Credit Cards Online Information

Let's face it. Not everyone is a history buff. That's obvious to those who've ever watched an episode of "The Tonight Show with Jay Leno." As he skirts around the streets of Los Angeles during his signature bit "Jay Walking," he gets the most laughable responses to the simplest questions. When asked during one bit when Christopher Columbus discovered North America, a lady studying to be a teacher responded, "1842."

It's a scary thought that a future educator doesn't know when "Columbus sailed the ocean blue." Maybe more people would know their history if it had a more direct impact on their lives. Then again, that statement doesn't always ring true because there are many people who don't have a clue about personal history that affects them greatly--their credit history.

Just as a resume displays your work experience to a potential employer, a credit report provides creditors, and in some cases employers and insurers, with a detailed picture of your credit history. And like a resume, your credit report can influence whether you'll get what you're applying for.

Good credit isn't only useful in getting a loan. Credit checks are often done before a person is able to sign an apartment lease or as part of a background check before being offered a job, said Luther Branham, senior vice president of consumer lending for USAA Federal Savings Bank.

Your credit report provides a snapshot of your credit history and helps lenders make a quick, objective and accurate assessment of your credit risk. Occasionally, however, there are errors on these reports that can adversely affect your ability to get a loan or credit. Therefore, it stands to reason that you want to make sure your report is an accurate, up-to-date reflection of your credit history. Here are five reasons why you should become a history buff when it comes to regularly reviewing your credit report.

Identity theft

In 2003, 9.9 million people became victims of identity theft. A Federal Trade Commission publication titled, "ID Theft: When Bad Things Happen to Your Good Name," points out that identity thieves use a variety of methods--low- and high-tech--to gain access to personal data like social security numbers and credit card account information.

"A thief can secretly run up thousands of dollars in bills using your name and a different or fictitious address, and you may not be aware of this until you are turned down on an application because the delinquent debt was recorded on your credit report," said Michael Jackson, associate director of the Federal Deposit Insurance Corp.'s electronic banking branch.

The best way to catch a thief using your name is to get a copy of your credit report, according to the FTC publication. The report will show all the accounts opened in your name.

Let's assume your wallet has been stolen. The FTC suggests you contact the fraud department of any of the three major credit bureaus to place a fraud alert on your credit file. The alert is basically a request for creditors to contact you before opening any new accounts or making any changes to your existing accounts. As soon as the credit bureau confirms your fraud alert, the other two bureaus automatically will be notified to place fraud alerts, and all three credit reports will be sent to you free of charge.

Inaccuracies and mixed files

Many inaccuracies on a credit report can be the result of simple human error. For example, a New Jersey woman named Norma Cohen was astonished when she was turned down for a loan to refinance her home. She thought her credit was close to perfect.

Apparently, someone mixed her up with her deceased ex-husband. It's easy to see how it happened since his name was Norman Cohen. But Norma and her husband had divorced four years before his death, so she shouldn't have been held responsible for his bad debts. Though she explained the situation to the credit bureaus, it took some doing to correct the problem.

Other inaccuracies aren't so hard to dispute. The important thing to remember is you should correct even the tiniest of errors. Whether the errors relate to payments not credited or to late payments, it's best to contact the credit bureau to dispute the inaccurate information before it does too much damage to your report.

Inquiries

Every time you apply for credit and the credit grantor checks your report, a credit inquiry is placed in your file. Credit inquiries are bad because too many of them can indicate that you're "credit hungry" and may be in financial trouble. For this reason, too many inquiries can actually make getting credit more difficult. Moreover, if you didn't authorize someone to look at your credit report and they did, they may have broken the law. In order to see who's been looking at your credit, you need to read your report.

Byline: Brian Krebs

Schuyler Cole needed an accessory for his Palm Treo 600 smartphone, so the Haleiwa, Hawaii, resident fired up his Web browser last month and ran a Google search.

After scanning the search results, he purchased the inexpensive item -- a USB cable used to synchronize the Treo's settings with his personal computer -- from Cellhut.com, the first online store displayed in the results that looked like it carried the cable. The site featured a "Hackersafe" logo indicating that the site's security had been verified within the past 24 hours.

Later that day, information from Cole's purchase --- including his name, address, credit card and phone numbers, and the date and exact time of the transaction --- were posted into an online forum that caters to criminals engaged in credit card and identity theft. Ostensibly, the data on Cole was posted as an enticement to other fraudsters lurking on the forum who might be interested in buying large numbers of similar records.

Other personal data posted into the fraud forum included the personal and financial information for Shane Galloway, an 18-year-old freshman at Louisiana State University in Baton Rouge. When contacted by washingtonpost.com, Galloway said he purchased a wireless phone from Cellhut.com shortly after midnight on Sept. 6, just minutes after the time stamp on Cole's purchase.

Another individual whose data was found in the online chat channel --- a southern California resident who asked that his name not be used --- confirmed that he bought wireless accessories from Cellhut.com at 9:15 a.m. on Sept. 7, the exact time listed in the entry that was posted into the online forum along with his credit card data and other personal information. Later, he discovered that $6,000 in fraudulent charges were made using his credit card.

While public attention has remain fixed on a series of high-profile data losses or database breaches at federal government agencies, large corporations and universities, experts who study financial fraud say hackers increasingly are targeting small, commercial Web sites. In some cases, criminals are able to gain real-time access to the sites' transaction information, allowing them to steal valid credit card numbers and quickly charge large numbers of fraudulent purchases.

Small e-businesses offer fewer total victims, but they often present a softer target, either due to flaws in the software merchants use to process online orders or an over reliance on outsourced Web site security.

Cole's and Galloway's information was recorded being traded in an online chat room by Dan Clements, co-founder of CardCops.com, a fraud prevention service that monitors underground chat rooms where criminals trade in stolen credit cards and information used to commit identity theft. Clements said many smaller online merchants use generic shopping cart software that they fail to maintain with the latest software security patches.

"Most of these merchants that get hacked do not have updated versions of the software that runs their business, they're just trying to sell widgets," he said.

Nearly 80 percent of all software vulnerabilities discovered in the first six months of 2006 involved Web-based applications produced by hundreds of different software vendors, according to a report released Monday by Cupertino, Calif.-based security vendor Symantec Corp.

"The people writing these applications often don't know very much about Web-based vulnerabilities," said Alfred Huger, a senior director at Symantec Security Response. "Many of these Web vulnerabilities are not that difficult to discover and are very easy to exploit."

Cellhut.com, like many e-commerce Web sites, features the "HackerSafe" seal on its homepage proclaiming that the site "is tested and certified daily to pass the FBI/SANS Internet Security Test." ScanAlert Inc., a Napa, Calif.-based company that sells the service, scans some 75,000 online merchants each day for thousands of known Web site flaws.

ScanAlert is one of many companies providing third-party Web site security audits to online businesses. Other players in this market include Comodo Group Inc. of Jersey City, N.J., which markets its HackerGuardian scanning service; Coral Gables, Fla.-based Xenitel and its HackerFree seal; and the Verified Safe service from Lansing, Mich.-based Periscan.

By and large, the companies offer a range of basic and advanced security services that they say will assure Web customers that a site is doing everything possible to protect their personal data. But computer security experts are quick to question the effectiveness of these services.

"We hear from our assessor contacts who investigate (Web site) breaches that most of the sites had previously passed vulnerability scans," said Avivah Litan, a financial fraud analyst with the Stamford, Conn. research firm Gartner Inc.

NEW YORK, NEW YORK, U.S.A., 2000 APR 25 (NB) People who surf the Web looking for credit card offers are more ethnically diverse and also more receptive to online branding than the general online population, according to a recently released study from Cyber Dialogue, a company specializing in Internet customer relationship management.

The study is part of the company's "American Internet User Survey."

Cyber Dialogue also says that it has found online credit card seekers to be younger, primarily male and more likely to carry larger balances than other segments of the cyberspace population.

To date, according to Cyber Dialogue projections, 9.8 million Americans have shopped for credit cards on the Internet.

Newsbytes spoke with Sam Callard, a financial analyst for Cyber Dialogue's Internet Strategies Group about the findings of the study. He said he thinks the study, which traces the offline and online consumer use of financial services, provides important information for credit providers in understanding how online credit card seekers differ from consumers looking for other types of financial services, such as home loans or insurance.

For example, Cyber Dialogue says, online credit card seekers are especially attractive because nearly half of them a projected 4.3 million have actually applied for a credit card directly online. This translates into a reduction in the cost of acquisition to online credit card issuers.

Another positive aspect of online credit seekers, according to the report, is that online credit card applicants have a high conversion rate. This means that more than half of those who applied for credit cards on the Web a projected 2.2 million ultimately acquired a credit card online, and began using it.

"Credit card companies are missing an opportunity to acquire potentially valuable lifetime customers by overlooking such largely untapped groups as ethnic minorities," said Callard. One of the benefits of the Internet, Callard points out, is its ability to reduce both the offline cost and risk of targeting these kinds of small, high-potential customer segments.

But online credit card seekers are also more demanding than the general Internet population, according to the report. They are especially driven by low interest rates as well as the reputation of the credit card issuer.

Cyber Dialogue reports that 90 percent of online credit card seekers list low interest rates as an important feature of a credit card; and, 83 percent list a trusted institution as being important in their choice of cards. The general online population is said to be a third less likely to cite these two factors as important elements in their choice of a credit card issuer.

Among the other findings of the report was the statistic that 35 percent of online credit card seekers are in an ethnic minority group, as compared to 20 percent of the total general online adult population. The primary reason for this, Callard feels, is due to the anonymity of the Internet.

Another figure of importance for credit card issuers is that with an average balance of $3,100, online credit card seekers carry $1,000 more credit card debt than the general online population. This translates into greater merchant fees and more interest income for card issuers, as long as the monthly payments are made.

The findings reported by Cyber Dialogue are from the company's cybercitizen Finance Continuous Advisory Service which is part of Cyber Dialogue's American Internet User Survey (AIUS). According to Callard, the AIUS random measures via telephone 1,000 online adults, age 18 and older, as well as 1,000 non-Internet users.

CHAMPIONSGATE, Fla. -- TransUnion, a leading global information solutions company, today led a general session panel discussion entitled "Gearing up for Bankruptcy Reform - A Unique Industry Perspective" at the 14th Annual Credit Card Collections Conference in ChampionsGate, Florida.

The panel was comprised of industry leaders from Citibank; the Association of Independent Consumer Credit Counseling Agencies; Money Management International, a credit counseling company; and a leading bankruptcy law firm. Participants discussed their respective roles in preparing for the bankruptcy reform laws that went into effect today. The panel also addressed new technologies and processes aimed at helping lenders, collection agencies and credit counseling companies more effectively work together in the post-reform environment.

Addressing a crowd of more than 200, panel moderator Mike Rosenthal, director of Debt Management Solutions at TransUnion, initiated the discussion by saying, "some innovative tools have entered the marketplace to assist credit grantors in devising treatment strategies that match an individual consumer's financial situation. Our panelists today represent industry leaders who are adapting and improving their roles based on this technology and on the needs of both consumers and businesses."

Earlier this year, TransUnion announced a debt management model, which credit counseling companies can use along with their core services to quickly assess whether consumers exhibit strong indicators for rehabilitation through temporary budget restructuring or a debt management plan. The score also assists lenders in making objective decisions to offer improved concessions, such as lower minimum payments, reduced interest rates or the removal of late penalty fees to those consumers who are most in need.

In addition to the bankruptcy reform discussion, TransUnion shared insights during the conference's "Collection Technology Showcase" on October 16. Michael Browning, president of TransUnion's direct marketing agency, Douglas-Danielle, contributed to a panel discussion on Online Collections. TransUnion offers an Online Payments solution that provides collectors with a customized Web site for collecting past-due payments that is cost-effective and less confrontational for consumers than traditional collection methods. Kevin Derbyshire, senior consultant in TransUnion's Analytic Decision Services group, shared his expertise in a panel discussion on Scoring and Strategy Management. In the scoring arena, TransUnion offers incidence-based models to help collections organizations identify which customers are most likely to pay in order to prioritize work effort and apply the most cost-effective treatment strategies.

OME $36 billion is likely to be spent at Web "e-tail" stores this year, up 145 percent from 1998. That estimate comes from shop.org, a trade association for online retailers.

Stressed-out workers are learning the value of e-shopping during their lunch breaks, or at midnight from their computer at home. And for the first time, you're seeing an explosion of Internet credit cards.

"Some of the very best and very worst cards are now offered on the Web," says Robert McKinley, president of CardWeb, a credit-card tracking service (www.cardWeb.com)

With a Web card, you apply online, get statements electronically or by mail, monitor your account online and pay by computer, too. Old-fashioned folk can still opt to pay by check.

For people seeking more credit this Christmas, the special appeal of Web cards is their speed. You give the same information you would in a mailed application. Approval (assuming you qualify) might come in just half a minute. From that moment, you can make purchases online.

Most issuers mail you a plastic card, usually a MasterCard or Visa, which you can also use in stores.

At Citibank, however, plastic has become uncool. Instead, Citibank is offering ClickCredit, a virtual card (www.clickcredit.com). It works like a credit card but exists only in Citi's computer. You use it solely for making purchases on the Web.

ClickCredit offers the usual credit-card bells and whistles, such as frequent-flier miles or cash-back rewards for frequent shoppers. The most desirable customers pay no annual fee and a 9.9 percent variable interest rate on unpaid balances. (Poorer credit risks pay 18.55 percent and perhaps a $50 annual fee.)

Here are McKinley's two favorite cards on the Web, plus the low rates they offer their better customers. Each has an introductory program, with low or zero rates for the first few months. Neither charges an annual fee.

(Who's a "better customer?" People who make payments on time and carry unpaid balances, or at least use their cards a lot. If you don't qualify, these issuers will charge you more.)

Wingspan Platinum Visa (www.wingspan.com) is issued by BankOne at a fixed 9.99 percent. With Wingspan, you get 5 percent off the cost of online purchases from 28 merchants.

NextCard Visa (www.nextcard.com) is issued by NextBank. You apply for a standard card with a fixed 15.9 percent rate. Once approved, you could be offered a rate as low as 9.9 percent, depending on your credit profile.

"That's fuzzy pricing," McKinley concedes, but he likes NextCard's rich rewards program. You get more frequent-flier miles per dollar spent than on any other card. But to get them free, you have to carry unpaid balances.

When checking a card's Web site, always click on the phrase "terms and conditions," to see what else the issuer may charge. For example, both of these cards punish people who pay late, pay less than the minimum or go over their credit limit.

Transgressors lose their low fixed rates. NextCard currently charges as much as 23.2 percent on unpaid balances, for those who pay less than the minimum. Wingspan goes to 22.99 percent for certain late payers.

Web credit cards provide the same fraud protection you'd get from any other credit card. Officially, you're liable for the first $50 in fraudulent charges. Most issuers, however, cover even that.

As for the bad apples, McKinley names three: Future Card Visa, First National Credit Card Visa and Global 1 Visa or MasterCard. They charge big fees up-front, substantial monthly fees and high interest rates.

Global 1, for example, charges $348 in setup fees, against a minimum credit limit of just $375 - which wouldn't leave you much to spend. First National charges $169, against a credit limit as small as $250. Even if your limit is higher, you're starting out in debt to the bank.

Don't let fraudulent credit card orders knock you out.

You thought a hearty "Congratulations!" would be in order. Your online business was still-in its first week and had already received a whopping $5,000 order. There was just one catch--it had been placed with a stolen credit card number.

The tip-off came when you saw that the order, ostensibly placed by a credit card holder with a U.S. billing address, was to be shipped to faraway Indonesia. A quick phone call to the real card holder, who told you she didn't have the foggiest idea about the order, confirmed your suspicion.

Sometimes, sniffing out fraudulent transactions can be a matter of common sense. While online fraud tactics are becoming increasingly sophisticated, preventing credit card fraud doesn't have to require expensive monitoring tools. Much of fraud prevention lies in knowing how fraud works.

Take, for example, this loophole in shipping companies' customer service policies: Any allegedly legitimate buyer can ask his merchant for the tracking number of his shipped order; the customer can then call the shipping company with the number and change the shipping address. This allows a person with a fraudulent credit card to clear a merchant's antifraud Address Verification System (AVS), which ensures that the customer's credit card billing and shipping information match bank records and each other. After having his or her order approved, any poseur can obtain his or her package's tracking number and change the original delivery address to his or her own.

Developing a policy of withholding the tracking numbers of overnight packages until delivery time has passed can serve as a simple but effective part of your strategy against electronic credit card fraud.

RISKY BUSINESS

Online merchants take on much higher risk than their brick-and-mortar counterparts: Nearly 10 percent of all Internet transactions are fraudulent, compared to less than 1 percent of credit card transactions in the physical world, according to a 1999 report by Meridien Research. (The company does, however, expect Internet fraud to drop to below 5 percent in its 2000 report.)

Internet merchants also assume higher penalties for credit card purchases than do physical stores, paying as much as 2.69 percent and 30 cents (compared to 1.5 percent and 20 cents) on every Net-based transaction.

Why are online fraud rates so high? Unlike face-to-face transactions, where a signed receipt serves as a contract protecting the merchant against identity fraud, transactions made over the phone or online do not guarantee the card user's identity. This means anyone with access to old credit card receipts or illegal software that generates authentic credit card numbers can attempt to use those numbers to buy online. Even worse, the merchant must assume all the risk in such non-face-to-face transactions.

Julie Ferguson, co-founder and vice president of emerging technologies for e-commerce software company ClearCommerce in Austin, Texas, and founding member and board member for the newly launched nonprofit Worldwide E-Commerce Fraud Prevention Network, says the total costs of e-fraud add up to far more than just the cost of goods sold. In fact, merchants are fined for chargebacks, or reversals, against disputed credit card sales. E-fraud costs thus include the cost of the order, bank and card processor fees (including higher discount rates, chargeback fees, fines and even termination of processor service for excessive chargebacks), the expense of manually resolving bad transactions and the decline in customer loyalty.

ANTI-FRAUD MEASURES

You can fight back against online credit card fraud by investing in fraud-detection software, either separately or as part of your credit card processing service. So-called store-in-a-box solutions can provide a generally easy and inexpensive system for processing credit cards, including pre-authorization with Visa and Mastercard. (For more on stores-in-a-box, see "Bizstartups.com" on page 122.)

If the anti-fraud tools that come bundled with your e-commerce solution provider or your credit card processing service aren't as robust as you want, however, you can invest in separate anti-fraud software and integrate it with your payment-processing service. These tools typically include realtime authorization capabilities to ensure the card number and expiration date are valid and customer funds are sufficient. Within the United States, tools also include AVSes. More advanced anti-fraud tools incorporate rules systems that are able to flag certain types of transactions based on customizable if/then statements (such as "IF the order is above $1,000 AND the shipping is express THEN review the order") and statistical models that learn by example and correlate transaction attributes with known fraudulent activity.