solutions are often not available. Smaller businesses are interested in electronic options for business-to-business (B2B) payments. But these businesses likely don’t seek out electronic payment solutions for B2B payments because, unlike checks or other forms, they aren’t always affordable and accessible. Story in Business Insider.
Capital One Buys Price Match Startup Paribus
Capital One has reportedly inked a deal to acquire Paribus, a price tracking service, as the credit card company makes another acquisition in the FinTech space. Paribus aids online shoppers in getting automatic refunds when the price drops on items they purchased. Paribus, which launched last year, is aiming to automate the process of checking up on previous purchases to ensure shoppers can request and get a refund from an online retailer if the price is cheaper elsewhere. Lots of retailers offer the post-purchase price match, but a lot of consumers don’t actually take advantage of it or even watch prices to see when things decline once they have completed their purchase. Paribus makes it easier for consumers by integrating with their email provider – be it Gmail, Outlook or Yahoo – in order to scan their inboxes for receipts of online purchases. When Paribus finds one, it will be on the lookout for a drop in the price of the item within the window for the customer to take advantage of the price match. The report noted the service works with Amazon, Best Buy, Walmart, Target, Bloomingdale’s, Macy’s, Bonobos, J.Crew, NewEgg, Costco, Staples, Kohl’s and others. Story in PYMNTS.
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 14.61 percent, identical to last week. Six months ago, the average was 14.77 percent. One year ago, the average was 14.56 percent.