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NEW CUNA opposes Senate interchange bill

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WASHINGTON (UPDATED 6/9/08 11:30 a.m. ET)—The Credit Union National Association (CUNA) opposes a recently introduced Senate bill to regulate credit card interchange fees and believes the free market, not the government, should set the user fees. Sen. Richard Durbin (D-Ill.), who is majority whip, introduced a bill last week that would force payment system providers and merchants to either agree on interchange fees or argue their case before a newly created tribunal which would have the authority to set the rate. His bill, a companion to similar House legislation, would set up a three-member panel of lawyers appointed by the U.S. Department of Justice and the Federal Trade Commission. Under Durbin’s Credit Card Fair Fee Act of 2008, retailers would be able to engage in collective negotiations with the providers of any electronic payment system with significant market power, defined as 20% or more of the credit and debit card market, over the fees and terms for access to that system. If the retailers and providers do not reach a voluntary agreement on fees and terms, the matter would be brought before the three-judge board. The House bill (H.R. 5546), introduced by Rep. John Conyers (D-Mich.) who is chairman of the powerful Judiciary Committee, was drafted after Conyers conducted a series of House task force meetings focused on whether credit card companies, as well as financial institutions, engage in anti-competitive practices when setting the fees they charge retailers. CUNA Vice President of Legislative Affairs Ryan Donovan Friday said CUNA strongly opposes government intervention in what should be a free-market process and has been working closely with the Electronic Payments Coalition to oppose legislative efforts in the House and Senate. Donovan said the current system of setting interchange fees is beneficial to consumers because interchange fees assist the growth of universal acceptance of cards and the innovation of super-fast authorization technology and enhanced security measures.

IRS adds functions to online payment application

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WASHINGTON (6/9/08)—The Internal Revenue Service (IRS) Friday introduced several new features to its interactive Online Payment Agreement application intended to make it easier for taxpayers, or their authorized representatives, to make changes to existing installment agreements. According to an IRS release, the system will now permit individuals to revise:
* Their payment due dates and/or amounts on existing agreements; *E xisting extensions to regular installment agreements and direct debit installment agreements; and * Existing regular installment agreements to a payroll deduction installment agreement or a direct debit installment agreement.
Also, the system now permits practitioners with valid authorizations to use the signature date found on their approved Form 2848, Power of Attorney and Declaration of Representative, or the caller ID as an alternate way to authenticate when requesting agreements for clients. According to the IRS, more than 75% of those eligible for an installment agreement can establish one using the online application, Since its launch in October 2006, more than 30,000 taxpayers have successfully used it to set up a payment agreement. Those eligible include taxpayers who owe $25,000 or less in combined tax, penalties and interest. They may self-qualify, apply and receive immediate notification of approval for installment agreements – including pre-assessed agreements on tax year 2007 Form 1040 liabilities and paperless direct debit agreements, the IRS release said.

Government shouldnt interfere in interchange fees says CUNA

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WASHINGTON (6/9/08)—The Credit Union National Association (CUNA) opposes a recently introduced Senate bill to regulate credit card interchange fees and believes the free market, not the government, should set the user fees. Sen. Richard Durbin (D-Ill.), who is majority whip, introduced a bill last week that would force payment system providers and merchants to either agree on interchange fees or argue their case before a newly created tribunal which would have the authority to set the rate. His bill, a companion to similar House legislation, would set up a three-member panel of lawyers appointed by the U.S. Department of Justice and the Federal Trade Commission. Under Durbin's Credit Card Fair Fee Act of 2008, retailers would be able to engage in collective negotiations with the providers of any electronic payment system with significant market power, defined as 20% or more of the credit and debit card market, over the fees and terms for access to that system. If the retailers and providers do not reach a voluntary agreement on fees and terms, the matter would be brought before the three-judge board. The House bill (H.R. 5546), introduced by Rep. John Conyers (D-Mich.) who is chairman of the powerful Judiciary Committee, was drafted after Conyers conducted a series of House task force meetings focused on whether credit card companies, as well as financial institutions, engage in anti-competitive practices when setting the fees they charge retailers. CUNA Vice President of Legislative Affairs Ryan Donovan Friday said CUNA strongly opposes government intervention in what should be a free-market process and has been working closely with the Electronic Payments Coalition to oppose legislative efforts in the House and Senate. Donovan said the current system of setting interchange fees is beneficial to consumers because interchange fees assist the growth of universal acceptance of cards and the innovation of super-fast authorization technology and enhanced security measures.

Mica urges Senate opposition to interchange bill

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WASHINGTON (6/9/08)—Each member of the U.S. Senate was urged by the Credit Union National Association (CUNA) Friday to oppose legislation that would insert government interference into a free-market system that works well—the setting of credit card interchange fees. In a June 6 letter, President/CEO Dan Mica noted CUNA’s disagreement with S. 3086, the Credit Card Fair Fee Act, introduced last week by Sen. Richard Durbin (D-Ill.). (See related story.) Mica noted that the bill would establish “a costly governmental tribunal that would be authorized to impose its decisions on a system that is more appropriately governed by the market.” CUNA has voiced opposition to a similar bill introduced in the House by Rep. John Conyers (D-Mich.). “While proponents of S. 3086 argue that interchange fees are becoming an increasing burden on their ability to do business, we believe that the current payment processing system directly contributes to the success of the retailer in guaranteed payment, increased sales, and the ability to competitively contract for payment processing services,” the CUNA letter argued. Mica pointed out that under the current fee system, 1.4 million merchants change acquiring relationships each year, in large part because of price shopping. “The number of options available to merchants and the fact that they actively change processors to get the best price available provides clear evidence that the payment processing system is competitive and the market is working,” Mica wrote. The CUNA leader also refuted the argument that legislating interchange fees would benefit consumers. “Government-imposed price controls on interchange fees are more likely to increase credit and debit card costs that consumers bear, and make convenient credit less available. “The uncertainty surrounding this legislation makes it unlikely that consumers will see any benefit. We urge you to oppose the legislation, Mica concluded.

Inside Washington (06/06/2008)

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* WASHINGTON (6/9/08)--A law enacted in Tennessee cracks down on credit card solicitations on college campuses, and may set a precedent for more tightly regulating the credit card push on campus. Tennessee’s law gives public university students the ability to opt out of the collection of personal information for solicitation purposes. Other states, such as California, Texas and Oklahoma have passed similar legislation. Texas has limited where companies can market cards on campuses, and Oklahoma made it illegal for colleges to sell students’ personal information to companies (American Banker June 6). Last month, Senate Banking Committee Chairman Christopher Dodd (D-Conn.) proposed credit card reform that would ban universal default, double-cycle billing and interest charged on fees. The bill also would limit prescreened offers of credit to consumers under 21. Issuers would also have to collect the signature of a parent or guardian before an individual under 21 is given a card (News Now May 1). Dodd’s bill aims to address complaints about young adults receiving credit card solicitations in the mail just after they turn 18. Some claim that the marketing practice could lead young consumers into high levels of debt ...

CUNA advises on CAN-SPAM rule

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WASHINGTON (6/9/08)—As of July 7, credit unions must remember to comply with CAN-SPAM Act rules that set certain requirements for email messages that primarily have a commercial purpose, the Credit Union National Association (CUNA) reminds. CAN-SPAM stands for Controlling the Assault of Non-Solicited Pornography and Marketing. The Federal Trade Commission (FTC), responsible for the law’s enforcement, has issued a final rule interpreting a number of provisions in the CAN-SPAM Act, a number of which may have an impact on credit unions. The law requires commercial-purpose emails to:
* Clearly and conspicuously indicate that the message is an advertisement or solicitation. Provide recipients with an opportunity to “opt-out” from receiving additional commercial e-mail messages from the same entity; and * Provide a physical postal address of the sender.
In a final rule analysis, CUNA advises that “transactional or relationship” e-mails, which may include most, if not all e-mails sent by a credit union, are not considered commercial e-mail messages and, therefore, are not subject to the same requirements. Use the resource link below for more CUNA analysis of the final FTC rule.