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15 posts from April 2013

Visa Survey Claims Consumers Lose $1 A Day In Cash

Visa logo While surfing the web recently, I ran across a news item at Talking Payments, a website for people and companies (e.g., banks, retailers, card issuers, payment processors, etc.) interested in digital payments. The TP news item mentioned a study by Visa that consumers lose, on average, about $1.00 a day.

To learn more about the Visa study, I next visited the Visa Viewpoints website. The August 2012 survey included 5,641 people in Australia, India, Indonesia, Japan, Russia, Singapore, South Africa, South Korea, Taiwan, Thailand, the UAE, and the USA. View the infographic about the study (Adobe PDF). The survey tries to document the "cost" to consumers of using cash by adding cash lost plus idle cash. Some findings:

  • In the US: $365 lost cash = $285 in lost foreign currencies after trips + $80 in idle cash lying around your home, office and/or car.
  • In the US: men ($331) lose more than women ($245). And, younger people ($165) lose more than older people ($135).
  • Lost cash varies across countries: Singapore ($656), Australia ($361), Japan ($349), and Russia ($137)

At first read, this seems very interesting. The implication of this study is that consumers who use payment cards (e.g., credit, debit, or prepaid) won't lose cash daily. Losing $1.00 a day in cash equals about $30 a month, or $365 a year.

Do you lose $1.00 a day in cash? I don't. I know this as I check the cash in my pocket at the end of the day -- everyday. When I receive change in the form of bills, I place that change in my wallet immediately. And, I don't consider idle cash as "lost." Maybe you do, but I don't. So, I am wondering exactly what consumers really lose $1.00 a day cash, and if people really lose that much cash daily.

One of the footnotes in the Visa inforgraphic reads:

"2. Foreign currencies given as tips given away in airports and/or misplaced."

What? So, a portion of the supposedly lost foreign currencies includes tips. I don't consider tips as lost money. When traveling, I tip bellhops, taxi drivers, and others who help me with my luggage. That's not lost money, That is paying for services received. Sometimes, I have foreign currencies left over from a trip, but that amount is nowhere near $285. It's under $5.

What's really going on here?

In my view, several things. First, banks really want to capture usage from consumers who don't have traditional bank accounts, or have only one account (e.g., checking or savings). Second, banks really want consumers to migrate to prepaid cards where there are fewer regulations for them; which means fewer or weaker consumer protections and consumer rights. That includes banks working with employers to provide payroll cards and banking services via prepaid cards, and/or health care spending accounts via prepaid cards. To learn more, read the list of prepaid card fees in this blog post, the payroll cards from Bank of America, and the Walmart MoneyCard.

To me, the study methodology compiled numbers in a way to inflate the amounts lost to justify these business goals.

Third, even if you lose as much as $1.00 a day in cash, a fair comparison is to consider the fees associated with prepaid cards, and if those those fees are greater than the cash you really lose. CNN Money found that basic prepaid card fees are about an average of $300 per year. That is almost as much as the supposed cash lost by consumers in the US, Australia, and Japan. Those average prepaid fees exceed the cash lost by consumers in several countries.

Both CNN Money and Consumer Reports found a wide variety of fees when it investigated prepaid cards: activation fees, monthly fees, reload fees, cash withdrawal fees, inactivity fees, online payment fees, paper statement fees, customer service phone call fees, and more.

What do you think of the Visa lost cash study?

Chicago Theft Ring Received Sentences For Card Skimming Crimes

In a Chicago court, several defendants were sentenced for card skimming thefts and fraud. The sentences ranged from six years of prison time for the ringleader to two years of probation for other members of the theft ring.

The thieves, working with employees at several fast-food restaurants in Chicago, had allegedly swiped consumers' debit/credit cards through small portable readers to obtain their card numbers. The theft ring then allegedly created fake cards with the stolen card numbers and purchased about $200,000 in merchandise.

Affected consumers had accounts at several banks: Chase, Citibank, Fifth Third Bank Harris Bank, U.S. Bank, Bank of America, and American Express. Reportedly, the banks assisted local law enforcement with the investigations. The seven defendants included:

  • Joseph Woods, 33 (the ringleader)
  • William Washington, 31
  • Alex Houston, 23
  • Britain Woods, 34
  • Jenette Farrar, 35
  • Essence Houston, 29
  • Kenyetta Davis, 33,
Congratulations to both local law enforcement and the judicial system.

Former Employee At Web Hosting Service Arrested And Charged With Felony Computer Breaches

Ars Technica reported that Eric Gunnar Gisse, a former Hostgator employee, has been arrested and charged with felony computer breaches. Gisse allegedly used his position to install secret code that allowed him unauthorized, "back door" access to more than 2,700 Internet-connected computer servers. Gisse, of San Antonio, Texas is being held on $20,000 bail in the Harris County jail.

This highlights one risk with cloud computing services. Many companies outsource the operation of their website to third-party vendors, such as Houston-based Hostgator, that offer what the industry calls "web hosting services." This is not new.

As a usability professional who has worked with several digital agencies, I have seen this outsourcing repeatedly work well and data maintain security. The issue is when employees abuse their positions and either steal or expose the sensitive information of people who use the compromised web servers.

The C/Net website lists companies that provide web hosting services.

ACLU Files FTC Complaint Against Mobile Carriers About Smartphone Security Failures

The American Civil Liberties Union (ACLU) has filed a complaint via the U.S. Federal Trade Commission (FTC) against several mobile carriers for:

"... failing to warn their customers about unpatched security flaws in the software running on their phones... running versions of Google’s Android operating system. Unfortunately, the vast majority of these phones never receive critical software security updates, exposing consumers and their private data to significant cybersecurity-related risks."

The mobile carriers named in the complaint include AT&T Inc., Verizon Wireless, Sprint Nextel Corp., and T-Mobile USA. In its announcement, the ACLU also said:

"Google’s Android operating system now has more than 75% of the smartphone market, yet the majority of these devices are running software that is out of date, often with known, exploitable security vulnerabilities that have not been patched. For consumers running these devices, there is no legitimate software upgrade path... Although Google’s engineers regularly fix software flaws in the Android operating system, these fixes aren’t packaged up and pushed to consumers by the wireless carriers and their handset manufacturer partners."

Download the ACLU complaint (Adobe PDF, 438k bytes).

Hacker Sentenced To Prison For Sony Data Breach

You may remember a series of data breaches during 2011 at Sony Online Entertainment and the Sony Playstation Network. ComputerWorld reported that 25-year-old Cody Andrew Kretzinger was sentenced to one year plus one day in prison for his role in the May 2011 hack into Sony Picture's systems and databases. After serving prison time, Kretzinger will also serve one year of home detention.

Kretzinger was a member of the LulzSec hacker group. Another group member, Hector Xavier Monsegur, was arrested in June 2011 and then served as an F.B.I. informant. Monsegur will be sentenced in August 2013.

April 20 Is 'Secure Your ID Day'

April 20, 2013 is "Secure Your ID Day." To learn more about how you can protect yourself and your sensitive personal information, visit the Better Business Bureau website. The site lists participating BBB groups in various states.

If you can't attend a local event, then browse these tips and suggestions from the BBB to keep your sensitive personal information secure. Other resources that consumers may find helpful:

Update: Schnucks Data Breach Exposed 2.4 Million Cards

Back in March 2013, this blog reported about the Schnucks supermarket data breach. On Monday, the St. Louis Business Journal reported:

"Over a three-month period, up to 2.4 million credit and debit cards used at 79 Schnucks stores may have been compromised..."

Two civiil lawsuits have been filed against the company. Now we know more than we did in March. Still, not good.

How To Help After Yesterday's Boston Marathon Bombing

I live and work in Boston, Massachusetts. So the horrible event on Monday has hit close to home. I live in the same area of the city as the 8-year-old victim and his family. For me, it feels like 9-11 and the Challenger disaster all rolled up together.

A few people have written to me asking how they can help and if I know of a victim's relief fun. So, I have compiled below a list of the options I have found. I am sure that more options will become available during the coming days:

Of course, do your homework and research a charity or fund before giving. The Better Business Bureau provides safety and giving tips to protect yourself from scammers. The Red Cross offers tips to recover emotionally after a tragedy. BTW, I donated at the above TUGG link, and I feel better.

Know of a victim's recovery or relief fund? Share it below, please.

Consumers Advised To Be Wary Of Prepaid Card Protections

If you haven't read it, there is an article by Sheila Blair in USA Today. Blair is a chairwoman at the FDIC and also a senior adviser to the Pew Charitable Trusts. If you use a prepaid card, then this article is a must-read. If you are considering a prepaid card instead of a traditional bank account (e.g., checking and savings), then this article is a must read.

In her article, Blair explores the relationship between banks, prepaid cards, and FDIC insurance protection for consumers:

"Banks sometimes fail... because of insurance provided by the Federal Deposit Insurance Corporation (FDIC). When a bank fails today, its insured depositors never lose a dime. By design, the failing bank is usually taken over by another bank... In fact, nearly 500 banks failed during the financial crisis and its aftermath, and every single depositor had access to their insured money within one business day... But this seamless protection for insured depositors can be avoided by companies that offer "reloadable" prepaid cards, a rapidly growing product that many Americans use instead of conventional checking accounts..."

So, don't get "mugged" by your bank's prepaid card. Ask your prepaid card provider for a copy of the complete terms and conditions agreement for your prepaid card. To learn more, read the Prepaid Cards section of this blog.

The CFPB Accepts Complaints From Consumers About Money Transfers

Logo for Consumer Financial Protection Bureau If you are like most people these days, your transfer or "wire" money to people or companies. It's a fast, easy way to send money to somebody in another state or country.

Sometimes, consumers encounter problems when transferring money. The company involved performing the transfer may have made a mistake, and/or does not respond to fix the problem. Or, the resolution may be unsatisfactory. There is a new resource for consumers to help you get problems like these resolved: submit a complaint to the Consumer Financial Protection Bureau (CFPB).

The types of money transfer problmes the CFPB can help with:

  • Money was not available when promised
  • Wrong amount was charged or received (e.g., transfer amounts, fees, exchange rates, taxes, etc.)
  • Incorrect or missing disclosures or information
  • Other transaction issues (Unauthorized transaction, cancellation, refund, etc.)
  • Other service issues (Advertising or marketing, pricing, privacy, etc.)
  • Fraud or scams

This includes both domestic and international money transfers. When you send money electronically to people in other countries, these are called remittance transfers. Consumers can transfer money using banks or certain financial companies the industry calls "non-depository companies" or money transmitters.

By law, companies in the USA are required to provide consumers with a disclosure document (in English) before you pay for your remittance transfer. The disclosure document should include the exchange rate, applicable fees and taxes, and the amount of money to be delivered.There are additional protections for consumers:

"1. Consumers get 30 minutes (and sometimes more) to cancel a transfer. Consumers can get their money back if they cancel.

2. Companies must investigate if a consumer reports a problem with a transfer. For certain errors, consumers can get a refund or have the transfer re-sent without charge if the money did not arrive as promised.

3. Companies that provide remittance transfers are responsible for mistakes made by certain people who work for them.

4. The rules also contains specific provisions applicable to transfers that consumers schedule in advance and for transfers that are scheduled to recur on a regular basis."

All of these protections for consumers apply to remittance transfers that are more than $15. Learn more or submit a complaint to the CFPB about an unresolved problem you had with a financial product and service.

The CFPB Consumer Complaints Database Does What It Was Designed To Do

Logo for Consumer Financial Protection Bureau In March 2012, the Consumer Financial Protection Bureau (CFPB) began accepting complaints from consumers about bank accounts, including checking, savings, CDs, and related financial products and services. Consumers were able to submit complaints about poor customer service experiences with banks and financial institutions.

Later during 2012, the CFPB began accepting complaints about student loans, credit cards, and credit reporting. In April 2013, the CFPB began accepting complaints about money transfers. In March 2013, the CFPB expanded the database to include mortgage complaints received since December 1, 2011. This expansion also included the addition of complaints about bank accounts private student loans, and other consumer loans received since March 1, 2012.

In March 2013, the CFPB went live with its Consumer Complaints Database. Some facts about it:

  • Contains complaints submitted by more than 90,000 consumers
  • Includes 450 companies
  • Total complaints received - 131,500
  • Complaints cover bank accounts, mortgages, student loans, credit cards, and related consumer loans
  • Complaints about credit reporting (e.g., credit reports, credit reporting agencies) will be added later
  • 48% of complaints were submited through the CFPB website
  • 9% of complaints were submitted bia telephone
  • 32% of complaints were received from other rgulators and agencies
  • At February 28, 2013, the CFPB sent 109,200 complaints (83%) to companies for review and response. Companies have already responded to 104,100 (95%) of those complaints sent

A typical complaint includes:

"... he type of complaint, the date of submission, the consumer’s ZIP code, and the company that the complaint concerns. The database also includes information about the actions taken on a complaint by those companies – whether the company’s response was timely, how the company responded, and whether the consumer disputed the company’s response. A consumer’s identity and other personal information is not included in the data."

So, similar to reports provided the BBB, the CFPB also tracks the status of complaint resolutionl. The CFPB goes further and includes resolution amounts.

In its summary report, the CFPB listed complaints by financial product type:

Complaints by type received by the CFPB through March 2013

The CFPB has received 30,600 credit card complaints. The analysis of credit card complaints received by type:

Credit Card Complaint Type%
Billing Disputes 15%
Annual Percentage Rate (APR) or interest rate 10%
Identity Theft, Fraud, Embezzlement
Credit Reporting 7%
Closing, Cancel Account
Collection Practices
Late Fee
Credit Card Protection, Debt Protection
Collection Debt Dispute
Total: top 10 credit card complaint types

Of the 30,600 credit card complaints received, the CFPB has forwarded 27,700 (84%) to financial institutions for review and response, and forwarded 10% to other regulatory agencies. 5% of credit card complaints are considered incomplete, and 1% are pending. Companies have already responded to 24,800 (96%) of the complaints forwarded. The CFPB also reported:

"Since December 2011, companies have also had the option of reporting the amount of monetary relief, if any. The median amount of relief reported was approximately $125 with $25 being the most common amount of relief for the approximately 5,300 credit card complaints where companies reported relief. Consumers have disputed approximately 4,200 company responses (18%) to credit card complaints."

The types of mortgage complaints received by the CFPB:

Mortgage complaints by type received by the CFPB through March 2013

The types of bank account and service complaints received by the CFPB:

Bank account and service complaints by type received by the CFPB through March 2013

The types of student loan complaints received by the CFPB:

Student loan complaints by type received by the CFPB through March 2013

The types of consumer loan complaints received by the CFPB:

Consumer loan complaints by type received by the CFPB through March 2013

The types of credit reporting complaints received by the CFPB:

Credit reporting complaints by type received by the CFPB through March 2013

Also, BusinessWeek summed it up quite nicely the impacts of the CFPB Consumer Complaints Database upon responses by financial companies:

"Response times have sped up by 3& percent since the database came online... Steven Ramirez, CEO of data-mining consultancy Beyond the Arc, says his financial industry clients are asking him to find patterns in the CFPB data that show where they’re lagging."

Transparency and information are critical to a healthy, functioning marketplace. It helps everyone: both consumers and financial companies. It helpfs financial institutions improve their customer service, which can lower their costs by reducing account turnover and by retaining customers they'd otherwise lose.

With more information, consumers can make better informed decisions about the products and services they purchase. I like that there is now another option for consumers, besides filing a lawsuit or doing nothing. Consumers can now log complaints which the CFPB forwards to banks and financial institutions for review and resolution.

No business is ever too big to avoid responding to customer complaints. To use a sports analogy: while the playing field is still far from being level, the CFPB Consumer Complaints Database removes a lot of the tilt in the field.

Thanks to the CFPB and its staff for all of their excellent, hard work. Learn more about the CFPB Consumer Complaints Database.

Survey: Consumer Usage And Perceptions About Mobile Banking

Late last month, the Federal Reserve Board (FRB) released the results of its latest survey of mobile usage by consumers for online banking. Key findings:

  • 87% of the U.S. adult population has mobile phones
  • 52% of mobile phones are smartphones (Internet-enabled)
  • 87% of smartphone users accessed their devices to access the Internet during the past week
  • 28% of all mobile phone owners used their devices for mobile banking during the past 12 months, up from 21% in December 2011
  • 48% of smartphone owners used their devices for mobile banking during the past 12 months, up from 42% in December 2011
  • 10% of mobile phone users who don't perform mobile banking expect to do so within the next 12 months

The specific mobile banking tasks consumers said they perform:

  • 87% check account balances
  • 53% transferr money between accounts
  • 21% deposit checks
  • 24% of smartphone users made mobile payments during the past 12 months,
  • 42% made an online bill payment, down from 47% in 2011
  • 6% of smartphone users made a retail point-of-sale payment during the past 12 months, up from 1% in December 2011. 22% want to use their mobile devices for retail purchases

Perceptions about the technology:

  • 54% of mobile phone users said the primary reason they do not use their device for mobile banking is that their banking needs were already being met without the use of mobile banking. This is down from 58% in 2011
  • 38% said concerns about the security were the primary reason for not us mobile banking. This is down from 42% in 2011
  • 49% said security was the second most common reason given for not using mobile banking. This is up from 48% in 2011
  • More than a third of mobile phone users who do not use mobile payments don’t see any benefit
    from doing so, and find it easier to pay with another methods (e.g., cash, credit, debit, prepaid)

Other tasks respondents said they use their smartphones for:

  • 42% comparison shop while in retail stores
  • 32% scan a product’s barcode to find the best price for the item
  • 64% percent of those who comparison shop have changed where they purchased the product based on the information found
  • 44% browse product reviews or get product information while shopping at a retail store
  • 70% of those who browse product reviews have changed the item purchased based on the information found
  • 64% of mobile banking users checked their account balance before making a large purchase
    in the past 12 months. About half of them did not purchase an item as a result of their account balance or credit limit

Who uses mobile phones:

  • 10% are unbanked (neither they nor their spouse have a checking, savings, or money market account)
  • 10% are underbanked (have a bank account, but also use a payroll card, payday lender, check cashier, or auto title loan)
  • 59% of the unbanked have access to a mobile phone, half of which are smartphones
  • 90% of the underbanked have access to a mobile phone, 56% of which are smartphones
  • 49% of the underbanked said they used mobile banking during the past 12 months

The terms "unbanked" and "underbanked" are labels used within the banking industry. The FRB defines mobile banking as using a mobile phone to access a bank account, credit card account, or other financial bank account. So, mobile banking includes using the mobile phone's web browse, text messaging, or application features.

The reasons unbanked consumers gave for why they don't have a checking, savings, or money market account:

Why unbanked consumers don't have bank accounts

How consumers said they use the money from payday loans:

Why consumers said they use payday loans

The reasons consumers said for why they don't use mobile banking services:

Why consumers said they don't use mobile banking services

The reasons consumers said for why they don't use mobile payments:

Why consumers said they don't use mobile payments

Consumers' perceptions of the security of mobile phones and mobile banking:

Consumers' perceptions of security about mobile devices and mobile banking

Regarding mobile payments, the report found:

"Despite the increasing availability of phones equipped with near field communication (NFC) chips for use with NFC-based payment services, retailers and consumers appear to be trending toward adoption of non-NFC-based payment services. Indeed, consumers making mobile payments were nearly twice as likely to have used a mobile app or barcode to make their payment as to have made a payment by waving or tapping their phone."

How consumers with checking, savings, or money market accounts do their banking:

  • 85% of banked consumers said they had visited a branch and spoke with a teller in the past 12 months
  • 74% said they used an ATM machine
  • 74% said they used online banking
  • 34% said they used telephone banking
  • 29% said they used mobile banking

The report's authors concluded:

"The two factors limiting consumer adoption of mobile banking and payments are concerns about the security of the technology and a sense that they don’t offer any real benefits to the user over existing methods for banking or making payments. With regards to security, consumers have actually become more likely in the past year to report that they simply don’t know how safe it is to use mobile banking, suggesting that consumers need to be provided with reliable and accurate information on the level of security associated with the various means of accessing mobile banking. In terms of the value proposition to consumers, the significant number of mobile users who reported an interest in using their phones to receive discounts, coupons, and promotions or to track rewards and loyalty points suggests that tying these services to a mobile payment service would increase the attractiveness of mobile phones as a means of payment."

The FRB's Consumer Research Section sponsored the survey and developed the report. GfK (formerly Knowledge Networks), an online consumer research firm. administered the survey from November 16 to 27, 2012. Nearly 2,600 respondents ages 18 or older completed the survey. The FRB conducted its first mobile survey in December, 2011.

Download the FBR "March 2013 - Survey of Consumers' Use of Mobile Financial Services" report (Adobe PDF, 941 kbytes).

CBC Interactive Map Of Foreign Travel Advisories

I like to travel to different countries. So do many people. If you plan to travel to other countries, then you might find this resource helpful to avoid getting mugged, your identity information stolen, or worse during foreign travel.

The Canadian Broadcasting Corporation (CBC), based upon data from the Canada's Department of Foreign Affairs, produced an interactive map of travel advisories for consumers. The map highlights places to avoid and places to take extra security precautions.

In the United States, the Bureau of Consular Affairs within the State Department provides similar information with alerts and warnings for foreign travel.

9 Things Consumers Should Do About A Lost Or Stolen Tablet

Forbes recently published a fairly good article listing nine things consumers should do before and while travel to avoid having their tablet computer lost or stolen. Perhaps, you've already lost a tablet while rush during business travel. Maybe you left it in a taxi-cab or on an airplane.

hile the article was written with a focus for information technology professionals, the list of items includes good good security habits for consumers (or employees) who use a company-provided tablet or who use their personal tablet for business:

  1. Password lock your tablet, especially when traveling
  2. Use identification tags or stickers to make it easy for people, who find and want to return the tablet, to contact you (or your company)
  3. When traveling, don't pack all of your gadgets iin one bag

Follow the link above to read the entire list. These tips help ensure that after a table loss or theft, a person can't use the tablet and access any sensitive information on it.

I consider the article "fairly good" because it unnecessarily focused on a single brand of tablet computers, when it easily could have been written more broadly to be relevant to all tablet users. The list of tips are not specific to any specific tablet brand.

5 Ways Retail Stores Spy On Their Shoppers

If you haven't read it, there is a good article at Consumer Reports which lists the ways retail stores spy on consumers while shopping. Not the online stores but the physical, brick-and-mortar store locations. Some of the ways stores spy on shoppers:

  1. Spy cameras: armed with facial recognition software, these cameras record and track both your movements in the store, the items you look at, and for how long. Some stores use mannequins that contain spy cameras, to distribute cameras thought store areas. Stores often merge these recordings with data from your purchases: amount, payment method (e.g., cash, credit, debit), store sections (e.g., clothing, shoes, housewares, etc.), and items browsed (e.g., pants, dresses, cookware, etc.). Outside cameras record your auto data (e.g., license number, make, model) which is also merged with interior recordings.
  2. Smart phone tracking: retailers record the geo-location data from your phone to map/track which departments you visit, in what order, and how long you stay in each department.
  3. Interactive digital ads: many contain tiny cameras to record the shoppers that view the ads.
  4. RFID technology: merchandise with radio frequency identification tags (RFID) can trigger nearby interactive digital ads, to then serve up targeted, personal ads based on the specific merchandise you are carrying
  5. Product returns: many stores demand photo identification to process product returns. Stores claim that the reasons for this are to prevent fraud, but the data collection includes shoppers who do not commit fraud.

What is worse is that the stores do no disclose any warning to shoppers or parents, except that most states require stores to post product return policies visibly in stores.

What's your opinion of the tracking/spying?