June 7, 2007

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Report: DaimlerChrysler Opens Call Center for Spanish-Speaking Customers
Detroit News (06/05/07)

DaimlerChrysler AG plans to invest $6.5 million in a call center for DaimlerChrysler Financial Services borrowers in Mexico. The center aims to maintain Spanish-speaking borrowers' loyalty in the United States and develop customers in Mexico. Mexican borrowers hold about $2.7 billion in DaimlerChrysler Financial Services loans. Once Cerberus Capital Management LP completes its acquisition of Chrysler, however, the call center will only service Chrysler's borrowers.
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Fair Isaac Upgrading FICO Score
New Mexico Business Weekly (06/05/07) Wyant, Carissa

Fair Isaac Corp. is introducing a new FICO credit grading system, christened "FICO 08." The new system includes modifications that will eliminate authorized user credit card accounts from consideration in the FICO scoring model. Fair Isaac says this new method of scoring will help protect lenders from loan applicants who buy fraudulent credit card histories.
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Credit Unions Bank on State Data-Security Laws
Computerworld (06/04/07) Vol. 41, No. 23, P. 6; Vijayan, Jaikumar

Credit unions across the country have been pushing state legislatures to codify pieces of the Payment Card Industry (PCI) Data Security Standard into law. In California, for instance, legislators held a hearing last week on a bill that would establish new data security and breach-notification requirements for all companies that process credit and debit card transactions in the state. The legislation, which is being pushed by the California Credit Union League, would also require businesses affected by security breaches to reimburse affected banks and credit unions for the expense of notifying customers and reissuing cards. Other credit union associations' efforts to get similar legislation passed in other states have enjoyed varying levels of success. Two weeks ago, Minnesota's governor signed the Plastic Card Security Act--which is similar to the bill in California--into law. In Texas, however, efforts to get a PCI-derived bill through the state Senate before the latest legislative session ended were unsuccessful. The failure of the PCI legislation in Texas came as good news to organizations such as the Retailers Association of Massachusetts. According to Jon Hurst, president of the associations, credit unions and small banks "should be working with [bigger] banks and the card associations to fix the system, and not trying to pass laws to bring more money their way."
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Now It's Banks Versus Retailers
National Journal (06/02/07) P. 48; Swindell, Bill

The banking industry and the retail industry are battling over various electronic payment issues. In the major feud, retailers are attacking the interchange fees imposed by banks for credit card and debit purchases. The Merchants Payment Coalition, comprised of over 80 business groups, supports this push for increased credit card fee transparency. The coalition argues that the interchange fee is a "hidden tax" that affects any industry accepting credit card payments, including hospitals and governments. The bankers' coalition, the Electronic Payments Coalition, contends that merchants typically choose to participate in lucrative electronic payment programs. In return, bankers are lobbying for legislation that would force retailers to be responsible for the replacement cost of credit cards that have been canceled after a data breach. Bankers are also concerned about commercial firms, like Wal-Mart, that are attempting to own or acquire industrial loan companies (ILCs). In light of the 1999 Gramm-Leach-Bliley Act, which upheld the separation between commerce and banking, critics argue that ILCs present multiple conflicts of interest; retailers reply that ILCs are beneficial for consumers. American Financial Services Association Senior Vice President for Government Affairs Bill Himpler says, "We think there is a benefit to the overall marketplace to have a number of charters for a variety of companies to choose from in providing a more cost-effective access to capital and a lower affordable access to credit for the consumer."
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Ruling Supports Preemption
American Banker (06/01/07) P. 3; Hopkins, Cheyenne

The U.S. Court of Appeals for the 1st Circuit has ruled that gift cards issued by national banks or thrifts and sold by a third party are not subject to state consumer protection laws, such as the New Hampshire law that bars the sale of gift cards that have an expiration date and that are valued at $100 dollars or less. The federal appeals court's decision upheld a ruling by a lower court that the New Hampshire law does not apply to cards offered by retail mall developer Simon Property Group. Simon sued New Hampshire's attorney general, Kelly Ayotte, claiming that the state law did not apply to Simon's gift cards, as they were issued by Bank of America, U.S. Bancorp, and Metabank. District Judge Juan R. Torruella decided that only federal regulators, not state regulators, have the power to supervise the terms and conditions of gift cards issued by federal thrifts and national banks.
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