Here are ten of the best photos that readers added to the Consumerist Flickr Pool in the last two weeks, picked for usability in a Consumerist post or for just plain neatness.
Want to see your pictures on our site? Our Flickr pool is the place where Consumerist readers upload photos for possible use in future Consumerist posts. Just be a registered Flickr user, go here, and click “Join Group?” up on the top right. Choose your best photos, then click “send to group” on the individual images you want to add to the pool.
Overall, Groupon’s transition from a company that sells discount vouchers to a company that sells discount merchandise has gone pretty well. Yet some news from Australia caught our attention when we learned that Groupon in that country sold counterfeit condoms on their website. Now the Australian government is alerting consumers who purchased those condoms that they should probably not use them.
This may provide a lesson for retailers in the dangers of drop-shipping. Drop-shipping is when a company accepts orders from customers, then pays another company to fulfill those orders. It’s very easy to scale your business up quickly this way, but it has inherent dangers. When Groupon started selling physical items here in the United States, they started by drop-shipping, and eventually shifted to storing and shipping their own merchandise.
If you remember the Great Nexus 7 Fiasco of Christmas 2013, Groupon blamed that on the vendor that they used to drop-ship many of the tablets.
Yet while that was a holiday gift-giving disaster, not receiving an Android tablet generally will not lead to pregnancy or a sexually transmitted infection. (We refuse to ponder what the exceptions to that statement might be.)
These condoms were advertised as products from Durex, and Groupon partnered with an outside company to drop-ship them. For any Australian readers, if you ordered condoms from Groupon between March 10 and April 12, you should have heard from them by now. “Signs that might indicate a potential counterfeit products include suspiciously low prices, poor quality of printing on the packaging and whether information on the foil packaging of individual condoms match that on the box,” Australia’s Therapeutic Goods Administration (like the FDA) helpfully points out in its recall announcement.
A spokesperson for Groupon told Mashable Australia that they’re investigating how the site could have ended up selling counterfeit condoms, and said in a statement:
Customers are our utmost priority at Groupon and we take their health and safety very seriously. All customers who purchased the counterfeit products have been proactively contacted by Groupon notifying them of the recall and have been advised to discontinue use immediately, dispose or return the goods, and seek professional medical advice if they have concerns about their health. A full refund has been processed to all customers.
We’ve questioned Groupon’s product sourcing in the past, too: you might remember the Consumerist reader who purchased a television only to learn that Samsung wouldn’t provide him with technical support since the TV was allegedly manufactured for the Mexican market, and wasn’t supposed to be sold in this country.
Counterfeit Durex branded condoms purchased from Groupon website [Therapeutic Goods Administration]
When your doctor wants to find out more about what’s going on inside your body, she orders lab tests, sending you down the street or down the hall to have someone extract your bodily fluids and perform tests on them. Laboratory Corp. of America, known on your medical bills as LabCorp, thinks that Americans want to order these tests themselves and pay for them with cash. Do they?
This is already a growing segment of the medical testing industry. There are companies where you can order up your own blood tests directly, visiting a local lab–the same one your doctor might send you too–and receiving the results confidentially in the mail or in an online dashboard. For example, you can pay WellnessFX $988 and have 18 tubes of blood drawn, which will get you “VIP-level access to every biomarker [they] offer,” checking everything from your cholesterol and thyroid levels to your reproductive hormones.
LabCorp wants a piece of the direct-to-consumer lab test action. “t’s a growth opportunity for us. It’s something consumers increasingly want to have access to, and it’s something we’re doing already and our capabilities are being utilized without us getting the benefit from a branding perspective,” the company’s CEO, David King, explained to Bloomberg BusinessWeek.
What he’s talking about is that LabCorp already provides lab services for some of the companies that sell tests to consumers, and now they’ll be getting in the direct lab testing business themselves. They already offer a portal where patients can access the results of tests that their doctor ordered: allowing patients to order their own tests online simply removes a step from that process. What the company hopes to do is partner with a drugstore chain, something that competitor Quest Diagnostics tried in the past.
It could be that the Quantified Self movement and increased availability of health information online could make more people interested in these services than in the past…but they could also draw conclusions from these blood tests that an actual medical professional wouldn’t necessarily agree with. Recently, businessman Mark Cuban posted a series of tweets (which have since been deleted) where he recommended that all people have a full panel of health-screening blood tests every three months. The problem, as actual doctors and other experts pointed out, is that such testing is expensive and likely to result in scary false positives, or people being medicated for temporary fluctuations in how their bodies function. If frequent screening tests are good, that doesn’t mean that even more frequent screening tests are necessarily better for your health.
The Doctor Is Out: LabCorp to Let Consumers Order Own Tests [Bloomberg News]
If you thought that we were done with lawsuits related to the mortgage meltdown, think again. The U.S. Dept. of Justice is suing Quicken Loans, alleging that the lender improperly underwrote hundreds of FHA-insured home loans before and during the housing market crash, resulting in substantial losses for the federal government.
The complaint [PDF], filed in a U.S. District Court in Washington, D.C., alleges violations of the False Claims Act, which allows the government to seek treble damages and penalties from companies that knowingly defraud the administration.
According to the DOJ, between Sept. 2007 and Dec. 2011, Quicken knowingly submitted claims for hundreds of improperly underwritten FHA-insured loans. Company employees allegedly ignored the underwriting rules and requirements for these loans, in an effort to push through as many mortgages as possible while knowing they could make an insurance claim to FHA if the loan went south.
The complaint accuses Quicken of violating FHA rules by falsely inflating appraised values of homes to make sure a loan was approved. The company allegedly granted “management exceptions,” in which managers allowed underwriters to break FHA rules to get a loan approved.
The DOJ contends that these practices were not relegated to a few rogue managers but were something that top company executives were aware of.
“I don’t think the media and any other mortgage company… would like the fact we have a team who is responsible to push back on appraisers questioning their appraised values,” wrote a Quicken VP for Underwriting in an e-mail cited in the complaint.
A second e-mail claims that 40% management exceptions on FHA-insured loans should not have been approved.
“[W]e make some really dumb decisions when it comes to client service exceptions,” reads the e-mail. “Example, purchase loan we pulled new credit and the client stopped paying on almost everything and the scores fell by 100 points, we [still] closed it.”
As a result of this allegedly deceptive underwriting, the Dept. of Housing and Urban Development paid out millions in insurance claims to Quicken over loans that should not have been approved.
Like the one loan applicant who had made multiple overdrafts on his bank account during the application process and who requested that Quicken refund his $400 application fee so he could feed his family. The government contends that this applicant was obviously in no financial shape to take on a mortgage, but his loan was approved anyway. According to the DOJ, this homeowner only made five mortgage payments before falling behind. HUD ultimately paid nearly $94,000 in insurance to Quicken over this mortgage.
Additionally, the complaint contends that there are many more loans from this time period that are currently 60 days delinquent and in danger of foreclosure, meaning Quicken will be filing insurance claims on these mortgages.
“Quicken violated HUD’s quality standards when obtaining HUD insurance for mortgage loans,” said U.S. Attorney John Walsh of the District of Colorado, whose office helped to lead the investigation. “Quicken issued hundreds of defective mortgage loans, and left HUD – and the taxpayer – to pay for the loans that defaulted. Quicken’s alleged fraudulent conduct affected communities nationwide. This case is the latest step in our commitment to hold accountable mortgage lenders who profit by taking advantage of HUD insurance and issuing defective loans that do not meet HUD’s standards.”
The NY Times notes that Quicken recently filed a lawsuit of its own against the DOJ and HUD, claiming the lender was pressured into making admissions that were “blatantly false” and was required to pay an allegedly unjustified penalty.
Jeni’s Splendid Ice Cream Recalls All Products, Closes Scoop Shops Over Possible Listeria Contamination
For the second time this week, an ice cream maker has issued a voluntary recall of all products for fear they may be contaminated with listeria bacteria. While the first recall centered on major manufacturer Blue Bell Creameries, the most recent belongs to Jeni’s Splendid Ice Creams, which sells desserts at its own boutique stores and retail stores such as Whole Foods.
The Wall Street Journal reports that Jeni’s Splendid Ice Creams is closing its shops and pulling all of its products from retailers’ shelves until it can be sure the treats are safe to consume.
The Ohio-based ice cream maker initiated the voluntary recall after the Nebraska Department of Agriculture found listeria in a random sample of the company’s products.
“Out of an abundance of caution, we made the swift decision to cease all ice cream production and sales until we can get to the very root of the problem,” the company says in a statement. “We are enlisting the help of experts so we can identify the cause, eliminate it, and return as quickly as possible to the business of making ice cream.”
The recall covers all Jeni products including ice creams, frozen yogurts, sorbets, and ice cream sandwiches sold at boutique stores in seven states and at retailers such as Whole Foods and Target.
So far, the company says it is unaware of any consumers falling ill from the products.
The company says they have called in experts to help find the root cause of the contamination and plans to work with suppliers to determine if the bacteria was introduced by a specific ingredient.
“We will not reopen the kitchen until we can ensure the safety of our customers,” the company says on its website.
Customers who have purchased any of the products are urged to dispose of them or return them to the store where they were purchased for an exchange or full refund, and consult with their physician regarding any medical questions.
Jeni’s ice cream recall comes just three days after Blue Bell Creameries announced it would pull all products from retailers nationwide.
Blue Bell has been in the midst of a months-long battle over listeria contamination that has included three recalls and the temporary closure of several production plants. In all, the company’s products have been linked to three deaths and at least 10 illnesses. On Wednesday, the Centers for Disease Control and Prevention announced that the contamination may go back as far as 2010.
Jeni’s Splendid Ice Creams Voluntarily Recalls All Frozen Desserts [The Wall Street Journal]
The Long Island-based cable/Internet provider is now offering a broadband package targeted at cord cutters and the “cord nevers” — the upcoming generation of Americans who scoff at the idea of browsing through a menu of hundreds of channels of reality TV programming when you can get it all online whenever you want.
The new offering from Cablevision’s Optimum Online broadband service starts at $45 for the first year (pricing will go up after that; we don’t know by how much) for broadband access up to 50 Mbps downstream.
The real kicker is that they will throw in a Mohu Leaf 50 digital antenna for free, meaning users can access all the local network TV without having to pay for cable.
It also means that you could use an over-the-top service like Dish’s Sling TV (which doesn’t include any local network content) or Sony’s PlayStation Vue (which only offers live feeds from certain network affiliates) in combination with the antenna to replicate something closer to pay-TV.
Cablevision was also the first — and currently only — pay-TV provider to allow its broadband customers to purchase HBO Now, the standalone streaming service that gives users HBO access without having to pay for basic cable.
Nielsen claims that most consumers who face the choice of cutting either cable or a streaming service choose to keep their cable. That seems to imply that cord-cutting is not that big of a problem yet. But it ignores the millions of Americans who have never had to make that choice because they’ve never had a cable account to cancel.
Monthly subscription boxes are currently a hot category in retail: vendors exist that can send you curated selections of everything from pet treats to razors to healthy snacks to butt wipes. One popular subcategory of these boxes are beauty sample boxes, which send you trial-size versions of beauty products to enjoy, and perhaps buy full-sized versions later on. Beauty brands and consumers both love these boxes…but which ones offer the best value for your subscription fee?
Our thoughtfully-curated colleagues down the hall at ShopSmart magazine ordered eight different boxes filled with beauty items for women for four months to compare and evaluate them. (Yes, subscription boxes with men’s grooming items also exist.) The advantage of having ShopSmart evaluate these products is that you won’t see ads for the products or their competitors next to the reviews, or affiliate links where the publication gets a cut of everything that you buy.
Here are some highlights of their four-month test:
Best box overall: The ShopSmart team was impressed with GlossyBox, which sent a very shiny box full of generously-sized items. One box included a full-sized but neutral-colored lipstick that would normally have cost $20.
Best $10 box: At this price point, ShopSmart preferred BirchBox to $10 competitor Ipsy, and not just because Birchbox offers a discounted option if you sign up for a whole year. It included “nice products from fresh and familiar brands and no random stuff.” Some months Birchbox sent along surprise values, like a full-size makeup product, or $10 coupon to the Gap.
Eco-friendly randomness: Goodebox markets itself as an eco-friendly box, with “healthy beauty and natural wellness products,” and has a neat gimmick: if you send back empty containers for recycling, you can earn points toward more free samples. It costs $19 month to month, and less if you buy a longer subscription.
For nail polish fans: Julep Maven is a box from nail polish brand Julep, which mostly sends bottles of nail polish and some other items. The subscription costs $25 month to month or $60 for three months at a time, and every month there is at least one full-sized product. However, they found the nail polish colors to be unusual shades that may not be for everyone.
Meh: Blissmo‘s beauty box sent more single-use items than others, yet was the most expensive of the bunch if you don’t commit to a longer subscription ($20, plus $5 shipping per month.) BeautyArmy was cheaper, at $12 plus $3 shipping mont-to-month, but the ShopSmart weren’t impressed. The items seemed more appropriate for a teen girl, and came in teeny sizes.
Are beauty subscription boxes worth it? [ShopSmart]
On April 23, 2005, YouTube cofounder Jawed Karim uploaded an 18-second video clip titled “Me at the zoo,” making it the site’s first video. It now has more than 19 million views which is respectable, to be sure, but it’s no “Gangnam Style,” which clocks in at more than 2.3 billion views.
According to CNBC.com, it was shot at the San Diego Zoo by fellow co-founder Yakov Lapitsky.
The year after that fateful upload, Google acquired YouTube for $1.65 billion, which was the company’s second largest acquisition at that time, making its founders multimillionaires.
Spoiler alert: The “cool thing” about elephants will not blow your mind or change your life. But you do have endless hours of cat videos to watch so, it is what it is.
When the new gainful employment rules take effect later this year, for-profit educators would need to demonstrate that their programs are actually training graduates to earn a living. But a pending piece of legislation seeks to give these schools a free pass to billions of dollars in federal student aid.
In response, a coalition of 45 organizations – working on behalf of students, consumers, veterans, faculty and staff, civil rights, and college access – sent a letter [PDF] to legislators today expressing their strong opposition of the Supporting Academic Freedom through Regulatory Relief Act.
The bill, which was referred to the House Education and the Workforce Committee after being introduced in February, would essentially repeal the recently finalized gainful employment regulation that requires all career education programs receiving Title IV funding “prepare students for gainful employment in a recognized occupation.”
Under the new gainful employment rules [PDF], for-profit colleges will be at risk of losing their federal aid should a typical graduate’s annual loan repayments exceed 20% of their discretionary income, or 8% of their total earnings.
Discretionary income is defined as above 150% of the poverty line and applies to what can be put towards non-necessities.
So for example, say the typical recent graduate of a career education program earns $25,000. That student would need to average annual student loan payments less than $2,000, or the school would be at risk for losing federal financial aid.
The Supporting Academic Freedom through Regulatory Relief Act would repeal those standards and prohibit the Secretary of Education from engaging in regulatory outreach with regard to educational institutions eligibility under title iV of the Higher Education Act.
Among other things the bill aims to ban the “Education Department from carrying out, developing, refining, promulgating, publishing, implementing, administering, or enforcing a postsecondary institution ratings system or any other performance system to rate institutions of higher education.
The coalition groups – which include The Institute for College Access & Success, National Consumer League, and our colleagues at Consumers Union – say that if the bill passes, it would harm both students and taxpayers.
“Congress should be increasing student and taxpayer protections, not scaling them back,” the letter states. “Numerous investigations have revealed widespread waste, fraud and abuse in the for-profit college industry in particular, including deceptive and aggressive recruiting of students; false or inflated job placement rates; and dismal completion rates.”
The group says that the gainful employment regulation, which takes effect July 1, has already had a positive impact, such as propelling many career education programs to disclose e basic information regarding their cost, debt levels, and completion or job placement rates.
“The threat of sanctions under the regulation has already prompted many of the biggest for-profit colleges to eliminate some of their worst programs, freeze tuition, and implement other reforms, such as giving students trial periods before banking their tuition checks,” the group’s letter states.
In addition to repealing protections that would that makes sure students receive the education they pay for, the coalition says the proposed bill would undermine the ban on incentive compensation in higher education.
According to the organizations, the Act would open the possibility that schools could use lies, deception, and other deplorable tactics to pressure students to enroll.
“This legislation would create three statutory loopholes similar to three of the regulatory ones that were just closed,” the letter states. “The last thing Congress should be doing is putting students and taxpayers at greater risk of harm from high-pressure tactics and fraud.”
While the bill still has a long way to go until it is enacted, GovTrack puts the likelihood that the bill will pass at 31%, enough to worry consumer groups.
“Congress should not be repealing rules designed to ensure taxpayer dollars are spent wisely or creating new loopholes for aggressive and misleading recruitment tactics.” the group says. “We need to be cutting wasteful spending, not subsidizing programs that routinely leave students and families buried in debts they cannot repay—and leave taxpayers holding the bag.”
The Supporting Academic Freedom through Regulatory Relief Act isn’t the first attempt to undermine the gainful employment rules.
In 2011, Dept. of Education issued a similar rule that required colleges to show they actually prepares students for gainful employment or risk losing money. However, just a year later, a federal judge blocked major provisions of that rule, forcing the department to start over.
Shortly after the rules were proposed again in 2014, a for-profit college group sued to stop the regulations from being implemented. In November 2014, the Association of Private Sector Colleges and Universities filed a 77-page lawsuit asking a federal judge to strike down the gainful employment rule.
This is according to a very brief story on Bloomberg, which cites anonymous sources as saying the announcement of the pullout could happen as early as tomorrow.
The New York Times subsequently reported an impending end to the merger, also citing anonymous sources.
Consumerist has reached out to both Comcast and the FCC. A spokesperson for the Commission declined to comment and we’ve yet to hear back from Comcast. We will update if we get anything further.
As we explained earlier today, the FCC and DOJ each have ways to oppose a merger that they believe raises too many antitrust issues or is not in the public interest.
The FCC, following its review of a pending merger can either approve it, put conditions on it, or — as was reported last night — put the matter before an Administrative Law Judge.
These sorts of hearings are usually a sign of sure death for a merger, as they indicate that the FCC has been unable to come up with any conditions for the merger that would make it work in the public interest.
The last time the FCC recommended a major merger go to a hearing was the failed 2011 acquisition of T-Mobile by AT&T. When the merging parties heard that a hearing was in the offing, they backed out of the deal.
If, as has been reported, the DOJ decides to fight the Comcast/TWC merger, it would do so by filing a lawsuit in federal court.
Such lawsuits are not necessarily the end of the road for an acquisition. Sometimes they are merely just the way to set in stone certain conditions being placed on a merger. For example, Comcast’s 2010 acquisition of NBC Universal involved a lawsuit and settlement that were filed on the same day, merely to codify the conditions Comcast and the regulator had agreed to.
As we mentioned earlier this week, ESPN maintains that its contract with Verizon prohibits the pay-TV provider from putting ESPN and ESPN on a premium sports tier. Instead, the channels must be included in the general basic cable package.
ESPN is by far the most expensive single piece of any basic cable bill, accounting for for upwards of $6/month. That’s several times more than the cost of most other cable offerings. Even some avid sports fans believe that it belongs on a separate tier.
An informal survey Consumerist readers found that more than 83% of them believe ESPN should no longer be part of the basic cable package.
Regardless, Disney maintains that Verizon is violating their agreement and has, according to Bloomberg, pulled FiOS ads from ESPN, ABC and A&E.
A rep for Verizon tells Consumerist that it looks like the FiOS Custom TV ads will also not run on Disney-owned WABC-TV in New York City, nor on at least one radio station owned by the company.
Verizon is also facing opposition from Fox and NBC, who are also not pleased with several of their basic cable offerings being parceled out into add-on bundles.
For its part, Verizon has maintained that Custom TV is not violating any of these contracts and that they are only trying to give customers more choices.
In 2013, FDA testing of diet supplements found that 43% of herbal supplements purporting to use the plant Acacia rigidula actually contained beta-Methylphenethylamine (BMPEA) — a chemical that has similarities to amphetamine, has never been tested for human safety, and which does not naturally occur in the plants used for these supplements.
A more recent study in the journal Drug Testing and Analysis confirmed the presence of BMPEA in these supplements even after the FDA’s initial tests.
The study notes that BMPEA was synthesized in the 1930s as a potential replacement for amphetamine, but that the chemical was never subsequently tested for human safety or efficacy, nor was it ever introduced as a pharmaceutical. And yet if users of these supplements take the maximum daily dosage, they could be “exposed to pharmacological dosages of an amphetamine isomer that lacks evidence of safety in humans.”
“The FDA should immediately warn consumers about BMPEA and take aggressive enforcement action to eliminate BMPEA in dietary supplements,” concluded the researchers.
And this week, the FDA did get around to throwing down the gauntlet over the BMPEA issue.
The Federal Food, Drug, and Cosmetic Act [FFDCA] limits “dietary ingredients” found in supplements to vitamins; minerals; herbs or other botanicals; amino acids; concentrates, metabolites, constituents, extracts, or combinations of any of these; and dietary substances “for use by man to supplement the diet by increasing the total dietary intake.”
Since BMPEA does not fall under any of these categories and its safety is undetermined, declaring it as a dietary ingredient on the product’s label would violate the FFDCA’s prohibition against false and misleading labels.
“Failure to immediately cease distribution [of the offending products] and any other products you market that contain BMPEA, could result in enforcement action by FDA without further notice,” read the letters. The law gives the FDA the authority to seize products that violate the rules and to enjoin the manufacturers from continuing to make and sell them.
The only argument the supplement makers could try to use is to claim that BPMEA is generally recognized as safe in food products. But since the FDA has no research showing this, the supplement companies would need to provide evidence of the chemical’s safety.
In total, the FDA has sent out five warning letters that cover eight different supplements: Fastin-XR (extended release); Fastin-RR (rapid release); Lipodrene (Ephedra Free); Conquer (Fruit Punch Slam & Raspberry Lemonade flavors); Critical FX; Sudden Impact; Phoenix Extreme; and Core Burner.
The makers of these supplements have 15 days to let the FDA know what they are doing to comply with the law.
According to KHOU-11, the ex-worker had a meeting with the owner of the company that operates the location.
“He just apologized and pretty much offered me if I wanted to go back to his business and work there again,” she said.
She’d maintained that she was fired for not reimbursing the restaurant the $400 that was stolen during a robbery on March 31, but the company said she was fired for breaking policy and having too much money in the register.
“I told them I’m not paying nothing,” she told KHOU. “I just had a gun to me. I’m not paying the money.”
The company issued a statement apologizing over how it handled things:
“We deeply regret the way this matter was handled. We are committed to continuing to work with [the worker], and we apologize to her, our employees, the public and other franchise operators of the Popeyes system. We have let them down and are committed to do better.”
CEO Cheryl Bachelder out of the Popeyes corporate office in Georgia also weighed in on the incident, saying Wednesday night:
“We recently became aware of a story in Houston involving a Popeyes restaurant and employee. The restaurant is operated by an independent franchisee of the Popeyes brand. We have spoken to the local franchise owner of the restaurant, and he has taken immediate action to reach out to the employee to apologize and rectify the situation. While the facts are gathered, we will closely monitor this until it is appropriately resolved. We deeply regret the distress this situation has caused.”
Along with her old job, the former manager has been offered $2,000 in back pay. She’s unsure if she’ll go back to work or not, despite having three children to support and another on the way.
“I do need a way to support my kids,” she tells KHOU. “I don’t want to go back to a business where I’m treated the same and I just get pushed back out if something else happened.”
Popeyes attempting to rectify pregnant manager’s firing [KHOU-11]
There are some disadvantages to using gift cards, but there are some laws that protect consumers who buy and use them. California has the strongest laws of this type: gift card holders can ask a retailer to cash in a gift card at any time, for example. Yet what happens when something that seems like a gift card isn’t, and it isn’t regulated the way that you expect–even in California?
That state’s laws also dictate that gift cards can’t ever expire. That’s why a parent who bought a ten-visit card for a local indoor playground was confused when she saw that the pass would expire in six months. She brought it to CBS Sacramento’s Kurtis Ming, who learned that stores don’t have to obey gift card law for something that isn’t a gift card.
A visit to this place, Climbaroo, normally costs $8-10 per visit, and the “VIP Play Pass” entitles the holder to ten visits. It costs $60, but is considered a “promotional pass,” and the company keeps track of a holder’s visits in their system apart from the physical card.
That’s a nice way around the law that normally dictates that gift cards can’t expire. The facility told CBS Sacramento that it generally allows bearers to use the cards past the printed expiration date, but leaving an unregulated “promotional pass” up to the discretion of the business owner is really against the spirit of California’s consumer protection laws.
Call Kurtis: Can Prepaid Cards for Services Expire? [Bloomberg News]
Just two days ago the American Customer Satisfaction Index revealed that Spirit Airlines was the worst when it comes to, well, customer satisfaction, and it seems the airline is wasting no time in confirming that it earned its low scores. Just ask the Michigan high school baseball team that had to fork over thousands of dollars for a chartered bus after being told they would have to wait an extra week to rebook their canceled Spirit flight.
WXYZ-TV in Michigan reports that the airline left a Detroit-area baseball team unsatisfied after stranding the high school students in Florida last month.
The ordeal began when the team was attempting to fly back to Detroit after spending a week training in Florida.
When the group arrived at the Orlando airport they learned that their flight was canceled due to weather. With few other options, the team stayed the night in a hotel and returned to the airport in the morning.
However, the team’s coach tells WXYZ-TV that when the players and chaperones attempted to rebook, they were told the only flight that could accommodate the large group was six days later, meaning the students would have to miss about a week of classes.
Because missing so much school was out of the question, the team ended up spending $12,000 to charter a bus and drive back to Michigan.
As if the 21-hour ride wasn’t bad enough, the funds used to pay for the bus came from the team’s fundraising account.
“To say a week – that’s not a viable option. I feel as if they should play a part in getting us home,” the team’s coach tells WXYZ-TV. “One of our mottos is, do the right thing, and Spirit could have done the right thing.”
But it doesn’t look the airline follows the same motto. The coach says that while the airline did refund the return portion of the group’s trip, it refused to refund baggage fees.
While the team feels that the airline should help cover the cost of the bus trip home, Spirit says that falls outside of the airline’s responsibility.
A spokesperson for the Spirit tells WXYZ-TV that because the flight was canceled due to weather, the company is only responsible for getting passengers home on their airline, even if that’s a week later.
Each year for-profit colleges receive billions of dollars in Post 9/11 GI Bill benefits by exploiting a loophole in the rules that govern how these institutions collect federal funds. Once again, a group of senators has set out to change the way in which these schools count student aid, this time by urging the Department of Education to take an aggressive stand.
A group of 20 U.S. senators sent a letter to Dept. of Education secretary Arne Duncan asking him to assist in closing a loophole that allows for-profit colleges to count GI benefits as non-federal funding in their revenue breakdowns.
“The negative effects of this loophole for students and taxpayers have been well documented in news articles and Congressional investigations and reports. It has led to aggressive marketing and recruitment of servicemembers and veterans,” the senators wrote.
The current federal 90/10 rule – used to cap for-profit colleges’ federal funding – is a provision in the law that bars for-profit colleges and universities from deriving more than 90% of their revenue from the U.S. Department of Education’s federal student aid programs. The other 10% needs to come from sources other than the federal government.
Currently, tuition assistance for servicemembers and MyCAA for their spouses are not included in the 90/10 calculation.
In the letter, the senators express concern over the lack of protection servicemembers and veterans have when it comes to being targeted and exploited by some for-profit colleges because of their access to 9/11 GI Bill funding.
As part of the senators’ quest to better protect servicemembers, the group asked the Dept. to provide public data about how much for-profit colleges truly receive from taxpayers.
Although those figures aren’t currently made public, a report released last summer by now retired Iowa senator Tom Harkin found that during the 2012-13 school year for-profit colleges enrolled a record number of veterans, bringing in more than $1.7 billion in Post 9/11 GI Bill benefits thanks in part to the 90/10 Rule loophole.
The senators point out that those figures aren’t going to improve unless changes are made.
The group then cites a 2013 analysis from the Dept. of Education that found 133 for-profit colleges received more than 90% of their revenues from taxpayers when the Department of Defense and Veterans Administration benefits were counted as federal education assistance, and another 292 institutions received more than 85%.
According to that analysis, obtained by the Center for Investigative Reporting, embattled for-profit chain Corinthian Colleges Inc. – which operates Everest University, Heald College and WyoTech – received $186 million in VA Post-9/11 GI Bill dollars alone.
CCI isn’t the only scrutinized for-profit chain receiving significant funding through veterans’ benefits.
Seven of the eight for-profit college companies currently under investigation by state Attorneys General and federal agencies for deceptive and misleading recruiting or other possible violations of state and federal law are among the top recipients of Post-9/11 GI Bill funds.
The senators, several of whom previously backed legislation last year that would close the 90/10 loophole, say in the letter that they plan to introduce similar measures this year.
And while the group expressed satisfaction with a measure in President Obama’s 2016 proposed budget that would close the loophole in the 90/10 funding rule, they urged the Dept. of Education to take immediate action.
“We ask that the Department include the amount and percentage of institutions’ revenues that are received from all federal educational programs, in addition to calculations required by current law, when it publishes the report required… of the Higher Education Act,” the letter states.
By publishing the information, the senators say the Dept. can provide a more accurate picture of the for-profit industry’s heavy reliance on federal taxpayers for many of their operations.
Senators who signed onto the letter include Dick Durbin (IL), Tom Carper (DE), Barbara Boxer (CA), Sherrod Brown (OH), Richard Blumenthal (CT), Chris Coons (DE), Dianne Feinstein (CA), Al Franken (MN), Mazie Hirono (HI) Ed Markey (MA), Claire McCaskill (MO), Jeff Merkley (OR), Chris Murphy (CT), Patty Murray (WA), Gary Peters (MI), Jack Reed (RI), Bernie Sanders (VT), Brian Schatz (HI) and Elizabeth Warren (MA).
Here’s the quick background on this case. Telemarketers for a company called Instant Response Systems would place calls to elderly and infirm consumers, many of them living on fixed incomes (and many of them with numbers on the National Do Not Call registry), falsely claiming they were responding to a request for information placed either by the consumer or a loved one.
The telemarketer would then ask questions about the person’s health and medical care before pitching them on a pricey service ($817 to $1,602) that supposedly provided around-the-clock medical alerts via a pendant worn by the customer.
The company was accused of sending devices and billing customers who never placed an order. Customers who contested the invoices or issued stop-payment orders on checks written to Instant Response were either unable to reach the company or received threatening messages, like the one telling a consumer to “consult an attorney and ask about the criminal and civil consequences of bouncing checks.”
In at least one instance, Instant Response allegedly sent a false police report to a victim, describing the pendant as “stolen property” if it was not paid for immediately.
“There is no genuine dispute that Defendants, in letters and phone calls, made material misrepresentations that consumers ordered medical alert services and owed [Instant Response] money when, in fact, they did not,” reads the summary judgement [PDF].
While the defendant contended that the customers did indeed place these orders and that their complaints to the FTC and others were just “feeble” attempts to get out of paying their bills, the judge notes that the sole piece of evidence provided by the defendant to support this claim was a single written affidavit that was inadmissible as it was not signed under penalty of perjury.
And even if that affidavit were allowed, the judge points out that the woman who wrote it was an independent contractor for Instant Response who “lacks personal knowledge of the consumer complaints or the calls at issue… Her job did not involve communicating with consumers.”
The company didn’t provide any affidavits from the telemarketers who spoke with consumers, nor did Instant Response provide a single recording or transcript of any phone calls with alleged customers, even though the company stated that all calls were recorded.
Jason Abraham, the man behind Instant Response, was already subject to a permanent injunction by a federal court in 2003 that banned him from making material misrepresentations in the sale of any goods or services.
“Instant Response Systems lied to older people to get them to pay for medical alert systems they didn’t order and didn’t want,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Their high-pressure, deceptive phone pitches were illegal, and they violated the Do Not Call rules to boot.”
Comcast and Time Warner Cable announced their intention to merge well over a year ago. They assured shareholders that the process would be relatively quick, beneficial to all, and likely to be approved and move forward in less than a year. Reality, however, has proved less accommodating to the would-be juggernaut. After months of lobbying, advertising, and public commenting from all comers, we’re down to the actual brass tacks of regulation, holding our collective breath to see if we get the rulings that will effectively kill the merger where it stands.
In the past, we’ve likened the merger to a corporate marriage. The two companies may be engaged, or even standing at the altar, but we’re essentially poised waiting for the, “speak now or forever hold your peace” part to clear before anything else happens.
There are two entities that both have to give the yea or nay before anything can move forward. If either of those agencies, the FCC and the Department of Justice, puts the kibosh on the deal, then Comcast and TWC have to call it off and argue over who’s paying the caterer.
A merger like this planned one has to go before both the FCC and the DoJ because each organization has a different mandate. Though there are areas of overlap, they’re looking over the pros and cons of the transaction from different angles.
The FCC is required to oversee the issuing and the transferral of licenses and authorizations for communications companies — so TWC handing over its licenses to Comcast, for example, triggers a review. The standard the FCC has to use to judge mergers is whether the public interest is actively served by the transaction, not just if it would fail to cause harm.
The Justice Department, meanwhile, is specifically responsible for antitrust issues: if something is anticompetitive or likely to cause a monopoly, the DoJ is supposed to step in and stop them before they can go around causing harm.
Way back in the long-long-ago time of 2014, we outlined in-depth the review process the merger has to go through at both the FCC and the DoJ.
The TL;DR version of the FCC’s process goes something like this:
- The parties that want to merge file their application
- The FCC makes a public notice and creates a docket
- The cycle of comments, reply comments, and replies to reply comments kicks off
- The FCC does its homework on all the issues for however long it takes, informally but not statutorily within a 180 day “shot clock”
After all of that, there are basically three possible outcomes. Two of them are approval: either the FCC can give the green light to the merger as-is, or it can request potentially significant conditions be attached. But the third is basically a giant red light: if the FCC is for any reason not able to find the merger in the public interest and give it a go-ahead, the deal goes to a hearing before an Administrative Law Judge.
Such a hearing is a really, really bad sign for the companies that want to merge, because it indicates that the FCC has been unable to come up with any conditions for the merger that would make it in the public interest. The last time the FCC recommended a major merger — AT&T and T-Mobile — go to a hearing, the companies instead gave up and withdrew their application, realizing the gig was essentially up.
And that kind of hearing is what reports indicate FCC staff are now recommending for Comcast and Time Warner Cable.
That’s one of two. As for the other…
The FCC’s process is more public than the DoJ’s, so we have a fractionally better sense of what’s going on. Over at Justice, the process goes more like this:
- Companies announce their intention to merge
- [a whole lot of highly confidential research and legal stuff]
- A lawsuit appears in public, and the merger happens or doesn’t
A lawsuit from the DoJ doesn’t mean the agency is blocking the merger. Sometimes, as in the Comcast/NBCU merger in 2011, a lawsuit and its settlement are announced at the same time, and the settlement is that the companies agree to the conditions that the DoJ is placing on the merger. The lawsuit is simply the way that the agency can legally respond.
However, a lawsuit can also seek to block the merger outright as being anticompetitive. And reports once again indicate that Justice is considering just that. Everyone’s favorite, “people familiar with the matter,” say that merger review staff at the DoJ could recommend filing a lawsuit to stop the merger as soon as next week.
The FCC, much to the cable industry’s chagrin, has been making a habit in the last year of actually working very hard to prioritize the well-being of consumers over the desires of entrenched corporate interests. The commission’s net neutrality and municipal broadband rulings, and the momentum behind those movements, have merger opponents cautiously optimistic that the FCC will stand in the way of Comcast’s plans.
Justice is more opaque, but the arguments made in public forums by the opposition (including us) show that there are tons of reasons why letting this merger happen would be anticompetitive in the extreme. So it’s easy to believe — or at least, to want to believe — that the rumors are right.
If the merger were going to be rubber-stamped as is, it would already have been sometime in the last 14 months. At the very least, the merger will face mitigating conditions — but those are unlikely to be enough really to help consumers (or other businesses). And so maybe, just maybe, we’re finally reaching the end of this road… and it will be an end that makes everyone except Comcast (and TWC, and Charter) happy.
While we’ve been critical of the Comcast/Time Warner Cable merger, the motivation behind that deal is clear: It would instantly add 10 million customers to Comcast’s bottom line and give the company control over cable/broadband access for the two largest markets in the country. The reasoning behind the less-scrutinized marriage of AT&T and DirecTV isn’t as cut-and-dry.
In a recent merger-related filing [PDF] with the FCC, AT&T contends that the addition of the nation’s largest satellite-TV provider (and second-largest pay-TV service) will allow it to expand its high-speed GigaPower fiberoptic broadband service.
It might seem counterintuitive that you could grow a wireline service by acquiring an inherently wireless business, but AT&T (which only has around 5 million U-Verse TV customers) argues that the TV-related cost savings of adding 20 million DirecTV subscribers will free up resources to invest in fiber-to-the-premises (FTTP) service.
“Based on the expected content cost savings alone, AT&T concluded that it will have an economically viable business case to justify expanding FTTP GigaPower’s reach to at least two million additional customer locations that would not meet investment thresholds absent the merger,” reads the filing, “and AT&T has committed to do exactly that within four years of the closing of the merger.”
AT&T also claims that the availability of DirecTV for customers might result in improved performance for U-Verse broadband customers. According to the company, it would be able to offer bundles of satellite TV and U-Verse Internet access. Since the U-Verse connection would no longer have to carry a TV signal, it would free up capacity for broadband.
The filing does acknowledge that this offloading of TV service onto DirecTV is not a longterm solution or replacement for FTTP.
(We will be sure to remind AT&T of this statement when, in a few years, the company inevitably argues that its existing U-Verse service is just fine and there is no need for costly investment in FTTP expansion.)
DSL Reports’ Karl Bode is even more skeptical of AT&T’s claims that a DirecTV acquisition will result in improved and expanded broadband.
Pointing out that the AT&T filing redacts any relevant math that would give us an idea of exactly how much the company could save, Bode writes that “it’s highly unlikely” that consumers will ever see those savings passed on to them.
“It’s also highly unlikely this savings would be used to expand gigabit offerings with AT&T so squarely focused on wireless,” he writes. “AT&T’s ‘Gigapower’ deployment of fiber to the home is aimed primarily at select high-end developments where fiber is already in the ground, but the telco has dressed it up as a much broader effort for PR effect. There’s nothing specifically about the DirecTV acquisition that will impact these plans; in fact AT&T has a long history of pretending that already-scheduled broadband deployments are only possible if Uncle Sam gives it what it wants.”
Just yesterday McDonald’s new CEO Steve Easterbrook claimed that he was in the midst of developing a turnaround plan for the once unstoppable fast food force. However, it appears his ideas on how to reverse sagging sales and criticism of labor practices comes a bit too late for about 700 locations that have already closed or are slated for closing this year.
Fortune reports that the Golden Arches shuttered 350 poorly performing stores in the U.S., Japan and China in the first part of 2015. Those stores are in addition to 350 other stores that were already targeted for shutdown in the first three months of the year.
McDonald’s CFO Kevin Ozan told analysts on Wednesday that these shuttered restaurants were chosen after comparable sales for the locations fell between 2.3% and 4.8% in the first quarter of the year.
Although the closure of 700 stores seems like a lot, it’s only a small fraction of McDonald’s 32,500 stores worldwide.
Analysts tell Fortune that the unexpected closures signify one way in which McDonald’s is attempting to aggressively address slumping sales.
McDonald’s announced Wednesday that same-store sales were down 2.6% in the first quarter, despite the company’s massive media push with its “lovin’” campaign, which briefly allowed random customers to pay with non-currency like hugs. The marketing, which included prominent Super Bowl advertising, increased brand awareness of McDonald’s but failed to improve sales or consumers’ feelings toward the company.
Other measures to bring the company back to its glory days included a Turnaround summit that some franchisees called a farce, and recently announced pay hikes for employees at certain company-owned stores.
Still, as Consumerist reported Wednesday, Easterbrook will provide actual details on new plans to turnaround the fast foot giant during a May 4 strategy call.