Pre-paid credit cards for teens

Imagine the opportunity here. A market which spends an incredible amount of time online, with (in most cases) nothing but disposable cash which is already topped up on a card and ready to be spent online – on whatever they choose.

The card is available to 13 – 18’s, costs only $5.95 to setup and can be topped up to a maximum of $1000 spend limit.

In a way, we could look at it as prepping the next generation of consumers, acclimatizing them to the process of shopping online.The card comes with a catch (albeit a very minor one), the holder of the card needs to have an active MySpace account.

Concert tickets, clothes, iPods, pre-paid pone credit, music – all the things that teens would typically have to ask Mum and Dad to buy for them, they will now have the flexibility to buy themselves online.

It’s great that ANZ have identified this opportunity, but perhaps it would be wise to extend the offer to Facebook account holders – not just MySpace.

With two thirds of all teens using some form of social networking site, the sky’s the limit.

When you think about this new generation of shoppers, and the existing online market – do you really have a reason not to take your business online?

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Tags: business, consumers, credit cards, Google, hd, Network, Networking, Space, US

WASHINGTON – The recent indictment of Albert Gonzales, who stole 130 million credit and debit card numbers in one of the worst cases of identity theft in U.S. history, has brought to light the insecurity of debit cards, the Washington Times reports.

Debit cards, which are used more than any other type of plastic payment, are not as secure and can expose users to more losses than credit cards. For thieves, debit cards represent cash.

Some financial experts advise keeping an eye on debit card accounts or asking the bank to issue a separate ATM card. Under federal law, credit card holders are only liable for up to $50 if the card is stolen; debit card holders can be held liable for up to $500 — or for all the funds if not reported within 60 days.

“If you lose your credit card and you report it, it’s the credit-card company’s problem,” said Jay Foley, executive director of the Identity Theft Resource Center. “If you lose your debit card and you report it in the same period of time, the transactions that occur from the time the card was lost and the time you reported it are still going to land on your doorstep.”

Credit card issuers generally use software to help uncover fraud, such as monitoring unusual activity and freezing the account until the credit card holder can be contacted to okay the charges. But the debit card companies do not employ such techniques. Visa and MasterCard offer zero-liability guarantees for credit and debit in most cases. These companies also say that Internet purchases using a debit card is as safe as using a credit card.

Susan Grant, director of consumer protection for the Consumer Federation of America, is calling for more security and legal rights for debit card fraud victims. “When unauthorized debits are made, consumers are in a much more troublesome situation … because the money’s been quickly withdrawn from their account,” she said. “With an unauthorized credit-card charge, you haven’t paid it yet.”

Debit card transactions surpassed credit card usage in 2008. “Consumers are shifting from credit to debit, and that’s fairly pronounced given the credit restrictions and other actions the credit-card-issuing companies have introduced,” said Thomas Goldsmith, spokesman for the Electronic Transactions Association.

Tags: blogs, consumers, credit cards, debit cards, Google, hd, Internet, money, Software, US, visa

Last year, debit card use surpassed credit card use for the first time in history: Americans made 28.4 billion debit purchases compared with 21 billion credit card purchases, according to payment systems newsletter The Nilson Report.
It happened, industry watchers say, because of tighter credit, recession-weary and strapped consumers, wider acceptance of debit cards for small purchases, and a burgeoning youth market that prefers paying with debit cards.

The typical American household carries four credit or debit cards. Which should be in your wallet, and for what should each card be used?

Brian Riley, research director for the TowerGroup, says consumers should pick the card that’s the best fit for their specific needs: convenience, low interest, fraud protection, rewards or even as a help in taming your inner spendthrift.

First step, though: Consider cash for the purchase. Cash is the simplest transaction and comes with no strings, fees or delayed costs.

Debit card pros and cons

Some considerations when using a debit card:

•Make sure the funds are there. A $6 sandwich can wind up costing $46 if you don’t realize your checking account is flat-lining. Most merchants no longer reject a card if you have an inadequate balance; instead, you incur a hefty overdraft fee.

For example, Bank of America charges $35 for each overdraft above $5. Spokeswoman Anne Pace says fees will be capped after a consumer makes 10 overdrafts in a single day; overdrafts totaling less than $5 carry a smaller fee of $10. Wachovia charges $22 for the first overdraft in a 12-month period, then $35 for each subsequent one, says spokeswoman Richele Messick.

Messick suggests debit customers can avoid fees if they keep track of expenditures and link checking accounts to savings accounts, credit cards or lines of credit.

•A security breach could mean trouble. “I do think there are a lot of advantages to using debit cards as far as restraining spending, but there are a lot of risks of having debit card information stolen,” says Ronald Mann, a Columbia University law professor who wrote Charging Ahead: The Growth and Regulation of Payment Card Markets.

“If there’s a problem with a credit card, I simply put that card aside and use a different card until things get worked out. With debit, it’s a much more serious event,” Mann says.

Federal regulations limit liability for most consumers who are defrauded, but your debit account could be inaccessible for up to 10 business days after you report the fraud, says Gail Hillebrand, senior attorney for the non-profit Consumers Union’s West Coast office.

If your credit card is lost or stolen, you typically won’t be on the hook for more than $50. If an unauthorized user gets your card number but not your card, your liability in most cases is zilch. Both Visa and MasterCard promise “zero liability” and quick resolution for any fraud committed over their transaction networks, including debit transactions. Some merchants use other networks.

•Usage fees. Some banks and merchants charge fees of 50 cents or a $1 for debit card use at certain stores.

•Account blocks. Some merchants place blocks on debit accounts for purchases that aren’t completed immediately: hotels, vehicle rentals and gasoline purchases, for example. That could keep you from using the debit card for other purchases.

•Prepaid debit and gift cards. Look out for fees — activation fees, non-use fees, ATM withdrawal fees, retail fees and reload fees. Also, many of these cards aren’t covered by federal regulations.

What about credit cards?

The major difference between credit and debit cards — when the money actually leaves your bank — accounts for the positives and negatives. Some considerations:

•They offer free short-term borrowing. If you pay the balance in full on time, you get an interest-free loan.

•Delayed payment raises the price paid. The $6 burger that ballooned to $46 with the debit card overdraft? It could do the same — or worse — over time on a credit card if you don’t pay the balance at month’s end. High interest rates and late-payment penalties can add up.

•Charges can be denied. If you use your card to purchase something that didn’t turn out the way you had hoped, you can dispute the charge. Some credit cards even carry insurance on purchased items.

“It’s the best method for ordering online or ordering something that you can’t evaluate until you bring it home and plug it in,” says Consumers Union’s Hillebrand.

•They tempt you to buy more than you can afford. “You have the best consumer protections on the payment method that creates the most risk to your household budget,” Hillebrand says. “The biggest danger with credit is going into debt — and that’s a danger that’s highly overlooked.”

•Be careful with rewards. Some credit card companies offer rewards programs to keep customers charging — although some issuers recently instituted fees for delinquent card holders who wish to remain eligible for rewards. Hillebrand advises consumers to rethink rewards.

“The basic problem with rewards programs is that they are designed to get us to use our credit cards more than we really should,” she says. “If you’re at any risk of not being able to pay it off at the end of the month, the rewards are not worth it. And, in this economy, we’re all at risk.”

Tags: blogs, budget, business, consumers, credit cards, debit cards, Google, hd, information, money, Network, research, US, visa

Any form of identity theft is problematic. But to lift the Social Security numbers, bank statements and other personal information of people applying for food stamps, financial aid, child-care subsidies and government medical programs is despicable.

Anyone who has experienced identity theft can attest that it is highly expensive and nearly impossible to undo the damage that can occur when someone has access to one’s bank accounts or uses personal information to obtain loans or credit cards. If someone’s income is so limited that they qualify for government programs, they will face extreme difficulty unraveling such a mess.

“It’s a particularly gross crime,” said U.S. attorney for Utah Brett Tolman in announcing federal indictments against four Utahns — including a woman employed on and off in the state Department of Workforce Services, where the identity thefts allegedly occurred. The woman had access to a database containing the personal information of some 1,775 people. “Gross crime” is an understatement.

These indictments come on the heels of two other high-profile incidents of employees snooping through records. Earlier this year, officials at the U.S. State Department learned that employees had accessed the passport files of a number of powerful Americans, among them presidential candidates Hillary Clinton, Barack Obama and John McCain.

The snooping was not politically motivated but, rather, garden-variety snooping by idle employees, agency officials said. Regardless, there’s no excuse for it. People who have access to such records have a specific duty to read them for official purposes only.

But at a time when security of sensitive government records should be iron-clad, Americans learned this past week that Internal Revenue Service computers have such poor controls that disgruntled employees, agency contractors or outside hackers could steal taxpayers’ confidential information.

Taxpayers at all levels deserve far better. Any time they provide personal information to a government agency…

Tags: Computer, computers, credit cards, Hackers, information

Rumors are floating around that Microsoft is considering retail stores, like Apple’s, to showcase its products. The problem is, there’s nothing to showcase, and while Apple understands the retail store paradigm and has products to back it up, Microsoft does not.

This week, BusinessWeek in addition to analysts from Gartner have pointed out that the level of customer pain with regard to Vista has been caused by Microsoft’s inability to innovate with the monster code base of Windows. As a result, making dramatic changes to Vista are akin to rapid changes in direction of the U.S.S. Abraham Lincoln (CVN 72) aircraft carrier.

While business users are willing to endure the pain because they have an IT staff, and they’ve made a huge investment in Microsoft products, consumers have shown less willingness. For example, they’ll grudging accept a new PC with Vista installed, but off the shelf sales of Vista upgrades are abysmal. That right there speaks volumes about the prospects for Microsoft retail stores. CompuUSA’s Windows focus and subsequent bankruptcy add further insight.

Microsoft’s estimation of the retail market appears to be influenced by Apple’s success, and the thinking may be, “Hey, if Apple can do it, so can we.”

The problem with that is that thinking is that it completely ignores the fundamentals of the retail business, what turns customers on, what drives them into stores, what makes them pull out their credit cards and what they expect from the retail buying experience. In order to do that, one first has to have products that are easy to support, easy to use, and for which customers lust. Apple’s product design and philosophy naturally leads to retail; Microsoft’s does not.

There just isn’t any analog to Apple products on the Windows side. Customers love cool toys and hardware as evidenced by Apple’s enormous Christmas holiday…

Tags: Apple, business, consumers, credit cards, Hardware, microsoft