The Jan. 4, 2012, appointment of former Ohio Attorney General Richard Cordray to the position of director of the newly created Consumer Financial Protection Bureau raises the issue of what regulatory power the agency will wield over the prepaid card industry.
A glimpse of what is to come is contained in a Jan. 5, 2012, CFPB blog post that announced the CFPB's Nonbank Supervision Program. The program will "assess whether nonbanks are conducting their businesses in compliance with federal consumer financial laws, such as the Truth in Lending Act and the Equal Credit Opportunity Act."
The CFPB will review nonbanks' business practices, including consumer directed marketing materials, program details, and compliance systems and procedures. It will require nonbanks to file reports when requested and will generally notify a nonbank in advance of an upcoming inspection, according to the blog.
The CFPB was mandated in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The law calls for a single director to head the agency. But Republican members of Congress, concerned about the extent of that director's powers, have pushed for a restructuring of the CFPB so that it is led by a five-member board.
With a lackluster economy and consumers intent on stretching funds as far as possible, businesses like Amazon.com Inc. have launched "re-commerce" programs that offer prepaid gift cards to consumers who trade in used gadgets such as old tablet computers and outdated cell phones.
Amazon's Electronics Trade-In Store, launched in May 2011, allows consumers to search a list of items the online retailer accepts for trade in. If products are eligible, customers follow prompts and print out shipping labels to mail items free of charge to Amazon.
After Amazon receives and inspects products, Amazon.com Gift Cards that reflect the trade-in value of items are deposited electronically into customers' accounts. The virtual gift cards can then be used for purchases on the website. Amazon gift cards are issued by ACI Gift Cards Inc., a company headquartered in Washington state.
Chicago-based gift card processing technology provider Card Activation Technologies Inc. filed a legal brief in the United States Court of Appeals for the Federal Circuit in response to a July 2011 ruling by the Federal District Court for the District of Delaware that invalidated CAT's patent claim. CAT said retailers, gas stations, phone companies and other businesses that utilize stored-value cards, such as gift cards, infringe its patent.
Safeway Inc. subsidiary Blackhawk Network is integrating gift card malls into over 200 Guitar Center Inc. stores nationally. Additionally, Guitar Center-branded gift cards will be available throughout Blackhawk's gift card mall network beginning March 2012.
Online gift card exchange CouponTrade.com is hosting "Sell Your Gift Card Month" through the end of January 2012. The company said nearly $20 billion worth of gift cards goes unused each year, amounting to $65 million per day.
Sacramento, Calif.-based gift card exchange GiftCardBin.com developed a process that pays up to 93 percent of the value on particular unused gift cards. GiftCardBin said it upgraded its website to make the gift card exchange process more accessible and secure.
InteliSpend Prepaid Solutions LLC said its new Expense Visa Prepaid Card is designed to improve corporate spending management and streamline business expense administration. InteliSpend cited an Aberdeen Group study that reported expense management automation showed a 63 percent cost reduction rate and a 42 percent higher travel policy compliance rate.
Plastyc Inc. reported a 93 percent increase in new signups in Houston in November 2011 compared to the same period last year. The increase coincided with a two-month marketing campaign in Houston that featured Plastyc's UPside Visa prepaid card.
In response to Verizon Wireless's proposal (subsequently withdrawn) to charge users $2 to pay phone bills with credit cards, PrepaYd Inc. subsidiary and telecommunications provider PrepaYd Wireless Inc. said its "Y Pay More" no-contract prepaid calling plan offers fee-free payment options.
U.K.-based Stanton Consultancy Ltd. achieved Payment Card Industry Data Security Standard Level 1 Service Provider certification. SCL, which received its assessment from qualified security assessor Blackfoot (UK) Ltd., said it has issued over 30 million prepaid cards on its UltraPoS platform.
Hamburger chain operator Red Robin International Inc. chose digital gift card solution company Transaction Wireless to power its business-to-consumer and business-to-business gift card programs.
Mobile money transfer firm Prepay Nation allied with the Afghanistan division of telecommunication provider Etisalat to allow mobile phone users in the United States, Canada and Europe to send small-dollar money transfers to recipients in Afghanistan. Etisalat said it provides voice and data services in 31 Afghani provinces and 196 districts, with more than 12,000 retail outlets.
Matthew S. Harris, Vice President of Marketing at InteliSpend Prepaid Solutions, will serve as the 2012 Chairman of the Board at the Incentive Research Foundation. The IRF conducts research to promote and advance the business use of incentive applications to reward employees.
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