Congress is holding hearings today to denounce the credit card practice of raising interest rates of customers who pay on time just because their credit score went down. The real investigation should be of the credit reporting agencies and how they determine those mysterious credit scores. Also, a credit score should be available for free at least once a year just like a credit report is free yearly.

This issue should have been part of the new bankruptcy bill that Congress passed in 2005 when it was clear that the credit card company practices of jacking up interest rates on credit cards to between 25% and 30% was helping to push people over the edge to bankruptcy. But Congress ignored the problem and just made it harder to file for bankruptcy.

Why can credit card companies charge so usurious rates? That's because credit card rates are set on a state by state basis and some states allow more freedom to jack up rates. That's why credit cards are based in states like North Dakota or Delaware that allow these outrageous rates.

Conventional wisdom says there's a tenuous relationship between eBay Inc. (NASDAQ: EBAY) and Google Inc. (NASDAQ: GOOG). Common knowledge says that eBay and Google compete in the realm of online payment services. It also seems to be an accepted fact that you can't use Google Checkout for purchases made on eBay, but did you know that Google Checkout has a back door into the eBay family? That's right, the eBay companies are not PayPal exclusive after all.

ProStores is an eBay merchants' option for the serious online retailer. ProStores is in fact an eBay company. ProStores directly competes with the in-house eBay Stores feature. The most interesting part is that ProStores allows the use of Google Checkout, while eBay itself does not.

Perhaps this isn't big news in the investment world, but I'll guarantee you that it's not common knowledge among eBay sellers, especially those who are straining to successfully operate eBay stores. The questions are, why does eBay keep this fact so quiet and why the double standard?

Could it be that eBay is using the availability of Google Checkout for ProStores as a marketing tool to create appeal to sign up for the ProStores service? If that's the case, then eBay is making a very odd, confusing, yet powerful statement. The availability of Google Checkout in ProStores says that eBay recognizes that service as a desirable option, yet the fact that Google Checkout is still being stonewalled from the eBay site itself says that eBay management still recognizes it as a considerable threat.

In the face of impending PayPal fee increases, which indicates that eBay profits are becoming stressed, the above scenario places some interesting angles on an already muddled eBay future.

What's it gonna be eBay: Do you Google or not?

In today's world, people rarely carry large amounts of cash on them. People have credit cards for large purchases or even debit cards to access their checking accounts. ATM machines are on every urban street corner in America. But what happens when you're not at home in that urban setting? What do you do if you're on vacation?

I recently went to the Caribbean with my wife. We knew that most places would accept our cards but we questioned the exchange rate. Eastern Caribbean money isn't that strong in comparison to the U.S. dollar ($2.60 EC to $1 U.S.) and we knew that our credit cards would charge a service fee for purchases made in EC dollars. My wife, whom I consider a "world traveler," has always gone with the traveler's checks and prepaid card route. She would cash the checks in at the hotel and use prepaid cards so she wouldn't put her personal accounts at risk. I always used my credit card on vacation. Before our trip, I was sent to the bank to pick up a pair of prepaid cards and some traveler's checks.

The July issue of Money magazine has a great article regarding the best way to keep exchange costs to a minimum with today's weak dollar.

I found out she was completely wrong - a month too late.

The practice that involves people "renting" credit history to improve their own credit score will come to an end, according to Fair Issac Corp (NYSE: FIC), the company responsible for FICO credit scores. The change will occur in a new version of its credit score system, the sixth generation, this September.

The move ends the ability for a consumer with poor credit to be placed as an authorized user of another person's credit card, who has great credit. This person would then benefit from having the payment history of the primary cardholder on their own credit report and improve their credit scores.

The practice has grown more common with internet companies popping up offering money to people with good credit to take on those with bad credit as an authorized user, then collecting fees from those consumers for the act.

This is fraud people; plain and simple.

It's hard to believe this practice still exists in the world we live in today. In a nation where state attorney offices and the U.S. attorney's office go after anyone and everyone who looks like they participate in fraud, including UBS Financial Services, Dell Inc. (NASDAQ: DELL) and the one that started it all, the Enron case.

This was considered the "first great scam of the new millennium" by Terry Savage of TheStreet.com. She highlighted that people with poor credit could "borrow" good credit for 60 days and then apply for a mortgage at a lower rate. Maybe that's one of the many reasons why this month's
foreclosure rates rose a whopping 90% year-over-year.

What do you think of this new move from Fair Issac? Do you think this is fair to the people with poor credit? What's your opinion?

Tired of carrying around a stack of plastic cards? Hope may be on the horizon, and it could be bad news for MasterCard Inc (NYSE: MA), VISA and others.

National Payment Card has launched a service that allows users to link their driver's license, via the info on its magnetic strip, to their checking account, thus allowing them to use it as a debit card. The program test began in Texas early this year, and will soon expand to convenience stores in the region.

This is bad news for Visa, et.al., for two reasons. First, NPC is undercutting the competition by charging only $.15 per transaction instead of the percentage demanded by the national cards.

The second problem is that this destroys branding of the product. Unless the BMV can be convinced to offer gold or platinum driver's licenses, commoditization of consumer credit may well follow.

This could be only the first step in making use of the new standard for driver's licenses that standardizes mag strip contents. If the market can gain access to the individual recognition and authentication features of the BMV system, the driver's license could become the go-to card for credit transactions, ATM access, or even federal benefits such as welfare and Medicare.

Look for the major players in the market to lobby hard to put roadblocks in the way of this movement. The stakes are enormous, especially in light of Visa's planned IPO.

This weekend's Wall Street Journal (subscription required) said some interesting things about retailers and FedEx Corp (NYSE: FDX).

Over 100 federal lawsuits seeking class-action status against merchants including Wendy's International (NYSE: WEN), TJX Cos (NYSE: TJX), Rite Aid Corp (NYSE: RAD) and Fed Ex Corp (FDX) have been filed for printing too much payment-card information on customer receipts this year alone.

TJX Co, the parent company of T.J. Maxx and Marshalls, reported in January that its computers were hacked and at least 47.5 million customers susceptible to fraud. For the following eight weeks, shares of TJX lost -15%; they have since recovered modestly.

As of December 4th, retailers will be prohibited from printing more than the last five digits of credit-card or debit-card numbers on receipts that are given to customers.

Breaking the law could result in fines as much as $1,000 per transaction.

A spokesman for Fed Ex Kinko's, the Fed Ex unit involved in the lawsuit, denied the charges by saying expiration dates were never identified as an item that could "compromise cardholder security."

Now, to some people this might make sense, but to me I have to scream foul against the claims made against FedEx. Does having one's credit-card expiration date on a receipt make you vulnerable to fraud and identity theft?

I'll stick my neck out on this one folks and say no.

My Discover card expires in May of 2010. Try to get something from that.

MasterCard, Inc. (NYSE:MA) reported a whopping 82% jump in earnings in its first full quarter as a public company. The company's May IPO where its shares debuted at $39 a share was the richest in two years. Around 11:30 today, MA shares were changing hands at $86, up 16% today.

The credit card company posted third-quarter net of $193 million, or $1.42 a share, compared with $106 million, or 79 cents, a year earlier. Revenue rose from $792 million in the third quarter last year to $902 million, a 14% increase attributed to robust credit-card spending in retail stores. Analysts were expecting earnings of $1.08 a share on revenue of $872 million.

With the retail industry posting a 3.8% rise in same-store sales in September, this positive retail environment contributed to MasterCard's results. MasterCard's gross dollar volume rose 15% to $502 million. World-wide purchase volume rose to $365 billion, a 17% increase over the same period last year. In the U.S. and Europe purchase volume grew by 19% and 33%, respectively. Also, the company increased its cards in circulation by 13% to 818 million cards.

Morgan Stanley analysts said MasterCard's results were a "major upside surprise" and praised the company lower advertising costs.

Executives of the company say the company has succeeded "in displacing paper-based forms of payment in all corners of the globe." Quite frankly, as a consumer, I'd have to agree. The cash I carry around is minimal. More than that, in spending on Internet purchases, one prominent choice of payment is credit cards, and with download music business booming, the company is positive on future growth.