The Prepaid Press - February 2009 - (Page 6)

PREPAID BUSINESS February 15 · 2009 - 6 REGULATORY RUNDOWN by Ed Maldonado February 2009 from policymakers is whether the OCC or the states can truly protect consumers when a gift card issuer fails. Movement among policymakers seems to be drawing a clear line that federal guidelines of some sort are necessary at this juncture. Such a policy would be consistent with recent federal enforcement of disclosures violations by the Federal Trade Commission (FTC) in 2008 against K-Mart, Red Lobster and other retail issuers of gift cards without clear and conspicuous notice of dormancy fees and expiration dates. The question remains one of agency authority and rules: Who will be the most proper agency to fulfill this role and what rules will they apply? Issuers of gift cards and closed-loop stored value products are encouraged to keep a keen eye on this topic in the second or third fiscal Quarter of 2009, as this will likely be the time the federal Bill will pass committee if introduced now. current low-cost and high cost Universal Service allocations. Whether the Congressional report’s criticism was political “fluff” or tangible “stuff” remains an open issue. The FCC responded to the report citing that, in the end, the House Energy and Commerce Committee did not conclude there were any violations of rules, laws or procedures by the FCC and that the procedures followed under the Martin Chairmanship were the same that have been followed for the past 20 years. However, with the interim appointment of Chairman Michael Copps (D) and the impending nomination of a Democrat as FCC Chairman, the composition and policymaking perspective of the FCC is clearly poised to recalibrate going forward in 2009. Speculation and conjecture over the Internet and regulatory Blogsphere is now highly focused on how the FCC under a Democratic majority will revisit issues that were narrowly decided on a 3-2 Commission vote under Chairman Martin. The past four years have seen a vertical consolidation of the FCC from the regulatory and policy 1. Stored Value Cards and Systems: Virginia Bill targets SVC Use in Political Contributions. RICHMOND, VA - VIRGINIA GENERAL ASSEMBLY (January 14, 2009). House Delegate Robert G. Marshall (R-Dist. 13) has introduced House Bill No. 1658 that provides, interestingly enough, that campaign contributions made through a stored value card may never be accepted. Built into the Bill is an updated definition of the term “stored value card” which may be used in other ongoing legislation and regulation in the State of Virginia. The Bill is set to amend and reenact § 24.2-945.1 of the Code of Virginia, as it shall become effective, and to amend the Code of Virginia by adding sections numbered 24.2-947.3:2 and 24.2-949.4:1 relating to campaign contributions; stored value cards; prohibition. Early in the process of being passed, the Bill is now being reviewed by the Assembly’s Committee on Privileges and Elections. However, the prohibitions as related to stored value definitely demonstrate that the Assembly sees stored value as a cash equivalent that could mask under-the-table contributions. The Bill includes the following prohibitions: 1. No candidate campaign committee shall accept contributions provided through a stored value card. 2. No political action committee shall accept contributions provided through a stored value card. 3. No out-of-state political committee shall accept contributions provided through a stored value card. 4. No political party committee shall accept contributions provided through a stored value card. 5. No referendum committee shall accept contributions provided through a stored value card. 6. No inaugural committee shall accept contributions provided through a stored value card. This Bill should be watched, as it may spur parallel legislation in other states addressing stored value as a means of masking improper or illegal contributions. Should this occur, new regulation may arise that limits use or mandates disclosers by the cardholders of stored value cards, or alternatively, by their issuers. consumer recourse when Gift Cards and Closed Loop Issuers go under. Of primary concern is whether consumers should be relegated to immediate redemption of their cards during inventory liquidation, or if more protection should be afforded consumers. Now that Circuit City is shutting down its last 567 stores, the company has reiterated that cards may not be refunded, and that consumers should use, or lose, the stored value on their cards during its liquidation of inventory. Five States currently have laws and regulations that address the recourse of consumers when an issuer, be they a retailer or closedloop card provider, goes under. These include California, Montana, New York, Oklahoma and Washington. However, other states’ laws and regulations are unsettled on this issue. Although there are numerous state laws that address dormancy charges, escheat, expiration dates and associated charges to the cardholder, state regulation is either vague or non-existent to address consumer recourses during issuer 3. Prepaid Telecom: FCC issues 2009 Regulatory Filing Due Deadlines. WASHINGTON, D.C. (January 10, 2009) The Federal Communications Commission (FCC) has updated its due dates for the First Quarter of FY2009. All FCC 214 holders, Common Carriers, Prepaid Calling Card Providers, Wireless Providers, VoIP Resellers, and Interconnected VoIP Providers should be advised that penalties and interest can accrue to assessments for late filing of the FCC Form 499. · Annual FCC CPNI Certification due March 01, 2009 · Annual FCC 499A Report due April 01, 2009 · Annual FCC Circuit Report due March 31, 2009 · Quarterly FCC 499Q Report for Contributing Carriers due February 01, 2009 · Quarterly Notice of De minimis status in lieu of FCC 499Q Report due February 01, 2009 · Quarterly FCC CPN Report Prepaid Calling Certification due March 15, 2009 Be advised that the recent thrust of 2008 FCC enforcement Actions and FCC Letters of Inquiry have targeted non-filers of the above reports, particularly the Annual FCC CPNI Certification. Five States currently have laws and regulations that address the recourse of consumers when an issuer, be they a retailer or closed-loop card provider, goes under. perspective which has favored consolidation, ILEC interests, and larger media interests, and shied away from clear and uniform regulation of VoIP, Net Neutrality, smaller carrier interests, CLECs, and review under the Regulatory Flexibility Act to determine how FCC policies have affects small to mid-sized businesses. What will likely be addressed by the FCC, going forward, falls into two general consensus areas as it relates issues affecting prepaid telecom providers: 1. Broadband service deployment to more Americans. This issue will likely encompass considerations of VoIP, Net Neutrality, and Universal Service offerings. Narrow opinion differences among FCC Commissioners in the past, related to the competitive status of CLECs, be the prepaid or post-paid, will likely be revisited as a part of this review. 2. Universal Service contributions, performance metrics and accountability. Who will fulfill existing low cost and high cost consumer needs, as well as those inherent to the broadband policy contemplated by the President Obama’s Administration, will be a deep policy consideration for the FCC. The current USF Fund now amounts to about $50 million, with ILECs expending minimal effort to meet consumer demand. While many competitive small to mid-sized CLECs and IXCs are now qualifying as Eligible Telecommunications Providers to participate in subsidized low-cost and high-cost service offerings, will they be given room to grow? Could this also be a lateral service field to which current prepaid CLECs, IXCs, Wireless, and Interconnected VoIP Providers migrate to offer similar services to low income and rural consumers with USF subsidies? The debate is unsettled here. What is clear is that the incoming FCC Chairman will have his hands full in redirecting Agency and Congressional attention to new priorities and the expansion of competitive markets, not just past criticism of what is not working or a repetition of business-as-usual within the FCC. Edward Maldonado is a regulatory attorney based in Miami, FL and the CEO of Regulatory Back Office, Inc., a regulatory group that procures regulatory registrations and files compliance reporting for telecommunications, prepaid calling, wireless, money service businesses and stored value providers. He can be reached at eam@maldonado-group.com. The gist of the report and investigation was that Chairman Martin has not administered affairs of the FCC in an open and transparent manner, which resulted in a climate of distrust, suspicion and turmoil among the five members of the FCC. bankruptcies. This is particularly true in situations where a small sized retailer or closed loop issuers goes bankrupt. In many instances, such issuers can continue to sell gift cards until the bankruptcy filing has been made, causing consumers to redeem or lose the value prepaid. A recent report by Kwame Kuadey, a gift card expert and CEO of GiftCardRescue.com, has indicated that Congress may now be stepping-in to fill this void. In the report, Kuadey drew attention to Senator Charles Schumer (D-NY), who has called for the initiation of a Bill entitled “Fair Gift Card Act” to be passed before the December 2009 holiday season. The substance of the contemplated Bill would place a federal law requiring a five (5) year minimum expiration date on all gift cards, and eliminating certain fees now commonly associated with gift cards and closed loop cards. The law would most likely not address bank issued gift cards, as such gift cards are already regulated by the Office of Comptroller of Currency (OCC). However, the concern 2. Stored Value Cards and Systems: Circuit City Bankruptcy spurs Gift Card regulation interest. RICHMOND, VA - U.S. http://www.GiftCardRescue.com

Table of Contents Feed for the Digital Edition of The Prepaid Press - February 2009

Payments & Processing: Prepaid Debit Card Trends Contents The Retske Report: A Courthouse Divided Regulatory Rundown Prepaid Business: 5 Minutes With Darren Dat Lu, CEO of Lunex Group Prepaid Telecom: International Mobile Top-Up Virgin Mobile USA Compliance Plan Accepted by NYSE Tata Communications Launches One IP World KIT Communications Selects PhoenixSoft Sprint Nextel Increases Payments to Virgin Mobile Motorola, Sprint and Boost Mobile Welcome iDEN Flip PhoenixSoft Announces New Program Virgin Mobile Partners with Susan G. Komen The State of Prepaid Technology: Prepaid Virtual Operators Emerge Prepaid Wireless Roundup Boost Launches ‘Monthly Unlimited’ in More Cities Cricket Selects Callidus On-Demand Solution ICC Worldwide Expands Prepaid Products IPsmarx Launches SIP Based Card Platform The Legal Line Prepaid Telecom in Brief Pinnacle Rolls Out Ingenico’s Payment Terminals TransCard Makes Staff Announcements H&R Block Bank Selects MasterCard Avangate Pays Vendors and Affiliates with Prepaid MC TIO Networks Announces Grant of Stock Options TSYS Offers Enhanced Loyalty Solution First American Payment Systems Inks Deal with RDM Hypercom Introduces HyperSafe Remote Key System i2c Expands Team iPayStation Integrates with Movistar Payments & Processing in Brief New Javelin Report on Evolving Prepaid Card Market TransCard, Socialwise Plan to Revolutionize Prepaid Congresswoman Introduces Financial Literacy Act Industry Analysis on Mobile Banking Available Gift Cards & Promotions: Seven Cost-Conscious Marketing Strategies for 2009 Ntreev USA Announces PvP Tournament hhgregg to Help Circuit City Customers NRF Releases December Industry Sales Cellfire Expands Kroger Mobile Coupon Program Petrofix.com Offers a New Fuel Solution Gift Cards & Promotions in Brief Our Advertisers Contact Us

The Prepaid Press - February 2009

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