Prepaid Debit Card Reviews, Complaints, Etc

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  • New FBI Prepaid Card Scam – Alert By Better Business Bureau

    New FBI Prepaid Card Scam – Alert By Better Business Bureau

    Criminals have certainly been hard at work lately. As anybody who has picked up a newspaper or logged onto the Internet recently knows, retail giant Target and tens of millions of its customers were the victims of a holiday season heist of payment and other personal information. And on January 17th, the Better Business Bureau issued an alert about a new FBI prepaid card scam.

    According to the announcement from the Council of Better Business Bureaus (BBB), this most recent thievery attempt involves a phone call from someone claiming to be an agent from the Federal Bureau of Investigations (FBI). The caller impersonating an FBI agent follows a familiar script, according to the BBB. “You answer the phone. The caller ID says “Federal Investigations,” and the person on the other line claims to be an FBI agent. He or she says the FBI is monitoring your online activity, and they know you have an overdue payday loan.”

    From there, the BBB says a caller will demand that whoever answered the phone pay the alleged debt off instantly via a prepaid debit card or wire transfer. If someone fails to do so, the supposed FBI agent will threaten legal action and jail, an especially unnerving threat because the caller often has personal information such as a social security number, address and place of work.

    No matter how persuasive someone may sound on the phone, the BBB says to never agree to pay anything. “Despite the threats, these “FBI agents” don’t have power over you,” reads the BBB’s alert. “Don’t give in and pay money you don’t owe; it’s likely scammers will just be back for more.”

    To help consumers avoid becoming victim to these scams, the BBB suggests taking the following steps. First, hang up and don’t call the number back. “It is temping to get the last word, but you may end up giving scammers information they can use later.” After hanging up the phone, the BBB suggests contacting the local police department to report the impersonation of a law enforcement officer.

    Additionally, the BBB points out that caller ID spoofing is easy so don’t be fooled by what appears to be a legitimate institution. If you do stay on the line with the caller, ask him or her for an official validation notice of the debt. “Debt collectors are required by law to provide the information in writing. The notice must include the amount of the debt, the name of the creditor and a statement of your rights under the Fair Debt Collection Practices Act,” reads the statement. “If the self-proclaimed collector won’t provide the information, hang up.”

     

     

     

     

  • Target’s Woes Continue

    Target’s Woes Continue

    Target’s troubles continue to mount, as the retailer’s own investigation into last year’s security breach has revealed that it was worse than originally believed. According to Target’s own statement on January 10, more than just credit and debit card information was swiped from shoppers who visited the company’s stores from late November to mid-December.

    “At this time, the investigation has determined that the stolen information includes names, mailing addresses, phone numbers or email addresses for up to 70 million individuals,” reads the statement from Target. In other words, not only was the original estimate of 40 million as the number of people impacted by the heist off by about 75 percent, the type of information stolen was more expansive than originally believed.

    Not surprisingly, the company’s holiday sales look to have been hurt by the furor over the theft of such a huge amount of customer data, which was first revealed on December 19. According to Target’s outlook, fourth quarter sales are expected to be down about 2.5 percent from the previous year and the company’s profit forecast has also been revised downward. In response to this latest revelation about the data theft, Target is both expressing remorse and offering some concrete assistance to customers.

    “I know that it is frustrating for our guests to learn that this information was taken and we are truly sorry they are having to endure this,” says Gregg Steinhafel, Target’s chairman, president and CEO. Besides words, Target is also assuring that guests will not have any liability for any fraudulent charges made as a result of the security breach. Additionally, Target is offering free credit monitoring for a year to any impacted shopper.

    While Target is scrambling to undo any lasting damage done by this high profile data thievery, there is evidence that the company still has plenty of work to do. Just three days after Target released its latest update on its security troubles, the research firm YouGov released its latest BrandIndex, which ranks companies according to consumer sentiment.

    According to an article at CBS News’ Moneywatch website, Target has lost its longstanding ranking among the top ten brands. Based on thousands of interviews, YouGov’s BrandIndex now puts Target at number 21, a precipitous drop. “The fact that Target not only fell out of the top ten but out of the top 20 is a big deal, especially since the incident only happened in December,” Lance Fraenkel, head of BrandIndex, told Moneywatch. “This kind of drop isn’t something that happens often.”

    Still, Fraenkel didn’t have exclusively bad news for Target. He lauded the company’s efforts to be transparent about the data breach and urged them to continue to communicate with customers. “Strong brands can weather storms,” he said.

  • Senate Bill Aims To Ensure Prepaid Card Fee Disclosure

    Senate Bill Aims To Ensure Prepaid Card Fee Disclosure

    U.S. Senator Mark Warner chose the end of the holiday shopping season to introduce a bill that would mandate prepaid card fee disclosure. Warner, a Democrat from Virginia, unveiled the Prepaid Card Disclosure Act of 2014 on January 9, and cited the recently completed holiday gift buying season and the industry’s rapid growth as the reasons motivating his bill.

    “At nearly $700 billion in sales each year, prepaid cards are one of the fastest growing parts of the financial industry,” he says. “However, these cards aren’t subject to the same kinds of consumer protections as other types of credit cards and gift cards. It’s important that young people and people without credit history or access to traditional banking tools have access to prepaid cards, but we can’t let the technology outpace smart consumer protections.”

    Specifically, Warner’s bill would task the Consumer Financial Protection Bureau (CFPB) with formulating and issuing rules that would require banks and other providers of prepaid cards to disclose their fees in a standardized manner. Among other things, the Prepaid Card Disclosure Act would require card issuers to reveal all of the fees associated with their products in an easily understood and conspicuous table that would be available to consumers before any purchase. In addition, the bill would insist banks allow consumers to use their smartphones to obtain real-time fee updates via a QR code or barcode. The proposed legislation would also require card issuers include both a toll-free telephone number and a website on each physical card where consumers could get detailed information about fees.

    In announcing the legislation Warner cited a range of fees that, while commonly associated with prepaid cards, may not be well known among the general public. Among the fees Warner, a member of the Senate Banking Committee, mentioned were fees to activate an account, monthly maintenance fees, and for checking account balances. Consumer advocates warmly received the bill. “Pew commends Senator Warner for taking action to require clear disclosures for prepaid cards. Pew’s research shows that inconsistent disclosures make it very difficult for consumers to understand the terms and fees associated with each card,” says Susan Weinstock, director of safe checking research at The Pew Charitable Trusts. “The growing number of consumers turning to prepaid cards as a way to manage their money underscores the need for reform.”

     

     

  • Pot Purchases with Plastic? The Credit and Debit Cards Question

    Pot Purchases with Plastic? The Credit and Debit Cards Question

    One of the first major news stories of 2014 is all about marijuana. Starting January 1, pot has been available for commercial purchase by non-medical customers in Colorado. In other words, Colorado residents are now able to purchase marijuana for recreational use by walking into a store, making a selection and paying for it at the counter – just as if they were purchasing a gallon of milk or an iPad.

    But one question that has accompanied the rollout of legal pot sales in the Rocky Mountain State is whether customers would only be able to make purchases with cash. It’s an issue because marijuana sales, while legal in both Colorado and Washington State, are still prohibited by the federal government. So, out of this arises this: pot purchases with plastic? It opens up the credit and debit cards question on pot purchases.

    In the past both Visa and MasterCard said that they would not allow illegal transactions to flow through their payment systems. But a recent article in the Denver Post indicates that credit and debit cards are being used to buy marijuana in Colorado. In part, this is due to the fact that Visa and MasterCard are leaving the decision about whether credit and debit cards bearing their logos can be used up to individual merchant banks.

    “In this instance, the federal government considers the sale of marijuana legal but has announced that it will not challenge state laws that legalize and regulate marijuana sales,” Visa said, in a statement to Denver Post reporter, David Migoya. “Given the federal government’s position and recognizing this is an evolving legal matter with different standards applicable in different states, our local merchant acquirers (banks) are best suited to make any determination about potential illegality.”

    While experts quoted in the Denver Post story maintain that Colorado pot retailers still face a risk in choosing to offer credit and debit card payment options, the motivation to do so is clear. In his story, Migoya quotes a customer who decided to make a bigger purchase when he found out that the store accepted plastic. “I showed up with some cash on hand because I had read prior that these places would be cash only,” said the customer, who would give only his first name, Kevin. “Once I found out that they were taking cards, I decided to buy more than the $25 in cash I had with me.”

  • U.S. Credit Card Security Outdated

    U.S. Credit Card Security Outdated

    Target has begun 2014 with a very bad hangover. As has been widely reported, as many as 40 million of the large retailer’s customers had financial and personal information stolen during the height of the holiday shopping season. The repercussions for Target have already been severe and seem only to get worse by the day. Besides seeing its all-important holiday shopping traffic decline, several states’ attorneys general are investigating Target and a number of class-action lawsuits have been filed against the company.

    A recent story in The Los Angeles Times points out that backward technology long ago abandoned by much of the rest of the world may be more to blame for the data breach than anything Target did or didn’t do. The story by reporter Chris O’Brien says that while it’s still the norm for U.S. credit card holders to have plastic with a magnetic strip that holds their account information, most other countries have opted for so-called smart cards.

    These smart cards earn that name, O’Brien writes, because they utilize embedded microchips to hold customer information rather than the magnetic strips that are found on 99 percent of all of the credit cards issued in the US. “The additional encryption on so-called smart cards has made the kind of brazen data thefts suffered by Target almost impossible to pull off in most other countries,” writes O’Brien.

    Because around 80 countries have already embraced smart card technology, the more vulnerable U.S. has become the favorite target of identity thieves. Given that smart cards provide such superior security, the question is why the U.S. hasn’t embraced their use. According to O’Brien’s story, there has been no political pressure to force businesses and financial institutions to make the switch. Importantly, an upgrade to smart cards would be expensive.

    Nevertheless, it does appear that the U.S. will soon become home to a lot more smart cards. According to O’Brien’s article, many credit card issuers have launched efforts to make the switch by October of 2015. To do that, credit card companies will change the rules about who is responsible whenever there are fraudulent purchases as a result of security breaches. “Under the new rules, the entity in the payment chain – merchant, credit card, banks – deemed to have the weakest security will be liable,” writes O’Brien. “Credit card companies can’t make anyone adopt the technology, but they’re giving them a hard nudge.”

  • Cybercriminals Hit Target

    Cybercriminals Hit Target

    The holidays just got a little more stressful for millions of Target customers. In a statement on Dec. 19, the large retailer acknowledged that as many as 40 million customers who used their debit or credit cards at Target’s U.S. stores between Nov. 27 and Dec. 15 might have had personal information stolen. Online shoppers at Target.com were not impacted.

    Target says that it discovered the problem on Dec. 15 and was able to take steps to resolve future problems. Target also said that the information stolen included customer names, credit or debit card numbers, card expiration dates and three-digit security codes.

    According to a report in The New York Times, criminals focused their attention on point-of-sale transactions taking place inside Target stores. “By breaching point-of-sale systems, they can steal the so-called track data on credit and debit cards, which can be sold, in bulk, on the black market and used to create counterfeit cards,” says the story by Times reporters Nicole Perlroth and Elizabeth Harris.

    This high-profile theft comes at a very bad time for both Target and its customers. The first day criminals accessed customer credit and debit card information was Nov. 27, the day before Thanksgiving and just prior to Black Friday, the traditional start of the holiday shopping season.

    In its statement alerting customers about what happened, Target said it had partnered with a third-party forensics company to investigate the security breach and had alerted financial institutions and law enforcement officials. The New York Times report said that the Secret Service, which is responsible for investigating financial fraud, had launched an investigation.

    Target also urged customers who may have been impacted by the theft to take a number of steps to protect themselves. Specifically, the company urged people to keep a close eye on credit and debit accounts in order to spot any fraudulent transactions. Target also suggested customers monitor free credit reports available from Equifax, Experian and TransUnion, the nation’s three major credit bureaus. “If you discover any suspicious or unusual activity on your accounts or suspect fraud, be sure to report it immediately to your financial institutions,” says the statement from Target.

    In the case that a customer does find irregular charges, Target suggests contacting law enforcement or the Federal Trade Commission (FTC) to report the incident.

Prepaid Debit Card Reviews, Complaints, Etc