If you have recently traveled abroad, specifically to Europe, you may have noticed a new kind of credit card terminal at checkout counters. These innovations combine the traditional magnetic strip reader with two sensors: a pad for “tap and go payments” and a slot for cards with uncovered EMV chips. 

Since the early 90’s EMV (acronym is derived from the trio (Visa, MasterCard and EuroPay) of processing networks that vaulted the technology’s development) has transformed into the global standard for the majority of credit card and debit card transactions—the United States remains the chief holdout. 

The traditional credit card used in the United States utilizes a magnetic strip on the back that contains an encoded version of the cardholder’s account number. The cards are read by swiping the magnetic strip through a reader. By contrast, the EMV technology reads the information from the card’s micro-chip, which is embedded inside of the card. Instead of raw account numbers, the microchip provides validation codes. 

With EMV standards, it is not necessary to physically swipe the card; instead, the purchaser will simply tap or wave their card near a payment pad. The payment pad will then transmit a radio signal that activates the chip. 

The need for merchant services lawyers has increased dramatically with the growth of consumer credit cards and ecommerce arrangements.  Merchant services process payments made to the merchant and facilitate the payment of the merchant.  In serving as the medium between the parties, fraud by the merchant services processing payment can cause significant damages to the merchant, both in terms of reputation as well as operating costs.  In the event of extraordinarily high service fees or withholding of payments to the merchant, merchant services lawyers can assist merchants in seeking damages against fraudulent or exploitive merchant services companies.

If the merchant services company begins to charge nonconsensual fees or misuses your personal information, you will be able to recover those fees as damages.  The worst merchant services companies involve other third parties that charge their own fees.  Small businesses that have developed relationships with merchant services companies to accept credit cards at their establishment, only to be defrauded through breach of contract can use the merchant service lawyer to force the merchant services to cancel its fees and repay the client the money withdrawn through misuse of personal information or exploitive billing.  Misuse of personal information can be as severe as forging the signature of clients or taking money from the client’s bank account without notice.  These violations may include a criminal component, if the merchant services company can be brought into an American courtroom.  Application fraud is the use of personal information to open up an account.  Some fraudulent merchant services will also do this for the purposes of billing, usually without the knowledge of the client.

When meeting with a merchant services lawyer, bring all agreements, electronic or otherwise, made with the merchant service companies.  Breach of these agreements is the easiest way to win damages against these companies.  These breaches may include raising fees above the agreement threshold without proper notice, processing payments slowly or failing to pay the business the money owed to them in its entirety.  

Many of the most exploitive merchant services are located offshore, beyond the reach of US jurisdiction and regulations.  As a result, the merchant services lawyer may have a difficult time of finding whom to file damages against and brining the violators to court.  In these cases, the lawyer may file a petition with the Federal Trade Commission to take action against the violator and prevent them from doing further business in the United States.  The merchant services lawyer is your best chance at understanding your legal options in the event of merchant services fraud.

Fraud is usually easy to detect as long as the client constantly checks statements and billing from the merchant services company.  Be aware of confusing or vague fees and account for all of the money owned by the merchant services.  In case of discrepancies, contact the merchant services for resolution and failing that, contact a merchant services lawyer to files suit.

In Tarpon Spring, Florida a Port Richey couple has been accused of stealing approximately 8,000 credit card numbers. Jail records show 30-year-old Angel Toland and 23-year-old Gary Blair were being detained Thursday at Pinellas County Jail on $5,000 bonds—it is not known if either will hire an attorney for their credit card trafficking charges.

A sheriff’s office report claims the pair attempted to sell undercover officers the credit card numbers and personal information of approximately 200 people for $1,500. Subsequent investigations revleaed the couple had roughly 8,000 credit card numbers—the information was secured on lead sheets from a telemarketing agency. 

 Detectives say the suspects may have stolen the paperwork when they helped the company with an office move; once the investigation concludes, the lead sheets will be destroyed. 

Layaway, a payment plan established by some retailers which allows purchasers to put items aside until they are fully paid off, is making a comeback from many larger retailers, especially for the holiday season. 

Layaway was a popular method before credit cards became easily obtainable and commonplace.  Now consumers, armed with the knowledge of the dangers of credit cards, can practice financial discipline with the help of retailers such as WalMart, Toys R Us, and Sears, which have all put layaway payment programs in place.  

While the practice of layaway does have costs for the retailer, as they must keep track of payments and hold the items within the store until they are paid off, a small fee is charged in order to make up for any losses.  Likewise, consumers may cancel their payments, however they will be subject to fees.  

Many of us have become familiar with the all too common “help” of a retail store employee informing us that we can save 15% on our purchase if we sign up with the store’s credit card.  However, while they may provide savings, many find that the percentage they save now may come at the expense of damaged credit and inflated rates later.  

Store credit cards are very similar to standard issued Visa or Discover cards, except that they are often attached with special offers and the promises of future discounts and rewards.  However, they also come with the same risks, as interest rates are often very large and spending limits tempting.  

Younger consumers, who may not understand the implications of credit card debt, are at risk of damaging their credit and becoming indebted for purchases that seem like a bargain.  Most, if not all financial experts, advise that younger consumers should stay away from such credit cards and focus on building their credit in much less riskier methods.  

The Credit Card Act of 2009 provided much needed reform to consumer credit cards which had subjected cardholders to unreasonable fees, soaring interest rates and arbitrary rules.  These rules took effect on February 22, 2010.

Minimum payments – credit card companies must display on their bill how long it will take for the consumer to pay off the balance is only the minimum payment is made every month.  Whenever the consumer pays more than the minimum balance, the leftover amount will go towards paying the next balance with the highest interest.  

Billing cycles – credit card companies may no longer charge retroactive fees for the previous billing cycle if there is not a valid reason such as disputed purchases or payments for insufficient funds.

Due dates – the new credit card rules dictate that the due date for monthly payments must be consistent every month and if the date falls on a holiday or weekend, the payment is due on the next business day, without penalty.

Change of Address – a credit card company changes its mailing address which in turn, leads to delays in processing cardholder’s payments, the card company may not charge late fees for sixty days after the change.

Interest rates – the new credit card rules ban retroactive interest rate hikes, with some exceptions.

– An expressed introductory period ends; the law now requires this period to be at least six months.

– The interest rate is variable.

– The cardholder fails to comply with a debt consolidation plan.

– The cardholder misses a payment for 60 days, even then, the rate must return to normal after the cardholder makes six months of on-time payments.

– A military service member leaves active duty which no longer entitles the cardholder to a government mandated cap of 6% APR.

Most importantly, a credit card company cannot raise rates if the cardholder fails to pay balances on other accounts such as utilities or other credit cards.

“Over-limit fees” – usually a credit card is declined when it exceeds its limit.  Over-limit fees cover the balance, often with substantial fees.  The new credit card law lets consumers opt out of over-limit fees and ensures it can only be charged once per billing cycle.  The law also requires those than opt into the fees understand the amount to be charged and retain the right to opt out at any time.

Paying balances – the credit card company is now required by law to not charge additional fees for any methods of payment, unless it is an expedited service to avoid late fees.  Statements must now be mailed to the cardholder at least 21 days in advance.  Fees may not be applied until 21 days after any declared “grace period” has ended.

Subprime cards have been known as “fee harvesters” as the holders typically incur several unforeseen fees which especially victimize individuals with poor credit worthiness.  Credit card companies can no longer charge upfront fees that exceed 25% of the credit limit.

The new credit card laws also contain provisions for gift and prepaid cards as well as gift certificates.  Unless the issuer specifically discloses it, these items cannot expire within five years.  Dormancy, inactivity and service fees are all expressly banned unless it is expressly disclosed and the inactivity exceeds one year.  In this case, only one fee may occur per month.

Issuing credit cards to persons under 21 is now banned unless there is an adult co-signer.  Alternatively, they may show proof that they have the means to pay back the balance.  Credit card companies may no longer solicit persons under 21 with prescreened credit card offers.

Colleges and universities must disclose all marketing and promotional relationships with credit card companies including contracts that disclose student and alumni information to credit card companies.  These disclosures are subject to inspection by the federal government.  

The new credit card laws mandate that credit and debt management courses become part of new student orientation at colleges.  Free offers may not accompany credit card promotions at or near (within 1,000 feet of) college campuses.  Colleges and universities are now required to limit the number and locations of credit card marketing events.

The new credit cards laws ensure that all fees, penalties and terms are disclosed and that there is at least 45 days notice of changes to credit card agreements.  They must also inform the cardholder of how long it will take to pay off their balance when making only the minimum monthly payment.  The Federal Reserve must collect electronic copies of all credit card agreements for public record.  The Federal Reserve also issues guidelines for card issuers to set up toll-free credit counseling and debt management assistance.

Consumers are entitled to one free credit report a year at AnnualCreditReport.com.  Other companies that offer free credit reports must disclose both visually and audibly that their credit report is not the “free one” provided by federal law.  

The right of consumers to opt out of significant change to their account is affirmed by the new credit card law and prevents opting out to be at the discretion of the card company.  Card companies that have account holder close accounts due to radical changes may collect the remaining balance over the next five years, charge a minimum payment amount that is up to twice the percentage charged before the change in terms or hold the former account holder to the same terms of the original agreement.  

Consumers cannot be punished for opting out of rate increases.  However, consumers are not allowed to opt out of minimum balance increases.  Consumers who are more than 60 days late on payments are also not allowed to opt out of rate increases

When applying for credit, lenders can inquire for a copy of an individual’s credit report from one of the major credit bureaus. These inquiries or credit checks can be listed on a credit report. While these inquiries may cause a credit score to drop, it will not change drastically. Sometimes, looking for a new credit line can mean a higher risk, but most credit scores do not get affected by multiple inquiries from mortgage, auto, or student loan lenders.

A credit check can be useful to determine an individual’s credit score, which many businesses, employers, creditors, and insurers use. The best way to go about doing a credit check is by getting a credit report. This provides information on an individual’s location, how the individual pays bills, record of lawsuits and arrests, and any history of bankruptcy. The credit report contains three different reports from the three major credit bureaus.

 A credit check can come in two forms. There is the soft pull which is just a basic credit check to determine a credit score. It is only use for informational purposes in order to find out a score. There is also a hard pull credit check, which results in more complicated reports. Lenders will often use hard pull credit checks for new accounts. These are the credit checks that can affect credit score.

The impression from applying for credit and having a credit check done will vary on a person to person basis based on their unique credit histories. For most people, one additional credit inquiry takes less than five points off. However, inquiries can show a greater impact with less accounts or a shorter credit history.

Large amounts inquiries also imply greater risk. An individual with at least six inquiries on their credit reports statically can be up to eight times more likely to declare bankruptcy in comparison to people with no inquiries. While inquiries can help assess risk, they play a minor part in doing so. How an individual pays bills and his overall debt burden as shown on your credit report is much more influential.

Performing a credit check through a credit report can help improve the chances of getting a job or a loan. Credit reports can show an individual what their credit score is and how it can be improved as opposed to jut a number.

Under the Fair Credit Reporting Act along with the Fair & Accurate Credit Transactions Act, everyone is entitled to free credit report annually from the major credit bureaus. This law was created in order to provide individuals with a free copy annually of their credit report upon request, making them more aware of their financial position. Free credit reports can be obtained by providing a name, date of birth, address, and social security number. 

A credit rating is a statistical analysis of an individual’s credit history. The credit score is delivered as a number based on the individuals debt vs. credit amount. This number is used by numerous lenders (organizations that distribute loans or credit card companies) to determine whether or not they will award an individual or business with a line of credit. In essence, the credit score is the fundamental statistic used to evaluate an individual or entity’s credit worthiness. 

There are three agencies that will issue a credit rating: TransUnion, Experian and Equifax. The majority of lenders will evaluate the credit score of two of the three agencies; the credit score is distributed in a report, which will detail the prospective borrower’s credit history.

The formula used to determine a credit score is known as FICO. Named after the Fair Isaac Credit Organization (the first company to use credit ratings), this formula will yield a number ranging from 300 to 900. The lower the credit score, the greater the risk of default; an individual with a score that is below 500 is viewed as a risky borrower to most lenders. 

The risk in this sense is tied into the borrower’s ability to repay the loan or pay-off his or her credit card. The credit score, thus acts as a gauge to determine a risk of default; ratings closer to 300 are viewed as extremely risky, while those above 800 are viewed as possessing limited to no risk.

The FICO score is calculated based on the percentage of an individual’s total credit that is currently being utilized, the amount of time an individual has had an open line of credit, the types of credit lines the individual possesses, the amount of past lines of credit the individual has had, and the number of delinquent payments. 

Each of these variables contains the following percentage weight to determine one’s credit score: Amount of credit currently utilized (30%), the period of time the lines of credit have been open (15%), the types of credit lines open (10%), the size of past lines of credit (10%) and the number of delinquent payments (35%).

In a general sense, a credit score around 500 is viewed as high risk; this score will generally yield a refusal to lend. If an individual obtains a credit line with a credit score around 500, they will be given a line of credit with high interest rates, exorbitant fees and complicated terms. 

A credit score of 800 or above, in contrast, will grant an individual the lowest possible interest rates, small down payments (where applicable) and limited fees. A credit score of around 650 is viewed as safe enough to receive favorable terms; this score will typically be good enough to receive a new line of credit. 

The majority of organization offer online access to your credit score. These websites will offer reports from the leading credit agencies and detail why your score may be low. Given the importance of favorable terms and interest rates it is recommended that you view your credit score to ensure that no mistakes have been made. 

Often times an individual’s credit score will be lowered because of a forgotten debt or miscalculated payment. In order to raise one’s credit score, they must realize the position they are in. As a result of this, paying a small fee to view your credit score is well worth it.