| |
Consumers Say They’d Buy More Online If Checkout Was Safer
There’s big money to be made by online merchants if they could just make payments easier and more secure.
That’s one of the messages from a new survey by Javelin Strategy & Research commissioned by direct carrier biller PaymentOne.
The survey found that four out of five consumers would spend more online if offered a more secure way to pay – a no-credit-card-required option that means you don’t have to disclose personal information. Shoppers said they would spend an average $89 more with such an option, which represents $109.8 billion in untapped online revenue, the survey found.
Some shoppers get all the way to checkout and then get uneasy about security. More than half of consumers surveyed said they bailed at checkout because of concerns about privacy, further evidence that online merchants are missing out on potential revenue.
It’s credit cards and debit cards that inspire the bulk of the security fears. By nearly four to one, people who responded to the survey said they thought m-payments are more secure than using their cards when shopping online.
Ninety-five percent of the 2,000 who responded have mobile phones, yet just 36 percent have used them to make a payment. The Online Payment Poll finds strong interest for using a mobile phone for payments on a wide range of items. Among consumers who have used their mobile devices for payments, nearly one in four have purchased digital entertainment; one in three bought entertainment tickets; and about one in four paid for travel and clothing.
“Consumers’ concerns around the security and privacy of online payment transactions are staring digital merchants in the face and demanding attention,” Brad Singer, executive vice president of PaymentOne said in a statement.
Here what consumers said worries them most about using a credit card to shop online:
- Concern that a merchant or website will start sending junk mail (55 percent).
- Fear that personal information will be sold to other merchants (54 percent).
- Concern that information will be intercepted (51 percent).
- Concern that unauthorized parties will access personal information stored by merchant (51 percent).
Singer said the message for sellers is clear: “The implementation of new consumer-friendly alternative payment options may well be the single most important step merchants and publishers can take to grow their customer bases and their revenues.”
This Week in Personal Finance Blogging: Say No to Holiday Debt Stress
I have a large blended family and so budgeting for the holidays always stresses me out. This year, my family grew even larger, making Christmas-time budgeting an even bigger challenge.
As I started doing the math earlier this week trying to figure how much I could afford to spend on each new in-law and infant, my heart sank. I could only afford to spend a tiny amount per person if I stuck to the budget I had set; but if I went over budget this year, what would I do next year if another niece or nephew came into the picture? What’s the etiquette for Christmas gift-giving when your already large family starts to double in size?
I could hand-make gifts again this year, I reasoned. But when I did that last year, I ended up spending multiple all-nighters painting mason jars, baking cookies and burning my fingers with a hot glue gun. And even then, the cost of all those craft supplies added up.
Feeling financially stressed and uncreative, I began scouring the Web for low-budget Christmas gift ideas and pep talks on personal finance. Here are some of my favorites from the last week:
1. Wisebread lists 31 low-budget ideas for Christmas gifts "that keep on giving."
2. GeekDad explains how to calculate exactly how much you should spend on each person by ranking them in order of importance.
3. Money Under 30 enlists followers and friends to answer the question: “What was the best inexpensive holiday gift you’ve ever received?”
5. Financial Highway shares tips on how to avoid a holiday debt hangover this year.
Reports of lost or stolen cards spike during the holidays
Do you know where your credit card is?
If you are still reeling from the Black Friday swiping frenzy, you might want to check.
A new survey says reports of lost or stolen credit and debit cards jump on average 19 percent in November and December compared to the rest of the year, according to PNC Bank, which looked at its reports of lost or stolen cards from 2008 through 2010.
It’s easy to see why it happens this time of year—you’re pulling your card in and out of your purse or wallet. There are long lines and mad scrambles. Harried clerks may forget to return them to you. Tired shoppers may not be as alert.
But lost cards can cause big problems. With credit cards, your liability if a thief charges on your card is limited under federal law to a maximum of $50. With debit cards, your liability may vary with the time it takes you to report the loss.
Also, banks may charge you to replace lost cards. Bank of America, for example, charges $5 to replace lost debit cards, with an overnight delivery costing $20. At PNC Bank, replacing a debit card will cost you $7.50 — or $25 if you want the new one fast.
Here are some ways to keep better tabs on your cards:
- Know where your cards are at all times. Don’t leave a purse or wallet – even for a minute.
- Carry only one or two cards with you to shop. If someone steals your wallet, the damage will be buffered. Never carry your Social Security card with you.
- Keep copies at home. Copy everything in your wallet front and back and store safely at home.
- Keep passwords safe. Never give your card number or passwords to anyone you don’t know over the computer or the phone.
- Don’t let anyone else use your credit or debit card. Also, never co-sign for a card that will be used by another person without your supervision.
-
Be sure to get your card back when you use it for purchases. And make sure it’s your own card and not one that looks similar. Also be sure you can see your card at all times when it’s being used for a transaction. If a clerk asks to take the card into another room, or takes too long to perform a simple transaction, be suspicious.
If your card is lost or stolen, call your bank immediately and file a report with the police and get a copy of it for your records. Change your PIN and password immediately.
Report: Our Slow Migration to EMV Is Contributing to Higher Fraud Rates
Even though the U.S. generates only 27 percent of the world’s total volume of purchases and cash, it accounts for nearly half — 47 percent — of global credit and debit card fraud, according to the Nilson Report, a trade newsletter on the payments industry.
There are two big reasons for this, David Robertson, publisher of The Nilson Report, says in a news release: lagging technology (U.S. banks have been slow to adopt newer technologies, such as EMV chip cards) and competition.
“Competition among U.S. issuers, which has resulted in the average cardholder having four credit cards in their wallet, makes any issuer reluctant to decline an authorization. The consumer will just pull out a competitor’s card,” he said.
Because banks in Europe, Latin America, the Middle East, Africa and Asia, have adopted stricter security procedures that come with computerized chips, global card fraud worldwide as a percentage of total volume actually decreased slightly last year.
The U.S. — the only developed country still primarily using credit and debit cards with magnetic stripes — is slowly moving toward EMV technology. It’s a Catch-22: Stores haven’t wanted to install terminals for smart cards because banks weren’t issuing them. Banks weren’t issuing the cards because stores wouldn’t accept them.
Visa announced in August that it would accelerate switching to EMV technology not only to beef up security but to help prepare for the coming wave of shopping by mobile phones. Visa’s plan offers financial incentives for retailers to upgrade their payment systems voluntarily while card issuers switch to the chip cards.
And Chase Card Services this week rolled out EMV chip-with-signature technology on the British Airways Visa Card. It can be used everywhere magnetic stripe cards are accepted in the U.S. and in more than 130 countries that have chip technology.
The microchip makes the card extremely difficult to copy, because the encrypted chip enables safer processing and data storage.
Naney Pandit, general manager of Chase’s card services, told the Associated Press that not having a chip-based card was becoming a hassle for customers in recent years.
”What used to be a trickle a few years ago has become a frequent point of irritation,” said Pandit.
Chase introduced two other cards with chip technology this year. The J.P. Morgan Select card has a $95 annual fee after the first year and the Palladium card, which is made of actual palladium and 23-karat gold, offers a 24-hour concierge service and perks for travelers such as unlimited airport lounge access. It has an annual fee of $595.
Survey: Shoppers admit they failed to save for the holidays
Most shoppers this holiday season plan to spend about the same amount they did last year – about $670 – and when they buy, most will be using plastic, a new survey finds.
TD Bank’s survey found 38% of consumers said they will use credit cards to pay for gifts this year, followed by 31% who will use debit cards and 28% who will use cash.
A large percentage this year will use plastic to buy more plastic: About 64 percent said they planned to buy gift cards. The choice of gift cards may reflect another finding in the survey – that the fear of the person not liking the gift is the biggest stressor of holiday shopping.
“With the majority of consumers looking to spend the same as last year, gift cards are a perfect option to keep holiday spending in check,” said Nandita Bakhshi, Executive Vice President at TD Bank, in a press release. “Giving a gift card reduces shopping stress, you spend exactly what you intend to, and are less likely to get caught up in the season and spend more money than planned.”
The bank’s survey polled 1,807 consumers within the Northeast, Mid-Atlantic, South Carolina, Florida and Washington, D.C.
Shoppers are clearly clenching their wallets this year. Only 14 percent expect to spend more this season than last. Twenty-eight percent expect to spend less and 57 percent say they plan to spend the same.
The National Retail Federation estimates U.S. holiday sales overall will increase a meager 2.8 percent this year, to $465.6 billion, compared with 2010. While that growth is way below the 5.2 percent increase retailers saw last year, it is slightly up from the 10-year average holiday sales increase of 2.6 percent.
Though economic fears seem to be keeping shoppers from binging this year, one lesson preached by consumer advocates everywhere isn’t sinking in, according to the poll results: More than two-thirds (68%) say they haven’t saved at all for the holidays. Instead, many plan to tap checking or savings accounts (46%) or use credit (22%).
But even if that’s sounding very familiar, it’s not too late to strategize to keep yourself honest this season. Consumer Reports offers the following tips for smarter shopping:
- Shop online. Some retailer websites will tell you whether an item is in stock at a particular store. Some let you purchase an item online and pick it up at a local store, which eliminates the shipping fee.
- Say yes to a store credit card and its one-time extra savings only if you’re buying something expensive and you know you can pay it off completely by the next statement.
- Shop alone. It makes for a more efficient buying excursion.
- Skip the extended warranty. Consumer Reports says years of surveying consumers have confirmed that they’re just not worth it for most electronics and household appliances. Those items usually don’t break during their warranty period, and if they do, the average cost of repair isn’t much more than the cost of an average warranty.
This Week In Personal Finance Blogging: Financial Literacy Edition
As a kid, the closest I came to learning about personal finance was playing Monopoly with my brother, who had a knack for gobbling properties and bulldozing his opponents. The lessons I learned were generally about what not to do with your money, but they’re still useful to me today: Don’t isolate yourself – you’ll sometimes need a friend to help you out or negotiate a better deal, don’t let yourself get overextended – flashing a hot and expensive property isn’t going to help you if you’re short of cash — and learn how to do the math.
As I got older and started earning more than a weekly allowance, I wished that I learned more about money at a younger age. That way, I might have avoided all the overdrafts, interest payments and late fees that I racked up as a college student and recent grad.
Apparently, Secretary of Education Arne Duncan agrees. Duncan gave a speech earlier this week arguing that schools should integrate financial literacy instruction into their curriculums, beginning as early as kindergarten, reports Financial Planning.
“I think the challenge we face now is that we don’t have a financially literate population,” argued Duncan in the speech. “As important as reading and math and social studies and science, I think today more than ever financial literacy has to be part of that. To continue to have a population that is relatively illiterate in these matters I think has real negative consequences to our democracy.”
Three cheers for that. With financial literacy in mind, here are my picks for the best personal finance posts from the last week.
The Digiterati Life lists five financial milestones that 20-somethings should try to reach before they hit 30.
Budgeting in the Fun Stuff points out that persistence is the magic key to meeting your financial goals.
Cardholders Say They’re Being Treated More Fairly, But Are Still Unsatisfied With Services
And more people made it into the credit card club this year: Only 14 percent were denied a card in 2011, as compared to 24 percent last year.
“Things are looking rosier for credit card holders,” Noreen Perrotta, Finance Editor, Consumer Reports, said in a statement. “Consumers are paying down balances and facing fewer punitive actions by credit card companies such as higher rates, late-payment fees, and canceled cards. But average interest rates on new cards are still up and you have to read the fine print of rewards programs.”
The survey found that 12 percent of Americans said their credit card companies had treated them unfairly, which was down slightly from last year’s 15 percent and quite an improvement from 22 percent in 2009. That’s the year the Credit CARD Act of 2009 kicked in and survey results indicate its protections may be working.
Included in the Act were changes that made it harder for banks to collect hefty fees and chop rewards and changes that mandated more notice on statements and better communication on what paying the minimum payment means for your balance.
Still, credit cards are in the basement when it comes to services, Consumer Reports analyzes. Only 51 percent of respondents said they were highly satisfied with their cards. Slightly more than a third of respondents said in the past year they had experienced at least one problem, such as a new annual fee, higher interest rate, lower credit limit or rewards limit.
The 2011 survey of 1,250 nationwide respondents was conducted in July by the Consumer Reports National Research Center.
If you do feel you’re being treated unfairly by your issuer, you have some options. In Consumer Reports’ survey last year, 34 percent of the people who challenged practices had at least some success in getting changes reversed.
Here are some tips in making complaints:
- Know how long you’ve been a customer with the issuer. Know your APR—what it currently is and what it was. If you know your credit score, have that handy. Research better deals.
- Call your card’s customer-service desk. Tell the person you would like to remain a customer but you have offers with much lower rates. Ask for better terms.
- If you are turned down by the first person who takes your call, politely ask to speak to a supervisor.
- Keep copies of all transactions. If you think that the card issuer is doing something unjust or illegal, you may file a complaint with the new Consumer Financial Protection Bureau.
ABA: Phishing Scams On the Rise
If you recently received a call or email claiming that your bank needs to update your account information and asking you to reveal bank card numbers or passwords, you may have been targeted by one of the recent phishing scams worming their way across the country.
The American Bankers Association is warning consumers about a sudden increase in scams where thieves use automated dialers, text messages or emails to trick people into thinking that their accounts have been closed due to fraud.
Consumers are then often directed to a look-alike website and asked to enter their card information, including expiration number and CV code on the back of the card, to reactivate their accounts.
That information is all thieves need to go on a shopping spree with your card or steal your identity.
The communications often look very official with familiar logos and colors taken from actual sites. And hackers are getting increasingly good at sending convincing messages.
Here are some ways to protect yourself:
- Do not respond to email that warns of dire consequences unless you validate your information immediately. Check with the company directly using a telephone number or Web address you know to be legitimate.
- Never give out your personal financial information in response to an unsolicited phone call, fax or email.
- Check your credit card and bank account statements regularly and look for any signs of trouble. Some thieves hope small transactions will go unnoticed. Report discrepancies immediately.
- Don’t count on traditional fraud give-aways. Some phishers are now able to forge the “https://” that you normally see when you’re on a secure Web server and concoct a legitimate-looking address. Some can even replicate the padlock that you see in the corner of your browser, that usually tells you the website is secure. Make it a habit to enter the address of any financial transaction website yourself and not depend on displayed links.
- Consider installing a Web browser tool bar to help protect you from known fraudulent websites. These toolbars match where you are going with lists of known phisher websites and will alert you. To report potential e-scams, go to the Internet Crime Complaint Center and file a report. If you receive unsolicited e-mail offers or spam, you can forward the messages to the Federal Trade Commission at spam@uce.gov.
- If you have already been a victim of such a scam and revealed financial information, assume that your data has been compromised and report it to your financial institution immediately. Some have 24-hour access.
WikiLeaks is Feeling the Sting From Card Issuers’ Refusal to Process Donations
Credit card companies have choked off donations to vigilante anti-secrecy site WikiLeaks for almost a year, and on Monday the site was forced to shut down, at least temporarily, said founder Julian Assange.
Assange said in a press conference in London Monday that WikiLeaks would stop publishing for the moment to focus on making money — saying that the blockade created by financial giants, including Visa, MasterCard, Western Union, PayPal and Bank of America, left it with no options.
Kristinn Hrafnsson, a spokesman for WikiLeaks, said in a statement that before the boycott began in late 2010, the average monthly donation to WikiLeaks was more than 100,000 Euros. Since then, Hrafnsson said, monthly contributions are between 6,000 and 7,000 Euros.
U.S.-based financial companies stopped processing contributions to WikiLeaks shortly after it began publishing more than 250,000 U.S. State Department cables from embassies to several countries last year. Cables in the release nicknamed “Cablegate” included highly classified and embarrassing information regarding the wars in Iraq and Afghanistan.
U.S. authorities have said disclosing the classified information was illegal and caused risks to individuals and national security.
Pfc. Bradley Manning, who is suspected of giving WikiLeaks much of its American material, remains in custody at Fort Leavenworth prison in Kansas on charges, including passing secrets to the enemy.
The WikiLeaks statement says that WikiLeaks must “aggressively fundraise in order to fight back against this blockade and its proponents.”
“Our scarce resources now must focus entirely on fighting this unlawful banking blockage. If this financial attack stands unchallenged, a dangerous, oppressive and undemocratic precedent will have been set, the implications of which go far beyond WikiLeaks and its works,” Assange said.
The group says the financial restrictions starved it of 95 percent of its revenue.
Credit card companies weren’t commenting Monday but issued several statements last year stating their reasons for pulling the plug, including:
- “MasterCard rules prohibit customers from directly or indirectly engaging in or facilitating any action that is illegal.”
-
"PayPal has permanently restricted the account used by WikiLeaks due to a violation of the PayPal Acceptable Use Policy, which states that our payment service cannot be used for any activities that encourage, promote, facilitate or instruct others to engage in illegal activity."
-
Visa Europe is suspending payments “pending further investigation into the nature of its business and whether it contravenes Visa operating rules.”
WikiLeaks has filed an antitrust complaint over the blockade with the European Commission and said Monday that it is starting legal proceedings against funding blocks in Iceland, Denmark, the United Kingdom, Belgium, the United States and Australia.
Bank Fees Draw Scrutiny in Washington
Outrage over the latest bank fees is inspiring calls for a federal probe and a state ban. It is also wrapped into the list of frustrations feeding Occupy Wall Street demonstrations around the country.
The actions come just weeks after Bank of America’s announcement that it would charge customers a $5 monthly fee starting next year for debit card use. Other big banks are testing debit card fees in select markets.
Last week, five House Democrats asked U.S. Attorney General Eric Holder to investigate whether American banks have illegally worked together to raise fees charged to consumers for banking services.
“Statements made by individual banks and their trade associations raise questions about whether some price increases that have occurred this year have actually been coordinated,” Rep. Peter Welch, a Vermont Democrat, wrote in a letter sent to Holder. Also signing the letter were Reps. John Conyers of Michigan, Raul Grijalva of Arizona, Keith Ellison of Minnesota and Mike Honda of California.
In the letter to Holder, Welch mentioned examples of comments that inspired the letter, including these two:
- “The only options left will be to shift these costs to consumers or cease providing debit cards,” said ABA President Frank Keating. Center for Public Integrity, May 4, 2011.
- “Free checking is going to be gone,” said Independent Community Bankers Association President Jerry C. Walker. “You can kiss that away. If you want a debit card, there are going to be (extra) fees.” TMCNet, May 8, 2011.
The legislators said they didn’t have evidence of wrongdoing and were leaving it to the Justice Department to determine whether what banks are doing is illegal.
On the state level, Democratic Rep. Jeff Clemens filed legislation Monday that would ban banks that operate in Florida from charging fees to use debit cards.
Clemens’ House Bill 375 would prohibit “certain financial institutions from charging specified fees for use or holding of debit card by consumers” and provide “administrative penalties” if a bank does decide to charge those fees. According to a press release, it would make it illegal “to charge or impose a dormancy fee, an inactivity fee or charge, or a service fee with respect to the use or holding of a debit card by a consumer.”
“The banks sold us all on the idea of a cashless society, and now that we’ve bought into their promise of free, easy access to our own money, they want to charge us for it,” Clemens said in the release. “Anyone with a sense of decency should be outraged.”
Fighting this battle is complicated because most of the big banks charging the fees are overseen by federal, rather than state, agencies including the Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency.
|
|
