Making Firms Liable for Consumers’ Mistaken Beliefs: Applications to the U.S. Mortgage and Credit Card Markets

2018 ◽  
Vol 15 (4) ◽  
pp. 800-841
Author(s):  
Alexei Alexandrov
Keyword(s):  
Credit Card ◽  
The U.S

Credit Solicitations as Market Experiments in the U.S. Credit Card Industry

2017 ◽  
pp. 1-5
Author(s):  
Nabil Al-Najjar ◽  
David Besanko ◽  
Roberto Uchoa
Keyword(s):  
Interest Rates ◽  
Selection Bias ◽  
Credit Card ◽  
Risk Profile ◽  
Average Risk ◽  
Credit Reporting ◽  
Credit Score ◽  
Typical Experiment ◽  
Market Experiments ◽  
The U.S

Describes market experiments conducted by a major credit card issuer. In a typical experiment, the issuer sends out hundreds of thousands of solicitations based on information received from credit reporting agencies (e.g., credit score, past delinquencies, etc.). Selection bias is striking: the average risk profile of those responding to higher interest rates is significantly worse than that of respondents to lower rates. Tracking respondents for 27 months after the experiment, respondents to higher rates displayed significantly higher delinquency and bankruptcy rates. Based on a research paper by Larry Ausubel.

Maxxed Out: TJX Companies and the Largest-Ever Consumer Data Breach

2017 ◽  
pp. 1-8
Author(s):  
Russell Walker
Keyword(s):  
United States ◽  
Credit Card ◽  
The United States ◽  
List Type ◽  
Data Breach ◽  
Royal Canadian Mounted Police ◽  
Operational Risks ◽  
Savings Bank ◽  
Security Standards ◽  
The U.S

In November 2005 Fidelity Homestead, a savings bank in Louisiana, began noticing suspicious charges from Mexico and southern California on its customers' credit cards. More than a year later, an audit revealed peculiarities in the credit card data in the computer systems of TJX Companies, the parent company of more than 2,600 discount fashion and home accessories retail stores in the United States, Canada, and Europe.The U.S. Secret Service, the U.S. Justice Department, and the Royal Canadian Mounted Police found that hackers had penetrated TJX's systems in mid-2005, accessing information that dated as far back as 2003. TJX had violated industry security standards by failing to update its in-store wireless networks and by storing credit card numbers and expiration dates without adequate encryption. When TJX announced the intrusion in January 2007, it admitted that hackers had compromised nearly 46 million debit and credit card numbers, the largest-ever data breach in the United States.After analyzing and discussing the case, students should be able to: Understand imbedded operational risks Analyze how operational risk decisions are made in a firm Understand the challenges in the electronic payment transmission process, which relies on each participant in the process to operate best-in-class safety systems to ensure the safety of the entire process Recognize the sophistication of IT security threats

scholarly journals Submission on improving acquisition of risk prevention and limit the bad debts of credit cards

2019 ◽  
Vol 2 (3) ◽  
pp. 19-29
Author(s):  
Dang Kien Cuong
Keyword(s):  
Credit Card ◽  
Credit Cards ◽  
Credit Market ◽  
Developed Countries ◽  
Legal Framework ◽  
Risk Prevention ◽  
Legal Regulations ◽  
Personal Credit ◽  
The U.S

To develop a sound personal credit market, especially credit cards, prevent and reduce the increasing bad debts in this market, it is necessary to establish, enhance and supplement the legal framework on issuance, granting credit card limits. Through the research about legal regulations on issuing conditions, granting personal credit limit via credit cards in developed countries in Europe, the U.S., and Canada, this paper aims to present findings on the above issues to contribute to the establishment, enhancement of and supplement to the Vietnam’s legal framework on the issuance and settlement of credit card bad debts.

Overconfidence in the Credit Card Market

2016 ◽  
pp. 150-168
Author(s):  
Susan Kriete-Dodds ◽  
Dietmar Maringer
Keyword(s):  
Interest Rates ◽  
Credit Card ◽  
Trading Volume ◽  
Credit Card Debt ◽  
Agent Based ◽  
Credit Card Market ◽  
Income Expectations ◽  
Credit Card Usage ◽  
Payment Credit ◽  
The U.S

High credit card debt default has been symptomatic for the U.S. and other countries in the last decades. Different explanations for this situation exist in the literature. One explanation is overconfidence, which has become a key concept in behavioural economics for explaining anomalies in financial markets such as excessive trading volume. There is also the idea that overconfidence is to blame for high credit card debt. In this paper, an agent-based model is presented that examines the effects of overconfidence on credit card usage. Overconfidence is used here to explain why people who never intend to borrow on their credit card(s) do so anyway. The model contains consumption, two means of payment (credit card and cash), and a distortion to agents' income expectations via overconfidence. It was found that overconfidence leads to more “accidental” borrowing and higher interest rates.

Cash Discounts to Retail Customers: An Alternative to Credit Card Sales

1982 ◽  
Vol 46 (2) ◽  
pp. 92-103 ◽  
Author(s):  
Charles A. Ingene ◽  
Michael Levy
Keyword(s):  
Credit Card ◽  
Cash Payment ◽  
Card Payment ◽  
The U.S

This article examines marketing and financial implications of offering a discount to retail customers to encourage cash payment rather than credit card payment. The conditions under which a discount is advantageous to retailers and to their customers are defined. The results of two surveys suggest that cash discounts are feasible under some circumstances. The surveys illustrate how a retailer might determine its own optimal discount policy. Legislation recently passed by the U.S. Congress makes this topic particularly timely.

scholarly journals How Do Minimum Payment Changes Affect Credit Card Arbitrage?

2012 ◽  
Vol 28 (3) ◽  
pp. 385
Author(s):  
Terrance Jalbert ◽  
Jonathan D. Stewart ◽  
Terry Pope
Keyword(s):  
Interest Rate ◽  
Credit Card ◽  
Deposit Insurance ◽  
Money Market ◽  
Unique Pattern ◽  
Card Payment ◽  
Federal Deposit Insurance ◽  
The U.S ◽  
Federal Deposit Insurance Corporation

This paper examines how changes in the minimum payment percentage and effective maturity of introductory offers affect credit card arbitrage. Credit Card arbitrage involves taking a cash advance on, or making purchases against, a credit card that offers a low or zero percent introductory interest rate. The proceeds are deposited into a Federal Deposit Insurance Corporation (FDIC) insured money market account. Profits from this strategy are dependent on factors including the minimum payment due on the credit card each month. Recently, under pressure from the U.S. Office of the Comptroller of the Currency, some banks have increased the minimum monthly payment percentage on their cards. We measure the sensitivity of Credit Card arbitrage profits to changes in the offer maturity and the required minimum monthly credit card payment. We also analyze how offer duration changes with changes in the minimum monthly payment. These calculations represent an important contribution to the literature because of the unique pattern of credit card loan payments.

The Effects of the COVID-19 Shutdown on the Consumer Credit Card Market: Revolvers versus Transactors

FEDS Notes ◽  
2020 ◽  
Vol 2020 (2792) ◽  
Author(s):  
Robert Adams ◽  
◽  
Vitaly Bord ◽  
Keyword(s):  
Credit Card ◽  
Consumer Credit ◽  
Credit Card Market ◽  
Revolving Credit ◽  
The U.S

The consumer credit card market has experienced dramatic, unprecedented changes in the wake of the COVID-19 shutdown of the U.S. economy. Revolving credit in the G.19 Consumer Credit statistical release fell by an annualized rate of 32 percent in the second quarter of 2020.

Targeting Target with a 100 million dollar data breach

2018 ◽  
Vol 8 (1) ◽  
pp. 9-23 ◽  
Author(s):  
Federico Pigni ◽  
Marcin Bartosiak ◽  
Gabriele Piccoli ◽  
Blake Ives
Keyword(s):  
Cyber Security ◽  
Credit Card ◽  
Consumer Confidence ◽  
Massive Data ◽  
Open Letter ◽  
Data Breach ◽  
Payment Card ◽  
Share Prices ◽  
Credit Card Data ◽  
The U.S

In January 2014, the CEO of the renowned U.S. discount retailer Target wrote an open letter to its customers apologizing for the massive data breach the company experienced during the 2013 holiday season. Attackers were able to steal credit card data of 40 million customers and more were probably at risk. Share prices, profits, but above all reputation were all now at stake. How did it happen? What was really stolen? What happened to the data? How could Target win consumer confidence back? While the company managed the consequences of the attack, and operations were slowly back to normal, in the aftermath the data breach costs hundreds of million dollars. Customers, banks, and all the major payment card companies took legal action against Target. Some of these litigations remained unsettled 3 years later. The importance of the breach lays in its far broader consequences, rippling through the U.S. Congress, and raising consumer and industry awareness on cyber security. The case provides substantial data and information, allowing students to step into the shoes of Target executives as they seek answers to the above questions.

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