Imagine if you are at a shop in a big mall and find yourself without enough paper currency to pay for your purchase. So, you open your wallet, purse or your handbag to sift through the plastic payment cards, of which you have at least a couple or more and, which comprise of at least one credit card and at least one debit card. To your shock and dismay, you realise that your debit card, only one or one of multiple, is missing. The last time you used your plastic – debit or credit – card was more than 10 days back.
Such a scenario is indeed possible with more than one card users. If you are not the kind of banking customer who is receiving SMS alerts of transactions on your debit card and credit card, then the scenario will very likely stand exposed to the grave risk of fraudulent purchases (online or offline). If it happens on your debit card then the entire balance from your savings account can be wiped out. Daily purchase limits will also not help if you notice your card loss after many days and fraudulent use occurs to every day in that period.
The biggest risk in all plastic cards, debit or credit, arises when a customer loses the card and his or her signature is there on the card to be easily forged and misused at merchant shops. It may be difficult to eliminate the risk of fraud altogether but here are a few things you can do to mitigate it. To begin with, consider the credit limit available on your credit card as the amount at risk and set the maximum credit limit as per your comfort level even though it may be much lower than what your credit card-issuing bank is willing to give you.
Unfortunately, the feature of maximum drawable limit on purchases is not there in debit cards as it is not provided by either Visa, MasterCard or any of their card-issuing banks. You, or another person who steals your debit card or finds your lost debit card can effect purchases up to the amount you have in your debit card-issuing bank’s saving account.
This makes debit cards inherently riskier than credit cards. In the current scenario where a couple of banks are offering a high interest rate of 7 per cent on their savings account, it is likely you may have more than one savings bank account.
If this is the case, do not opt to receive debit-cum-ATM cards from all banks. Tell the bank you need only a pure ATM card for the purpose of ATM-related transactions only, such as withdrawals and mini-statement. Subject to Reserve Bank of India's rules, your bank does not have a strong case to insist on giving you a debit-cum-ATM card, which increases the risk of losing money for you.
If you are still stuck with multiple debit-cum-ATM cards then register yourself for receiving SMS-based alerts on debits in you savings account as any debit card transaction results in a debit of your savings account. This way, a fraudulent transaction on your debit will send a SMS to you, which you can see to be one not authorised by you and take action immediately.
2012年2月5日 星期日
2012年1月12日 星期四
PayPal and AJB Bring Digital Wallet to Offline Retail Space
A new partnership with payment solution provider AJB Software Design is helping PayPal expand beyond its extensive online presence and into an offline environment. Together, the companies will offer point-of-sale application programming interfaces that will allow shoppers to make PayPal payments at U.S. retail stores that use AJB payment technology.
AJB is building a PayPal interface for its Retail Transaction Switch (RTS) platform that AJB customers are already using. Once the interface is complete, shoppers will be able to pay for merchandise at the merchants' existing POS terminals by entering the mobile phone number and PIN associated with their PayPal account. Additionally, customers will be able to swipe a PayPal card for payment and to redeem coupons, gift cards or rewards associated with their accounts.
Anuj Nayar, PayPal's director of communications, says that this new project is a simple way to bring the digital wallet into the physical retail environment. "There's a lot of buzz right now in the industry about the digital wallet," says Anuj Nayar, PayPal's director of communications. "PayPal has had a digital wallet for 13 years. It just lives up in the cloud and can be accessed from any device. Deals like this allow us to jumpstart the adoption of these technologies with a very easy integration."
What makes PayPal's digital wallet so easy to deploy is that it does not require a change in technology from a merchant infrastructure perspective, says Pat Polillo, vice president of sales at AJB. "When you're looking at retailers who have got hundreds of thousands of stores, is a costly endeavor," he explains. "The nice thing about the PayPal wallet is that it uses technology that is already in the stores being used for the acceptance of a credit or debit card. Merchants can deploy this much faster than any of the other digital wallets that are on the market."
This news follows a recent announcement that PayPal is rolling out a small pilot of its POS technology with retailer Home Depot. Nayar says that its partnerships with both Home Depot and AJB are the start of a larger initiative that PayPal is undergoing to expand its relationships in the offline retail environment and beyond, and to expect similar announcements down the road.
In addition to merchants and payment technology providers, PayPal stresses that it looks to expand upon its relationships with banks. "We think there's a massive opportunity for financial institutions to work with PayPal," says Nayar. "We actually have an entire group dedicated to working with financial institutions in order to develop new ways to connect with their customers via PayPal."
AJB is building a PayPal interface for its Retail Transaction Switch (RTS) platform that AJB customers are already using. Once the interface is complete, shoppers will be able to pay for merchandise at the merchants' existing POS terminals by entering the mobile phone number and PIN associated with their PayPal account. Additionally, customers will be able to swipe a PayPal card for payment and to redeem coupons, gift cards or rewards associated with their accounts.
Anuj Nayar, PayPal's director of communications, says that this new project is a simple way to bring the digital wallet into the physical retail environment. "There's a lot of buzz right now in the industry about the digital wallet," says Anuj Nayar, PayPal's director of communications. "PayPal has had a digital wallet for 13 years. It just lives up in the cloud and can be accessed from any device. Deals like this allow us to jumpstart the adoption of these technologies with a very easy integration."
What makes PayPal's digital wallet so easy to deploy is that it does not require a change in technology from a merchant infrastructure perspective, says Pat Polillo, vice president of sales at AJB. "When you're looking at retailers who have got hundreds of thousands of stores, is a costly endeavor," he explains. "The nice thing about the PayPal wallet is that it uses technology that is already in the stores being used for the acceptance of a credit or debit card. Merchants can deploy this much faster than any of the other digital wallets that are on the market."
This news follows a recent announcement that PayPal is rolling out a small pilot of its POS technology with retailer Home Depot. Nayar says that its partnerships with both Home Depot and AJB are the start of a larger initiative that PayPal is undergoing to expand its relationships in the offline retail environment and beyond, and to expect similar announcements down the road.
In addition to merchants and payment technology providers, PayPal stresses that it looks to expand upon its relationships with banks. "We think there's a massive opportunity for financial institutions to work with PayPal," says Nayar. "We actually have an entire group dedicated to working with financial institutions in order to develop new ways to connect with their customers via PayPal."
2012年1月4日 星期三
ASA bans Naked Wines ad
The complaint concerned an advert run by the merchant in August 2011, which offered consumers the chance to have 40 refunded to their account after making a purchase and then signed them up to a 20 a month Angels Account if they said “yes”.
Rowan Gormley, founder of Naked Wines, told the drinks business that the affair was a “storm in a wine glass as nobody has lost a penny – nor can they.”
The ASA’s website explains that after making a purchase a customer would see and an advert asking: “Thank you. Now would you like your money back?” with two boxes underneath, one red stating: “No thank you, I have quite enuff (sic) already”, and another in green that read: “Yes please, it would be stupid not to”.
A further heading underneath that asked why the merchant was doing such a thing followed by the text: “We are delighted to give you 40 now and 33% cashback on ALL future orders because, frankly, we would rather give it to you than Rupert Murdoch.
“You see if you buy from us on a regular basis, we don’t need to waste money selling to you. So we can afford to take that money and refund it to you. It’s like getting paid to drink wine!”
Again under that was the heading “What do you have to do to get paid to drink wine?” whereupon it explained: “Show us that you are going to become a good customer by investing 20 a month into your Naked Wines account”.
It was then explained that customers would be able to cancel their Angels Account at any time with a full refund.
However, the ASA maintained that the complainant’s challenge that the ad was misleading was justified as “the website did not make clear that by clicking the green link, which stated ‘Yes please’ he would automatically be subscribed to an Angels Account and be charged 20 per month.”
Naked Wines argued that it was explained that by clicking the green button, customers were opening an Angels Account and that the green button was linked to a page explaining the workings of the account and that customers were able to cancel and receive a full refund at any time.
Nevertheless, Naked Wines said that it had amended the advert. A subsequent assessment by the ASA, however, decided that the amended advert was too similar to the previous one and upheld the complaint.
The explanation on the ASA’s site agreed that although there had been a change to the order of the text and a broadening of the explanation regarding the deal and the Angels Account, “We considered that the ad did not make it clear that by clicking on the green button, the customer was signing up to open an Angels Account and would be charged 20 a month, which would go into the account towards future purchases.
“We considered that the main body of the ad should have made it clear that by clicking on the green button the customer would be opening an account. Because the ad had not done so we concluded that it was misleading and had breached the Code.”
It ruled that the advert must not be run again in its current form. Gormley however has explained that it was not and indeed is not possible for consumers to lose money with the merchant through the scheme, saying: “Customers have to opt in to become Angels, by clicking a button.
“The requirement to invest 20 a month was set out on the page in question, and not hidden in terms and conditions.
“The Angel scheme has been designed so that there is no risk of loss to customers. Any customer signing up in error can cancel at any time and get their money back immediately. The 20 monthly payment is not a subscription or a fee or an investment. It is the customer’s money and they can do with it as they will.
“The page in question was one step of a process, that includes a confirmation page, and an insert in the customer’s case and a monthly statement.
“Over 50,000 customers have signed up to become Angels over the three years Naked Wines has been in business. On the other hand the number of complainants is tiny.”
Rowan Gormley, founder of Naked Wines, told the drinks business that the affair was a “storm in a wine glass as nobody has lost a penny – nor can they.”
The ASA’s website explains that after making a purchase a customer would see and an advert asking: “Thank you. Now would you like your money back?” with two boxes underneath, one red stating: “No thank you, I have quite enuff (sic) already”, and another in green that read: “Yes please, it would be stupid not to”.
A further heading underneath that asked why the merchant was doing such a thing followed by the text: “We are delighted to give you 40 now and 33% cashback on ALL future orders because, frankly, we would rather give it to you than Rupert Murdoch.
“You see if you buy from us on a regular basis, we don’t need to waste money selling to you. So we can afford to take that money and refund it to you. It’s like getting paid to drink wine!”
Again under that was the heading “What do you have to do to get paid to drink wine?” whereupon it explained: “Show us that you are going to become a good customer by investing 20 a month into your Naked Wines account”.
It was then explained that customers would be able to cancel their Angels Account at any time with a full refund.
However, the ASA maintained that the complainant’s challenge that the ad was misleading was justified as “the website did not make clear that by clicking the green link, which stated ‘Yes please’ he would automatically be subscribed to an Angels Account and be charged 20 per month.”
Naked Wines argued that it was explained that by clicking the green button, customers were opening an Angels Account and that the green button was linked to a page explaining the workings of the account and that customers were able to cancel and receive a full refund at any time.
Nevertheless, Naked Wines said that it had amended the advert. A subsequent assessment by the ASA, however, decided that the amended advert was too similar to the previous one and upheld the complaint.
The explanation on the ASA’s site agreed that although there had been a change to the order of the text and a broadening of the explanation regarding the deal and the Angels Account, “We considered that the ad did not make it clear that by clicking on the green button, the customer was signing up to open an Angels Account and would be charged 20 a month, which would go into the account towards future purchases.
“We considered that the main body of the ad should have made it clear that by clicking on the green button the customer would be opening an account. Because the ad had not done so we concluded that it was misleading and had breached the Code.”
It ruled that the advert must not be run again in its current form. Gormley however has explained that it was not and indeed is not possible for consumers to lose money with the merchant through the scheme, saying: “Customers have to opt in to become Angels, by clicking a button.
“The requirement to invest 20 a month was set out on the page in question, and not hidden in terms and conditions.
“The Angel scheme has been designed so that there is no risk of loss to customers. Any customer signing up in error can cancel at any time and get their money back immediately. The 20 monthly payment is not a subscription or a fee or an investment. It is the customer’s money and they can do with it as they will.
“The page in question was one step of a process, that includes a confirmation page, and an insert in the customer’s case and a monthly statement.
“Over 50,000 customers have signed up to become Angels over the three years Naked Wines has been in business. On the other hand the number of complainants is tiny.”
2011年12月27日 星期二
Top five stories of 2011
Boxing had another year more notable for what didn’t occur than what did. The bout that fans have been clamouring to see for at least three years, a welterweight showdown between Floyd Mayweather Jr. and Manny Pacquiao, the two best fighters in the world, never materialized.
Both of boxing’s brightest stars did compete in 2011 and their work was big news.
So was a stunning admission from one of the sport’s greatest icons, as well as the death of some notable boxers. Here are the top five boxing stories of 2011, as chosen by Yahoo!
A quarter century ago, the odds were great that Bernard Hopkins might not even be alive at 46, let alone setting boxing records. He was in a Pennsylvania prison on a strong arm robbery conviction and was clearly rolling down the wrong path. But Hopkins turned his life around to become one of boxing’s greatest champions, defending the middleweight title successfully 20 times. He set a record on May 21 in Montreal when, at 46, he defeated Jean Pascal for the WBC light heavyweight title to become the oldest man ever to win a world championship.
In early November, the news broke that the legendary heavyweight champion Smokin’ Joe Frazier was fighting liver cancer. Only a few days later, on Nov. 7, the sad news broke that Frazier had died. He was a 1964 Olympic gold medallist best known for his victory over Muhammad Ali in their epic 1971 bout of unbeaten heavyweight champions. Among the other boxing notables who died in 2011 were Genaro Hernandez, Sir Henry Cooper, Billy Costello, Butch Lewis and Scott LeDoux.
Floyd Mayweather Jr. has long been one of the sport’s elite fighters, but his greatest talent may be to get people talking about him. He did that again on Sept. 17, when after taking a head butt from Victor Ortiz in their welterweight title fight, Mayweather clocked Ortiz with a 1-2 just as the bout resumed, while the referee looked away. Many, including HBO commentator Larry Merchant, called it a cheap shot. Mayweather, though, said it was a part of the business and celebrated the win. “Money” added to his 2011 headlines in late December, when he was sentenced to 90 days in a Nevada jail for misdemeanour battery domestic violence and harassment.
It shouldn’t have been a surprise that Manny Pacquiao had a hard time with Juan Manuel Marquez in their welterweight title fight on Nov. 12. They’d fought two extremely close bouts before. But since that second bout, Pacquiao had improved dramatically and had become, in the estimation of many, the top fighter in the world. He was not, however, able to conclusively beat Marquez, winning a hotly disputed majority decision. Many fans in the MGM Grand Garden Arena in Las Vegas that night agreed that Marquez won and began showering the ring with trash and shouting obscenities. Pacquiao, though, insisted he’d clearly won.
While Hopkins was becoming the oldest champion in boxing history, his partner at Golden Boy Promotions and one-time in-ring rival Oscar De La Hoya entered a rehabilitation centre for drug and alcohol abuse. He spoke openly of his drug and alcohol abuse, admitted he harboured thoughts of suicide, and said he had been unfaithful to his wife, Latin pop singer Millie Corretjer. It was a stunning admission for a guy who had a squeaky clean image and was the face of boxing.
Both of boxing’s brightest stars did compete in 2011 and their work was big news.
So was a stunning admission from one of the sport’s greatest icons, as well as the death of some notable boxers. Here are the top five boxing stories of 2011, as chosen by Yahoo!
A quarter century ago, the odds were great that Bernard Hopkins might not even be alive at 46, let alone setting boxing records. He was in a Pennsylvania prison on a strong arm robbery conviction and was clearly rolling down the wrong path. But Hopkins turned his life around to become one of boxing’s greatest champions, defending the middleweight title successfully 20 times. He set a record on May 21 in Montreal when, at 46, he defeated Jean Pascal for the WBC light heavyweight title to become the oldest man ever to win a world championship.
In early November, the news broke that the legendary heavyweight champion Smokin’ Joe Frazier was fighting liver cancer. Only a few days later, on Nov. 7, the sad news broke that Frazier had died. He was a 1964 Olympic gold medallist best known for his victory over Muhammad Ali in their epic 1971 bout of unbeaten heavyweight champions. Among the other boxing notables who died in 2011 were Genaro Hernandez, Sir Henry Cooper, Billy Costello, Butch Lewis and Scott LeDoux.
Floyd Mayweather Jr. has long been one of the sport’s elite fighters, but his greatest talent may be to get people talking about him. He did that again on Sept. 17, when after taking a head butt from Victor Ortiz in their welterweight title fight, Mayweather clocked Ortiz with a 1-2 just as the bout resumed, while the referee looked away. Many, including HBO commentator Larry Merchant, called it a cheap shot. Mayweather, though, said it was a part of the business and celebrated the win. “Money” added to his 2011 headlines in late December, when he was sentenced to 90 days in a Nevada jail for misdemeanour battery domestic violence and harassment.
It shouldn’t have been a surprise that Manny Pacquiao had a hard time with Juan Manuel Marquez in their welterweight title fight on Nov. 12. They’d fought two extremely close bouts before. But since that second bout, Pacquiao had improved dramatically and had become, in the estimation of many, the top fighter in the world. He was not, however, able to conclusively beat Marquez, winning a hotly disputed majority decision. Many fans in the MGM Grand Garden Arena in Las Vegas that night agreed that Marquez won and began showering the ring with trash and shouting obscenities. Pacquiao, though, insisted he’d clearly won.
While Hopkins was becoming the oldest champion in boxing history, his partner at Golden Boy Promotions and one-time in-ring rival Oscar De La Hoya entered a rehabilitation centre for drug and alcohol abuse. He spoke openly of his drug and alcohol abuse, admitted he harboured thoughts of suicide, and said he had been unfaithful to his wife, Latin pop singer Millie Corretjer. It was a stunning admission for a guy who had a squeaky clean image and was the face of boxing.
2011年4月1日 星期五
New Financial Regulations
One way of searching for investment opportunities is to look for businesses that are thriving with products and services that are in demand. But another method for finding investment opportunity is counterintuitive: Look for something that is broken or doesn't make sense. Once you locate that problem or fault, either look for a company that may have a solution or perhaps look at the problem itself to see if it is viable or just noise.
Financial regulation, or FINREG, is one of those "problems" that contains some noise. FINREG creates challenges for banks, brokerages, lenders and the consumer.
If you are not completely familiar with the complex 2,300-page bill, The Wall Street Journal assembled this interactive page that details the different facets.
How Can You Profit From the Confusion?
Sometimes an apparent roadblock (legislation in this case) may have holes that make it less restraining than first thought. Now, I'm not going to say that FINREG isn't a highly restrictive, far-reaching, costly (in several respects) and poorly timed bill.
But some parts are just plain ridiculous and bad for the American consumer, and should be altered or removed. One of those pieces is the "Durbin Rule."
Back on March 10, in a note to my subscribers of WaveStrength Options Weekly I detailed this flawed piece of the FINREG puzzle:
Some of you may have heard of the "Durbin Rule" -- it's imbedded in the Dodd-Frank financial regulation bill.
The rule essentially states that "interchange fees," those fees that retails incur anytime you swipe a credit or debit card, are to be limited (fixed) to 12 cents per transaction (the average is 44 cents). It means retailers will be capped in the amount they have to pay in merchant fees that are charged by banks and by Visa, MasterCard, etc. Good news for retailers and bad for banks and our friends over at Visa and MasterCard. This rule equates to BILLIONS of dollars annually!
Our genius politicians thought this legislation would benefit the consumer because the retailers would lower prices because of their savings. This may be true in some cases, but there are serious flaws.
If this is implemented in its current form, big banks like Bank of America and JPMorgan Chase will lose billions of dollars in revenue, as will Visa and MC. What's worse is that the bill excludes smaller banks (which was meant to help them), but if small banks continue to charge high fees and the large banks are forced to do it cheaper, the small banks will lose business.
All the banks are waging war on Capitol Hill to get this rule overturned or, more realistically, modified, which I believe will happen.
Our angle is that the markets have NOT priced in a good outcome for MasterCard, but I believe a compromise will come about, because the rule as it stands now just doesn't work -- this will be beneficial for MA.
Since then, MasterCard (MA:NYSE) stock went from $241 to a high of $262. WOW subscribers were able to capture some fantastic profits there and have since exited, but I wanted to take this a bit further and share this story with you.
On Tuesday the Federal Reserve declared that it is going to delay its ruling on appropriate levels from April 21 till July 21, which was a big win for MA and Visa (V:NYSE), not to mention my hypothesis from two weeks prior.
What "Durbin" Means for You
FINREG is supposed to "help" the American consumer, but aside from the issues for the banks, there are many ways in which this hurts us. Banks have shareholders to report to, which means they must keep profits up. If you take a couple billion dollars away from their balance sheets, they must replace it.
Guess who gets to replenish their balance sheets? The American Consumer!
Some of these changes are ALREADY happening, here are some of the ways the Durbin rule and FINREG is "helping" (hurting) you:
Financial regulation, or FINREG, is one of those "problems" that contains some noise. FINREG creates challenges for banks, brokerages, lenders and the consumer.
If you are not completely familiar with the complex 2,300-page bill, The Wall Street Journal assembled this interactive page that details the different facets.
How Can You Profit From the Confusion?
Sometimes an apparent roadblock (legislation in this case) may have holes that make it less restraining than first thought. Now, I'm not going to say that FINREG isn't a highly restrictive, far-reaching, costly (in several respects) and poorly timed bill.
But some parts are just plain ridiculous and bad for the American consumer, and should be altered or removed. One of those pieces is the "Durbin Rule."
Back on March 10, in a note to my subscribers of WaveStrength Options Weekly I detailed this flawed piece of the FINREG puzzle:
Some of you may have heard of the "Durbin Rule" -- it's imbedded in the Dodd-Frank financial regulation bill.
The rule essentially states that "interchange fees," those fees that retails incur anytime you swipe a credit or debit card, are to be limited (fixed) to 12 cents per transaction (the average is 44 cents). It means retailers will be capped in the amount they have to pay in merchant fees that are charged by banks and by Visa, MasterCard, etc. Good news for retailers and bad for banks and our friends over at Visa and MasterCard. This rule equates to BILLIONS of dollars annually!
Our genius politicians thought this legislation would benefit the consumer because the retailers would lower prices because of their savings. This may be true in some cases, but there are serious flaws.
If this is implemented in its current form, big banks like Bank of America and JPMorgan Chase will lose billions of dollars in revenue, as will Visa and MC. What's worse is that the bill excludes smaller banks (which was meant to help them), but if small banks continue to charge high fees and the large banks are forced to do it cheaper, the small banks will lose business.
All the banks are waging war on Capitol Hill to get this rule overturned or, more realistically, modified, which I believe will happen.
Our angle is that the markets have NOT priced in a good outcome for MasterCard, but I believe a compromise will come about, because the rule as it stands now just doesn't work -- this will be beneficial for MA.
Since then, MasterCard (MA:NYSE) stock went from $241 to a high of $262. WOW subscribers were able to capture some fantastic profits there and have since exited, but I wanted to take this a bit further and share this story with you.
On Tuesday the Federal Reserve declared that it is going to delay its ruling on appropriate levels from April 21 till July 21, which was a big win for MA and Visa (V:NYSE), not to mention my hypothesis from two weeks prior.
What "Durbin" Means for You
FINREG is supposed to "help" the American consumer, but aside from the issues for the banks, there are many ways in which this hurts us. Banks have shareholders to report to, which means they must keep profits up. If you take a couple billion dollars away from their balance sheets, they must replace it.
Guess who gets to replenish their balance sheets? The American Consumer!
Some of these changes are ALREADY happening, here are some of the ways the Durbin rule and FINREG is "helping" (hurting) you:
2011年3月31日 星期四
While ExxonMobil would make a great partner for the NOC's
ExxonMobil Corp (XOM): Resource nationalism has always been a challenge for international oil companies (IOC's) and their ability to grow production, but now that the majority of the world's remaining resources are government controlled, that challenge is quickly increasing. Large oil providers like ExxonMobil need sizable projects in order to operate at the level they are accustomed, but with oil-rich nations continuing to favor national oil companies (NOC's) over international ones, fewer projects exist. While ExxonMobil would make a great partner for the NOC's, partnerships are less profitable and harder to secure, to the point, some would argue, of being uneconomical. Due to their long development times, investing exclusively in "megaprojects"is risky; therefore, management must make the decision to take on more projects at less favorable terms or pursue frontier locations. Short interest is at 0.56%.
Avon Products Inc. (AVP): Following several years of rapid international expansion, Avon is now working tirelessly to rid itself of all the inefficiencies created by that very same expansion, including a bloated management structure and poor supply chain. Incurring $700 million in restructuring costs in 2010 alone, CEO Andrea Jung must fix these follies fast, as tight consumer spending and execution issues in developing markets continue to stall sales growth as is. Given that about 80% of Avon's consolidated sales are international, the company faces significant exposure to currency fluctuations. Also, key markets in Japan will be hit especially hard due to the crisis following the March 11 earthquake and subsequent tsunami. Some investors now wonder if the full benefits of Avon's restructuring will take longer than initially forecast. Short interest is 2.00%.
American Express Co (AXP): In stark contrast to their lend-centric competitors like Visa and MasterCard, Amex has always been spend-centric, relying on merchant fees--instead of loan rates--to account for most of their earnings. In order to increase those earnings, they encourage the use of their cards. But while it may sound okay to entice cardholder spending, Amex was doing so pre-2008, at a time when the housing market was booming and cards were in the hands of high-spending clients who were spending beyond their means. Then came the 2008 financial crisis, which rocked Amex so hard it shook the putty from every little crack in their business model. Three years later, the card lender is still patching holes. In an effort to speed up repairs, Amex has recently opened their "closed-loop"model by partnering with banks and third party lenders in an attempt to build their client base, but concerned investors wonder if it is smart for Amex to look for growth outside its core clientele of high-net-worth individuals. Other risks concerning investors: Amex will continue to struggle as long as the unemployment rate remains high; the company still faces regulation. Short interest: 0.78%.
Avon Products Inc. (AVP): Following several years of rapid international expansion, Avon is now working tirelessly to rid itself of all the inefficiencies created by that very same expansion, including a bloated management structure and poor supply chain. Incurring $700 million in restructuring costs in 2010 alone, CEO Andrea Jung must fix these follies fast, as tight consumer spending and execution issues in developing markets continue to stall sales growth as is. Given that about 80% of Avon's consolidated sales are international, the company faces significant exposure to currency fluctuations. Also, key markets in Japan will be hit especially hard due to the crisis following the March 11 earthquake and subsequent tsunami. Some investors now wonder if the full benefits of Avon's restructuring will take longer than initially forecast. Short interest is 2.00%.
American Express Co (AXP): In stark contrast to their lend-centric competitors like Visa and MasterCard, Amex has always been spend-centric, relying on merchant fees--instead of loan rates--to account for most of their earnings. In order to increase those earnings, they encourage the use of their cards. But while it may sound okay to entice cardholder spending, Amex was doing so pre-2008, at a time when the housing market was booming and cards were in the hands of high-spending clients who were spending beyond their means. Then came the 2008 financial crisis, which rocked Amex so hard it shook the putty from every little crack in their business model. Three years later, the card lender is still patching holes. In an effort to speed up repairs, Amex has recently opened their "closed-loop"model by partnering with banks and third party lenders in an attempt to build their client base, but concerned investors wonder if it is smart for Amex to look for growth outside its core clientele of high-net-worth individuals. Other risks concerning investors: Amex will continue to struggle as long as the unemployment rate remains high; the company still faces regulation. Short interest: 0.78%.
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