First Data 2012 Annual Report Download - page 12

such as Social Security and driver’ s license numbers. Certain state laws impose similar privacy obligations as well as, in certain
circumstances, obligations to provide notification to affected individuals, state officers and consumer reporting agencies, as well as
businesses and governmental agencies that own data, of security breaches of computer databases that contain personal information.
Credit reporting and debt collections regulations. TeleCheck Services Inc. (“TeleCheck”) is subject to the Federal Fair Credit
Reporting Act (“FCRA”) and various similar state laws based on TeleCheck’ s maintenance of a database containing the check-writing
histories of consumers and the use of that information in connection with its check verification and guarantee services.
The collection business within TRS Recovery Services, Inc. (“TRS”) is subject to the Federal Fair Debt Collection Practices Act
and various similar state laws. TRS has licenses in a number of states in order to engage in collection in those states. In the United
Kingdom, FDRL has a license under the Consumer Credit Act of 1974 (“CCA”) to enable it to undertake, among other things, credit
administration and debt collections activities on behalf of its card issuing customers through calls and correspondence with the
cardholders. FDRL is also licensed under the CCA to carry on the activity of a consumer hire business for the purpose of leasing
terminals to merchants. The CCA establishes a comprehensive code of regulations for the origination, administration and enforcement
of credit and hire agreements.
Significant portions of federal regulatory oversight of both the Fair Credit Reporting Act and the Fair Debt Collection Practices
Act have been transferred from the Federal Trade Commission to the Consumer Financial Protection Bureau. TeleCheck and TRS are
subject to regulation, supervision, and examination from the Consumer Financial Protection Bureau. Further regulations may be
imposed in the future as both state governments, the Consumer Financial Protection Bureau and other federal agencies identify and
consider supplementary consumer financial protection measures involving, among other things, collection activities, the collection,
storage and use of data and databases regarding consumers. In particular, laws regulating activities with respect to current or emerging
technology such as the use of automated dialers or pre-recorded messaging or calls to cellular phones could impair the collection by
TRS of returned checks, including those purchased under TeleCheck’ s guarantee services. Moreover, reducing or eliminating access to
and use of information on drivers licenses, requiring blocking of access to credit reports or scores, mandating score or scoring
methodology disclosure and proscribing the maintenance or use of consumer databases, including a consumer’ s rights to affect the
usable content of databases, could reduce the effectiveness of TeleCheck’ s risk management tools or otherwise increase its costs of
doing business. Such legislation could also affect the business of First Data Solutions, Inc., which provides access to non-FCRA data
for identity verification and fraud-prevention purposes, by imposing new regulatory requirements or restricting the availability and
completeness of consumer data.
In addition, several subsidiaries in the Company’ s International segment are subject to comparable local laws regarding collection
activities and obtaining credit reports.
Anti-money laundering and counter terrorist regulation. Certain of the Company’ s businesses are subject to regulation by the
U.S., including anti-money laundering laws and regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act o
f
2001 (collectively, the “BSA”). The BSA, among other things, requires money services businesses (such as money transmitters, issuers
of money orders and official checks, and providers of prepaid access) to develop and implement risk-based anti-money laundering
programs, report large cash transactions and suspicious activity, and to maintain transaction records. Recently, the Financial Crimes
Enforcement Network, the agency that enforces the BSA, finalized its rule that defines Stored Value under the BSA, and places
requirements on entities that are either the Provider or Seller of Prepaid Access. Money Network, a First Data entity, will be the
Provider of Prepaid Access for various open loop prepaid programs for which it is the Program Manager.
The Company is also subject to certain economic and trade sanctions programs that are administered by the Treasury
Department’ s Office of Foreign Assets Control (“OFAC”) that prohibit or restrict transactions to or from or dealings with specified
countries, their governments, and in certain circumstances, their nationals, and with individuals and entities that are specially-
designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations.
Similar anti-money laundering and counter terrorist financing and proceeds of crime laws apply to movements of currency and
payments through electronic transactions and to dealings with persons specified in lists maintained by the country equivalents to the
OFAC lists in several other countries and require specific data retention obligations to be observed by intermediaries in the payment
process. The Company’ s businesses in those jurisdictions are subject to those data retention obligations.
The Company has developed and is enhancing global compliance programs to monitor and address legal and regulatory
requirements and developments.
Money transmission and payment instrument licensing and regulation. The Company is subject to various U.S. federal, state
and foreign laws and regulations governing money transmission and the issuance and sale of payment instruments.
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