Credit Cards Online Information

This year, I'm still sweating every time I buy presents online. Next year, I'll have a Blue, Blue Christmas. When did American Express start doing everything right? How did the same folks who once alienated merchants with high usage fees and who introduced the ill-conceived Optima card suddenly revolutionize the credit card industry? Simple: they went back to the future.

The Blue card, launched a few months ago by the people who first gave us gold and platinum cards, stands alone as the best new product of 1999, for two reasons. First, it's a masterful reaffirmation of Amex's ability to be the badge-creating leader of the credit/charge card industry Second, it's an honest-to-God technological advance, and one the competition won't be able to copy just by changing colors.

I mean it; I sweat when I type my credit card number into a Web site form. Am I supposed to believe the little pop-up box that tells me I've just entered a "secure connection;" or should I believe the guy on the local news who happily describes online credit card fraud to boost ratings during November sweeps? I'm not all that thrilled with personal credit transactions these days, either: Just last week, they busted some outside vendor at Bloomingdale's for surreptitiously swiping her customers' cards into a little device that entered their card information into her Palm Pilot.

Now, with Blue, I can use my card--I mean, literally use the card--right at home. Thanks to a smart chip (and a chip-reading device Amex is, for now, providing free), I can go to most major Web retailers, find what I want to order, swipe the card, enter my PIN, and have the order form automatically filled in and the stuff paid for. Safely Say alleluia. Say amen.

That same chip serves as platform for limitless features: say a new "wallet" function, which means essentially that Blue can store all your other credit card info ... so if you want to get your Sony points with your Visa, you can use Blue to do that, too. Eventually you'll probably be able to get air miles and reward points with Blue. Eventually you'll forget all about your Sony card.

Best of all--for Amex, anyway--use Blue and you'll likely rediscover a personal attachment to your credit card. Something you haven't felt since you first flashed your gold card. With the smart chip, and the technosavvy it implies, Amex has reestablished the plastic badge.

The most inspired feature of Blue, though, is the fact that it's a credit card. Not a must-be-paid-in-full charge card, like Amex's flagship card and its colored brethren, but a true competitor for Visa, MasterCard, and all the banks they partner with. The neat little trick here is that, by ramping up the features and not overselling the basics, Amex has essentially gotten into the entry-level credit card market without appearing to be slumming. (Strangely, though, some of the creative they've come up with to go with their more inspired media choices, like movie theater ads, wastes time by being a little heavy on the Star Wars effects and a little light on the brand attributes.)

Amex's other recent product launch, while not anywhere near as visible, is almost as laudable in its display of marketing smarts. Remember the rumor that Amex had an extremely exclusive card known as the "black card"? Legend had it that rock stars and captains of industry flashed the little sucker, and merchants and service personnel went weak at the knees. Apparently Amex heard the rumor, too ... and decided to make one. With a $1,000 annual fee, the new (black) Centurian Card is clearly another example of the Acura NSX/Sam Adams Triple Bock maxim: Well-received, ultra-highend products may not mean serious volume, but they do wonders for reaffirming an already solid corporate image.

OK, one quibble: Amex, you've got to stop referring to your new card as "Blue from American Express." When you're launching something so bold, it seems awfully half-hearted to distance your name from it.

# posted by Medical Information : 2:55 AM  0 Comments

The first sign that consumers are putting a brake on spending as they stagger under a mountain of debt emerged last week with reports that sales are slowing in the shops.

But so far the messages coming out of the high street are mixed. Shares in retailers such as Next, Debenhams and Marks & Spencer fell with the news of a quiet September. Yet the CBI contradicted this picture, indicating that shopping activity remained buoyant, particularly in housing-related stores such as those selling carpets and furniture.

"Once you start getting mixed messages, it usually means something is changing," says HBOS group economist Martin Ellis. "It is conceivable that consumers are becoming nervous. They are still borrowing at record levels, and at some stage they will have enough of piling on debts. They will start to be concerned at the economic prospects. The question is when we reach that point."

Taking on credit has never been cheaper, with mortgage rates at historic lows and credit cards charging nothing at all on borrowings. And now a new breed of plastic, the "pick-and-mix" card, has arrived to entice customers to spend even more.

These cards allow shoppers to select for themselves the features they wish to enjoy on a credit card, ranging from zero introductory interest to loyalty bonuses. But while in theory they provide customers with the opportunity to tailor their plastic to meet their specific needs, they would seem to fly in the face of attempts to simplify credit cards so that customers understand exactly what they are being charged every time they borrow.

It is understood that MPs on the Treasury Select Committee are soon to launch an investigation into the credit card market - which currently comprises 55 million cards chosen from 1500 variations. The committee's report into banking services, published earlier in the summer, concluded that customers were bewildered and misled by annual percentage rates that did not fairly reflect the cost of borrowing. The MPs are now planning more work to investigate how credit cards can be made simpler and more transparent.

RBS Advanta has introduced a pick-and-mix card that potentially provides customers with 360 different choices. For example, they can choose what introductory credit interest they wish to pay, ranging from zero to 4.9%; and how long that rate lasts, from six months to eight months.

They can also choose whether to opt for air miles or cashback of 0.75% on their spending - or go for no loyalty points at all. The long-term rate they subsequently switch to when the introductory discount is finished will depend on these selections. So someone who opts for no introductory discount and no loyalty points will enjoy the lowest deal of 11.9% APR - or 10.9% APR with the platinum card available to those earning more than (pounds) 20,000. Customers who pick the maximum introductory discount and cashback will subsequently switch to the highest standard rate of 17.4% APR.

Customers who never borrow, and who pay their bills at the end of the month, should opt for the loyalty points, while those with big outstanding borrowings should opt for the maximum discount with a view to switching out at the end. Haphazard payers who dip in and out of the red on a regular basis may prefer an ongoing cheaper rate.

Pick-and-mix cards were first launched by a company called Accucard, which manages offers on behalf of the internet insurer More Th>n and easyMoney (part of the easyJet group). "Each customer is assessed individually and will pay interest ranging from 9.9% APR to 20% APR depending on the risk," says spokesman Martin White. "But on top of that they can also select their own level of reward, up to 1.6% cashback. This would mean that for every (pounds) 1000 spent on the card you got (pounds) 16 back.

"I don't accept these cards are complicated," White adds, "but I acknowledge that they will not be suitable for everyone."

The other main player in the pick-and-mix market is Virgin Money, which offers the unusual option of letting customers borrow cash at 0% interest for six months. Essentially customers can either chose the zero route and pay a higher standard subsequent rate - up to 15.9% APR - or they can forgo the rewards and introductory offer but peg the rate at 10.9% APR.

However, if it's simple, cheap money you're after, then it's worth remembering that Nationwide, Egg, Tesco and RBS Advanta all have 0% introductory interest cards which are easy to understand. At Tesco and RBS the low rate applies until next June.

And if you are simply looking for a long-term low rate, Intelligent Finance (www.if.com) charges just 8.9% interest on purchases and balance transfers - but offers no cashback.

Those who never borrow are the ones who benefit most from loyalty or cashback cards. The Halifax refunds 0.5% of cash spent on its cashback card up to (pounds) 1000, and 1% thereafter.

And Barclaycard has linked up with Debenhams, BP and Sainsbury's to launch the Nectar points-based reward card. You earn points for spending in the stores and petrol stations - and can earn even more if you pay with your Barclaycard. The points can be exchanged for a range of goods and services including videos, DVDs, flights and cash vouchers.

# posted by Medical Information : 2:54 AM  0 Comments

The General Accounting Office said the Navy lacks an automated system that would identify potential or actual fraud by holders of "purchase cards" used for goods and services. The improper purchases were submitted to the Navy in monthly credit card statements and approved for payment.

The study was the latest in a series of reports on government credit card abuse. In a separate report obtained Monday, the congressional investigators found that Navy personnel used separate government travel cards to hire prostitutes at brothels, buy jewelry, gamble and attend New York Yankees and Los Angeles Lakers games.

The purchase card report focused on the Navy's vulnerability to fraud and did not attempt to place a value on the improper transactions.

# posted by Medical Information : 2:52 AM  0 Comments

Research and Markets (http://www.researchandmarkets.com) has announced the addition of Credit Cards In China: A Market Analysis to their offering.

This newly updated report studies the growing market for credit and debit cards in China. Not only does it consider the new developments in the banking and finance industry as they relate to credit cards, but also maps the latest developments in tie-ups between international card brands and the Chinese banks. The report also analyses the growing use of credit cards, and how this is affecting the retail and Internet market in China, both B2B and B2C.

Market Definitions

2001 is seeing a major push by the foreign banks to establish and extend their operations in China before WTO. Similarly, local banks are attempting to modernise and extend their operations in order to better compete in the new regulatory climate.

China launched its first credit card in 1985. The issuer was the Bank of China and the card was called the Great Wall Card. The Great Wall Card became a member of Visa in 1987 and began issuing the first international credit cards in China in 1988.

This report covers the emerging market in China for credit cards. There is some reference to the new store cards and IC cards, though the main focus is bank-issued credit and debit cards and the activities of the international payment settlement companies such as Visa and MasterCard.

Key Facts of the Report:-

According to the People's Bank of China's statistics, since the Bank of China issued its the first credit card in 1985, Chinese banks have issued over 140 million cards.

- The number of cards issued by the banks has increased by 64% each year. The total sum of transactions has increased by 76% per year, and the number of retailers who accept the cards has grown by 51% per year.

- The number of card-issuing banks has increased from the initial four state-owned commercial banks to over 20 banks. Meanwhile, the percentage of retail purchases using bankcards also has been on the rise. Last year, it grew to nearly 10% of all retail sales revenue

# posted by Medical Information : 2:36 AM  0 Comments

Rapidly increasing fees charged by credit and debit card companies coupled with a lack of federal controls over those fees are squeezing food retailers' profit margins, according to the Food Marketing Institute (FMI). In recent testimony to the House Subcommittee on Financial Institutions and Consumer Credit, FMI Senior Vice President John Motley claimed that there have been 11 credit/debit fee increases in the past 12 months "with still more expected this year." He said card associations (VISA/MasterCard) collected $29.2 billion in 2003 from electronic transaction fees.

According to a 2003 report by the TowerGroup, food retailers handle over half of all electronic credit and debit card payment transactions. "At the same time," Motley said, "the cost of accepting these cards has been skyrocketing, often exceeding the 1 percent net profit margin of the typical grocery store." He urged Congress to consider international efforts to control escalating electronic payment fees: "Several countries, including the UK, Australia and Israel, and the EU have initiated caps on fees, changes in operating rules, antitrust/fair trade investigations, regulation of the allowed components of fees, studies and legislation."

Motley said the marketplace offers no incentives for financial institutions to reduce their electronic transaction fees. "The current interchange fee model is inverted from normal competitive market models--more volume means more cost," he said. Last July, FMI called upon the Federal Reserve to investigate fast-rising and proliferating fees for electronic transactions, to explore ways to cap these costs and to disclose them to consumers. According to Motley, the results of the Fed's study are expected to be released next year.

# posted by Medical Information : 2:35 AM  0 Comments

A NEW SOURCE OF DATA PROVIDES A FIRMER FOUNDATION FOR CREDIT ANALYSIS AND DECISIONS.

This article demonstrates the value of aggregated credit bureau data for benchmarking portfolio performance and modeling trends in household borrowing and payment behavior. The analysis utilizes a unique database built from a series of large random samples of U.S. consumer credit histories drawn quarterly since 1992. The data provide a more accurate picture of borrowing behavior at the regional, state, and local level than the aggregate statistics available from the federal government and industry associations. Their predictive power is apparent in models built to explain county-level patterns in personal bankruptcies and three types of consumer loan delinquencies from 1993-1998.

A new and promising tool has recently become available for tracking and forecasting consumer borrowing and payment behavior. For many years, credit grantors and insurance firms have used consumer credit reports to evaluate the repayment risk of individual applicants for loans and insurance. The rich detail in individual credit reports has supported the development of sophisticated statistical models that estimate an individual's repayment risk with remarkable accuracy. However, until very recently, this information was available only at the individual level. Timely, reliable data on consumer borrowing and payment activity, aggregated to the local, state, or regional level, have been largely unavailable except through proprietary marketing research surveys or infrequent government-sponsored household interviews.

Actual observations (as opposed to self-reported survey responses) on borrowing and payment behavior could have enormous value in calculating household debt burden, forecasting consumer spending behavior, estimating demand for consumer durables at the local or regional level, and benchmarking portfolio performance. The three major U.S. credit bureaus have recognized the value of aggregating the individual-level information in their archived files and are beginning to market such data products.

This article provides examples of how aggregated credit bureau data can be used for benchmarking and modeling to identify the factors that influence bankruptcy and delinquency trends at the county level. The following sections utilize a unique database assembled by Trans Union LLC. Dubbed TrenData [1], this new tool is based on a series of large random samples of U.S. consumer credit histories drawn quarterly since 1992. Each quarterly sample contains approximately 30 million depersonalized credit reports. From this underlying database, variables have been built to describe consumer borrowing and payment behavior aggregated to the county, state, and national level. The Credit Research Center (CRC) at Georgetown University's MoDonough School of Business is collaborating with Trans Union to explore the predictive value of TrenData variables. [2]

Advantages of Aggregated Credit Bureau Files

The rich detail of individual credit file data supports the creation of a host of aggregate variables. TrenData provides more than two hundred variables for analysis, all aggregated to the county level on a quarterly basis. The following brief list conveys the scope of what is available:

* Average mortgage, installment, and revolving debt, per borrower

* The percent of bank card holders thirty, sixty, or ninety days past due

* Percent of revolving credit lines utilized, per borrower

* Dollar amount of new automobile credit extended in the previous three-month period

* Average monthly minimum debt payment (consumer + mortgage), per borrower

* Number of new installment or revolving loan accounts opened in the previous three months.

Do aggregate credit bureau data provide additional insights into the current environment? Two examples illustrate the contribution of this new tool. First, consider the most widely-used measure of the rate of growth of consumer installment credit. The Federal Reserve Board (FRB) has reported that the total dollar amount of consumer (nonmortgage) credit grew 6.2 percent dining the twelve months ending with the first quarter of 1999, up from a 4.1 percent growth pace during the twelve-month period ending in first quarter, 1998. Because TrenData is constructed from individual borrower files, it can provide additional insight regarding the composition of the aggregate growth. Interestingly, TrenData indicates that the average amount of nonmortgage debt per borrower actually fell slightly (3.2 percent) from the first quarter, 1998, to the first quarter, 1999. However, during the same period account openings accelerated. The average number of new accounts opened each quarter from March 1998 through March 1999 was 25.2 per hundred borrowers, as compared to an average quarterly rate of 23.0 per hundred borrowers during the twelve months from March 1997 to March 1998. The small decline in debt per borrower during a period of rapid account openings and rising aggregate consumer installment debt suggests that borrowers with little or no previous debt accounted for much of the aggregate growth. This insight can not be derived from the FRB aggregate statistics alone.

# posted by Medical Information : 2:34 AM  0 Comments

Perth-based ERG has become a world leader in smart-card technology. Now it has set its sights on Asia's public transport systems.

Global smart-card leader, ERG, is poised for explosive growth as it pursues a strategy to meet the smart card needs of Asia's rapidly developing mass public transit systems.

Through its automated fare equipment and software systems for the transit industry, smart card systems and telecommunications, the West Australian-based ERG group has grown to become a world leader in its field -- with a global presence that takes in 11 countries.

Its success comes from a recipe of clever technology, deep pockets for research and development and the judicious use of alliances with carefully chosen global giants to sell its technology to Berlin, Rome, San Francisco, New Zealand, Hong Kong and Singapore.

Those alliances have been made with the likes of Motorola, Nokia, Proton World, Banksys SA, American Express, Visa International, Interpay Nederland and Unisys Corporation.

ERG's automated fare collection and software division, ERG Transit Systems, which opened an office in Singapore this year, is now positioning itself to cater for a rising thirst for its technology by Asian transport operators.

The automated fare collection systems are already in use in more than 200 cities around the world and handle more than 22 million transactions per day, or more than 8 billion annually.

Ingenuously, the technology generates major cost and time efficiencies for both transport authorities and passengers by enabling a smart card user to embark a train, ferry or bus with a simple wave of their card.

The user's passport is a credit card-sized device embedded with a computer chip that accepts, stores and sends up to 100 times more information than traditional magnetic-striped cards.

ERG Transit Systems Asian regional general manager John Farrer said Asia was bursting with opportunities, with major transit projects planned for Delhi and Bangkok.

However, ERG would tread modestly and take an incremental approach to new business in Asia.

The sales effort would be driven from Singapore with supplies initially coming out of Perth.

ERG and its alliance partners provided operators of integrated intermodal transport systems -- train-bus-ferry -- with the convenience of seamless fare collection based around just one ticket.

Asian transport operators were keen to attain benefits such as increased passenger throughput while reducing operating costs and controlling revenue leakage.

ERG's trump card for the region is Hong Kong's central clearing and smart card management system -- the world's largest automated fare collection system.

This system, installed through an alliance with the United States-based wireless communications company, Motorola, reconciles the four million daily transactions which take place in Hong Kong and apportions the correct revenue to each of the seven participating transport companies.

In April, the same ERG-Motorola alliance won a contract to provide an integrated smart card fare collection system for Singapore's public transport network.

In the 1998-99 financial year, ERG's group revenue totalled A$269 million across its divisions after sustaining over 20 per cent revenue growth annually since 1992.

Group profit jumped 47 per cent to A$20.3 million, up from A$13.8 million in 1998.

It is phenomenal growth for a company which began in its current form in 1986 from almost a standing start with Peter Fogarty as chief executive officer.

ERG is now working to piggyback the development of other applications such as electronic purses, loyalty programs, parking, vending and security access on its transit systems.

"We believe that for smart cards to reach their potential, they need to ride on the back of a `killer application' which will provide a sufficiently large card base and frequency of use," Fogarty said.

"ERG believes that killer application is transit."

# posted by Medical Information : 2:31 AM  0 Comments

A multiyear congressional investigation reviewing the bank-issued individual travel cards has found an unusually high number of delinquent cards and a chronic lack of government oversight.

The cards, which work like corporate credit cards, also have been used fraudulently. Congressional investigators found that some cards were used to pay for prostitution, jewelry, cruises and New York Yankees games. The investigators also found that more than 5,000 military personnel submitted bad checks as payment.

"This has been a good example of what can happen when you have breakdowns in control," said Greg Kutz, investigator with the General Accounting Office. "No one is actually responsible for one thing."

The Office of Management and Budget, however, said Thursday that a White House crackdown has reduced personal shopping sprees with government credit cards, including those of the military.

The Defense Department alone is canceling some 400,000 travel cards, nearly 20% of the total issued by the federal government, the OMB said.

Also, a congressional bill would limit the number of accounts issued by the Pentagon to 1.5 million, prohibit issuance of a government card to anyone found not creditworthy and establish procedures for disciplinary actions.

Charlotte-based Bank of America signed the five-year Defense Department contract in 1998 to be the sole provider of travel cards to the Army, Marines, Navy and Air Force.

The bank has issued more than 1 million cards with the stamp "For Official Government Travel Only," meaning the cards are to be used only for travel expenses.

The largest portion of delinquent cards has been traced to lower- level military personnel, who made less than $30,000 annually, and also to those who had bad credit history or no credit history. The cards were routinely given to 18-year-olds fresh out of high school.

In a typical transaction, an individual charges a hotel room or dinner to a travel card and submits vouchers to the government. The government reimburses that individual. The card holder is responsible for paying the balance on the card to Bank of America.

The bank's contract calls for each military branch to monitor its own personnel.

The bank has no control over who receives a card or whether their account is canceled when it isn't paid, but it is left holding the bag on unpaid bills. The bank has written off the $60 million. But it has recovered $20 million of that as the military garnished wages of delinquent card holders, as part of the recent government crackdown.

More delinquencies

Before 1998, the military had a smaller number of travel cards with American Express. Bank of America won the contract after a bid process. Citibank, First National Bank of Chicago, Mellon Bank and U.S. Bank won other accounts with different government agencies.

Investigators say the military contract was the most costly. The monthly delinquencies have been as high as 10% to 18% and, on average, 6 percentage points higher than other federal agencies, according to the General Accounting Office. (For civilians, the average delinquency rate is 3.9% on a personal credit card, according to the American Bankers Association.)

"Many banks of lesser size could not meet these unexpectedly high service levels and sustain these kinds of ongoing losses," Bank of America executive Clifford Skelton told a congressional subcommittee in May 2001.

That year, after bank and the government wrangled over the repeated delinquencies, they renegotiated the contract. The changes included higher fees for cash withdrawals and late charges.

At that time, the program had more than 1.4 million individual accounts, both paid and unpaid, totaling $2.1 billion.

Bank of America spokeswoman Angela Ashley declined to say if the military account is profitable for the bank. She also declined to discuss any other details because the company considers the military a private client.

The bank released a two-paragraph statement saying it provides the military "an easy and efficient expense management tool."

As for renewing the contract next year, Ashley said that only the government can renew or cancel the contract.

Investigator Kutz said he wasn't sure the bank "knew what it was getting into" when it signed the contract four years ago. The Defense Department has historically had problems tracking where it spends its money, he said.

Kutz last month released the latest congressional investigation report, titled "Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse." A similar Army report was issued earlier this year, and the Air Force review comes after Congress reconvenes this month.

# posted by Medical Information : 2:56 AM  0 Comments

THE IDEA BEHIND SO-CALLED "stored-value" cards is familiar to anyone who has ever paid $10 or $20 for a prepaid, long-distance calling card. Today many types of companies, not just long-distance carriers, sell stored-value cards, which allow consumers to spend preset amounts on their goods and services. But few companies have taken the idea as far as Wildcard Systems Inc. of Sunrise, a privately held, five-year-old company that expects $30 million in sales this year.

Tucked into a quiet third-floor office in the Sawgrass Industrial Park, WildCard is quickly becoming a leading company in the development of a cashless society. The firm specializes in electronic payment systems that use rechargeable, stored-value cards with magnetic stripes embedded in them. "The idea is so simple, it's actually clever," says Larence Park, president and CEO of Wildcard.

Wildcard's growth is being driven by government and private industry mandates to get away from mailing checks for recurring transfers of money. Instead of paychecks and company credit cards for expenses, for example, corporate and US government employees can get their salaries or expense budgets electronically deposited into accounts that are accessible online or with the magnetic-striped cards.

In addition to payroll and government benefits, Wildcard systems have been set up to substitute stored-value cards for such paper payment items as gift coupons, traveler's checks and personal checks. Clients include Thrifty Car Rental, Ford Motor Company, Ace Hardware, Simon Property Group, Marriott Hotels, BellSouth and AAA.

"We are essentially a software development, data processing business," says Park. "We handle all of that bulletproof authorization and settlement activity." And the secret weapon behind the various applications? Cards linked to a Wildcard system can be used anywhere Visa or MasterCard is honored. "We are leveraging the ubiquitous network of Visa and MasterCard worldwide, and adding functionality," Park says.

While consumer awareness of stored-value cards is still low, they are likely to gain in popularity over time, says Rob Leathern, an analyst with high-tech consulting firm Jupiter Research in San Francisco. He says issuance of stored-value cards "serves a real consumer need as a good alternative to checks and check-cashing stores." People who don't have bank accounts can avoid check-cashing fees by accepting stored-value cards, instead of paper checks, for salary or government benefits.

Some banks are promoting the use of stored-value cards to capture new customers and to cement relationships with existing ones, says Joseph A. Lyons, a Charlotte, N.C.-bascd manager of stored-value programs for Bank of America, a Wildcard client. "The entire prepaid category is a way to deepen the relationship with our customers," Lyons says. Adds Park: "It's a classic high-technology marketing strategy."

Overseas opportunities also beckon to Wildcard, whose multinational clients include travel company Thomas Cook AG and Visa International. "The strategy is to build a mosaic of global partnerships," says Alex Fernandez, Wildcard's senior vice president of international business.

To build that mosaic, Wildcard has become a joint-venture partner of Visa International in Asia, Canada, Latin America and the Caribbean region. The companies are currently conducting joint tests of money-transfer initiatives in Mexico and the Dominican Republic.

Wildcard formerly operated under the name ClaimCard, and provided insurance payments via stored-value cards, a market the company still serves. As Wildcard branched out into other lines of business, opening offices in Orlando and Silicon Valley along the way, investment flowed in. The company's cumulative venture capital financing since 1998 totals about $50 million, Park says.

The 180-employee company turned its first monthly profit in December, Park says, and Wildcard expects 2002 to be a profitable year. Even if it falls short of its bottom-line forecast, Wildcard has a big cushion of capital to fall back on. Its most recent equity infusion came in late 2001-$14.5 million in venture capital from a group led by Sutterhill Ventures of Palo Alto, Calif.

So far, the company's key advantage may be its willingness to enter unexplored markets for stored-value cards. As Park explains, "We picked a niche that gave us plenty of headroom for growth-but small enough that the big guys didn't see it."

# posted by Medical Information : 2:56 AM  0 Comments

LOS ANGELES -- Large and Growing Underserved Market Needs Efficient Banking Solution

Direct Response Financial Services, Inc. (OTCBB:DRFL), an innovator of payment card systems, today announced that it has restructured its business operations to focus on and pursue a market opportunity to serve the needs of the un-banked and under-banked Latino population in the United States.

Latinos are the largest and fastest growing ethnic group in the U.S. currently composing over 14% of the population. Studies have shown that roughly half of this population does not have credit cards. The Pelorus Group projects that the number of pre-paid debit cards issued will grow from 6.3 million in 2002 to 38.7 million in 2007. The major customers for these cards will be the non-banked or under-banked segment of the population. It is estimated that the dollar volume for all convenience and debit cards will grow from $38B in 2002 to $80B in 2007.

In an effort to meet this market demand, Direct Response Financial Services has designed and is in the process of launching a debit card program specifically tailored to meet the unique needs of Latinos. The debit card is a cost-efficient payment solution, can be loaded with funds through a network of conveniently located ATM-like loading terminals, and requires documentation that Latinos either already have or is easily obtainable through their respective consulates.

Direct Response Financial Services has invested its resources to build a proprietary network of partnerships with media outlets and Hispanic marketers to advertise and distribute the cards as well as leading financial institutions and transactions processors that will manage back-end functions. Additionally, the Company is in final negotiations with providers of loading terminals located in retail outlets where card holders can load their accounts and strategically located retail food and convenience store chains where loading terminals are available to customers.

"In the near term we are preparing to launch our Personal Advantage Media Prepaid MasterCard(R) Card program, which is tailor-made for the Latino market in the United States. We have made significant time and resource investments to bring our unique business model to fruition. We believe our solution will contribute to making life a little more comfortable for a large segment of the Latino population. We have designed our operations to deliver pre-paid debit cards in a very cost-efficient manner, making it more accessible to our customers and creating an attractive revenue model for our company," stated Direct Response Financial Services CEO, Mr. Ted Kozub.

About Direct Response Financial Services, Inc.

Direct Response Financial Services, Inc. is a provider of payment card systems including a variety of branded and co-branded stored value cards (i.e., pre-paid debit cards). The Company has agreements with leading financial institutions such as MasterCard, Chase Manhattan Bank, and Optimum Pay USA, Inc. The Company's main focus is to develop and market payment solutions for un-banked and under-banked Latinos, the largest and fastest growing population in the United States. For more information on the Company please visit www.drfs.net.

Statements that are not historical facts are forward-looking statements. The Company, through its management, makes forward-looking public statements concerning its expected future operations, performance and other developments. Such forward-looking statements are necessarily estimates reflecting the Company's best judgment based upon current information and involve a number of risks and uncertainties, and there can be no assurance that other factors will not affect the accuracy of such forward-looking statements. It is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by the Company. They include, but are not limited to, government regulation, managing and maintaining growth, and the effect of adverse publicity, litigation, competition and other factors that may be identified from time to time in the Company's public announcements.

# posted by Medical Information : 2:55 AM  0 Comments

THE "BLACK sheep" of a distinguished Israeli family was jailed for five years yesterday for masterminding an "unprecedented" credit card fraud.

Dan Mazar, 33, of north London, whose uncle, Yitzhak Ben-Zvi, was an Israeli president, "meticulously planned and carefully executed" an international swindle. With the help of 300 credit cards in an array of bogus identities, he enjoyed luxury holidays and hotels and shopping sprees in stores such as Harrods, Selfridges and Fortnum & Mason. Dressed in designer clothes and travelling everywhere by taxi, he filled the pounds 220,000 flat he bought for cash with top-of-the- range furniture, including a pounds 4,000 bed and a pounds 3,500 television.

"This defendant was the central figure in a sophisticated conspiracy," Martin Hicks, for the prosecution, told Southwark Crown Court in London.

"He was involved both as prime mover and principal beneficiary. It was a meticulously planned, carefully executed conspiracy to defraud credit card companies on an unprecedented scale."

After two years and 10 months, interrupted by a seven-month prison sentence for the Israeli end of the plot, his "luck ran out" in a central London branch of Superdrug in April. As a taxi paid for with one of the many credit cards waited outside, Mazar embarked on another shopping expedition. But staff became suspicious and called police, who arrested him as he tried to flee in the cab. When he was searched officers found 15 credit cards in different names, and an extensive "aide memoir" with various identification details to help him keep track of his various aliases. He admitted one count of conspiracy to defraud, concerning pounds 286,903.

# posted by Medical Information : 2:48 AM  0 Comments

CHICAGO -- Like the "We Have Beany Babies" signs that have popped up in virtually every storefront in this city, the majority of booths at the recently completed Retail Systems '97 show held at the Navy Pier boasted "We Have Smart Cards."

As far as their current impact on U.S. consumers is concerned, smart cards are the payment systems equivalent of the DVD player: really cool, but with few applications so far. The cards, like common credit cards with low-power microprocessors built in, allow several functions to reside on one card and communicate with each other. For instance, a consumer could include credit and loyalty functions; each transaction would automatically include loyalty points, which could be redeemed instantly at the point of sale, without the usual flurry of paperwork.

In the future, smart card proponents see the cards adding electronic ticketing, digital cash and other payment functions, while storing electronic versions of a consumer's passport, drivers license, medical identification and even more specialized functions, such as a full version of medical records, including x-rays and other graphics.

The catch, of course, is that before consumers embrace smart cards as a viable payment solution, U.S. businesses will have to build up an infrastructure of smart card readers to take advantage of the technology. And they don't come cheap.

Siemens Business Communications Systems, the Santa Clara, Calif.-based division of high-tech superpower Siemens Nixdorf has introduced the most high-profile smart card application, a $23,000 two-way video kiosk that can give retailers a massive improvement in customer service according to Peter McLellan, general manager of Siemens' access terminal solutions group.

"A home center customer could dial up a plumber, get advice on a project, download a shopping list and itemized directions, and pay a small fee instantly for the advice," he said. "Or a customer could apply for and receive a loan in minutes, then download the cash onto his smart card."

The kiosks would allow retailers to enter very specialized businesses with minimum additional investment, McLellan said. "You only need one person at headquarters who really knows the business," he pointed out. Possible applications include wedding counseling (Ames Department Stores tried to enter this business in the early '90s, but found that having live counselors on premises was too expensive), catering, travel services and the like.

There are roughly 150,000 on-line kiosks in operation in the United States today, McLellan said, and Siemens sees that number reaching one million within seven years. "People are much more protective of their time today," he noted. "Kiosks can drive true one-stop shopping."

At a more prosaic level, vendors are introducing smart card enabled POS terminals of varying configurations at a rapid pace. Checkmate Systems, for instance, has come out with a modular system that allows retailers to mix and match features according to their needs. The terminals can be fully operational, or they can be equipped with a smart card slot that can be upgraded later. "The smart card readers are very difficult to build, and the standards are still evolving," a spokesperson said. "Retailers are faced, though with the need to replace aging equipment, and they don't want to invest in terminals that will be out of date in two or three years. We're offering the opportunity to invest now and upgrade later."

The inclusion of a smart card reader today adds between $150 and $300 to a terminal, vendors said, depending on the number purchased and the sophistication of the reader.

Interest is very high in smart cards, said a spokesperson for Penware, the digital signature capture vendor. "But no one wants to invest yet. It's unclear which standards will eventually be adopted, and right now we have to support them all, as well as traditional magnetic stripe technology." Penware is offering an upgradable version of its hardware, with two PCMCIA ports that will allow a plug-in smart card reader to be attached in the future. "We started thinking about this several months ago, we realized that without this capability, we would be selling throwaways. This allows retailers to buy now," the spokesperson said.

And, according to Scott Tubbs of terminal maker VeriFone Inc. "retailers want to be ready. They don't want to be caught unprepared like they were with debit cards six years ago." On the other hand, no one is stepping up and buying to date, he noted. VeriFone is offering a snap-in module system, with a traditional magnetic stripe reader containing ports on the bottom where a smart card reader can be snapped in at some later date.

According to Kees Klomp, senior executive officer of Dutch retailer Ideta B.V., a division of the KBB Group, the case for smart cards is far from settled. Many European retailers are already using smart cards, generally for electronic purse, store card and loyalty programs. And the European case is quite different from the U.S.; credit cards are rarely used in most European countries, but debit cards are far more prevalent.

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The best just got better for customers of U.S. Bank and Korean Air who earn SKYPASS miles with the SKYPASS Visa Credit Card. New benefits have been added to enhance the only Visa cards issued in the United States that earn SKYPASS miles. The enhancements include a bilingual automated, 24-hour account access line with English and Korean capabilities that is the first of its kind nationally. U.S. Bank and Korean Air celebrated these enhancements at a customer recognition ceremony Wednesday, Nov. 10 in Los Angeles.

The added benefits reward cardmembers and enrich their traveling experience on Korean Air. In addition to the bilingual phone line, benefits include no cap on miles, a lower annual fee and bonus miles at renewal. Plus, each year SKYPASS Visa Platinum card members receive double miles on Korean Air ticket purchases, two Korean Air VIP lounge coupons and a $100 discount on a Korean Air ticket purchase.

Launched in February 2002, the SKYPASS Visa allows customers to earn miles for the dollars they charge while enjoying worldwide acceptance, cash access at more than 805,000 ATMs and the superior benefits of Korean Air. The accumulated SKYPASS miles never expire and can be redeemed for free travel rewards on Korean Air and SkyTeam partners. The SKYPASS Visa cards include Platinum, Classic, Secured and SkyBlue with no annual fee for personal use or Business Platinum for business needs.

Credit cards that earn airline miles can be a great resource for the consumer. "Customers can earn rewards every day when they use the SKYPASS Visa cards," said Rob Morris, senior vice president of U.S. Bank Retail Payment Solutions. "It's really a convenient way for customers to earn the miles they need to meet their travel goals while making purchases that they would traditionally make with a regular credit card."

As part of February 2004 launch of the SkyBlue SKYPASS Visa card with no annual fee, U.S. Bank and Korean Air sponsored the SKYPASS Visa Sweepstakes. The winner, announced at the Nov. 10 event in Los Angeles, received two, round-trip, Korean Air business class tickets from the United States to any of the locations worldwide serviced by Korean Air, and $10,000 in spending money.

Customers can pick up a SKYPASS Visa application at any U.S. Bank branch, Korean Air ticket office or airport locations. They can also apply by phone at 1-866-SKYPASS (1-866-759-7277), ext.

Korean Air, with a fleet of 117 aircraft, is one of the world's top 20 airlines and operates almost 400 flights per day to 85 cities in 29 countries. Korean Air is a founding member of SkyTeam, the global alliance partnering AeroMexico, Air France, Alitalia, CSA Czech Airlines, Delta and as of September 2004, Northwest, Continental and KLM. For more information on Korean Air visit

U.S. Bancorp (NYSE:USB), with $193 billion in assets, is the 6th largest financial services holding company in the United States. The company operates 2,346 banking offices and 4,621 ATMs in 24 states, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. U.S. Bancorp is home of the Five Star Service Guarantee in which the company pays customers if certain key banking benefits and services are not met. U.S. Bancorp is the parent company of U.S. Bank.

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Borrowing on personal credit cards to finance a business is an expensive form of financing that Inc. magazine's Online publication proBusiness says is likely to get pricier. The U.S. Supreme Court recently decided there could be no limit on late fees and other penalties.

Moreover, entrepreneurs who use the same credit cards for business and personal purchases may find it difficult to prove to the IRS how much interest is tax deductible. Credit card interest on business purchases may be deducted, but not personal interest charges. Moreover, sorting out charges for office supplies and business travel on one hand and pharmacy costs and children's toys on the other can be confusing.

If your company can't qualify for a corporate card, proBusiness suggests using one personal card solely for business. If you do have a corporate card, CPA Harvey J. Berger of Grant Thornton's Washington, D.C., office, warns: "You've got to keep those transactions squeaky-clean to avoid IRS challenges." He recommends writing a personal check each month to reimburse the company for any personal expenses that may have been charged to the corporate card.

Finally, Berger warns, keep good records. "I can't tell you how much money and time business owners waste when they-or their CPAs or lawyers-have to hunt through old records to try to figure out what a credit card was used for," he says.

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In its third in a series of credit card usage studies conducted since 1998, Nellie Mae randomly selected data for 600 undergrads, aged 18 to 24, attending four-year public and private institutions. The students had applied for a credit-based loan with Nellie Mae during the summer and fall of 2001. (The same methodology was used in 1998 and 2000, with a smaller sample size; methodologies year-to-year remained consistent.) Highlights of the study:

* Graduating students have an average of $20,402 in combined education loan and credit card balances, but ...

* Undergraduate college students are carrying credit cards in record numbers. The percentage of students holding at least one card in 2001 has risen 24% since 1998.

* 83% of undergraduate students have at least one credit card; a 24% hike since '98.

* Although freshmen have the lowest rate of card possession among undergraduates, 54% carry a credit card. The percentage of students with at least one card increases to 92% in sophomore year.

* Only 23% of freshman, on the other hand, have a student loan. For many students entering college today, their first credit experience is with a credit card, whereas 10 years ago it was through a student loan.

* The median debt level among card-carrying undergraduates--where half the population have balances lower than this amount and half have balances higher--has risen to $1,770, up 43% from $1,236 in 2000. This is an indicator that more students are using their cards regularly and may not be paying off the balances each month.

* 21% of undergraduates who have cards have high-level balances between $3,000 and $7,000; a 61% increase over 2000.

* The good news is that average credit card balances among students who have cards is $2,327, and has decreased by 15% from the previous average calculated in 2000. The percentage of students with balances greater than $7,000 has also declined.

* The bad news: Students double their average credit card debt, and triple the number of credit cards in their wallets, from the time they arrive on campus, 'til graduation.

Source: "Undergraduate Students and Credit Cards: An Analysis of Usage Rates and Trends," 2001, Nellie Mae (a wholly owned subsidiary of Sallie Mae).

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It's one of the most wonderful times of year for the banking industry's most lucrative business: credit cards. In the coming weeks, millions of Americans will reach into their wallets and use plastic to buy an estimated $100 billion in gifts for the holidays. But at what cost?

FRONTLINE® and The New York Times join forces to investigate an industry few Americans fully understand in "Secret History of the Credit Card," airing Tuesday, November 23, at 9 p.m. on PBS (check local listings). In this one-hour report, correspondent Lowell Bergman uncovers the techniques used by the industry to earn record profits and get consumers to take on more debt.

"The almost magical convenience of plastic money is critical to our famously compulsive consumer economy," Bergman says. "With more than 640 million credit cards in circulation, the U.S. economy has clearly gone plastic."

Millions of Americans use credit cards to make ends meet. Others, like actor and author Ben Stein, use plastic purely for convenience. While it would appear that Stein -- who says he charges a small fortune every month on his credit cards -- is the ideal customer, in reality, he is what some in the industry call a "deadbeat." That's because he pays his balance in full every month.

The industry's most profitable customers, the ones being sought by creative marketing tactics, are the opposite of Stein; they are the revolvers: the estimated 90 million Americans who carry monthly credit card debt.

Ed Yingling, executive vice president of the American Bankers Association tells FRONTLINE that "revolvers are the sweet spot" of the banking industry. This "sweet spot" continues to grow as the average credit card debt among American households has more than doubled over the past decade. Today, the average card-carrying American family owes a record $7,500 on their credit cards. This debt has helped generate record profits for the credit card industry -- nearly $30 billion just last year.

Some experts say the profitability of credit cards really began twenty-five years ago, when the banking industry successfully eliminated a critical restriction: the limit on the interest rate a lender can charge a borrower. Deregulation, coupled with a revolution in technology that enables the almost real-time tracking of personal financial information and the emergence of nationwide banking, has facilitated the widening availability of credit cards across the economic spectrum. But for some, the cost of credit is often far greater than it appears.

According to Harvard Law Professor Elizabeth Warren, the credit card companies are misleading consumers and making up their own rules. "These guys have figured out the best way to compete is to put a smiley face in your commercials, a low introductory rate, and hire a team of MBAs to lay traps in the fine print," Warren tells FRONTLINE.

Much of the industry's profit, critics say, is derived from what they call deceptive new tactics used to add to the bottom line. Spelled out in a credit card contract -- the terms and conditions of which can be changed at any time for any reason with fifteen days' notice -- these tactics are often triggered when consumers hit an unanticipated bump that makes them particularly vulnerable.

"[Banks are] raising interest rates, adding new fees, making the due date for your payment a holiday or a Sunday on the hopes that maybe you'll trip up and get a payment in late," says Robert McKinley, founder and chairman of Cardweb.com and Ram Research, a payment card research firm. "It's become a very anti-consumer marketplace."

American Bankers Association spokesman Yingling defends industry practices. Because the credit card business is basically unsecured lending, he says, the risks associated with the business must be offset.

But that's of little consolation to consumers. According to the Better Business Bureau, credit card and banking companies are together the subject of record numbers of complaints. "It's not an accident that the banking and credit card business generates more complaints nationally, across the country, than any other industry.... Out of one thousand industries that we track, they are number one," says Pat Wallace, head of the San Francisco Bay Area Better Business Bureau. "There are irritated, unhappy, dissatisfied customers in this industry."

As Professor Warren sees it, the industry is operating without fear of penalty. "There's no regulator, and there's no customer who can bring this industry to heel," Warren says.

Despite the number of consumer complaints, the ability of state and local governments to investigate the credit card companies has virtually been eliminated. That's because the federal regulator for the banks that issue the majority of the credit cards, the Office of the Comptroller of the Currency (OCC), has been engaged in what some describe as a "turf battle" with the states. The OCC has fought aggressively in courts and Congress to blunt state consumer protection laws and curb enforcement actions, sparking a nationwide battle.

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At a time when Washington State University is bracing for major state cutbacks, the school is having trouble minding its small expenses.

A recent Washington State Auditor review of WSU's financial accountability gave the school a generally clean bill of health, with one exception. The audit pointed to problems in the university's purchasing card system, a credit card program that last year amounted to $5 million in transactions.

The problem, according to the auditors' findings, is that the university isn't keeping proper watch over where the money is going.

Under the program, 413 people in more than 200 departments have cards to use for buying tools and supplies for their work units. Out of the 50 cardholders in 18 departments the auditors chose to review, more than a third came up in violation of WSU's rules.

"The way we look at it, if we had found one instance in one department, we would view it differently," said Debbie Pennick, the auditor who supervised the review of WSU. "Here it looks more like a systemic issue requiring university-wide training or policy changes."

At the WSU Tri-Cities campus, for example, the auditors found that no one was reviewing the expenditures for six of the 12 cards.

In the Pullman-based School of Biological Science, which had the largest number of transactions with two cards totalling as much as $190,000 each, again, no supervisor was overseeing the expenditures.

In that instance, one employee also was violating the rule of limiting purchases to less than $2,500. She was circumventing the limit by dividing up her orders. The employee used two different cards to buy lab supplies and instruments. In one instance, a $5,755 bill was divided into four separate charges, three on one card and one on the other. The auditors caught it because all the charges were listed on one invoice from the supplier.

Auditors found similar violations in the College of Nursing and the Economics Department. In the latter, two cards were used to divide a $2,729 bill for Xerox cartridges.

In other cases, employees were using the cards for travel, postage and meals, which is against university policy. And in six instances, receipts and supporting records for the purchases had not been kept.

The Auditor's office notified the university of its results last month and encouraged the school to beef up its monitoring system.

"We had a failure to follow procedure," said Barry Johnston, Director of Business Services/Controller at WSU. While the cardholders had all been properly trained, "we did a less than stellar job training the people who supervise the expenditures of the card holder," he said.

WSU has been free of state audit findings for several years, but in the past decade has had trouble with misappropriation of public property and funds. According to a 1998 audit, the university lost track of about 400 pieces of computer equipment in the School of Electrical Engineering/ Computer Sciences. It also had weaknesses in its cash handling policies and controls.

Johnston said he was glad this time there hadn't been a finding of abuse, fraud or theft.

"There was no loss here," he said. "We just have to improve our training for the entire card program."

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Credit card debt is a burgeoning problem on campuses. Although most students handle credit well, a significant minority get into debt. Causes include beliefs about future earnings, debt attitudes and financial knowledge. Many students have not had financial training and, among those who have, classes do not necessarily cause behavioral changes. Colleges, parents, and public policy makers must work together to combat the problem of student consumer debt. Suggestions are made for college policy with respect to credit card solicitation.

"I've called several attorneys and my question is how can they charge so much for bankruptcy when you already don't have any money? How much do you charge?"

These are questions you might expect to hear in a bankruptcy attorney's office. Instead, the inquiries were from a young woman at a seminar on managing credit card debt led by a local attorney given on our college campus.

Credit cards have become a fact of life on college campuses. With a reported $13 billion in discretionary income, college students represent a huge market for credit card companies (Kara, Kaynak, & Kucukemiroglu, 1994). Students often receive incentives, such as t-shirts or mugs, to apply for cards, and requirements, such as previous credit history, are often waived (Kara et al, 1994). Due in large part to these marketing efforts, a recent study reported that approximately 70 percent of college students possess at least one credit card--a number much higher than previously thought (Manning, 1999), while another study reported that 93 percent of college seniors have acquired at least one card (Markovich & DeVaney, 1997).

Colleges, too, have embraced the idea of credit cards among their students. According to one study, 77 percent of colleges reported accepting credit cards for payment of tuition (National Association of College and University Business Officers, 1995). Further, many colleges allow companies to solicit students and alumni with imprint cards, cards personalized with the institution's logo. Colleges then receive money, either in a lump sum, an amount for each completed application, or, in some cases, a percent of the amount charged by those possessing the cards. Credit card companies often are allowed to seek business on campus. For example, at some institutions, student groups may sponsor credit card companies who wish to solicit applications. Both sides appear to benefit from this arrangement. The student group receives a set dollar amount for each application received, and the company is able to set up a table one day a week in the student union.

Most Students Manage Credit Well

For most students, this easy access to credit is not an issue. Studies indicate that most students manage credit wisely. The 1998 TERI (The Education Resources Institute) Credit Risk or Credit Worthy study reported that 59 percent of students pay off their credit cards monthly. Others have estimated that only one in ten students is irresponsible with credit card use (Stanford, 1999). Indeed, the TERI study reported that most students report using and having credit cards in order to build a credit history and for use in emergencies. The study further reported that 82 percent of students with credit cards had balances of $1000 or less.

Credit Card Debt is a Problem for Many

However, despite the fact that the majority of students do well managing their finances, a significant portion do not. Manning (1999) reported an average credit card debt of $2,226 while Norvilitis, Szablicki, and Wilson (in press) found an average debt of $1,518 among all students. The consequences can be serious. There have been at least two cases widely reported in the media of college students who took their lives in part because of their credit card debt. Sean Moyer was a 22-year-old student with $10,000 of debt and Mitzi Pool was a 19-year-old student with $2,500 in debt. In both cases, they had talked to others about feeling overwhelmed by the debt shortly before their deaths. Anecdotally, on this campus, many students at academic probation hearings report having to hold several jobs to service the debt they have already accrued. For other students, the result can be bankruptcy or starting a career already heavily burdened by debt. It is not surprising, then, that students with high levels of debt, likely realizing the severity and chronicity of their situations, report both daily financial stress and decreased psychological well-being. Further, high levels of debt are related to a decreased sense of one's ability to manage and comprehend one's financial situation (Lange & Byrd, 1998).

The situation may be worse for those who get their credit cards on campus. The Public Interest Research Group's (PIRG) Student Credit Card Trap study (1998) found that students who received cards from campus tables had higher unpaid balances than students who received their cards from elsewhere and were also more likely to carry a balance from one month to the next. Norvilitis and colleagues (in press) found a similar pattern that suggested that students who receive cards from tables in the student union have larger debt to income ratios than students whose cards are from another source.

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They're in college bookstore bags, hawked with free gifts like basketballs and duffle bags, and tacked by the dozen to campus bulletin boards.

Credit card applications.

Eight out of 10 American undergraduates has at least one credit card, according to a survey by the student-loan company Nellie Mae. And despite what students may tell their parents, the cards are not just for emergencies. Students carry an average monthly balance of $2,327.

Some groups - including many students - argue that banks prey on students, using giveaways and pressure sales to lure credit novices into years of high-interest debt.

Every year for the last six, students and consumer groups have asked state lawmakers to rein in credit card marketing on college campuses. Banks and pro-business lawmakers have managed to quash the proposal every year.

This year looks no different. Freshman Rep. John McCoy, D- Tulalip, is pushing House Bill 1934, to limit credit card pitches in dorms or dining halls, ban free gifts in exchange for filling out an application, and require the companies to host free financial management workshops for students.

Despite support from students at Washington's two largest state universities, however, the bill was attacked by banking lobbyists and several Republican lawmakers.

"Well, if I hear you right, you want us to have a piece of legislation that helps protect you from yourselves. Am I wrong?" Rep. Jim Clements, R-Selah, told student lobbyists from Washington State University and the University of Washington.

A $3,000 credit card debt didn't strike Rep. Cary Condotta, R- Wenatchee, as all that much for a graduating senior.

"Hopefully, most of these kids will start at $40,000 to $50,000- plus," he said, referring to the salaries they might command.

Rep. Don Cox, R-Colfax, said that college students are the best and brightest, and should be able to handle their own financial matters.

"Part of the university experience is to learn how to manage life," he said.

McCoy's response: Debt and bruised credit can follow students for years.

"The overall thing is that we're trying to save the students," he said. "If you screw up on a credit card, that haunts you for a long, long time."

McCoy had originally wanted to flatly ban all credit card solicitation on campus - something that 300 colleges have done nationwide, according to House researcher Sydney Forrester. But that proposal has been watered down, after bank and credit union lobbyists pointed out that the bill would have hamstrung their on-campus branches.

Some students say the marketing is too aggressive. WSU student lobbyist James McMahan said that every fall and spring, about the time that students need to buy books and pay tuition, credit card companies set up booths on campus and offer hats, CD cases and other gifts in exchange for filling out an application. McMahan wants more prominent disclosure of interest rates and fees, and less hawking of freebies.

"We firmly believe in the right of students to receive credit cards," he said. "But we also believe in fair marketing practices."

Condotta told him that life is full of free enticements by businesses.

"Get used to it," he said.

Banking industry lobbyists said their companies play by the state and federal fair-trade rules, and that most students handle credit responsibly.

"We have to remember: these people are adults, and they're capable of making choices," said Gary Gardner, who represents two large credit unions.

The state public colleges, which keep a close eye on legislation and budgets, were silent on the credit card bill. Many bookstores, alumni associations and student groups have contracts with credit card companies, giving them easier access to students and alumni.

"Is there, for lack of a better term, kickback deals?" asked Cox.

"Yes, there are give-and-take relationships, you bet," said Denny Eliason, a lobbyist for the Washington Bankers Association.

Bruce DeFrates, associate vice president for enrollment services at Eastern Washington University, said the school has no way to know how many students get in over their heads in credit-card debt. But he supports the bill.

"Our bookstore manager would probably shoot me if he heard me say that," said DeFrates. "But I think there is a group out there that's easily tempted, and it (the bill) would remove some of that temptation."

In some cases, he said, incoming freshmen arrive already burdened with credit problems.

"They have problems even before they get to us," he said. "As soon as they turn 18, they get hammered (with credit applications) at the malls."

This sidebar appeared with the story:

FAST FACTS

The numbers

Student credit-card statistics:

54 percent of college freshmen have a credit card.

92 percent of sophomores have one.

The average credit card balance for college students is $2,327.

21 percent of undergraduates have high-level balances of $3,000 to $7,000.

Students in the Northeast use credit cards the least; student in the Midwest use them the most.

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