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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.”
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"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."
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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.
New Law Helps Protect Foster Children From ID Theft
Foster children, who face higher rates of identity theft than other children or adults, will get help from a new federal law aimed at resolving credit issues before the children enter adulthood.
The legislation addresses a common scenario: Foster children age out of the system, usually at age 18, and find that when they try to get a credit card, rent an apartment, get a job or a student loan, their credit has been ruined by someone using their Social Security number.
By the time they find out, they are often left to navigate the system alone, to clear their records without the safety net of family support.
A provision in the law, co-sponsored by Reps. Jim Langevin, (D-R.I.) and Pete Stark (D-Calif.), requires child welfare officials to help resolve cases of identity theft so foster children can start building their lives with a clean slate.
Foster children are often a target for ID thieves. Robert Fellmeth, director of the Children’s Advocacy Institute, estimates the number affected at about 30 percent.
They are too young to take out loans or get a credit card, so they have clean Social Security numbers, which are very attractive to thieves. They also may be victimized by their original families. Some family members see these unused numbers as a way to start new credit to pay the bills. Also, because foster children often move from place to place, the number of adults who have access to their personal information is multiplied.
Children in general are at risk for ID theft. A study released earlier this year found that when Carnegie Mellon researchers scanned more than 40,000 children’s identity records, they found 10 percent of them tainted by Social Security numbers that were being used by at least one other person.
The problem is so prevalent that the Dept. of Justice and the Federal Trade Commission held an open forum this summer where representatives of government agencies, businesses, nonprofits, legal service providers and victim advocates discussed strategies for preventing and resolving child identity theft, with an emphasis on foster care and identity theft within families.
The new law calls for:
- Ensuring that youths transitioning out of care have basic documents and tools for achieving independence.
- Requiring that foster care agencies review the credit reports of foster children by age 16 and take action to clear them if there is an inaccuracy prior to the foster child leaving care.
- Ending the use of a child’s Social Security number as an identifier.
Langevin gathered Tuesday, Oct. 11 with foster children advocates in Providence, R.I., to celebrate passage of the legislation. He says he wants to eventually expand the law to require credit checks for all foster children.
Survey: Bankers Expect Delinquencies to Rise
After a stretch of growing optimism in late 2010 and early 2011, FICO’s latest quarterly survey of bankers shows grim projections for delinquencies on credit card payments, consumer loans such as car and student loans, and housing prices.
The survey, conducted for FICO by the Professional Risk Managers’ International Association (PRMIA), asked bank risk managers to look six months out. Apparently they don’t like what they see.
Auto lending had been one patch of good news in FICO’s previous quarterly reports, but by the end of September, 30 percent of respondents said that they expect auto delinquencies to rise, while 21 percent expected them to fall.
For credit cards, 40 percent expected delinquencies to rise and 23 percent expected them to fall. That 23 percent is down from the 36 percent in the first quarter of this year who expected credit card delinquencies to fall. As for student loans, 48 percent of respondents expected delinquencies to rise and 13 percent expected them to fall.
The news was mixed regarding consumers’ debt payment strategies. About 45 percent said consumers were more likely today than in the past to pay off their credit card bills before other bills; 29.8% disagreed with that assessment.
Some of the darkest projections came in the housing forecast. When asked if housing prices nationally would rebound to 2007 levels before 2020, 49 percent of respondents said no and 21 percent said yes. Beyond the property values, bankers were skeptical that people could keep up with payments.
Among those surveyed, 73 percent said mortgage defaults would stay high for at least five more years; 46 percent expected mortgage delinquencies to increase over the next six months and only 15 percent said they would decline.
“Housing has been an enormous drag on the economy for over three years as U.S. households lost trillions of dollars in equity,” Andrew Jennings, chief analytics officer at FICO and head of FICO Labs said in a news release. “While the housing sector will almost certainly gain strength during the next nine years, many bankers clearly believe prices will remain depressed for half a generation. This puts the devastation of the housing crash into perspective.”
FICO CEO Mark Greene said in an interview with The Daily Ticker that at the same time these numbers are emerging, banks are tightening their lending standards. “At the very moment they’re worried about consumers’ health going forward, they’re also pulling back on the amount of credit available to consumers — particularly in the mortgage space –when so many people are attracted to low interest rates and they want to refinance. They actually can’t qualify.”
Three big areas are at the heart of analysts’ concern—consumer confidence, jobs and housing. “If we can solve any part of that” we may pull out of this, Greene says.
This Week in Personal Finance Blogging: Breaking Up Is Hard to Do
I was 18 when I opened my first Bank of America checking account, and I still have the same decade-old photograph on my Bank of America debit card.
I remember driving to my local bank in downtown Mission, Texas, after school and shyly asking to see a customer service representative about opening my first-ever checking account.
After they filled out my paperwork, took my photo and shuffled me out the door with a bulging envelope in my hands, I sat in my car for several minutes staring at my temporary debit card. I felt grown up and proud of my new piece of blue and gold plastic – and I haven’t moved my checking account since.
But yesterday, I heard a startling rumor about the bank I’ve stayed loyal to for so many years. Bank of America wants to charge me $5 every month I use my debit card for purchases. That adds up to an annual fee of $60 – just for the privilege of using a card rather than cash or a check to pay for items out of my checking account.
I can think of a lot of things I’d rather spend $60 a year on – especially when I’m not getting anything back for that 60 bucks. At least most credit cards that charge an annual fee give you rewards points in return … and even then, it takes some serious spending and planning to make that annual fee worth it.
As soon as I heard about Bank of America’s announcement, I started brainstorming banks – or, more likely, credit unions — I could move my cash to.
I feel a little guilty about it. It’s hard to say goodbye when you’ve been through so much together. After all, that Bank of America debit card has followed me from the dusty South Texas town I graduated high school from to North Carolina, New York and Washington, DC. It stood by me when I overdrafted it far too many times in college and helped me budget my way out of credit card debt in those first few expensive years as a recent grad.
I’ll also miss the convenient access to fee-free ATMs wherever I go and the comforting familiarity of a card that’s looked mostly the same for years. But I can’t justify paying $60 a year just so my bank can make up for “profit losses” from the Durbin Amendment’s soon-to-be-implemented cap on debit card swipe fees.
Unfortunately, Bank of America’s not the only bank testing debit card fees – and, as The Simple Dollar points out, more banks are sure to follow. The Simple Dollar thinks I should wait it out before I jump ship and see which other banks decide to tack on fees. It’s good advice, but hard to follow. I feel like Bank of America and I just had a fight and, in the heat of the moment, I’m ready to break up.
To put myself in a brighter mood and free my mind from the monthly fee I’d prefer not to pay, I scoured the personal finance blogosphere for motivating posts on personal and financial growth. Here are seven of my favorites from the last week:
2. Give Me Back My Five Bucks shares 10 financial commandments for 20-somethings. Commandment No. 1: Plan ahead.
3. Budgeting in the Fun Stuff reminds officer workers everywhere to remember who you are outside the cubicle and do what you can to minimize the health risks of spending all day in your chair.
4. Well Heeled Blog ponders a question every 20- and 30-something starts to ask after attending their umpteenth wedding of the year: How much do you really have to spend on wedding gifts?
5. Money Reasons shares how he learned to master time and squeeze more value from each hour.
My favorite quote from Cordelia’s post: “We don’t get anywhere if we don’t nudge ourselves beyond the ‘easy’ point. Not just nudge, but keep nudging. Because a muscle will eventually atrophy if you stop exercising it. And you don’t want to atrophy. You want to grow, baby, grow … “
New: Merchant-Friendly Daily Deals
Within weeks, loyalty program provider Affinity Solutions, in conjunction with Sovereign Bank, will test daily deals similar to those offered by Groupon or Living Social, but with a merchant-centric twist.
Traditionally, consumers sign up for daily deals by opening an account online and they get a daily deal offer via email based on the city they live in.
The new incarnation, called Spot ON Deals, will allow merchants, through Affinity’s analytics, to target particular consumers with offers based on what they know from the data about consumer spending trends.
“Today’s daily deals programs more often than not attract bargain hunters; they don’t encourage repeat business, and they don’t allow merchants to meaningfully track results," said Jonathan Silver, President and CEO of Affinity Solutions in a press release.
Spot ON Deals will enable merchants to track the effectiveness of their offers and use information on how the offers are being used and by whom to send follow-up offers to encourage repeat business.
The program initially will be rolled out only to Sovereign customers. Consumers who choose to receive the service, which starts Oct. 18, will get three Spot ON Deals a week through email, according to Affinity. They will also be promoted through a consumer’s online banking experience.
Consumers can also download an app that will integrate Spot ON Deals with Google search results. After a consumer redeems an offer for a particular deal, marketers can set up a bounce-back email that presents the consumer with a new offer.
Marketers will be able to view redemption and sales metrics, as well as how many times a consumer purchased from the location or store after the initial offer was redeemed. That addresses a complaint by merchants who have offered these deals only to find that customers often use them as a one-time bargain.
Analytics can segment a consumer’s shopping behavior into categories, such as clothing, travel, restaurants and groceries.
Spot ON Deals is one of the latest players in a fast-growing field. Research firm BIA/Kelsey reports the daily deals industry in the U.S. is growing so quickly that it has revised its March 2011 forecast, which measures daily deals, flash sales and instant deals.
The revised report projects that consumer spending on deals will grow from last year’s $873 million to $4.2 billion by 2015 (a 36.7 percent compound annual growth rate). This is up from their March estimate of $3.9 billion for 2015.
This Week in Personal Finance Blogging: Don’t Forget the Details
It’s easy to talk the talk and say you’re going to pursue a long-term financial goal, such as ‘reshape your budget’ or ‘become debt-free for good.’ However, if you’re like me, chronic procrastination – and a tendency to favor the big picture over the mundane — can easily derail you.
Lately, my grand plans for deliberately increasing my credit score so I can qualify for a low-rate car loan in a year or two have been in long-term limbo while I scramble to keep up with all my other daily tasks and plans.
For example, I’ve been planning since August to ask for a credit limit increase on my credit card so I can bump up the amount of credit I have available and improve my credit utilization rate (which measures how much of your available credit you’re actually using). However, it took me more than three weeks to actually pick up the phone and call my issuer to ask for it.
Luckily, asking for a credit limit increase is fast and simple – especially if you only ask for a small amount. (For example, to increase the limit on my Bank of America card, I just filled out a short form online and then followed up with a five-minute phone call to a customer representative.)
However, to do a credit limit increase right, without dinging your credit score, you’ve got to periodically ask for small amounts every six months or so and ask the customer service representative to increase your credit limit without making a hard inquiry on your credit report (which will negatively impact your score).
It sounds easy enough, but following through on simple but periodic tasks like that can be hard to do when life gets busy (just ask anyone who’s lost money because they forgot to turn in a rebate).
That’s the less-than-fun part about financial goal-setting. Many of the steps you need to take to meet big financial goals, such as saving for retirement or sticking to a budget, are relatively easy. However, they take careful planning and mundane detail work to do right.
Looking for a little commiseration, I scoured the personal finance blogosphere for some posts on the detail work we all have to do to meet our financial goals. Here are some of my favorites from the last week:
1. Always the Planner rebels against the time-sucking tedium of tracking your spending and decides to give her budget some much-needed breathing room.
2. In a guest post on zenhabits, Man Vs. Debt takes the opposite approach and extols the consciousness-raising virtues of detail work. Automating money tasks, such as tracking spending, buries the problem, he argues, rather than helps solve it.
3. Budgets are $exy reflects on why it’s so difficult for many people to get around to making returns and shares some tips on how to successfully return items you don’t want or need.
4. Well Heeled Blog shares some money-saving tips on how to successfully ask for a price adjustment with a simple email or phone call.
5. FreefromBroke pans money-gobbling rebates, which far too many of us forget to redeem, and gives some tips on how to make sure you get the money owed to you.
6. 8 Women Dream reflects on the costs and value-driven causes of procrastination.
How to Protect Yourself from Credit Card Skimming
Before you stick a credit or debit card into a gas-pump slot, an ATM or another unattended reader, it might pay to look for signs of tampering from skimming.
Skimming is the crime of capturing information stored on a magnetic stripe by tampering with the hardware or software of card reading devices, and it can happen in several ways.
It could be a device stuck inside the actual reader; it could be a fake reader installed over the real reader; or a camera set up near the slot to record the information; or someone using wireless technology to intercept signals that some gas stations use to transmit card data from pumps to computers. It could even be a corrupt employee in a bar or restaurant who may use an illegal reader and sell the information to thieves.
The criminals download the information and often encode it to a blank card, which they can then use to pull money from the victim’s account.
NACS, an international trade association for retailers and suppliers, offers one way to help gas stations detect the fraud. NACS has developed a WeCare security label to be used on fuel dispensers near the credit/debit card transaction area. If the label is lifted to insert a skimming device, a “void” message alerts customers and store employees.
But detection relies mostly on consumer awareness and sharp attention. Experts offer these tips to help protect yourself:
- Avoid using ATMs in poorly lit or low-trafficked areas. Experts often recommend choosing an ATM inside a bank over standalone ATMs. Look for new or suspiciously placed cameras and unusual signage.
- Pay inside a gas station where you can deal with a person and sign for the transaction.
- Pay attention to what the card reader and keypad normally look like on the ATMs you use most frequently.
- Don’t use an ATM if the card reader appears to be added on, fits poorly or is loose. Look for glue marks or residue around the reader.
- When entering your PIN, cover the keypad with your other hand to hide information from any cameras. Also, periodically change your PIN.
- Don’t let a store employee walk away with your credit card to swipe it if you can help it.
- Monitor your statements and keep a close eye out for suspicious charges. Through your financial institution, you can also sign up for alerts that will notify you when certain types of transactions occur.
- Report any fraudulent activity to your bank as soon as you discover it. Consumer protections for debit and credit cards vary, but depend largely on when the fraudulent activity is reported.
Two New Credit Cards Combine Security with Convenience
Two new developments in the payment card industry play up twin selling points of paying with plastic — convenience and safety — with unusual twists.
One is Fifth Third Bank’s Duo card, which offers a first-of-its-kind combined credit and debit function on one card. Customers can make purchases using either a line of credit or funds in their checking account.
To draw funds from their checking account, cardholders choose “debit” at the point of sale and enter a PIN, or they can take money from their checking account at an ATM. (One caveat: If there’s no option to enter a PIN, Duo functions like a credit card.) When they want to use the card more like a traditional credit card, consumers choose “credit” at the point of sale and sign.
The Duo card’s transactions that require a signature are not directly tied to the customer’s checking account, unlike traditional debit cards, so the customer’s cash is not up for grabs in case the card is stolen or compromised. Cardholders receive separate monthly statements for the two accounts. Each signature or credit purchase is also covered by MasterCard core benefits, including MasterCard’s Zero Liability Protection.
The bank advertises that there is no annual fee and that the credit card also earns two reward points for every dollar spent on the credit card in gas, grocery and discount store purchases, and one point for every dollar spent on all other credit purchases.
Another innovation being tested with a very limited distribution is Diebold Inc.’s Card Lock, which allows an ATM or debit card holder to send a “lock” text command with a mobile phone to quickly prevent a lost, stolen or misplaced card from being used.
The user could keep the card in lock mode most of the time and turn it on only when making a purchase, or switch it off only when he or she can’t locate it. If you find the card, you can text “unlock” to access it again.
The new service, an add-on feature for Diebold’s mobile banking solution, is being tested at the Diebold Federal Credit Union, the credit union for the company’s own employees, Diebold spokeswoman Rebekah Boyd says. The feature would have to be implemented by the participating financial institution and will currently work only on ATM/debit cards. Boyd says the company will be bringing the service to market later this year.
The Card Lock function mirrors what mobile wallets are expected to do when phones function as payment devices. Several companies developing mobile wallets include a feature to lock them with a PIN or a password. Diebold’s Card Lock would work with all copies of the card with the same card number, Boyd says.
Locking features appeal to consumers who want to take back more control over their account safety as personal information is able to be accessed by consumers — but also by hackers — in ever increasing ways.
Savvy Consumers Successfully Dodge Banking Fees
With all the buzz lately about banks tacking fees on to previously off-limit areas, such as debit card swipes, to help make up what they’re losing in financial reform, it may be surprising to learn that 71 percent of all bank customers are managing to avoid fees altogether.
That’s what consumers said in a new survey by the American Bankers Association that also reports 82 percent of consumers spend $3 or less in monthly bank fees.
The numbers show “that consumers are savvy and able to navigate the new banking landscape with skill,” Nessa Feddis, ABA vice president and senior counsel said in a press release. “Often, avoiding bank fees can be as simple as maintaining a minimum balance or accepting a paycheck by direct deposit.”
When asked how much they spent for banking services each month, such as checking account maintenance and ATM access, consumers gave these responses:
- 71 percent said they pay nothing.
- 11 percent said $3 or less.
- 6 percent said $4 to $6.
- 4 percent said $7 to $9.
- 7 percent said they pay $10 or more.
The annual survey of more than 2,000 U.S. adults was conducted for ABA Aug. 12-14.
So if you’re asking yourself why you’re not in the 71 percent club, here are some ways that associations, watchdog agencies and consumer groups say you can buck the fees:
- Look for free checking and savings accounts. Most banks offer these for free, though the numbers among the largest banks are steadily dropping. You may have to keep a minimum balance or have an automatically deposited paycheck to avoid the fee.
- Use your own bank’s ATMs. Try to use only those associated with your bank. Otherwise, you can be charged up to $3 each time you swipe.
- Avoid overdrafts. Ask for automatic alerts when your balance gets low. Keep good track of what’s in each account.
- Go paperless. You can save money and help the environment by getting statements online.
- Watch for foreign transaction fees. When you travel, beware of these fees, in addition to currency conversion fees. Make sure you know what you will be charged for credit card and debit card transactions.
- Think small. Many smaller community banks, credit unions and online banks offer free checking without strings attached.
- Play the loyalty card. If you’re a longtime trouble-free customer, plead your case to the bank in person and ask to have the fee waived. Be prepared to walk if they say they can’t do anything for you. Stiff competition works in your favor here.
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