The CARD Act’s August 22 regulatory deadline is fast approaching, forcing financial institutions who issue gift cards to evaluate their plastic inventory.
 
Because a significant amount of new cards are currently being manufactured and ordered to meet the new regulations, FIs are encouraged to act quickly, as delays are likely.
 
A few other things to keep in mind as we approach a post-August 22 climate:
 
• A pre-sale disclosure must be visibly displayed at the gift card point-of-sale.
• August 21 is the last day to sell existing card stock.
• Non-compliant card stock must be physically destroyed (don’t forget to also remove card account numbers from relevant software applications). 
• All marketing materials and collateral need to be updated to be in compliance.
 
If you have questions about compliance or regulatory issues with regard to prepaid or any other card product, let us know. We’re happy to help.

Everyone knows growing business is necessary. But not many financial institutions (particularly credit unions) are really serious about doing it.

Why is that?

If they want to be “in the game,” FIs must grow their customer base for the corresponding business they can bring into the relationship.

Growing business is really important from an asset liability management (ALM) standpoint. If your FI doesn’t actively seek new business, you’re undoubtedly falling behind. If this lack of new business pursuit continues long enough, you’re out of business.

FI executives must remember that any business enterprise begins with communication.

If you want business, you’re going to have to talk to people and ask for it. Perhaps it’s the lingo throwing some FI executives off – stuff like “client tending,” “on-boarding,” etc.

My advice? Don’t make it harder than it needs to be. You’ve got a product (and/or service) that you want people to use. You’re proud of it, right? Talk about it.

One caveat – just be sure to talk about it in the right way. Enumerate the different ways you can provide the products. And don’t forget to ask questions – this further engenders the relationship.

What many people have trouble with is getting past the “selling” bugaboo. Selling is not a bad thing. Anywhere you go – a restaurant, a gas station, a salon – you expect people to sell you something.

Business not only begins with communication, it ends with it as well. Getting your new customers engaged in talking about you to others is the real sweet spot.

Now that things are beginning to look up in the U.S., we’re hearing a lot of talk about how to prevent another economic near-crisis.

And in our civilized society, rules – which take the form of laws and regulations – are the go-to answer for correcting past mistakes. 

But when it comes to rules and regulations, can we have too many?

Absolutely.

In fact, we may already be at that point, as it seems we can’t efficiently manage the laws we currently have.

Perhaps a better approach would be to offer incentives to get the desired results. A supremely effective way to change behavior, the creation of incentives also prevents people from getting lazy – often an unintended consequence of an overabundance of laws.

Take for instance an environment where banks are allowed do anything they want with the caveat they are only allowed deposit insurance for certain services, like savings, loans, checking, credit, debit and ATM cards.  

Two things would happen:

First, banks that wanted to stay in business would only offer those described services.

Second, consumers’ money would only be insured if they banked with an FI that had deposit insurance.

The creation of more incentives, not more laws, stands a much better chance of supporting a no-bailout future for the United States.

Interested in increasing your credit card sign-up four-fold? TMG client Heritage Family Credit Union just may have the answer.

That’s because the Vermont-based CU recently achieved a 400 percent increase in the cross-selling of its credit cards when it hosted the Heritage Thoroughbred Racing Series, a horse-racing themed employee incentive program.

Grouping CU employees to form horseracing teams, the CU encourages their staff to cross-sell products like credit and debit cards, e-statements and online bill pay for a chance to win weekly prizes. 

At the end of the eight-week racing series, the team who has sold the most, earning the highest number of “furloughs,” wins a trip to Saratoga Race Track via limousine with dinner and tickets to a race. 

Since the program first launched in 2005, the CU has repeated it on an annual basis in the summer months. During game weeks last year, the program resulted in a 60 percent increase in employee incentive payouts as compared to payouts during non-game weeks.

In addition, July 2009 (a game month) saw the following increases as compared to June 2009 (a non-game month): debit cards increased by 36 percent; e-statements by 153 percent; consumer loans by 157 percent; and the big one – credit cards by 400 percent!

Congratulations on such a successful program, HFCU!

One of the many lessons we’ve learned from hosting our annual client conference is the value of talking to one another. Call it ideation, brainstorming or just plain commiserating – whatever the form – getting together to share what’s working and what isn’t is beyond compare.

Of course we know that budgets are tight and face-to-face meetings have to be carefully balanced with other FI staff priorities. That’s one of the reasons we’ve created a new way for our clients to talk – TMG NOW.

An interactive Website for our clients, TMG NOW hosts an exclusive peer chat tool that lets our clients interact, ask questions and share advice regarding their cards and payments programs.

In addition to connecting our clients, we also hope the site will better unite our clients with us, our personnel, products and expertise.

For those away from their computers, TMG NOW allows clients to sign up for the receipt of critical notifications, such as fraud alerts or system maintenance notifications, via text-message alerts.

Other items clients can find there are a calendar of TMG and industry events and a resources library housing product information, forms and card program resources.

Current clients, if you have not given TMG NOW a try yet, get out there today and play around. If you didn’t receive an invitation via email, let us know.

With all the audio, video, print and online content generated every day, small FIs’ messages can easily become drown out. You put your best foot forward, utilizing as many free and low-cost outlets to spread your news, product updates and expertise. But do you ever feel like no one’s listening?

You have another option – the press.

That’s exactly where several credit unions recently turned when interchange legislation threatened to change the very fabric of our country’s payment systems and potentially increase fees for their members.

Credit unions went to their local newspapers, radio and TV stations to rally their communities to pay attention to what otherwise may have been overlooked.

While it remains to be seen how effectively the CU community’s message imparted change, the effort is remarkable. Read more here and think about how you might work with the press to drive home some of your FI’s messages.

When it comes to security, using social media networks irresponsibly is like leaving your curtains open.

Why? Because they give fraudsters a dangerous peek inside your operations.  Sure it’s great to reconnect with high school friends, but who else is looking at your profile?

U.S. law enforcement agents use popular social networking sites to communicate undercover with suspects. Likewise, fraudsters use the tools to gain access to you and your cardholders.

Internet privacy is ever-evolving. Only a few years ago, people were hesitant to shop online or even to use their real names in virtual communities. Today, some of these same people are comfortable announcing their day-to-day activities via sites like Facebook and Twitter.

Thanks to the efforts of organizations like PleaseRobMe.com, consumers are becoming aware of the dangers of over-sharing of information on the Internet. But, there are still a great number of people Tweeting invitations to criminals like this one: “Going skiing in Aspen for 3 days!! Leaving tomorrow.”

Your FI can join the educational effort by sharing the following five tips with your cardholders.

1.  Use Good Judgment: Before you post an update, consider who will read it.

2.  Know Your Contacts: Think twice before accepting that “friend” or “follower.”

3.  Use Your Privacy Settings: Facebook recently changed their privacy settings, overwhelming many users who are now unsure of what information is private and what is public.

4.  Change Your Passwords: Switch often and don’t use the same password for these sites as you do your online banking or email accounts.

5.  Remember, Everything’s Public: Don’t post or respond with information you don’t want made public, such as your phone number or other personal information. If you must communicate this info via social networking sites, use direct communications that are hidden from public view.

Online stores run by Apple, Google and others now offer more than 250,000 applications, such as games and financial tools. The unique applications (a.k.a. “apps”) are one of the selling features of the Apple iPhone and other smart phones. As the popularity of both smart phones and apps rise, so too does concern with security, particularly when it comes to the prevention of malicious software.

According to The Wall Street Journal, Google pulled dozens of unauthorized apps from its market in December. Priced at $1.50, the apps were made by a developer named “09Droid” who claimed the apps provided access to accounts at many of the world’s banks.

Luckily, these apps didn’t enable any crimes. However, the case does highlight the fact that mobile apps aren’t always on the up and up. Monitoring and preventive security measures need to be in place just like with the Web.

As Gordon Snow, assistant director of the FBI’s Cyber Division, told The Wall Street Journal: “Mobile phones are a huge source of vulnerability.”

The Journal goes on to report that the FBI recently began working on a number of cases based on tips about malicious programs in app stores. To protect its own operations, the FBI bars its employees from downloading apps on FBI-issued smart phones – not a bad practice to adopt.

As an industry, we must be diligent, aware and cautious of the applications we and our customers download to our phones and where they are coming from.

If only there was an app for that.

The summer months are an ideal time for cardholders to get away, unwind and de-stress. But while cardholders are relaxing on vacation, card fraudsters are working overtime.

Because cardholders are much more likely to make atypical purchases in the summer travel months, fraudsters know financial institutions often look the other way when suspicious spending habits start to show up.

Fraudsters prey on that sensitivity to cardholder satisfaction.

Knowing that FIs will be faced with odd spending habits from their cardholders, they target issuers that have trouble distinguishing odd from fraud.

In her final installment in the fraud white paper series, TMG’s Senior Cards Risk Manager Karen Postma discusses the threats of these summertime fraudsters, as well as how cardholders and FIs can stop fraud before it starts.

Card Fraudsters Get Tricky with Travel is available here.

There’s a saying among us fraud analysts: “If these criminals would use their smarts for good, we’d have a cure for cancer already.” It’s sad, but true.

These criminals are smart cookies, and they are becoming even more advanced in their technologies and techniques.

I recently came across a YouTube video showing how to generate counterfeit cards. There it was, out in the open for all to see. Of course a fraudster would need specific software to run the type of program the video demonstrated, but finding that equipment is only a Google search away.

Days later, the Spanish Interior Ministry released information regarding 178 people arrested in 12 countries for being part of what they are calling “the biggest fraud ring to date.”

The arrests were the result of a 2-year investigation and included raids in France, Italy, Germany, Ireland, Romania, Australia, Sweden, Greece, Finland, Hungary and the United States. Experts say it’s clear this was a very organized crime ring; high tech card-cloning labs were discovered at most locations, and some of the detainees had serious criminal histories.

The message to financial institutions is clear – we need better security. Many FIs are still using the same technologies that first existed when cards were developed. If the fraudsters can adapt and become more sophisticated, so must we.

Getting away from the magnetic stripes is a nice start. Europe has adopted the Chip-and-PIN EMV cards. The United States, however, is still largely holding back, with industry leaders citing the expense to transition to EMV terminals as the reason.

TMG is proud to have recently helped one of our FIs, the United Nations Federal Credit Union, buck the U.S. trend as it created an EMV card for its membership. Click here to read more about it.

New technology standards will not be cheap. We don’t know where the money will come from or who should foot the bill. But fraud loss is costly, as well, and not going anywhere but up – at least until we change our standards.