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What Happened Last Year in Credit, Debit Cards

NEW YORK ( LowCards.com) -- Identity theft and actions by the Consumer Financial Protection Bureau dominated the credit card headlines last year, including these Top 10 stories:

  • One of the largest data breaches in history took place at Target stores between Black Friday and Dec. 15, the busiest shopping time of the year. The breach may have affected as many as 40 million people who used their credit or debit cards in Target stores throughout the country.
  • Two years after the creation of the Consumer Financial Protection Bureau, the agency finally got a permanent director. On July 16, the Senate voted 66-34 to confirm Richard Cordray to lead the CFPB. He had been serving as the acting director since January 2012 after being installed by President Barack Obama as a recess appointment. That move angered Republicans, who stalled his nomination for 18 months. Cordray is likely to remain in the post through the completion of Obama's second term in 2016.
  • The CFPB made its presence known under its new director. It began a crackdown on debt collectors, investigating how collectors verify borrowers' information and communicate with consumers. It is also investigating credit card rewards and whether customers are being misled when they sign up for complex credit card reward programs. It started regulating the nation's largest student-loan servicing firms, which manage student accounts, process monthly payments and respond to borrower questions. Finally, the CFPB put its mark on the loose lending that caused the housing crisis, tightening the rules on documentation.
  • In July, federal indictments were handed down on foreign hackers who stole and sold 160 million credit card numbers from more than a dozen companies during the past seven years, causing hundreds of millions of dollars in losses. The scheme was run by four Russian nationals and a Ukrainian. The victims in the scheme, which prosecutors said ran from 2005-12, included J.C. Penney, 7-Eleven, JetBlue and Heartland Payment Systems.
  • In May, federal prosecutors charged eight people in New York with cyber attacks on the global financial system. They were called part of an international ring that hacked into a database of prepaid debit cards and stole $45 million from ATMs around the world. Prepaid cards have fewer protections and regulations than credit and debit cards issued by a bank. They do not provide information about credit history or individual behavior, which makes them a good option for people with bad credit or no bank account  but also for thieves.
  • Social Security benefits went paperless in March. In a cost-saving measure, the government started a program in May 2011 to eventually eliminate the paper checks distributed for Social Security, Veteran Affairs, Supplemental Security Income and other government programs. According to Treasury officials, a mailed check costs the government 92 cents more than a payment made by electronic transfer. Eligible recipients were required to move to direct deposits or the prepaid debit cards called "Direct Express" by March 1, 2012.

  • Delinquency rates on credit card accounts dropped to the lowest level in 18 years, signaling that more cardholders are paying their bills on time. Figures released by the American Bankers Association in March showed that the number of accounts 30 days or more overdue dropped to 2.47% in the fourth quarter of 2012. The delinquency rate for credit card accounts peaked at 5.01% in 2009, but the rate dropped rather steadily since then.
  • The number of young Americans living without credit cards has doubled since the recession. About 16% of consumers ages 18 to 29 didn't have a single credit card by the end of 2012  up from 8% in 2007, according to data that credit score provider FICO. As a result, credit card debt has declined by about a third among this age group, from an average $3,073 to $2,087 per person.
  • JPMorgan Chase was ordered by the CFPB to refund $309 million to credit card customers that were improperly billed for add-on products. Many of the 2.1 million cardholders were billed for services they never got, such as identity theft protection and fraud monitoring. In addition to the $309 million in refunds to cardholders, JPMorgan Chase was ordered to pay fines of $60 million to the Office of the Comptroller of the Currency as well as $20 million to the CFPB's Civil Penalty Fund.
  • After years in court, federal judge John Gleeson finally gave Visa and MasterCard approval in December on the $5.7 billion class-action settlement to resolve retailer objections over the interchange fees charged every time a consumer uses a debit or credit card -- the largest private antitrust settlement in history. Retailers are still upset by the ruling, claiming the settlement does not stop credit card companies from increasing the fees in the future.

Bill Hardekopf is chief executive of LowCards.com, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."

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