All About Credit Cards

When traveling to Europe, the Orient, or wherever your final destination may be, your options for paying for dinners and tourist gifts are either 1) traveler’s checks or 2) your credit card. The choice of which to used to be quite easy, but things have changed.

The ideal choice used to be to swipe your plastic. The big three (Visa/Mastercard/AMEX) would give you an excellent exchange rate, since they run so much money through the international banks. However, these days, cards have begun to affix surcharges when they’re used internationally. The percentages are usually fairly low (from 1-3 percents) but they can add up.

These fees make it so it might be worth looking into traveler’s checks, particularly if A) you can get them for free and B) you find a place with good exchange rates. You do lose some convenience, but expensive meals can rack up some big bills. So, take a close look at your options, and choose which payment method makes the most sense to you (and your wallet.)

Ways to compare credit card offers
New credit card legislation for students
New credit card legislation for students

How do you compare credit card offers? Do you look at the APR? The necessary credit score? A strong rewards program? Annual fee? Something else? Well, here is a short list of factors that should take into consideration when shopping different student credit card offers.

1. Type of card – There are three main types of credit cards you can get:

* Secured cards are for those with poor credit and require a security deposit.
* Regular cards don’t have many features but have higher credit limits than secured cards but lower limits than premium cards.
* Premium cards come in the various metallic flavors (silver, gold, platinum) and have the highest credit limits. They can also have rewards programs like cash back or travel insurance.

2. Grace period references the number of days you have to pay your bill in full without a finance charge. This isn’t standard and does vary by card.

3. Calculation of the finance charge is important as I discussed before with regards to the two-cycle average balance. Take a look at how the different cards work their interest accruals.

4. Fees are not only in terms of annual fees but also over-the-limit fees, late payment fees, and balance transfer fees.

5. Cash advance features which refers to how much it costs to use, how it’s accessed (ATM or checks) – as well as any associated fees and how payments are credited.

6. Credit limit is determined by your credit history, but some cards come with a predetermined limit.

So, next time you’re in the market for s new card, keep this list in mind and be sure to check it twice.

Students: worried about getting in over your head with credit card debt?
Parents: worried your kids might be getting in over their head with credit card debt?

Well, back in August, Senator Herb Kohl of Wisconsin was also not thrilled with the high balances that undergraduates (and even more for graduate) students are burdened with. Student loan debt is enough to worry about - more than that is quite unnecessary!

Therefore, he decided to introduce the “Student Credit Card Protection Act”. This legislation seeks to make it more difficult for students to acquire more credit than they should be able to afford. Specifically, the rules include the following:

* Require credit card companies to verify a student’s annual income if he/she is under 21.
* Require a parent, legal guardian or spouse to co-sign if the student has no verifiable income. Also, requires approval by the co-signer for increases in credit.
* Limit the amount of student’s credit based on their annual income.
* Prohibit the credit card company from issuing multiple cards to students.

Most of these seem like fairly obvious restrictions and it’s quite surprising that Congress has to get involved to make these stipulations into law. It’s still at the initial stages, so hopefully, it’ll progress further down the path and meet with universal approval. Even better would be if some of these legalities were in place for all consumers, and not just for students!

Students: worried about getting in over your head with credit card debt?
Parents: worried your kids might be getting in over their head with credit card debt?

Well, back in August, Senator Herb Kohl of Wisconsin was also not thrilled with the high balances that undergraduates (and even more for graduate) students are burdened with. Student loan debt is enough to worry about - more than that is quite unnecessary!

Therefore, he decided to introduce the “Student Credit Card Protection Act”. This legislation seeks to make it more difficult for students to acquire more credit than they should be able to afford. Specifically, the rules include the following:

* Require credit card companies to verify a student’s annual income if he/she is under 21.
* Require a parent, legal guardian or spouse to co-sign if the student has no verifiable income. Also, requires approval by the co-signer for increases in credit.
* Limit the amount of student’s credit based on their annual income.
* Prohibit the credit card company from issuing multiple cards to students.

Most of these seem like fairly obvious restrictions and it’s quite surprising that Congress has to get involved to make these stipulations into law. It’s still at the initial stages, so hopefully, it’ll progress further down the path and meet with universal approval. Even better would be if some of these legalities were in place for all consumers, and not just for students!

Do you currently face an increasing amount of credit card debt? And do you happen to be in graduate school? In 2006, a college financing company surveyed graduate students in order to determine their card usage statistics. Here are the highlights that I found most intriguing:

* The average balance of graduate student cards is over $8,600
* Only 20% of survey respondents paid off their balance each month
* Ninety-three percent of these students would have appreciated their undergraduate school to have offered financial management classes
* About 94% of these grad students used credit cards to pay for some portion of their direct education expenses, primarily textbooks.

The fact that the average balance is so high is a bit scary. If it’s not paid off, these students could see their interest increase the balance another $1,500 each year!

Of the above points, the latter is the only statistic that we, at StudentPlatinum, would possibly recommend. If you’ve got a low enough APR and you couldn’t find a better deal with a private college loan, then financing your education would have some value. Other than that, the high balance students have - combined with the low number of students who pay their entire balance - makes it seem that additional financial education even at the high school level would be extremely valuable. Just don’t ask the credit card companies to foot the bill!

Many believe that having bad/poor/weak credit is the exact same issue as not having any credit. That’s not quite right - they are actually different from one another.

Having “no credit” refers to situations when you’ve never owned a car, rented an apartment or had a credit card. At this point, lenders (card companies) have absolutely no idea whether or not you’d be a good candidate for paying back the bills you generate. In these situations, getting mom or dad to co-sign your student credit card (provided they have good credit) will allow you to get started with plastic.

If you are one of those with “bad” or “not so good” credit, you’ve already had your shot at a credit card or apartment rental and didn’t do such a great job. Certainly, unforeseen circumstances could have taken place (family emergency, financial difficulties, etc.) but your credit score doesn’t care about those issues - a low credit score is a low credit score.

Some suggestions for those with weaker credit:

* Specific credit cards for low credit - Many car companies offer cards for those with weaker credit. These may have additional upfront costs (annual fee, application fee), but by paying them off, you’ll improve your credit score and eventually upgrade to a card for those with stronger credit.
* Secured credit card - This type of card allows customers to provide an initial outlay of cash as the funding source for their card. By providing a fail-safe amount of money, it’ll be much easier to pay it off each month.
* Department store/gas cards - Whether it’s Mobil or Macy’s, most retailers have leaner restrictions on who they provide credit for. Therefore, it’s almost like a second chance at establishing credit. Just make sure to pay back what you use, as these types of cards generally have much higher APRs!

So, make sure you understand the difference between lacking credit and not having good credit. Both can be fixed, as long as you take the appropriate steps to do so.

My friend’s cell phone contract was about up and she was tired of paying the higher rates. What did she do? Well, if you read the title of this blog post, obviously she gave them a ring. Right of the bat, she gave them a call and asked for the cancellation department. She was connected fairly quickly and asked to close her account. Of course, they ask, “How come?” Her response was that it was too expensive and she’d found some other very enticing offers.

The rep, not interested in losing a customer, ran down what she has now - 700 minutes, unlimited texting and Internet. All for $60/month. Their counter was quite good - 1000 minutes, texts and Internet. All for $45/month! So, she’d receive 33% more minutes at 25% less per month. She was quite pleased and I recommend that everyone does this if they aren’t in a cell phone contract.

And, since this blog is about credit cards for students, the same goes for your plastic - don’t like your APR? Accumulated a fee for something unusual? Just pcik up the phone!

Re-age? What does that mean? Redo first grade? Go through puberty again? No no, it refers to your credit card account, (naturally). Let’s look at some details.

Wow, that new plasma TV looks great in your living room. The colors! The details! Everything is wonderful - until you get your bill and find out that your expenses for the month have far exceeded what you can afford at this point. You ultimately incur late fees and interest on this payment. And, of course, more bills and expenses come the next month, so how much longer can you do this?

When situations like the above take place, one option that credit card holders have is to “re-age” their account. This means that the account reverts back to a status when there were no late fees and your account status was “current” rather than “delinquent”. Had a lower interest rate? You’ll be there, as well.

How does this happen? You need to strike a deal with your credit card rep and ask them to re-age. You can only do it once a year, and they need some sort of agreement that this was just a fluke and that you’ll continue with on-time payments (they don’t have to be in full). Once you get a verbal OK from them, ask for something in writing, in case there is a computer fowl up of your account and the re-aging accidentally gets forgotten.

Is this always the best route? For the most part, yes. Getting your account back in good standing will assist you with your credit and also with getting the best APR. However, if you’ve only missed one payment and then are back on track, it probably isn’t worth re-aging. Since you can only do it every 12 months, it’s better when you’ve got multiple months of late fees that would otherwise kick up your interest rate and knock down your credit score.

How do you compare credit card offers? Do you look at the APR? The necessary credit score? A strong rewards program? Annual fee? Something else? Well, here is a short list of factors that should take into consideration when shopping different student credit card offers.

1. Type of card – There are three main types of credit cards you can get:

* Secured cards are for those with poor credit and require a security deposit.
* Regular cards don’t have many features but have higher credit limits than secured cards but lower limits than premium cards.
* Premium cards come in the various metallic flavors (silver, gold, platinum) and have the highest credit limits. They can also have rewards programs like cash back or travel insurance.

2. Grace period references the number of days you have to pay your bill in full without a finance charge. This isn’t standard and does vary by card.

3. Calculation of the finance charge is important as I discussed before with regards to the two-cycle average balance. Take a look at how the different cards work their interest accruals.

4. Fees are not only in terms of annual fees but also over-the-limit fees, late payment fees, and balance transfer fees.

5. Cash advance features which refers to how much it costs to use, how it’s accessed (ATM or checks) – as well as any associated fees and how payments are credited.

6. Credit limit is determined by your credit history, but some cards come with a predetermined limit.

So, next time you’re in the market for s new card, keep this list in mind and be sure to check it twice.

A friend of mine recently received a postcard in the mail from Discover. Inside, it said that his standard APR was about to double - from 12% to almost 21%! This was preposterous to him, so he picked up the phone and gave Discover a ring.

Rep: “Discover credit card services. How can I help you?”
Friend: “Yes, I just received a postcard saying my APR has doubled. I’ve always paid my bill on time and have been a customer for years. Why did my rate suddenly increase so much?”
Rep: “(looking at the account) Yes…I see that you received that card in the mail. Let me transfer you to a Credit Specialist.”

At this point, my friend was quite worried that something was wrong. Why else would he need a “credit specialist”?

The so-called “specialist” gets on the phone:
“Hello, how can I help you?”
Friend: “Hi, I’m calling about the postcard that’s raising my rate. Can you give me reasons why you did this?”
Credit rep: “Oh (checking the account) we can keep your rate where it is…”
Friend (being quite nice): “Well, actually, it’d be even better if you could lower it.”
Credit rep: “Sure we can do that - how about we take you from 12% to 10%?”
Friend (ecstatic): “That’d be terrific, thank you!”

So, the card was mostly checking to see if their customers actually read their postal mail. In this case, it actually benefited the customer, because the rate was lowered. Granted, it did take some time out of my friend’s day, but he saved himself from a drastic increase in APR, and actually ended up with something better!

JENNIFER, THE ASSISTANT Jennifer treasurer at ABC Corp. in New Orleans, opened an e-mail from a former colleague who no longer worked for the organization. The e-mail read: "Hi Jennifer, there should be a refund of $716 on my old corporate Visa card from the IP Conference. I paid for, but did not attend, the conference and did not turn in the charge to ABC for reimbursement. Can you have Visa issue a refund check to me? Thanks very much for your help."

The e-mail was from Larry, a former ABC executive who had been Jennifer's boss at one time. The message seemed innocuous enough. Larry had legitimately charged a business conference to his corporate credit card, but he had canceled his registration because he left the company. Therefore, he was due a refund.

It would have been very easy for Jennifer to trust her former boss and get him the refund. Instead, because something didn't seem quite right, she chose to check on whether ABC had already reimbursed Larry for the conference.

Looking out for your own interests

As you gear up for the bustling holiday season, you'll be shopping for the latest toys for the kids, unique gifts for family members and friends, the perfect dress for the office Christmas party, and, no doubt, buying tickets to travel out of town. In nearly all of these instances, you will be using a Visa, MasterCard, American Express, or Discover Card to make purchases.

After all, using your credit or charge card is actually the best option for holiday shopping in terms of security and tracing. You'll have the security of shopping safely and knowing that if your card is stolen, it can be canceled immediately. Your bank can issue you a new credit card and have it delivered the next business day. You should limit your credit card use to major purchases such as televisions, stereos, and jewelry, so that if you need to make a return without a receipt, the credit card data can be used as a tracking mechanism. Also, if the product is flawed, it can be disputed through your credit card company. With online shopping, an increasingly popular medium, your credit card is required as well. You cannot use a check, and C.O.D. is rarely offered.

When using a credit card, it's important to do so wisely and sensibly. Credit card companies are in the business of making money. It's important that you look out for your own personal interests. "We get so many calls from consumers who complain about the interest rates that credit card companies charge and from people who want to know their rights as credit card holders," says Jennifer Davis Carey, director of consumer affairs and business regulation for the state of Massachusetts.

To address these matters, Massachusetts published a consumer guide entitled 12 Credit Card Secrets Banks Don't Want You to Know to educate the public on how to select the best credit card and to help them understand the billing process of most companies.

Many companies engage in interest backdating, if you don't pay off your monthly balance in full. This practice involves charging interest from the date of purchase, although days elapse before they actually pay the merchant on your behalf. Also, credit card issuers have two-cycle billing--a means of calculating interest--which results in customers paying two months' worth of interest if they did not pay off the first month's balance in full. Two-cycle billing only occurs when consumers have changed from paying in full to carrying a balance each month.

"It is important to know about interest backdating and two-cycle billing. If this occurs, find another credit card issuer or make sure you pay your bill in full by the due date," says Carey.

"Ask your creditor to reduce your interest rate," says Mel Stephens, a certified counselor for Consumer Credit Counseling Service (CCCS).

To find credit cards that offer the best interest rates for you, visit the Global Payment Card Information Network Website at www.cardweb.com. You'll find information on the lowest rates offered by banks, cards that have no fee, and secured credit cards.

"Consider what you are looking for in a credit card, such as the annual fee, grace period, interest rates, and credit line," says Carey. "Then, do your research. It is important to find out the terms of the initial agreement. Be sure to read your monthly statements and flyers that are included because most contracts state the terms are subject to change. If they change the grace period or interest rate, you may rack up unexpected late fees."

When you need cash, use your credit card as a last resort. There are double fees on cash advances. Most credit cards enforce both a transaction fee and finance charges.

"You are being charged two fees for one transaction," says Carey. "Don't use cash advances for casual purposes. It is not good budgeting."

New credit card and payment solutions are helping Latin American corporations gain a competitive edge in the marketplace, while offering significant advantages to consumers. These rapidly evolving credit, debit, travel, payment and purchasing card programs are helping Latin American companies to speed their payment flows, manage their expenses, reduce fraud, and operate more efficiently. Perhaps most importantly, these innovative card programs allow organizations to deliver valuable personal services and reward programs that build and sustain long-term customer loyalty.

From the consumer's point of view, new applications of current card programs technology, as well as the advent of' smart cards (bank cards with embedded chips), can address key issues from account management to secure authentication of personal financial transactions. The advancement of card technology, combined with well-implemented service programs,' promises to transform the nature of financial services provided to businesses and individuals throughout the region.

By llse Pizzolante, Vice President of Consumer Credit Products, Visa International, Latin America and Caribbean Region (LAC).

In the world of credit cards, there is a world of choices--from starter cards with minimum credit lines to gold cards for loyal costumers. But for the affluent consumer, a superior choice of card exists.

Visa Infinite and Visa Platinum are two cards designed for the elite business executive and traveler. Their aim: To satisfy any need, anytime, anywhere.

Accepted at more than 22 million locations, Visa Infinite and Visa Platinum offer unique services for business and personal travel, Internet purchases, customer service, shopping and value. Visa is the preferred card among elite customers for day-to-day use, Internet purchases, customer service, shopping and value.

Need a dinner reservation for the hottest Parisian restaurant at the drop of a hat? A 24-hour concierge service will oblige, and your seat is guaranteed. Have a medical emergency? The Visa insurance program will take care of you, anywhere. Tired after that 10-hour flight from Buenos Aires? Your card allows room upgrades in the world's leading hotels. Still have an eight-hour flight to go? Use the cards to access VIP waiting areas at airports and terminals.

Unlike other cards, Visa Infinie chip-based technology enables it to be used as a debit card at points of sale and ATMs worldwide. And the rewards programs offered with both cards allow users to redeem each dollar spent for airline travel, vacation packages, car rental or gifts.

The Visa Infinite card, the most elite card, is for the high-maintenance client. It provides a line of credit of over $20,000, travel accident insurance coverage of $1 million, emergency medical insurance coverage of $25,000 while traveling, emergency card replacement and cash advance within 24 hours.

Cardholders are entitled to opportunities made possible through Visa's partnerships with leading hotels, spas, resorts and luxury service providers worldwide. For example: Suite upgrades at properties such as Ritz Carlton, Beaches Resorts, Warwick Hotels, Groupe Lucien Barriere and Banyan Tree, among others; special promotions for rentals of private yachts or airplanes through Yachtstore, New World Aviation and TAG Aviation; membership in the Saks 5th Avenue 5th Avenue Club--which includes a fashion consultant and private rooms, and VIP status at Galerie Laffayette, with priority seating at weekly fashion shows and a personal shopper.

Visa Platinum, in addition, offers $500,000 travel accident insurance, emergency medical insurance and rental car insurance. Card holders enjoy upgrades, late check-out and VIP status at a wide array of properties, including Renaissance Hotels, Resorts and Suites and Sofitel Hotels, as well as special packages with retailers and travel planners.

To get an idea of the experience, picture this: A suite (upgraded), at an exclusive, 100-room resort in the Caribbean. A call to a personalized concierge service leads to a Personal Travel Advisor who makes a reservation, sends a gift to a business partner, finalizes a travel itinerary and purchases tickets. You don't have to leave early; your cards allow you to check out late afternoon.

One of the main arguments against the direct shipping of wine to consumers, particularly via online sales, is that it provides an easy way for minors to get their hands on forbidden beverages. When faced with the retort that few 15-year-olds have their own credit cards with which to make Internet purchases, the standard response from wholesalers and concerned citizens is that it's easy enough to swipe mom's Visa card when she's not looking.

But what if there were a way to instantly verify a wine buyer's identity online, at the time of purchase--even if the buyer in question had gotten his hands on an adult's credit card? Would wholesalers declare the world of Internet wine buying safe for minors and encourage states to open the direct-shipping floodgates? We'll soon find out, if a new online age verification system catches on with U.S. wineries.I believe IDlive's technology significantly challenges the posture taken by the wholesalers," says IDology group VP and chief marketing officer Raye Croghan. "We have reached out in the past, to no avail. If we can disarm them, perhaps the real issue can be addressed and dealt with on a fair playing field."

In addition to forcing wholesalers and distributors to acknowledge their true agendas, Croghan says, IDlive helps wineries steer clear of government sting operations. "The system has highly effective and creative sting prevention capabilities," she says. Even if a winery is caught in a sting, "Our winery clients have the protection of exercising their right to what's called due diligence defense, recognized in all states."

Many people believe that shipping companies are liable for wine packages that are delivered into the hands of minors--particularly if the delivery person fails to obtain the required adult signature. However, according to Kristin Krause, public relations specialist for regulatory and government affairs in FedEx's Washington D.C. office, that is not the case. "Our terms and conditions of carriage place the responsibility for ensuring compliance with applicable laws and regulations on the person or company tendering the shipment to us," she confirms.

How It Works

IDlive allows wineries and online retailers to create a customized Internet verification system that taps into public records. The system sifts through and sorts the data to verify age and identity, then provides a confirmation (or denial) to the company that is taking the order. (Because the consumer's detailed personal information is not divulged in this process, the data is protected against identity theft.)

To prevent kids from using a parent's credit card to buy wine, the system can be set up to enable a "knowledge-based verification"--meaning, that it searches pubic records for information about the cardholder, and presents questions that only that person should be able to answer. (For example: "What make/model car were you associated with in 1979?")

IDlive can be set up to run automatically or manually. In a manual system, the winery representative or online retailer enters the name, address and year of birth of the buyer, then clicks a button to determine if the person is of age. If IDlive is unable to verify a person's information, or it is determined that the buyer is a minor, the system can respond in various ways, according to each individual winery's preference. Some wineries list an 800-number that the customer must call to verify purchase, while others simply send a message to the user, declining the order.

"We try to re-create the entire retail buying experience in an online environment," Croghan says, from selecting the product to bringing it to the counter to having the cashier check the ID. "The difference is that we know if an ID is fake, while retailers don't always know."

IDlive In Action

After the Supreme Court's recent ruling on direct shipping, IDology extended an offer of 500 free age verification checks and free enrollment for wineries that registered by May 31. A large wine conglomerate and several small wineries took advantage of the offer, and have since signed contracts to continue the service.

IXL, New York, has launched a site to support Sony's new Sony Card credit card (Visa/MasterCard), which allows customers to collect points redeemable for Sony merchandise with every purchase.

Jeffrey Dorn, senior vice president of the Sony Card business division in Park Ridge, N.J., said the card is geared toward men and women 25 to 49 who earn incomes of at least $50,000 and "have a high enthusiasm for both electronics and entertainment."

The site, located at www.sony.com/sonycard, provides information about the card, which is co-branded with Citibank, as well as an online card application and commerce area for Sony products. The site's most interesting feature may be its "story log" which uses online storytelling to tell visitors about the bonuses of the card. The story log includes a narrative appealing to a young, professional demographic, or the Ally McBeal and Friends set, said Ian Kerner, director of iXL's strategic solutions group. Despite using TV shows to describe the card's demographic, Kerner noted that the Internet is central to its marketing plan. "I think it's clear that the Sony Card is really embracing the medium."

In the current story, a man leaves his cellular phone in a taxi, and a female tourist snaps some photos of the cab's license plate. As the duo frolick through New York tracking down the phone, users can click on Sony products placed throughout the couple's travels for purchase information using the card. Items also can be redeemed with Sony points.

Jack Templin, lead strategist of iXL's strategic solutions group, said the site eventually will include a suite of tools that can guide users with Sony Cards through search and recommendation sections. "This is a card that's both a traditional credit card and also very intelligent about navigating cyberspace and c-commerce," he said.

Sony is also running a direct response campaign in traditional media created by Young & Rubicam Direct, New York. The online campaign, Dorn added, is integral to the marketing. "We hope the Internet is going to be a very, very rich and active channel for us," he said.

Links to the card site and its application will be on Sony's other sites, including those for its music, Playstation gaming system and other merchandise. "It's bringing together all of the Sony entities,"

FRAUD: The bad guys want your customers' credit card information. But there are things you can do to tighten security on your site.

It was an e-retailer's nightmare. When Bibliofind, an Amazon.com-owned online shop that hooks up buyers with used-book sellers, was hacked this past February, the proprietors thought only their homepage had been defaced. Then the company looked at its server logs. It found that a rogue had been accessing customer data files since the previous October, exposing the credit card numbers of 98,000 Bibliofind buyers.

While e-commerce sites publicly pooh-pooh the threat of credit card theft, it's a real and far-reaching problem. A recent report by the San Francisco-based Computer Security Institute found that 85 percent of e-commerce and government sites polled experienced a security breach in the past year. Thirteen percent reported that customers' credit card numbers were rendered accessible.

The reality is that "no system is 100 percent secure," says Chris Wysopal, director of research and development for online-security firm @stake. But you can minimize the threat of theft by taking a few precautions.

Hackers usually break into sites through holes in Web server software. Hundreds of these holes are discovered every year. To keep track of them, many sites use e-mail lists like Bugtraq. That's where, for example, you would have learned about the 32nd hole discovered in Microsoft's Windows 2000 Internet Information Server. Technically known as a "critical buffer overflow problem," the Windows design flaw could let a malicious hacker take control of an entire Web server.

Once hackers break into your Web server, they can satisfy themselves simply by fiddling with your homepage. To do real damage -- to steal credit card numbers, for instance -- they have to get beyond the Web server and into the box that houses your customer database. Assuming your IT department is on the ball, that means breaking through a firewall. There are a raft of hardware and software tools -- Check Point Firewall-1, Cisco Pi, PGP Gauntlet and Symantec Raptor are a few examples -- that protect your network by admitting only approved users and applications.

But there's a chink in this armor: Firewalls on e-commerce sites must be configured to admit data traffic from your Web server. If they weren't, none of the transactions from that server could get through to your site's back end. So if a hacker finds a hole that lets him control your Web server, he could also get through your firewall.

That's why your site should encrypt sensitive data. The simplest way is by configuring your Web server to use the secure sockets layer, or SSL. (If your IT people don't know how to do this, get some new IT people.) SSL encrypts incoming and outgoing data streams, hiding them from hackers who've penetrated your Web server or who are simply sniffing at data traffic from your ISP or Web hosting service.

You might also consider encrypting your customer database using specialized hardware or software. But that, says Ric Steinberger, technical director at Security Portal, a security news site, is "like putting an extra fence around Fort Knox." If your OS is patched, you've got a good firewall and you're using SSL, that should be enough to stop most hacks.

Unfortunately, few sites bother to implement all these precautions. That's why hackers are usually caught after the fact, when system operators have had a chance to notice unusual activity in network logs. Companies like Cisco, ISS and NFR all make intrusion detection software - priced anywhere from $2,000 to $25,000 - to alert you if anything odd happens.

If your customer data is compromised, you have little choice but to admit it as quickly as possible. That's what Bibliofind did. The company took the site down and sent e-mail to customers whose cards had been exposed. Sure, it was a public relations nightmare. But at that point, there's not much else you can do.

The Bank of the Philippine Islands (BPI), the nation's second largest bank, recently unveiled the country's first virtual credit card system called the BPI E-Credit targeted to security-conscious customers making frequent purchases on the Internet.

Josephine Ocampo, BPI's president for card banking division said that E-Credit is an extended virtual account for holders of BPI MasterCard. It would allow its customers to make Internet purchases without using physical cards.

The E-Credit system, which is exclusive to BPI MasterCard users, creates an account for card owners and would automatically grant a 50 percent credit limit for purchases made on the Web, based on customers' existing credit line. A separate account number and card verification code (CVC) for the E-Credit card would be issued to the holder of the physical MasterCard.
The account number and CVC of the E-Credit card then would be entered into the order field of a merchant Web site, instead of the information on the customer's physical MasterCard

An applicant for the E-Credit can choose to place any desired amount into the E-Credit account, which could range between 5,000 pesos ($94) to a maximum of 50,000 pesos ($936) at present. Ocampo said this particular option would help manage the buying behavior of cardholders. He said though the maximum amount would eventually be raised depending on the future needs of clients.

"The customer is given all the freedom and convenience needed for buying items online, but it could also discourage compulsive buying," she quipped.

The same self-restraining method also secures accounts of cardholders against credit card hackers since the use of the E-Credit card numbers are only exclusive to Internet purchases. "There is no way the numbers could be used for traditional purchases that are coursed through regular stores," Ocampo said.

Whenever a purchase has been made using E-Credit, the amount will be deducted from its physical MasterCard's online counterpart. The deduction would then be reflected on the MasterCard holder's monthly statement of account.

Nevertheless, customers could also check their accounts for both MasterCard and E-Credit through BPI Express Online (www.bpiexpressonline.com), BPI's Web site launched early this year to help customers check their savings accounts and keep track of their credit line in real time.

Ocampo added that the whole system would be fully operational by the end of the month, though applications can already be made through all of their branches or via the Web. Initially, BPI is aiming to convince around half of its 150,000 BPI MasterCard users to also get E-Credit card accounts by the end of the year.

"We also hope to get the same number for our Expressnet ATM users until the early part of next year," she said.

Ocampo predicted that Filipinos' use of the Internet for online purchasing would gradually increase within the next two years, despite the low usage of the Internet in the Philippines, which reportedly counts only about 2 million users.

"We're helping to promote the future of online purchasing by providing the service now," Ocampo said.

William Reyes, BPI MasterCard product manager added that the launching of E-Credit also coincides with the bank's upcoming promotions for the next four months, the first two months of which are often considered as early preparation for the Yuletide season.

In these tough economic times, many of us are looking for work. But don't let your quest for employment suck you into the innumerable "work at home" scams riddling the Internet. In particular, watch out for a new trick that targets PayPal users. We've had several reports lately that describe a similar scenario: An online ad seeks to hire people to use their own PayPal accounts to facilitate sales for customers who allegedly have no other way to transfer funds.

Here's a typical, but real, example reported to us in March. The victim answered a Monster.com job ad like the one in Figure 1, posted by a company called Insync Soft that claimed to be based in Prague, in the Czech Republic. Looking for people with experience using PayPal, the company promised to pay 10% and up on any transactions the person facilitated. (Monster.com has since removed the ad.)

In a follow up e-mail, Insync Soft representative William Lesoe claimed PayPal wasn't allowed in his country (it's not), so the company needed someone from the outside to act as a middleman to receive funds from customers buying software. But—and here's the catch—the job seeker (that is, the victim) had to set up and use his own PayPal account and to send Insync Soft payment and log-on information. And he had to use his own credit card and bank account to guarantee the PayPal account.

You can probably guess the rest of the story. The victim receives credit card payments from "customers" to the PayPal account, then sends the money out of the country by an untraceable Western Union cash transaction. As with the infamous Nigerian scams, the victim is supposed to keep a percentage of the money.

But there's no happy ending. Once the money has been withdrawn and sent, there are charge-backs from the credit card companies because the credit cards were stolen. PayPal returns the money to the credit card company and goes after the account holder for the money. The victim is left to cover the charge-backs out of his own pocket. The customers, of course, are bogus.

We spoke with a woman named Gloria in the account resolution department at PayPal to see what a victim can do. Not much, it turns out, because the victim agreed to be the primary company or person on the PayPal account. And PayPal doesn't allow its account holders to act as intermediaries for others.

Charge-backs usually occur when the credit card company contests a charge because of nonshipment, misrepresentation, or occasionally fraud. The credit card company asks PayPal for the money, who in turn asks the account owner. PayPal will go to the boards to defend its members against charge-backs, but only if there's a paper trail showing that products were shipped or services rendered. In this scam, since the victim is acting as a straw man and not actually shipping anything, PayPal won't fight the charge-backs. These are empty transactions, so the victim has no recourse.

Be wary of variations on this theme. We also received reports of companies called Ross Soft (owned by a Kevin Lesoe) and Eastern Exchange advertising on job boards. Both promised great rewards for PayPal work.