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This Week In Credit Card News--Costly Processing Fees, Possible Internet Sales Tax

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What You Need to Know About Credit Card Processing

A series of posts about a search for an honest and affordable processor of credit card transactions: It was not an easy search, but I learned a lot--much of which I never wanted to know but some of which I think may be helpful to other business owners. As a warm-up to the series, I offer this primer on card-processing basics. My own search began when I was tipped off that I was paying more than necessary for my transactions. Many years ago, I agreed to let my bank handle them, and since then, I had given the topic little thought. I felt that my credit card processing--also known as merchant services--was costing me too much. That feeling was set off by a cold call last spring from a processor that was interested in seeing whether it could lower my transaction costs. That prompted me to do some research. [New York Times]

Internet Sales Tax Gaining Support in Senate

One of online retailing's big advantages could be dealt a serious blow in the future. The Senate passed a nonbinding amendment which would allow states to collect sales tax from out-of-state online retailers. The amendment was part of the Marketplace Fairness Act and passed the Senate by a vote of 75-24. The National Retail Federation advocates the passage of such a bill, since their brick-and-mortar businesses lose so much volume each year to online retailers. The NRF estimates that states annually lose $24 billion in unreported online purchases. [LowCards.com]

American Express Adds Checks, FDIC Insurance to Bluebird Product

American Express is adding paper checks and deposit insurance to the Bluebird prepaid card it debuted last year with Wal-Mart Stores as it faces competition from other firms pitching alternatives to big-bank checking accounts. Until now, the Bluebird card lacked paper checks and was not covered for losses by the Federal Deposit Insurance Corp. The lack of FDIC coverage prevented customers from having government payments like Social Security, military pay and tax refunds deposited directly to the accounts. Federal regulation requires that direct deposits of such payments be made into FDIC-insured accounts. [Wall Street Journal]

Consumer Bureau Eases Limits on Credit Card Fees

The Consumer Financial Protection Bureau is scaling back rules on credit card fees in order to dodge a court battle with the financial industry. In 2011, the CFPB took over certain oversight duties from the Federal Reserve, including the authority to issue Truth in Lending Act regulations. As that transition was under way, a South Dakota-based bank, First Premier Bank, sued the Fed and claimed the regulator acted outside of legal bounds when writing rules for credit card fees. Regulation Z in the Truth in Lending Act prohibits card issuers from charging fees that exceed 25% of a cardholder's total credit limit. The Federal Reserve interpreted the congressional guidance to include fees that are charged when a credit card is opened, as well fees from the first year of an account. On Wednesday, the CFPB wrote that the restrictions on fees would only apply to the first year of an account, but not when a new card is opened. The credit card industry applauded the new proposal, saying it is a more accurate reading of the law. [The Hill]

The CFPB Expanding Complaint Database

Today, based on feedback from the public, we're expanding it--and increasing the number of complaints from about 19,000 to more than 90,000. Here's what we're adding data about: Mortgage complaints submitted since we started taking mortgage complaints on December 1st, 2011; complaints about bank accounts and services submitted since we started taking them on March 1st, 2012; private student loan complaints submitted since we started taking them on March 1st, 2012; complaints about other consumer loans (for example, if you got a loan to finance your daughter's braces) submitted since we started taking them on March 1st, 2012; more specificity about the product each complaint is about, where provided. [CFPB]

Survey Shows Consumers Have Benefited from CARD Act

A survey by Consumer Action has found that while consumers still gripe about credit card companies, the number of complaints has fallen significantly since the implementation of the Credit Card Responsibility, Accountability and Disclosure Act. Prior to the 2009 law going into effect, credit card problems topped the nonprofit agency's complaint hotline. Since then, credit card complaints have plunged from 12% in 2009 to 4% in 2010. Respondents reported that credit card companies are treating them the same or better than before the law. They also said the disclosures mandated by the law have helped them take action to avoid credit card debt. [LowCards.com]

Missouri Senate Panel Weighs Ban on Charging Extra to Use Credit Cards

Retailers would be barred from charging consumers an extra fee for paying with a credit card under a bill being considered by a Missouri Senate committee. Sponsoring Republican Sen. Eric Schmitt of Glendale said his bill is an important consumer protection as credit card usage grows. Retailers could be charged with a Class D felony for continuing to assess a surcharge. Opponents say businesses need to charge extra because it's expensive to allow credit cards as a form of payment. Schmitt says retailers could build that cost into an item's price rather than charge the extra fee. [Associated Press]

LowCards.com Weekly Credit Card Rate Report

Based on the 1000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.29%, slightly below last week's average of 14.30%. Six months ago, the average was 14.32%. One year ago, the average was 14.30%. [LowCards.com]

Provided by LowCards.com