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Saturday, May 1st, 2010

Visa Cuts One Sneaky Credit Card Trick

In a recent press release, Visa announced that it will stop an online practice apparently dubbed a form of “aggressive” abuse by members of Congress. This is good news for online shoppers. Here are the details.

  • Data passing: Several credit card issuers have introduced what’s called a "data pass" feature to customers during online purchases. After paying for merchandise online, customers are prompted to visit another website and accept a temporary membership for some type of reward.
  • Shared information: Once customers accept such offers, they’re directed away from the web site on which the original transaction was made. At the second site, they may need to opt into some sort of free trial membership or subscription—but they do not need to reenter credit card information.
  • Unexpected charges: Though consumers themselves don’t give their information to these secondary sites, the credit card companies do (or did, in Visa’s case), and "free" trials quickly defaulted into costly monthly subscriptions or memberships. When customers began to see unfamiliar items on their bills, they apparently complained about the behavior.

Last fall, the Senate's Commerce Committee issued a report (see below) on these activities: it seems that the companies Affinion, Vertue and WebLoyalty sold $1.4 billion dollars in online memberships in such transactions and paid $792 million to the online retailers that participated.

While several online retailers apparently responded to initial complaints from Congress about the angry consumer complaints that began pouring in and canceled their participation, Visa is the first credit card company to announce a halt to the practice.

According to the press release, Visa's "priority is protecting our cardholders and the integrity of the electronic payments system. Consumers who shop online using their Visa cards should be confident that they will only be charged for the products and services they legitimately intend to purchase—not those that are foisted on them through deceptive data pass schemes."

Sources indicate that "rewards" offers may still appear when you make online purchases, but you’ll have to reenter your credit card information for a transaction to go through.

Protect yourself: In general, when shopping online, be very careful if you navigate away from the page on which you made your initial transaction. That's when the danger of unwanted and unexpected purchases mounts. Without strong knowledge of your credit card situation, you can easily find yourself taking on more debt than you can manage and end up filing bankruptcy.

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Thursday, March 4th, 2010

Credit Cards 101: Visa

If you're a Visa cardholder, you probably received a packet of updated policies and terms of use for your card, related to the new credit card laws. However, even if you did read all the fine print, you still may be curious of the intricacies of how your Visa card works.

An interesting post from FiveCentNickel.com offers a look at Visa’s rules that merchants must follow if they accept Visa cards. Here’s a summary.

  • What to take: Vendors can choose whether to accept credit and business cards, debit cards and gift cards, or both.
  • No price limits: If a merchant accepts Visa cards, it is required to accept the cards for any transaction, regardless of its dollar amount. However, many merchants ignore this policy and set a minimum purchase amount to encourage spending. If you’re irritated by a specific vendor’s policy, consider speaking to a manager.
  • Near equality: Items bought with Visa cards cannot be subjected to any special charge, but vendors can offer customers discounts for paying with cash (you may notice this especially at gas stations).
  • Convenience fees: Online and over-the-phone transactions may be subject to extra charges, so long as they’re disclosed and not applied to any in-person transactions.
  • No cash tax: Sellers cannot collect taxes from Visa transactions in cash.
  • Tip not included: When you pay with a Visa card and intend to add a tip, vendors can only authorize your account for the amount of the service minus tip.
  • No cash returns: If you buy something with a Visa card, sellers cannot give you cash should you return it.
  • Time crunch: Merchants have to report Visa sales receipts within five days of purchase.
  • Privacy limits: Receipts for Visa transactions should only show the final four digits of your card number and should not show your card’s expiration date. Further, sellers have to keep all account number information private.
  • Policy disclosure: Vendors must explain (or make available) return and exchange policies before a customer makes a purchase.
  • Signature required: Unsigned cards are considered invalid. If a cashier encounters one, she is supposed to make the customer sign the card and compare the signature to one on an ID card. Writing “ask for ID card” in lieu of a signature is considered an invalid substitute.
  • ID optional: Merchants may ask for a photo ID, but cannot require buyers to have one in order to complete a transaction.

It’s always a good idea to make sure you know the rules of your debit or credit card, so if you don’t have a Visa, check out your cardholder’s website!

If you're overwhelmed by unmanageable credit card debt, filing bankruptcy may be able to give you the financial fresh start you need to begin rebuilding credit.

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