Cell phone firms eye new anti-fraud rules

Domestic cell phone companies, including the nation's [Japan's] three leading firms, will voluntarily introduce new rules to prevent so-called remittance fraud using cell phones, such as only allowing up to five lines per customer, it was learned Wednesday.

Police will cooperate by, for instance, responding to inquiries from cell phone retailers requesting information about driver's licenses to prevent the use of forged licenses.

At present, driver's licenses are used for about 70 percent of identifications when customers concluding cell phone contracts at shop counters need to prove who they are.

The new voluntary rules will be enforced as soon as NTT Docomo Inc., SoftBank Mobile Corp. and KDDI Corp. and others are ready to implement the regulations. The exact timing for the new scheme is being coordinated among concerned parties, sources said.

The total costs incurred by remittance fraud cases has topped 100 billion yen over the past four years, with some victims driven to suicide.

In one particularly common style of remittance fraud, a con man concludes several dozen contracts under one name using a forged driver's license. He and his accomplices then concoct stories and begin calling people to try to persuade them to send money.

In response to the problem, the Liberal Democratic Party established a task force on combatting remittance fraud, headed by House of Representatives member Isshu Sugawara, which reached a basic agreement on the rules with cell phone firms and the National Police Agency.

According to the agreement, the number of cell phone lines that can be held under one person's name will be limited to five, the sources said.

In addition, when cell phone firms judge it will be necessary to confirm the identities of clients when concluding contracts with them, they will ask police to confirm the authenticity of the customers' licenses.

If a customer refuses to submit to the policy inquiry, firms will decline a contract, and will contact police if they become suspicious about a customer, the sources added.

Cell phone firms eye new anti-fraud rules : National : DAILY YOMIURI ONLINE (The Daily Yomiuri)

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Remittances stay resilient

By Maricel E. Burgonio, Reporter

MONEY sent home by overseas Filipino workers (OFWs) rose significantly in the first five months of the year due to steady growth of deployed workers, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.

In a statement, BSP Governor Amando Tetangco Jr. said total remittances grew 14.7 percent year on-year to $6.8 billion in the five-month period. In May alone, remittances rose 15.6 percent year on year to $1.4 billion.

The bulk of remittances continued to emanate from the US, Saudi Arabia, Canada, the United Kingdom, Italy, the United Arab Emirates, Singapore, Japan and Hong Kong.

“Behind the continued expansion in remittances for the period was the steady growth in the number of deployed Filipino workers and enhanced financial services offered by the banks to overseas Filipinos,” Tetangco said.

Preliminary data from the Philippine Overseas Employment Administration showed that the number of deployed Filipino workers worldwide jumped by 39.5 percent to 533,945 for the first five months of the year.

Tetangco said this reflected the distinct preference for the skills, quality and competence of Filipino workers.

More jobs were available to qualified Filipinos particularly from current expansion of a giant oil processing complex in the Middle East to service the rising global demand for crude.

Meanwhile, banks and non-bank remittance centers have been aggressive in expanding financial services to OFWs and their beneficiaries.

Tetangco said the establishment of more remittance centers, correspondent banks, and branches or representative offices abroad, together with the existing tie-ups with foreign financial counterparts, is expected to further facilitate the flow of remittances.

Click here to read entire article: The Manila Times Internet Edition | BUSINESS > OFW remittances stay resilient

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Fed Accepting Comments On Proposed Credit Card Rules

More reasons we at IPM see banked and unbanked people moving to more pre-paid, stored value card and electronic transaction products.

Article follows:

Hat Tip: Mish's Global Economic Trend Analysis

The Fed has proposed sweeping changes for the credit card industry and is now accepting comments. MarketWatch sounded the horn in Your own bully pulpit.

"The Federal Reserve is accepting comments through Aug. 4 on credit-card reform rules it proposed in May. (The deadline for comments regarding related proposals, mainly to do with credit-card disclosures, is sooner: July 18.)

Already, more than 9,300 people have commented on the sweeping set of proposed changes that, among other things, would prohibit credit-card companies in some instances from hitting you with a higher interest rate on debt you've already incurred.

The proposed rules also would prohibit "two-cycle billing," in which banks compute interest on debt on days preceding the most recent billing cycle, a practice that can result in borrowers paying interest on debt paid off during the previous month's grace period."

Mish's Comment: Discover Card uses the two cycle billing method. For more on two cycle billing, please see Read the Fine Print On Credit Cards.

"Credit industry disagrees

Credit-card issuers say the proposed rules are bad news for consumers.
"We are deeply concerned that these rules will result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards," said Edward Yingling, president and chief executive of the American Bankers Association, a Washington-based trade group, in a statement released soon after the Fed's proposal."

Mish's Comment: The credit card companies do not give a damn about consumers. Here is a better translation of their concerns: "We are deeply concerned that these rules will result in fewer fees, less revenue, and less profit for the industry."

"And the Fed rules don't really address fees. That's where Congress may step in. A veritable feast of pro-consumer bills has been introduced over the past year or so.

In February, Rep. Carolyn Maloney, D-N.Y., introduced H.R. 5244, a bill that, among other things, would end "universal default" -- when a credit-card issuer raises a consumer's interest rate based on late payments to other, unrelated creditors. The bill would also prohibit "any time, any reason" changes in credit-card terms, with certain exceptions.

Sen. Chris Dodd, D-Conn., recently outlined a bill he intends to introduce with similar provisions to Maloney's, such as requiring banks mail statements 21 days before the bill is due rather than the current 14, according to Dodd's statement.

In May 2007, Sen. Carl Levin, D-Mich., introduced S. 1395, which proposes a cap on "penalty" interest-rate hikes to no more than seven percentage points above the previous interest rate. The bill would also prohibit charging interest on fees, among other provisions.

Sen. Robert Menendez, D-N.J., introduced S. 2753 in March. Like Dodd's proposal, the bill limits the ways in which banks offer credit to people under age 21. Also, it would prevent late-payment fees on any payment postmarked by the payment date, among other changes."

Reform Is Coming

Credit card reform as well as a potential rewrite of the bankruptcy reform act of 2005 are very likely under the next Congress. Please see Bank of America's Parking Meter Play for more discussion of this theme.

Mish's Global Economic Trend Analysis: Fed Accepting Comments On Proposed Credit Card Rules

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Money is just an SMS away

This is a service that will soon be available through IPM for remittance transactions from U.S. to Mexico and beyond.

Article follows:

By JO TIM BUONG

INDONESIANS sending money home do not need to stand in line anymore because they can now do it with their mobile phones.

Local mobile content company, Com2U Sdn Bhd recently launched moneyMe, an operator-independent mobile remittance service, to immediately and securely transfer money within Malaysia and Indonesia via SMS.

The service currently allows Maxis and DiGi mobile subscribers to transfer money between Malaysia and Indonesia.

Com2u plans to make the service available to Celcom subscribers next month.

Currently, most fund transfers to Indonesia are done manually at banks and results are not instantaneous, Com2U said.

Com2u decided to launch its service in Indonesia based on the huge number of its workers earning a living in Malaysia. It estimates that about 66% of foreign workers in Malaysia are from Indonesia.

“Most of them come from ‘under-banked’ areas and the beneficiaries live in those under-banked areas,” said Tan Sri Ahmad Mohd Don, Com2u chairman.

Ahmad added that every family in those under-banked areas would have at least one mobile phone that is shared among its members.

This he said, makes mobile remittance a perfect service for them.Com2U has also established a strategic partnership with PT Ebays, an authorised marketing distributor of Duit Pos Multiguna Service in Indonesia to allow beneficiaries to withdraw funds at Pos Indonesia outlets with the Wesel Pos Instant Service, a remittance service found in Indonesian post offices.

“It’s as easy as reloading your mobile airtime credit,” said Eugene Loke, Com2U chief executive officer told In.Tech after launching the service last week.Registration and subscription via SMS to the service is free. After registering, users can go to any outlet with e-pay facilities to load the desired amount to their moneyMe mobile wallet.

E-pay facilities can be found at numerous bookstores, convenient stores and restaurants nationwide.Subscribers are allowed to transfer up to RM50,000 a day and are charged a processing fee from as low as RM9.

The beneficiary will be notified with a text message identifying the amount and sender of the funds and it can be cashed at any Pos Indonesia agents.

MoneyMe’s functionality is guarded by a Personal Identification Number (PIN) and a subscriber’s account details are not stored on the phone.

“They can call moneyMe customer service to freeze the account if they lose their mobile phones,” Loke explained.

Com2u said it will be expanding its moneyMe service to banks in Indonesia to make it even more convenient for beneficiaries to claim their funds.

The company said it also plans to expand the service to other countries in South-East Asia but did not elaborate further.

Money is just an SMS away

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Hackers steal $2M from Citi ATMs

Citibank ATM breach reveals PIN security problems - Jul. 2, 2008

SAN JOSE, Calif. (AP) -- Hackers broke into Citibank's network of ATMs inside 7-Eleven stores and stole customers' PIN codes, according to recent court filings that revealed a disturbing security hole in the most sensitive part of a banking record.

The scam netted the alleged identity thieves millions of dollars. But more importantly for consumers, it indicates criminals were able to access PINs - the numeric passwords that theoretically are among the most closely guarded elements of banking transactions - by attacking the back-end computers responsible for approving the cash withdrawals.

The case against three people in U.S. District Court for the Southern District of New York highlights a significant problem.

Hackers are targeting the ATM system's infrastructure, which is increasingly built on Microsoft Corp.'s (MSFT, Fortune 500) Windows operating system and allows machines to be remotely diagnosed and repaired over the Internet. And despite industry standards that call for protecting PINs with strong encryption - which means encoding them to cloak them to outsiders - some ATM operators apparently aren't properly doing that. The PINs seem to be leaking while in transit between the automated teller machines and the computers that process the transactions.

"PINs were supposed be sacrosanct - what this shows is that PINs aren't always encrypted like they're supposed to be," said Avivah Litan, a security analyst with the Gartner research firm. "The banks need much better fraud detection systems and much better authentication."

It's unclear how many Citibank customers were affected by the breach, which extended at least from October 2007 to March of this year and was first reported by technology news Web site Wired.com. The bank has nearly 5,700 Citibank-branded ATMs inside 7-Eleven Inc. stores throughout the United States, but it doesn't own or operate any of them.

That responsibility falls on two companies: Houston-based Cardtronics Inc. (CATM), which owns all the machines but only operates some, and Brookfield, Wis.-based Fiserv Inc. (FISV, Fortune 500), which operates the others.

A critical issue in the investigation is how the hackers infiltrated the system, a question that still hasn't been answered publicly.

All that's known is they broke into the ATM network through a server at a third-party processor, which means they probably didn't have to touch the ATMs at all to pull off the heist.

They could have gained administrative access to the machines - which means they had carte blanche to grab information - through a flaw in the network or by figuring out those computers' passwords. Or it's possible they installed a piece of malicious software on a banking server to capture unencrypted PINs as they passed through.

What that means for consumers is that their PINs were stolen from machines that showed no signs of tampering they could detect. In previous PIN thefts, thieves generally took steps that might draw notice - sending "phishing" e-mails, for example, or installing false-front keypads or even tiny cameras on ATMs.

Getting the PINs is a key step for identity thieves. It lets criminals encode stolen account information onto blank ATM cards and withdraw piles of cash from compromised accounts.

Click here to read entire article: Citibank ATM breach reveals PIN security problems - Jul. 2, 2008

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Credit Card Issuers Face Bigger Losses Than Expected

Hat Tip: Mish's Global Economic Trend Analysis

We at IPM think this is a positive development for our stored value pre-paid card market. As the credit card market continues to drop, the demand will continue to increase for stored value cards as a way to conduct electronic monetary transactions.

The stored value pre-paid will continue to expand in the unbanked and banked markets.

Article from CNNMoney.com follows:

Dow Jones Newswire

June 27, 2008: 10:54 AM EST
By Aparajita Saha-Bubna and Marshall Eckblad

Investors sold on plastic may want to reduce their balances.

Credit card issuers - ranging from standalone companies such as Discover Financial Services (DFS) and American Express Co. (AXP) to those at banks like Washington Mutual Inc. (WM) and Citigroup Inc. (C) - are likely to suffer worse losses in the coming quarters than initially expected.

Hit by the double-whammy of a growing reliance on credit cards by cash- strapped borrowers and a worsening economic downturn, issuers' earnings should be dented by deeper loss reserves and higher defaults.

New credit card data from Fitch Ratings indicate that losses are hovering around or have exceeded five-year averages and issuers have increased their loss expectations or withdrawn guidance in the face of rising unemployment, record- high gas prices and a housing slump that has yet to bottom.

"The deterioration in credit cards is accelerating faster than many had expected," said Christopher Wolfe, an analyst at Fitch and one of the authors of the report published Friday. "The message we are trying to deliver is that things are going to get worse before they get better. Thus far, credit card businesses have been profitable but that could change.

Click here to read entire article: Credit Card Issuers Face Bigger Losses Than Expected

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Fed Looking To Bend Rules To Aid Banks

Hat Tip: Mish's Global Economic Trend Analysis

CNBC is reporting Fed May Ease Rules on Private Equity Bank Stakes.

The U.S. Federal Reserve is considering steps to make it easier for private-equity firms and others to invest in banks, the Wall Street Journal reported on Thursday, a move that could open the door to more capital for cash-starved banks.

Fed officials recently have met with big buyout firms, including J.C. Flowers, Carlyle Group, Kohlberg Kravis Roberts and Warburg Pincus, and banking lawyers to discuss the obstacles, according to people familiar with the matter. Under federal law, to own more than 24.9 percent of a bank, an entity must register as a bank holding company, which is subject to heavy regulation and can be forced to serve as a "source of strength" for the bank, the Journal said.

Ownership of more than 9.9 percent of a bank also subjects the entity to regulatory scrutiny to ensure that it isn't controlling—or even influencing—the bank's operations.

The Fed can't change those laws, but it has room to maneuver in how it interprets them. This announcement today is not unexpected. It is in strict accordance with the Fed Uncertainty Principle.

Uncertainty Principle Corollary Number Four: The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it's easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking.

When it comes to new rules or bending the rules, if the Fed does not like an interpretation, it will simply make the one it wants. The key point now,however, is the Fed feels a personal need to intervene directly in the markets to help line up sources for capital.

If the worst was over as Bernanke suggested (See Things That Have Not Yet Happened) then why is there a need for these kind of actions?

Have the Sovereign Wealth Funds in Singapore, China, etc. had enough? It's looking more like that every day. Yet the writeoffs continue.

Click here to read entire post: Mish's Global Economic Trend Analysis: Fed Looking To Bend Rules To Aid Banks

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