The problems with credit and debit cards are bigger than we thought

The Target hack shows our payment systems are in big trouble.

The problems with debit and credit cards are no longer about high-tech skimmers at gas stations and restaurants.  Things have gotten worse, not better. According to a December 19 update on the Target problem by security reporter Brian Krebs, as many as “40 million credit and debit card accounts may have been impacted between Nov. 27 and Dec. 15, 2013.” After first claiming that ATM PINs weren’t involved, Target later conceded they were stolen, too.

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Why mobile apps get rejected from the Apple app store

There are nine surprising reasons an app might get rejected from the Apple app store.

To keep the app ecosystem healthy, the Apple App Store review process is designed to protect users from low quality or hostile apps.  It works for the most part.  Sometimes an app rejection might not be for the reason you might expect.  Sometimes it can force developers to rush to push back their launch date or maybe even redevelop key features.




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Lenders Delaying Evictions, Borrowers Living Rent-Free

1 pat and gene harrison 870

Patricia and Eugene Harrison have lived since October 2008
without making any payments on their mortgage

Despite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend.
It’s been 16 months since Eugene and Patricia Harrison last paid the mortgage on their Perris home. Eleven months since the notice got slapped on their front door, warning that it would be sold at auction.
A terse letter from a lawyer came eight months ago, telling them that their lender now owned the house. Three months later, the bank told them to pay up or get out by the end of the week.
Still, they remain in the yellow ranch-style home they bought seven years ago for $128,000, with its views of the San Jacinto Mountains. They’re not planning on going anywhere.
“We’re kind of on pins and needles, but who’d want to leave when you put this kind of energy into a house?” said Eugene Harrison, 70, gesturing toward a bucolic mural of mountains, stream and flowers the couple painted on the living room wall.
Throughout the country, people continue to default on their home loans — but lenders have backed off on forced evictions, allowing many to remain in their homes, essentially rent-free.
Several factors are driving the trend, industry experts say, including government pressure on banks to modify loans and keep people in their homes.
And with a glut of inventory in places like Southern California’s Inland Empire, Nevada and Arizona, lenders are loath to depress housing prices further by dumping more properties into a weak market.
Finally, allowing borrowers to stay in their homes helps protect the bank’s investment as it negotiates with the homeowners, said Gary Kirshner, a spokesman for Chase bank, a major lender.
“If the person’s in the property, there’s less chance for vandalism, and they’re probably maintaining the house,” he said.
Economists say the situation won’t last forever, but in the meantime the “amnesty” may allow at least some homeowners to regain their financial footing and avoid eviction.
In the Inland Empire, an estimated 100,000 homeowners are living rent-free, according to economist John Husing, who based that number on the difference between loan delinquencies and foreclosures. Industry experts say it’s difficult to say how many families are in that situation nationally because only banks know for sure how many customers have stopped paying entirely.
But Rick Sharga of Irvine data tracker RealtyTrac notes that the number of loans in which the borrower hasn’t made a payment in 90 days or more but is not in foreclosure is at 5.1% nationally, a record high. And yet the number of foreclosures last year was 2.9 million, below the 3.2 million that RealtyTrac economists predicted.
More evidence is provided by another firm, ForeclosureRadar, which says it now takes an average of 229 days for a bank to foreclose on a home in California after sending a notice of default, up from 146 days in August 2008.
“For some reason, banks are being more lenient with homeowners who are behind on their loans,” Sharga said. “Whether it’s a strategy to try and slow down the volume of foreclosures or simply a matter of the banks being able to keep up with volume is something that banks only know for sure.”
Lenders say the trend reflects their efforts to work with borrowers to modify loans to avoid foreclosure. Bank of America “continues to exhaust every possible option to qualify customers for modification or other solutions,” spokeswoman Jumana Bauwens said.
Some lenders are making it a policy to partner with delinquent borrowers. Citibank said this month that it would let borrowers on the brink of foreclosure stay at their homes for six months, whether or not they make payments, if they turn over their property deed.
Such policies may partly reflect the fact that lenders can’t keep up with all the foreclosures, some say.
“The mortgage lenders are so backlogged that some people are able to slip through the cracks,” said Kathryn Davis, a real estate agent at America’s Real Estate Advocates in Corona.
That was apparently the case for the Harrisons, who were told at various times that their house had been sold, that it belonged to someone else and that it was empty.
“It’s been frustrating, a real major pain in the buttocks,” said Eugene Harrison, a nondenominational minister with a clipped mustache and a sudden laugh.

The Harrisons missed their first payment in October 2008, shortly after Patricia Harrison, 57, lost her job as a healthcare aide and her husband’s part-time towing work dried up. They said they applied for a loan modification with Countrywide Financial (since acquired by Bank of America) but were told that they couldn’t receive one until they were three months behind on their payments. So they stopped paying.
In April 2009, they received a notice warning them that their property “may be sold at a public sale,” and in July, they were told their house was a bank-owned property.
he bank sent a notice by FedEx in October demanding $3,000, and when the Harrisons called to discuss this notice, they were told they had four days to vacate the house.
Panicked, they arranged to stay with family in New Mexico and started packing their things, filling their garage with boxes of books, camping equipment and art. But no one came to kick them out.
“We were afraid to leave the house, afraid the sheriff was going to come,” said Patricia Harrison, an amateur painter.
After contacting consumer advocates about their situation, the Harrisons decided to stay put. Soon after, two men in a white pickup truck showed up at the house and peeped in the windows, telling the Harrisons that they thought the house was abandoned.
The Harrisons suspected they were planning to move in themselves and chased them away.
The couple don’t want to leave but are in the midst of a running dispute with Bank of America about the terms of their loan modification. The bank says it mailed them documents this month.
As they wade through the red tape, the Harrisons can’t imagine abandoning a house where they’ve left their mark in the goldenrod and potpourri rose walls, the new fixtures and stenciling in the bathrooms, the fruit trees planted in the yard.
Although the Harrisons’ future is uncertain, industry observers agree that the rent-free life can’t last forever. As home values climb, banks will find it financially advantageous to foreclose on delinquent borrowers and sell their properties.
“In many cases, particularly in California, people owe a boatload of payments, and no bank is going to forgive that,” said Guy Cecala, editor of Inside Mortgage Finance, a trade publication.
In Diamond Bar, the Fraguere family is finally moving on after living rent-free for 18 months. Job loss and other setbacks prevented them from paying their mortgage, but they say they didn’t hear anything from the bank, First Franklin, until a real estate agent showed up at their door last month saying she was going to sell their house.
Sandy Fraguere wasn’t surprised that it had taken the bank so long to ask them to move.
“I don’t think they really knew what was going on or who was there,” she said.
Next stop for the Fragueres is a hotel, where they plan to stay for two weeks until their apartment in Chino Hills is ready for them to move in. Their dogs are being boarded and their belongings stored until they can retrieve them someday. Their children, ages 8 and 9, are being steeled for more instability.
The Fragueres have started saying goodbye to their neighbors, adding yet another empty house to a block that has already seen two other families forced to pack up and leave.

Despite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend.

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The Coming Era of Flexible, Frictionless Money

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Two months after PayPal opened its platform, 15,000 developers
had used it to create new payment services

The banks and credit card companies have spent 50 years building a proprietary, locked-down system that handles roughly $2 trillion in credit card transactions and another $1.3 trillion in debit card transactions every year. Until recently, vendors had little choice but to participate in this system, even though — like a medieval toll road — it is long and bumpy and full of intermediaries eager to take their cut. All of that is about to change.

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German Government to Buy Stolen Records from HSBC to Track Tax Evaders

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Customer records were stolen from
British bank HSBC’s operation in Switzerland

The German government says it plans to buy a CD containing customer data apparently stolen from British bank HSBC’s operation in Switzerland. The move has enraged Swiss officials, but it already appears to be bearing fruit. Berlin expects a wave of tax evaders to turn themselves in over the coming days in the hope of avoiding prosecution.
The German government’s plan to buy stolen bank data from Switzerland to nab tax evaders is already showing signs of success. Finance Minister Wolfgang Schäuble of the conservative Christian Democratic Union wants to purchase a CD with data reportedly stolen from a Swiss branch of British bank HSBC that allegedly contains information about German tax evaders for €2.5 million ($3.49 million).
The CD is believed to contain information about 1,500 tax-evading German citizens, who possibly owe a total of as much as €100 million. Despite criticism from within her own party, Chancellor Angela Merkel has made clear that she is interested in accepting the offer, which has been described as immoral and criminal by some critics. The last time the German government bought stolen data, it became a financial boon for the treasury and this time, too, Merkel and her government have money in their eyes.
Before the government has even purchased the CD, tax evaders across Germany are already considering turning themselves in. Finance Minister Schäuble has encouraged them to take this step. “I can only advise anyone who has evaded taxes in the past to turn themselves in,” he told the Augsburger Allgemeine newspaper.
Lawyers around the country are reporting a flood of calls from clients. “There is strong interest in this possibility,” Munich tax attorney Jan Olaf Leisner told SPIEGEL ONLINE. The attorney is an expert on the issue. When the German government last bought a DVD with stolen tax evader data in 2008, Leisner represented 50 Germans implicated in the case. With this week’s developments, his phones are ringing again. “Today alone I have already gotten five calls,” he said.
In the meantime, the lines are also busy in Switzerland. “Our phones won’t stop ringing,” said one adviser at a foreign private bank who deals with wealthy German clients. Many Germans are in a “state of cold sweat,” he said.
Germany’s Federal Association of Tax Advisers sent out a press release on Tuesday advising people “to swiftly turn themselves in if they have secret Swiss bank accounts.” Anyone in Germany caught committing tax evasion in excess of €1 million could also face prison time. For many, that risk “has become considerable,” the statement said.
The statement also said that tax advisers are prepared to provide advice on how customers can submit amended returns and turn themselves in. “This could be the last chance for tax evaders to avoid prosecution,” it said.
Don’t Panic
But clearly it is not just the German government that is looking to make a fast buck here. A former employee of major British bank HSBC has denied media reports that he wants to sell data to the German government. Last year, the man sold French authorities data from Switzerland on thousands of people. The Frankfurter Allgemeine Zeitung newspaper also reported data may have been stolen from Credit Suisse bank. But the bank said there were no signs of any such incident.
Still, tax evaders are likely to be following each and every headline closely this week. And they may seek to contact attorneys like Leisner. “If people aren’t HSBC customers, I am advising them not to panic — the tax investigators won’t be arriving at their door overnight. But if a person is a customer at the bank in question, then they should turn themselves in as quickly as possible.”
German tax authorities, of course, are pleased that suspected tax evaders are getting nervous. “This speculation is the best thing that could possibly happen to us,” said a high-ranking official at a German state-level finance ministry.
Leisner, the Munich-based tax attorney, said Merkel’s clear words on the matter earlier this week, when she said that the government was determined to get its hands on the data, had had a major impact. “Great uncertainty drives people to turn themselves in — even if the government ends up not buying the CD,” Leisner said. “If the government now purchases the CD, all the dams will burst. It will open the floodgates for imitators (i.e. governments in other countries) to do the same.”
What Happens When People Turn Themselves In?
In 2008, Germany’s foreign intelligence agency, the BND, purchased a DVD for close to €5 million with data from Liechtenstein’s LGT bank that helped the government track tax evaders who had deposited their money in the tax haven. The government at the time, a coalition of Merkel’s conservative Christian Democrats and the center-left Social Democrats, was able to generate around €200 million in fines and back tax payments using the data. The most prominent person incriminated in the data was former Deutsche Post CEO Klaus Zumwinkel, who had to resign from his position.
At least 600 people then lined up to confess they had dodged their taxes, despite the fact that only 210 were listed on the DVD. “At some point people get fed up with the whole business: first it was Liechtenstein and now Switzerland,” Leisner says.
Leisner also suggested that people should turn themselves in even if their data isn’t on the CD. “These people will be playing safe,” he said, because by filing amended returns they can avoid prosecution. Others will only be able to escape prosecution so long as no case has been filed against them. The German Association of Tax Advisers is encouraging tax evaders to move quickly. “The window for turning oneself in is small in this case,” it said. It could close as soon as details of the bank in question becomes public or, at the very latest, at the point the data on the CD has been matched up against the returns filed by suspected tax evaders.
So what happens if someone turns themself in? As their attorney, Leisner said, he would first request the appropriate documents on their bank accounts in Switzerland. The data would be “kept in our Zürich office so that they don’t have to cross the border into Germany.” A person who had kept, for example, €4 million in a numbered account over a 12-year period without paying tax on the interest, which would likely have amounted to some €2 million, would have to pay around €1.35 million in back taxes, including interest. “Then the client has to decide,” Leisner said. “If he turns himself in, he can sleep easy again — knowing that he won’t have to pay any fines or face further sanctions.”
But amended returns take some time to prepare, if they are to be correct and complete. That’s something that the German authorities are also aware of: The official at the state finance ministry said that he expects a wave of people turning themselves in “by the middle or end of next week.”

The German government says it plans to buy a CD containing customer data apparently stolen from British bank HSBC’s operation in Switzerland. The move has enraged Swiss officials, but it already appears to be bearing fruit. Berlin expects a wave of tax evaders to turn themselves in over the coming days in the hope of avoiding prosecution.

Continue reading… “German Government to Buy Stolen Records from HSBC to Track Tax Evaders”


Consumers Paying Their Credit Card Bills Before Their Mortgage

a new study shows that many people, when faced with a financial crisis, are not putting their mortgages first.
TransUnion, one of the big credit bureaus, recently released a report showing that an increasing number of consumers are choosing to pay their credit card bills before their monthly mortgages.
My grandmother Big Mama had a key financial rule that I’ve followed throughout my life.
You can manage without a telephone, she would say. You can take the bus and get by without a car. But you can’t live comfortably if you don’t have a roof over your head. Big Mama always made sure she paid her mortgage — and on time.
Thankfully, Big Mama, who raised me, never had to skip payment on another bill to cover her mortgage. If it had come to that, there’s no question which bill would have been paid first.
But a new study shows that many people, when faced with a financial crisis, are not putting their mortgages first.
TransUnion, one of the big credit bureaus, recently released a report showing that an increasing number of consumers are choosing to pay their credit card bills before their monthly mortgages.
The percentage of people delinquent on their mortgages but current on credit cards jumped to 6.6 percent in the third quarter of 2009, up from 4.9 percent in the third quarter of 2008.
“I think the biggest message that the data shows is that consumers’ priorities have changed,” said Sean Reardon, the author of the TransUnion study and a consultant for the credit bureau. “This is really a reflection of the housing bubble bursting and the ripple effect of the recession.”
The percentage of consumers current on their credit cards but delinquent on their mortgages first surpassed the percentage of consumers up to date on their mortgages but delinquent on their credit cards in the first quarter of 2008, according to TransUnion.
“The implosion of the mortgage industry over the last 24 months, the resetting of adjustable-rate mortgages and the weak job market have all come together to redefine how consumers are managing their finances and meeting or not meeting their credit obligations,” said Ezra Becker, director of consulting and strategy in TransUnion’s financial services business unit.
Many people see their credit card as an emergency source of funds. They may not be able to afford a mortgage payment, but they can make a minimum credit card payment. For them, it’s not about buying flat-panel televisions or toys for their kids. Instead, they are using credit to buy food or gas or pay for other basic necessities. When faced with a choice at bill-paying time, they are opting to pay their credit card accounts so that reservoir of money doesn’t get snatched away.
For the study, TransUnion looked at consumers who had at least one credit card and one mortgage. The company examined 30-day credit card and mortgage delinquency data.
The shifts in payment behavior are even more pronounced in California and Florida, two states that have experienced high foreclosure rates and significant decreases in home prices.
TransUnion found that the percentage of consumers in California who are delinquent on their mortgages but current on their credit cards was 10.2 percent in the third quarter of 2009, up from 3.5 percent in 2007. In Florida, it increased to 12.4 percent from 5.1 percent.
The financial news continues to be troubling, signaling that this trend might not turn around soon. For the week ended Jan. 30, the Labor Department said the number of laid-off workers filing initial claims for unemployment benefits was 480,000, up 8,000 from the previous week. Forecasters expected new claims would drop.
A record 2.8 million U.S. properties received foreclosure notices in 2009, up 21 percent from 2008 and 120 percent from 2007, according to a 2009 year-end report from RealtyTrac, which tracks foreclosure activity throughout the country.
“In the long term, a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog,” said James J. Saccacio, chief executive of RealtyTrac.
Reardon said in an interview that many people are figuring that they may lose their homes, so they reason: Why pump more money into the mortgage? They cling to the notion that the plastic is their savior.
“It used to be people kept cash in the coffee can for an emergency,” Reardon said. “But times have changed. People don’t have coffee cans. Plastic has become their coffee can.”
I hope this trend is only temporary. Relying on your credit card is like having a life jacket with a slow leak. It may keep you afloat for a little while, but the protection is short-term. You’ll still sink.
Via Washington Post

Paying Bills 783

A record 2.8 million home owners received foreclosure notices in 2009

A new study shows that many people, when faced with a financial crisis, are not putting their mortgages first.

TransUnion, one of the big credit bureaus, recently released a report showing that an increasing number of consumers are choosing to pay their credit card bills before their monthly mortgages.

Continue reading… “Consumers Paying Their Credit Card Bills Before Their Mortgage”


Twitter Founder Jack Dorsey Announces Latest Venture

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Payment device attached to an iPhone for swiping cards

Twitter founder Jack Dorsey announced his latest venture, a company called Square. As an attempt to solve many of the key issues associated with accepting online payments, Square promises a refreshingly simple system for cutting through the red tape.

In February 2009, Jim McKelvey wasn’t able to sell a piece of his glass artbecause he couldn’t accept a credit card as payment. Even though a majority of payments has moved to plastic cards, accepting payments from cards is still difficult, requiring long applications, expensive hardware, and an overly complex experience. Square was born a few days later right next to the old San Francisco US Mint.
Today the Square team is focused on bringing immediacy, transparency, and approachability to the world of payments: an inherently social interaction each of us participates in daily. We’re starting with a limited beta and rolling out to everyone in early 2010.
Square is backed by Khosla Ventures and a team of angels.
Square, Inc. has offices in San Francisco (Product & Engineering), Saint Louis (Operations), and New York City (Risk & Partnerships).

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Product Placement To Be Allowed On British Television

Placement ad whoring

Product placement is to be allowed on British TV shows, in a move due to be announced this week.

Independent broadcasters will be allowed to take payments for displaying commercial products during shows.

The change is intended to bring in extra funds for commercial broadcasters.

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