In November 2008, the Federal Deposit Insurance Corp.'s board of directors approved its General Counsel's Opinion No. 8 requiring the funds held in FDIC-insured banks that secure open loop, stored value cards be secured up to $250,000. According to the FDIC ruling, "All funds underlying stored value products will be treated as deposits and subject to assessments." The opinion was proposed in August 2005. Following a comment period required by regulatory agencies to allow feedback from consumers, merchants and financial institutions, the final ruling was implemented after all comments were considered. Additionally, the approval comes in the wake of three large retailer bankruptcies during 2008 in which consumers lost over $100 million in nonused and invalidated gift cards.

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According to a report recently published by TowerGroup, total gift card sales for the 2008 holiday season will total approximately $88.4 billion, a drop of nearly 9 percent from 2007. This plunge is largely due to two factors: a projected 14 percent decrease in the sales of merchant sponsored – also called closed loop or private label – gift cards coupled with a 5.6 percent sales increase in bank sponsored – network branded or open loop – gift cards. Brian Riley, Research Director, Bank Cards Practice at TowerGroup, said the rise of open loop cards, which can be used anywhere MasterCard Worldwide, Visa Inc., Discover Financial Services or American Express Co. gift card products are accepted, is a silver lining for financial institutions in an otherwise dark gift card cloud.

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The Payment Card Industry (PCI) Security Standards Council (SSC) launched a quality assurance program for Qualified Security Assessors (QSAs) and Approved Scanning Vendors (ASVs). The program is intended to promote reliable interpretation of the PCI DSS and ensure quality among all vendors. The PCI SSC, managing body for the PCI Data Security Standard (DSS), PIN Entry Device (PED) Security Requirements and the Payment Application (PA) DSS, developed the plan in response to industry input.

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On Nov. 11, 2008, American Express Co. won approval from Federal Reserve banking regulators to become a commercial bank. The fourth largest U.S. credit card issuer said it is taking steps to cut borrowing costs and give it access to government funds. Regulators said they approved its application because of the "unusual and exigent circumstances" currently shaking up financial markets. This move opens the door for AmEx to accept deposits and permanently access financing from the Fed.

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U.S. House Financial Services Committee Chairman Barney Frank, D-Mass., wrote to U.S. Treasury Secretary Henry Paulson and Federal Reserve Board of Governors Chairman Ben Bernanke on Nov. 10, 2008, asking them to postpone issuing regulations pursuant to the Unlawful Internet Gambling Enforcement Act of 2006. "I am deeply disappointed to hear that your agency is proceeding with what I consider to be unseemly haste in issuing regulations implementing the [UIGEA]," Frank said. "This midnight rulemaking will tie the hands of the new administration, burden the financial services industry at a time of economic crisis and contradict the stated intent of the Financial Services Committee."

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On Nov. 6, 2008, California Gov. Arnold Schwarzenegger asked the state legislature to convene a special session and approve his plan for a one-and-a-half percent sales tax increase. Schwarzenegger said the Wall Street meltdown could reduce California's capital gains tax by as much as $4 billion, and additional funding from the increased tax is necessary. The sales tax would generate an estimated $3.5 billion and revert to its current level after three years. "We are living in a different world now," Schwarzenegger said at a Sacramento, Calif., press conference. "We have a dramatic situation, and it takes dramatic solutions."

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In 2007, TJX Companies Inc., owners of several retail brands including T.J. Maxx, Marshall's and Bob's Stores, reported millions of credit and debit card numbers were stolen from its systems over a year-and-a-half period. The final number approached 100 million cards – the largest theft of personal card data in the United States. But the fraudsters the U.S. Department of Justice said perpetrated the TJX breach had been hacking into various retailers' systems since 2003. Between 2003 and 2007, DOJ said the TJX fraudsters hacked into nine other retailers, including BJ's Wholesale Club Inc., DSW Shoe Warehouse Inc., Office Max, Barnes & Noble Inc., Boston Market Corp., Sports Authority and Forever 21 Inc.

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On Nov. 3, 2008, First Data Corp., the world's largest processor, and financial titan JPMorgan Chase & Co. amicably terminated their joint venture, Chase Paymentech Solutions LLC, the leading merchant acquirer worldwide. Both JPMC and First Data concluded merchant acquiring and payment processing are core to their business strategies and decided to operate their respective shares of the former joint venture independently.

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