A race of Olympic proportions is now underway among the top credit card issuers. The prize is the coveted #1 ranking. Over the past few weeks Citigroup and MBNA America have announced major acquisitions. Citigroup just announced it is acquiring Associates First Capital while MBNA announced it is acquiring First Union's credit card portfolio. Citigroup, currently the industry's top dog, held $79.1 billion in U.S. credit card loans as of June 30. Associates' credit card portfolio has $7.4 billion in outstandings. Combined Citigroup will hold $86.5 billion in credit card loans or about 17% of the total bank credit card market. As of mid-year, MBNA held $61.1 billion in U.S. card loans and First Union has $5.6 billion for a combined total of $66.7 billion. However Citigroup is growing only one-third as fast as MBNA, 5.6% versus 16.8%. Barring any additional major acquisitions, MBNA will beat Citigroup to $100 billion mark sometime in 2003. But it is more likely that both issuers will make more acquisitions over the course of the next two years. For now, Citigroup and MBNA will hold a combined market share of 30%. The nation's current #2 issuer is Bank One/First USA, with $66.3 billion in credit card loans. Bank One/First USA has been losing market share since last summer, declining from a peak of $70 billion in card loans. Nevertheless, the nation's top three issuers, Citigroup, Bank One/First USA, and MBNA collectively control 44% of the marketplace. The top ten issuers now hold 76% of the market and the top 25 now have an aggregate market share of 90%. The other 10% is split up among more than 6,000 U.S. card issuers, most of whom are credit unions. With decreasing profit margins, many mid-sized issuers are throwing in the towel. This means the race to be #1 is far from over.

TRIAL  CURTAIN  CLOSES

Testimony in the government's antitrust suit against VISA and MasterCard has come to a close. The trial will be in recess until Oct. 16 when all the parties involved will present their final oral arguments. Legal experts speculate it is possible a ruling could be issued immediately following final oral arguments but most likely the judge's decision will be handed down near the end of the year.

AD  DOMINANCE

For the first time Internet credit card marketing ads dominated the list of the most viewed banner ads. Of the top ten banner ads viewed by at-home surfers for the week ending Aug 20, six of the spots included banner ads for credit cards issued by Capital One and NextCard. According to Nielsen//NetRatings, NextCard remains the most active online credit card marketer, delivering 168.9 million banner ads during the period, for a 23% market reach. NetRatings says of 146.8 million consumers with Internet access only 64.4 million actually surfed the web the week of Aug 14-20. Ad response rates declined more than 6%. Based on NetRating's current data it takes slightly more than 300 banner ad impressions to produce one click.

PRIVACY  SETTLEMENT

U.S. Bancorp confirmed this month it has settled two complaints involving consumer privacy, including the settlement of a consolidated class action suit and an agreement with a multi-state task force of attorneys general. In regards to the class action settlement, U.S. Bancorp has agreed to provide a settlement fund of $3 million to pay potential claims and will also pay the first $500,000 of plaintiffs' attorneys fees approved by the Court.  If the settlement fund is not used in its entirety, the balance will go to the University of Minnesota Law School or to non-profit human services agencies. Claim forms are being mailed this month to claimants who had U.S. Bank checking or credit card accounts with the bank prior to July 1999. Claim amounts will range from $25 to $400, with most claims to be settled at $50. Last summer U.S. Bank voluntarily settled the attorneys general lawsuit and agreed to contribute $4 million to charities or public bodies in Minnesota and other states where the bank conducts business. The Minnesota portion of the settlement ($2 million) was paid in the third quarter of 1999, with the balance of the funds, an additional $2 million, earmarked to be divided between the additional states. The attorneys general lawsuit was filed June 8, 1999 for allegedly releasing customers' private banking information to a telemarketing company in exchange for a fee of $4 million plus a 22% commission on each sale. The suit also alleged that some of commissions were generated through bogus, unauthorized charges by CT-based MemberWorks, the telemarketing company involved. Minnesota alleged that U.S. Bank violated the FCRA and engaged in consumer fraud and deceptive advertising by providing the telemarketing vendor with such private information as: SSN numbers, account balances, transaction history, credit limits, credit insurance status, year to date finance charges, automated transactions authorized, credit card brand, number of credit cards, cash advance amount, behavior score, bankruptcy score, any other personal account data.

CARD  CONS

  The FTC said this month the first group of payday loan cons it has gone after were "especially contemptible" with no intention of delivering the credit and cash advances they promised consumers. The FTC action effectively puts an end to the 'MoneyMarketCard' marketed by Las Vegas-based Consumer Money Markets and Continental Direct Services. The FTC alleges the two firms, as well as other individuals and firms connected to the companies, violated the FTC Act, the TSR, and the TILA by making false claims in regard to advance loan fees, payday loans and credit cards. CMM launched the 'MoneyMarketCard' in the summer of 1996. In solicitations, consumers were told they would receive a credit line of $5,500 at 14.99% interest, regardless of their previous credit history in exchange for a $169.95 membership fee. CMM implied that consumers could use the credit line for general shopping but the company failed to disclose that, in fact, they could only use the credit line for CMM catalog shopping. CMM required that consumers put down 30% on the purchase of all goods. Also, the initial loan amount was only $20, and instead of being on revolving credit, it had to be entirely repaid to Interstate Check Services, Inc., CMM's cash-loan affiliate, in 30 days. ICS charged $6 for each $20 loan or 360% per annum.  Continental Direct Services purchased CMM's assets in July of 1999. Under terms of the proposed settlement both firms will be required to disgorge $350,000 in profits they received from consumers and forgive an additional $1.6 million in outstanding consumer debts. Between August 1996 to July 1999, the companies collected card membership fees totaling more than $12 million from 80,000 customers.

POLICE  TERMINALS

Traffic offenders will soon be able to pay their fines at the point of violation. MasterCard and Elan Merchant Services have launched a wireless acceptance terminal pilot program for Wisconsin State patrol cars which allows the acceptance of credit and debit cards from motorists for moving violation payments. In the past, motorists would have to accompany the officer to the police station to pay their appearance bond. MasterCard is providing Wisconsin State Patrol cars with a 'Lipman Nurit 2090' mobile terminal with a built-in printer. The 'Nurit' uses the BellSouth Wireless Data network and process transactions in 6 to 8 seconds. The Wisconsin State Patrol says the new program will allow its police officers to reconcile the violation payment and get back on the road in half the time.

MILEAGE  PLUS  BONUS

Cardholders of the 'First USA/United Mileage Plus VISA/MasterCard' are set to receive a mileage bonus as a reward for their patience in regards to United Airlines recent scheduling problems. 'Mileage Plus Premier' members (flying 25,000+ miles per year) will receive an additional bonus for United flights between May 1 and December 31. 'Premier' members will receive an extra 25% bonus for flights, while 'Premier Executive' (flying 50,000 miles per year) and 1K members (flying 100,000 miles per year) will receive a 100% bonus. This extra bonus will be credited to accounts in January 2001.  In addition, members who qualify for 'Premier' status in 2000 will also be eligible for these bonuses. United also announced it is waiving its $75 flight change fees in many cases.

CANADA  3000 &  AMEX

Amex Bank of Canada announced this month that Canada 3000 Airlines will join the 'Membership Rewards' program as its newest airline partner.  In April Canadian Airlines abruptly announced it was no longer participating in the AmEx 'Membership Rewards' program. Effective Oct. 2nd, cardholders can choose to book travel to 12 countries and over 40 destinations with point redemption levels starting at 20,000 points. Canada 3000 commenced operations in 1988 and offers a global route structure extending from Sydney, Australia to Vienna, Austria. It is Canada's second largest scheduled air carrier. Canadian Airlines had been a 'Membership Rewards' partner for the past eight years with its current contract set to expire in 2002.

AAA  STV  CARDS

MBNA and AAA have teamed up to offer a suite of stored value cards. The new prepaid VISA cards include: 'AAA Global Currency', 'AAA EveryDay Funds', and the 'AAA Gift Card'. The 'EveryDay Funds' and 'Global Currency' offer prepaid denominations from $5 up to $9,999 and can be accessed at 600,000 Interlink merchants in the U.S. and 625,000 ATMs worldwide. The 'EveryDay Funds' and 'Gift Card' also can be used at all VISA merchant locations. The 'Gift Card' can be purchased with any denominations from $25 up to $2,000. The 'Global Currency' card is available free at participating AAA club locations to AAA members with a minimum initial balance of $300 or more, or for $3 per card to non-members. The cards also can be obtained by paying a $2.95 shipping and handling fee via the Internet or by calling the toll-free order center.