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The Consumerist

American Apparel Says Former Founder, CEO Dov Charney Under Investigation By SEC

Thu, 2015-03-26 14:49

(smcgee)

(smcgee)

Any hope founder of American Apparel Dov Charney had of returning to the company may have gone out the window this week, after it was revealed that the Securities and Exchange Commission opened an inquiry into the circumstances leading to his departure.

The New York Times reports that American Apparel learned last month that the SEC had begun an investigation in matters related to Charney’s conduct while at the company, including the handling of company finances.

The company said in a filing this week that the investigation was initiated “with respect to matters arising from” the internal review into Charney’s behavior. American Apparel says it will cooperate fully with the investigation.

In June 2014 when Charney was first ousted, the company said that he was fired for allowing employees to be publicly shamed and for just being a jerk in general.

Company documents publicized after the initial ousting suggested that Charney misused company property and funds. In some instances, the board says Charney used American Apparel money to pay for family members’ travel, as well as letting friends use homes paid for by the company when they weren’t being used by Charney.

Problems continued to arise for Charney while he was acting in a consultant capacity for the company. Soon after he was suspended by the board, a video hit the Internet that purportedly showed him dancing around naked in front of employees.

Finally, in December, American Apparel announced that Charney would officially leave the company following an internal investigation for “alleged misconduct and violations of company policy.”

At the time, the company said “it would not be appropriate for Mr. Charney to be reinstated as CEO or an officer or employee.”

Dov Charney in S.E.C. Investigation, American Apparel Says [The New York Times]

Can New Payday Loan Rules Keep Borrowers From Falling Into Debt Traps?

Thu, 2015-03-26 05:01

Nearly one in four consumers continue to turn to high-cost, short-term financial products like payday loans, auto-title loans and other pricey alternatives when struggling to make ends meet, even though research shows these expensive lines of credit often leave consumers worse off than when they began. After nearly three years studying the issue, the Consumer Financial Protection Bureau is now announcing its first attempt to protect consumers from predatory lenders.

The CFPB is set to propose new rules for companies that provide payday loans, vehicle title loans, deposit advances, and certain high-cost installment and open-ended loans. The guidelines are intended to reduce the likelihood of borrowers falling victim to the vicious — and often devastating — cycle of debt associated with these financial products by preventing lenders from making loans that can’t be repaid.

The Bureau is also taking aim at payment-collection practices that take money directly from bank accounts in a way that frequently hits the borrower with hefty fees.

“Today we are taking an important step toward ending the debt traps that plague millions of consumers across the country,” CFPB Director Richard Cordray says in a statement. “Too many short-term and longer-term loans are made based on a lender’s ability to collect and not on a borrower’s ability to repay. These common sense protections are aimed at ensuring that consumers have access to credit that helps, not harms them.”

Ending Debt Traps For Short-Term LoansImage courtesy of C x 2 Section Permalink Bookmark Section Share on Facebook Share on Twitter

Short-term, high-interest loans offer borrowers a quick influx of cash to cover unexpected costs. Essentially, when a consumer takes out a payday loan, they are making a promise to repay that debt with their next paycheck or within 10-14 days, whichever comes first.

However, more often than not, payday loan borrowers — who tend to be among the country’s most vulnerable consumers with few other credit options — are unable to repay the full debt plus interest and fees in such a short time frame; or repaying in full leaves them unable to pay the bills for the next few weeks. That’s why payday lenders allow the borrowers to rollover their debts for an additional two weeks, while tacking on more fees of course.

Last year, the CFPB found that only 15% of borrowers were able to repay their debt when it was due without re-borrowing. By renewing or rolling over loans the average monthly borrower is likely to stay in debt for 11 months or longer.

The CFPB’s proposal to end this debt trap covers not only payday loans, but any credit product that requires consumers to pay back the loan in full within 45 days, so that also includes deposit advance products, certain open-ended lines of credit, and some vehicle title loans.

The CFPB is considering rules that would give lenders two ways to extend short-term loans without causing borrowers to become trapped in long-term debt.

Debt Trap Prevention

The first option for lenders is to eliminate debt traps by determining at the outset whether or not a consumer can repay the requested loan while maintaining their other major financial obligations and living expenses.

Other requirements of the rule would likely include:
• Lenders would generally have to adhere to a 60-day cooling off period between loans.
• The consumer could not have any other outstanding covered loans with any lender.
• To make a second or third loan within the two-month window, lenders would have to document
that the borrower’s financial circumstances have improved enough to repay a new loan without re-borrowing. They would have to verify, for example, that the consumer’s income had increased following the prior loan.
• After three loans in a row, all lenders would be prohibited from making a new short-term loan to
the borrower for 60 days.

Debt Trap Protection

Under the protection rule consideration, lenders would eliminate debt traps by providing affordable repayment options and by limiting the number of loans a borrower could take out in a row and over the course of a year.

This protection would include the following restrictions:
• The loan could not exceed $500, last longer than 45 days, carry more than one finance charge, or require the consumer’s vehicle as collateral.
• The consumer could not have any other outstanding covered loans with any lender.
• Rollovers would be capped at two – three loans total – followed by a mandatory 60-day cooling-off period.
• The second and third consecutive loans would be permitted only if the lender offers an affordable way out of debt. To achieve this, the Bureau is considering two options: (1) require that the principal decrease over the three-loan sequence so that it is repaid in full when the third loan is due; or (2) require the lender to provide a no-cost “off-ramp” if the borrower is unable to repay after the third loan, to allow the consumer to pay the loan off over time without further fees.
• The consumer could not be more than 90 days in debt on covered short-term loans in a 12-month period.

Ending Debt Traps For Longer-Term LoansImage courtesy of frankieleon Section Permalink Bookmark Section Share on Facebook Share on Twitter

While short-term loans are most often associated with the devastating debt traps, the CFPB’s proposed rules would also cover longer-term loans that carry the same three-digit interest rates and unaffordable payments.

The proposed rules would apply to credit products of more than 45 days where the lender collects payments through access to the consumer’s deposit account or paycheck, or holds a security interest in the consumer’s vehicle, and where the all-in annual percentage rate is more than 36%.

According to the CFPB, this classification includes longer-term vehicle title loans, some high-cost installment loans, and similar open-end products.

Much like the proposed rules for short-term loans, the proposal to end the debt trap associated with longer-term loans provides two alternative means of lending practices.

Debt Trap Prevention
Under the prevention requirements for longer-term loans, the CFPB would mandate lenders to determine whether or not the consumer can make each payment on the loan including interest, principal, and fees for any add-on products without defaulting or re-borrowing.

For each loan – whether initial or rollover – the lenders would have to verify the consumer’s income, major financial obligations, and borrowing history to determine whether there is enough money left to make payments on the loan after covering other major financial obligations and living expenses.

Other stipulations under the prevention rule would include:
• Lenders would be required to determine if a consumer is able to repay the loan each time the borrower seeks to refinance or re-borrow.
• If the borrower has been delinquent on a payment, the lender would be prohibited from refinancing into another loan with similar terms without documentation that the consumer’s financial circumstances had improved enough to be able to repay the loan.

Debt Trap Protection 

For the debt trap protection requirements, the CFPB is considering two options for loans that would have a minimum duration of 45 days and a maximum duration of six months.

Under the first approach, lenders would have to adhere to many of the same terms offered under the National Credit Union Administration program for “payday alternative loans.” These requirements include:
• The loan principal is between $200 and $1,000, and the balance decreases over the loan term.
• The lender could not charge an interest rate higher than 28% and an application fee higher than $20.
• The consumer has no other covered loans.
• The lender would only be able to provide two of these loans to a consumer within six months, and the consumer could only have one at a time.

The second approach mandates that longer-term lenders could only issue lines of credit if these specific conditions are met:
• The amount the consumer is required to pay each month is no more than 5% of the consumer’s gross monthly income.
• The consumer has no other covered loans.
• The lender does not provide more than two of these loans to the consumer in a 12-month period.

Putting An End To Harmful CollectionsImage courtesy of Newton Free Library Section Permalink Bookmark Section Share on Facebook Share on Twitter

While the CFPB’s proposed rule outline for short-term and long-term loans provides unique requirements for different lenders, the Bureau also tackled one of the more egregious and devastating aspects of small-dollar lending: collection practices.

Currently, both short-term and longer-term lenders often require access to consumers’ checking, savings or prepaid accounts before issuing credit. Such access allows the lender to collect payments directly from consumers in the form of post-dated checks, debit authorizations, or remotely created checks.

While this payment method may be convenient, it often leads to additional debt, as borrowers incur charges like insufficient funds fees, returned payment fees or account closure fees.

To alleviate additional debt burdens associated with short-term and long-term loans, the Bureau is considering certain restrictions on collection practices.

Requiring borrower notification before accessing deposit accounts

The CFPB would require lenders to provide consumers with three business days advance notice about the payment collection before submitting a transition to consumer’s bank, credit union or prepaid account for payment.

This proposal would cover payment collection attempts through any method and would help consumer better manage their deposit accounts and overall finances, the CFPB says.

Limit unsuccessful withdrawal attempts that lead to excessive deposit account fees

The second harmful debt collection proposal under consideration would limit the number of unsuccessful direct account collection attempts to two. After this point, the lender would no longer be able to attempt a collection directly from a checking, savings or prepaid account unless given a new authorization from the borrower.

The CFPB anticipates this requirement would limit fees incurred by multiple transactions that exacerbate a consumer’s financial woes.

It’s A Long Time ComingImage courtesy of Nathan Van Driel Section Permalink Bookmark Section Share on Facebook Share on Twitter

After waiting years for the CFPB to release details about a possible payday lending rule, consumer advocates from across the country were quick to embrace the preliminary rule outline, while pointing out areas of concern.

“The time is long past due for federal rules to protect payday loan borrowers from abusive practices,” Suzanne Martindale, staff attorney for our colleges at Consumers Union, tells Consumerist. “Today’s announcement is a step forward to promote safe and responsible lending practices.”

Representatives with the National Consumer Law Center say the proposal could go a long way in making small dollar loans safer for consumers.

“The CFPB has recognized that payday lenders must do what any responsible lender does: consider the borrower’s ability to repay the loan while meeting other expenses without needing to reborrow,” NCLC associate director Lauren Saunders says in a statement. “The CFPB has made clear that ensuring that a loan is affordable is the cornerstone of fair and responsible lending in the small dollar loan market, as in all credit markets.”

While the long-awaited proposal does span a range of loan products, Saunders says loopholes in the rules could permit some unaffordable high-cost loans to stay on the market.

“The CFPB has taken an ‘either/or’ approach: ‘prevention or protection,’” Saunders says. “But borrowers need both. Lenders must be judged both on whether they evaluate affordability before making a loan and also on whether those loans default, roll over or are refinanced in significant numbers.”

Additionally, NCLC questions the message the CFPB sends by allowing even one rollover for small-dollar loans.

“The proposal would permit up to three back-to-back payday loans and up to six payday loans a year,” Saunders says. “Rollovers are a sign of inability to pay and the CFPB should not endorse back-to-back payday loans.”

It’s Not Over YetImage courtesy of www.GlynLowe.com Section Permalink Bookmark Section Share on Facebook Share on Twitter

The rule-making process for short-term and long-term small-dollar loans is far from over for the CFPB.

Following today’s publication of the outline of the proposals under consideration, the CFPB will convene a Small Business Review Panel to gather feedback from small lenders.

In addition to the panel, the Bureau will continue seeking input from stakeholders in the lending industry before issuing a proposed rule.

Once the Bureau issues its proposed regulations, the public will be invited to submit written comments which will be carefully considered before final regulations are issued.

House Committee Asks Same Net Neutrality Questions As The 4 Previous Committees

Wed, 2015-03-25 23:21
(Brad Clinesmith)

(Brad Clinesmith)

FCC chairman Tom Wheeler was once again called before Congress today. His task: to justify the commission’s vote to protect consumers from the potential, likely harms of monopoly ISPs out to make a buck in any way they can. Or, in other words, to defend the agency’s recent vote on net neutrality.

Today’s hearing before the House Judiciary Committee is the fifth — and last — in a week-long marathon for Wheeler and some of his fellow commissioners. Since last Tuesday, Wheeler has been called upon to explain the net neutrality rule before the House Oversight Committee, the Senate Commerce Committee, the House Commerce Committee, and the House Appropriations Committee.

All of the hearings had one major theme in common: the FCC’s Open Internet order, while a good news for consumers, has a very long, very ugly, very political uphill battle to keep fighting here in Washington.

Today, chairman Wheeler and fellow commissioner Ajit Pai were in the hot-seats, along with FTC commissioners Joshua Wright and Terrell McSweeny.

After all four witnesses read their written testimony into the record, the Q & A portion of events kicked off. And it was adversarial from the start, every inch the free-with-facts back and forth with talking points that all of the net neutrality “debates” have been.

Committee chairman Bob Goodlatte of Virginia immediately began by interrogating Wheeler about existing, proven anticompetitive harms that had already happened in the internet marketplace. Finding Wheeler’s responses about wireless carriers insufficient, Goodlatte cut Wheeler off and turned to commissioner Pai instead.

Pai then claimed that the reason the order, as issued, did not include a list of explicit harms from just the last three years is because, “there is no evidence of a systemwide problem.”

Michigan Rep. John Conyers ran with that ball when his turn for questioning came up, asking Wheeler, “if there was much truth, or any” to the concept that “the internet’s not broken and there’s nothing for the FCC to fix.”

Wheeler, in turn, pointed out that since there are bills in Congress seeking to implement the bright-line rules of net neutrality — no blocking, throttling, or paid prioritization — without involving the FCC, that clearly he is not the only one who feels there might actually be a problem.

And so it went.

Later, Pai, in response to questions from Rep. Steve King of Iowa, cited Google Fiber as an excellent example of burgeoning competition of the kind that Title II will somehow stifle and destroy. However, just this morning — well after everyone has had a chance to familiarize themselves with the new rule — Google announced a further expansion of their service, this time into the Salt Lake City area.

Pai also repeatedly asserted, in response to questions from Rep. Ted Poe of Texas, that the United States has the best internet service in the world, and that Title II can only diminish our greatness. What Pai, Poe, and others in the hearing seemed to forget is that study after study after study after study finds that broadband in the U.S. is, at best, unevenly distributed and on average significantly slower and more expensive than in many other developed economies worldwide.

The rule, its metaphorical ink still not dry, already faces two legal challenges in court and is likely to face more once it is officially entered into the Federal Register. In the meantime, businesses are already looking for space in the rule’s grey areas that will allow them to sidestep the requirements.

Banks Aren’t Really Going To Replace Everyone’s Credit Cards This Year

Wed, 2015-03-25 22:54

(Jeremy P)

(Jeremy P)

Hey, remember how the major credit card companies were going to replace all of our magnetic stripe credit cards sometime this year with computer chip cards sometime this year? You know, like what the rest of the world uses? That isn’t happening. We’ll get our computer-chip cards, sure, and some retailers might be able to read them. However, banks might take until 2017 or so to replace all of our cards.

Yes, 2017. It’s possible that your bank or credit union might be waiting to switch out your current credit and ATM card when it expires, which pushes the date to convert the entire country out to 2017. CNN reports that one estimate is that maybe a quarter of all cards in the U.S. will actually be replaced by the end of 2015. (Warning: auto-play video)

Bank of America told CNN that most of its cards will be chip-laden by the end of the year, but not all of them. Not that it matters all that much, anyway: while cards with chips are safer from being cloned, that doesn’t mean baddies can’t get hold of your card number and go on an online shopping spree.

However, merchants might be the losers in this scenario: they have to replace their card readers, which will cost at least a few hundred dollars per cash register, or be liable for any fraudulent purchases made in their stores.

You’re about to get a new credit card … and it’s an epic failure [CNN] (Warning: auto-play video)

Walmart Entices Shoppers To Try Online Grocery Pickup With Discounts

Wed, 2015-03-25 22:29

(KFSM)

(KFSM)

Does the idea of placing an online grocery order at Walmart and then simply visiting the store to pick it up appeal to you? Walmart is now experimenting with a few pilot stores where you can do just that, and now they’re experimenting with special discounts to get customers to try it out.

Offering discounts for online orders makes sense: while they have to employ order pickers, a facility like Walmart’s new pickup-only grocery store near its mothership in Arkansas only needs to have pickup kiosks and a warehouse: there’s no need for retail aisles, pretty displays, or even cashiers. That could make pickup-only grocery more profitable…assuming that enough customers decide to try it.

In the industry, this kind of setup has a terrible acronym: BOPIS, or “buy online, pick up from store.” Walmart sent out e-mails offering $5 off any purchase or $10 off a $50 purchase to persuade customers to give it a try.

While ordering online and picking up at the store normally doesn’t save shoppers any time, in the case of a full grocery order that may be different. The Pickup Grocery test store is in Arkansas is a retail laboratory of sorts that’s meant to test this concept for possible implementation everywhere.

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Wal-Mart uses discount to woo more consumers to pickup format [City Wire] (via RetailWire)

Macy’s CFO: Sales Are Sluggish Because Women Don’t Want To Put Makeup On To Shop There

Wed, 2015-03-25 20:56

(The Caldor Rainbow)

(The Caldor Rainbow)

You there, with the bare lips and the TJ Maxx bag binge-watching Scandal online: Did you decide to skip Macy’s and head to an off-price store because you just couldn’t bear to tear yourself away from Netflix and put your face on that day? Macy’s CFO seems to think an aversion to lipstick and millennials’ love of digital content (among other things) is funneling customers away in favor of off-price stores, leading to sagging sales.

Macy’s reported 1.8% increase in revenue last quarter to $9.36 billion fell short of analyst expectations, and it’s the fault of those makeupless women and millennials shopping with mobile devices, Macy’s CFO Karen Hoguet explained during an industry conference on Tuesday, as reported by MarketWatch.

“We did some consumer research, and the customers said, she likes going to the off-price retailers because she doesn’t have to put lipstick on,” Hoguet said, according to a transcript of the event cited by MarketWatch, implying that said customer would feel pressured to slap on the war paint to go to Macy’s.

Along with that is the growing consumer trend of shopping for electronic devices and services like streaming media, and millennials’ habit of using mobile phones to shop instead of going into bricks-and-mortar stores, she added.

“I think part of that is the customers are buying other things, whether the electronics, cable services, Netflix, whatever,” she said, all things Macy’s doesn’t sell. There doesn’t seem to be any actual data linking the popularity of Netflix or other services to the downward slide of physical retail stores, however.

Macy’s is trying to remedy by that luring millennials into stores, where the retailer has had success selling them impulse purchases like cosmetics (need that lipstick to go shopping, natch), shoes and apparel. In an attempt to make that happen, Hoguet says Macy’s is focusing on getting millennials on board when they get engaged, and then keeping them once they’re hooked on flatware and bed skirts.

Macy’s didn’t offer MarketWatch a comment on Hoguet’s reported remarks, shoppers who hate putting on lipstick, or a link between paying for a monthly digital content subscription.

Macy’s CFO blames millennials, Netflix and lipstick haters on shifting retail landscape [MarketWatch]

American Express To Fight Court Ruling That Would Let Retailers Encourage Use Of Competing Cards

Wed, 2015-03-25 20:40

(The.Comedian)

(The.Comedian)

Back in February, a federal court ruled that American Express merchant agreements violate antitrust laws, resulting in higher costs for consumers, by forbidding retailers that accept AmEx from encouraging customers to use competing cards like those from Visa, MasterCard, and Discover. Today, the credit card company’s CEO said the company is asking the court to stay this ruling.

American Express typically charges merchants higher per-transaction fees than the competition, so it only makes sense that some retailers would want to nudge shoppers toward using the less-expensive option by, for example, offering a small discount for using a MasterCard. However, the AmEx merchant agreements include so-called “anti-steering” or non-discrimination provisions that forbid the retailer from doing anything to favor one card network over the other.

The court ruled this prohibition “results in higher costs to all consumers who purchase goods and services from these merchants.”

But according to the Wall Street Journal, American Express CEO Kenneth Chenault told investors today that the company intends to try to stay this ruling. If granted, that would allow the current anti-steering rules to remain in place while AmEx appeals.

“Fighting this suit was the right call in 2010 and continuing to fight is the right call now,” Chenault explained.

The appeals process can’t begin until after the court determines the remedy in the case; that issue was not resolved at the time of the ruling.

Now There’s A Bidding War For The Smoldering Remains Of RadioShack

Wed, 2015-03-25 20:38

(cambelina)

(cambelina)

Since RadioShack finally declared bankruptcy last month, the assumption has been that Standard General, a hedge fund that has lent the Shack large amounts of money for its failed comeback attempt, would win the bankruptcy auction. They would buy 1,700 or so of the stores that are left, along with RadioShack’s brand. Now a different lender has joined the bidding, but claims that the auction favors Standard General.

That other lender is Salus Capital Partners, one of the lenders that provided the Shack with some fresh batteries back in 2013 and stood against the chain closing a large number of its stores during its pre-bankruptcy decline.

The Standard General deal had the advantage of keeping a large number of stores open, and preserving about 9,000 retail jobs. Salus hasn’t said what their plans are with the Shack’s retail operations, but their teaming up with a team of liquidators indicates that they would be more likely to sell off the stores and fixtures and maybe keep the RadioShack brand going as an online retailer.

The final hearing about the different parts of what used to be RadioShack will be held tomorrow, at which time the court will approve (or not) the winning bids for different parts of the company. As we’ve shared before, other creditors are not super thrilled with Standard General’s status as almost-winners.

Bidding War to Determine RadioShack’s Fate [Wall Street Journal]

Walgreens Cashiers No Longer Required To Tell Customers To “Be Well”

Wed, 2015-03-25 19:57

(JeepersMedia)

(JeepersMedia)

Having someone wishing you well is always nice, but when it’s a pre-ordained phrase that you know the person is required to say as part of their job, well, not everyone loves that. And so it goes that Walgreen Co. says it’s putting an end to its “Be well” campaign that had cashiers bestowing the canned blessing upon customers.

A spokesman told the Chicago Tribune that the campaign had run its course after a few years, but didn’t explain why it was getting the axe at this particular time.

“It’s accomplished its goal of reinforcing our branding,” spokesman Michael Polzin said. “We’ll continue to build our relationships with customers in other ways.”

Walgreens employees learned about a few other changes in how they’re to deal with customers in a memo cited by the Tribune, including suggestions that workers learn customers’ names and that they should thank them for their purchase.

When a shopper walks into the store, employees no longer have to say “Welcome to Walgreens” verbatim, but can opt for something like, “Good morning” or “Welcome Back, Mrs. Doe.”

If you weren’t a fan of hearing “Be well” every time you buy a six-pack of ramen and a supply of gummy bears (don’t judge), you aren’t alone: Walgreens workers started a Facebook page called Walgreens Gone Wrong last year to air their issues with the required phrase.

Workers noted that it was somewhat ridiculous to say “be well” when someone’s buying cigarettes, or entirely awkward when aimed at a “cancer patient picking up post chemo meds.”

Then there are those who don’t mind saying nice things to customers, but having to stick to a script just didn’t feel right.

“I love and respect my customers, and of course, want them to be well, but it’s just not necessary to sound like an insincere carbon copy routine Walgreens worker,” said one. “This is definitely a step in the right direction.”

Walgreen nixes ‘Be well’ at checkout line [Chicago Tribune]

Another 130,000 Consumers Tell FCC: Don’t Allow Robocalling To Our Cellphones

Wed, 2015-03-25 19:36

(alexkerhead)

(alexkerhead)

Federal law currently bars companies from making automated, pre-recorded calls to your cellphone without obtaining explicit prior consent, but banks want to kick down that legal barrier so they can robocall without fear of penalties. In February, 60,000 consumers asked the FCC to just say no to opening this loophole, and today another 130,000 Americans are adding their voices in opposition to robocalls.

This latest petition was coordinated by our colleagues at Consumers Union, whose endrobocalls.org website has managed to gather a massive number of signatures in a short period of time, asking the FCC to not allow so-called “wrong party” robocalls — in which the caller isn’t penalized for a wrongful robocall if the intention was to reach someone who had given prior consent.

Banks are also asking the FCC for the right to make robocalls without prior consent in certain conditions, like possible fraud notifications, or data breaches.

Opponents of robocalls aren’t against emergency calls; they just point out that if a call is so urgent, there’s no reason a real human shouldn’t handle it.

“Companies shouldn’t be allowed to make robocalls to your cellphone without your consent,” explains Delara Derakhshani, policy counsel for Consumers Union. “But some companies are pushing for loopholes that would open your cellphone to telemarketing pitches, and would limit the companies’ liability for making these harassing calls. Instead of weakening the protections in place, companies should be working harder to ensure that calls are made only when the consumer has explicitly agreed to receive these calls. That’s why so many consumer groups across the country are calling on the FCC to reject this effort by industry, and preserve our right to say ‘no’ to robocalls to cellphones.”

Facebook Messenger Now Allows For Real-Time Customer Service Chat

Wed, 2015-03-25 19:31
Facebook is rolling out a new feature on its Messenger platform that allows customers to talk directly to businesses.

Facebook is rolling out a new feature on its Messenger platform that allows customers to talk directly to businesses.

Peppering a company’s Facebook page with questions and comments appears to be yesterday’s form of communication, as the social media site announced today that it’s giving users and companies the ability to chat with each other through its messenger app.

In announcing the new venture, Facebook say it’s working to improve the way consumers and business interact by enabling real-time conversations.

The initiative is a partnership with cloud-based customer service platform Zendesk.

For now, the feature will be piloted with online retailers Everlane and Zulily, so that in addition to calling, Tweeting and emailing the companies, consumers can use Facebook Messenger to receive order information and other customer service requests.

While many companies already have online chat support for customers who don’t want to use a phone or email to contact businesses, Bloomberg reports that representatives for Facebook are confident their product is better.

“We want to reinvent the way people and businesses are communicating,” David Marcus, Facebook’s vice president of messaging products, said at the company’s F8 conference this week. “Lots of companies have tried to build chat services and a bunch of other things but they’re not that good.”

Of course, users wanting to actually utilize the business-to-consumer communication away from their desktop will have to download the separate Messenger application.

Additionally, Facebook doesn’t provide details on whether or not the consumer has to make first contact with the company or if users might be inundated with unwanted messages from over-eager business representatives.

Can’t Pay Your Student Loans? In Some States It Might Cost You Your License To Drive Or Work

Wed, 2015-03-25 19:09
(Chris Goldberg)

(Chris Goldberg)

In addition to causing irreparable damage to their credit scores, student loan borrowers who default on their debts face a much more devastating and counter-intuitive danger: the lost of their driver’s or occupation licenses, including those used by nurses, doctors, teachers and emergency personnel

Bloomberg reports that 22 states currently have laws on the books giving authorities the power to revoke these privileges from consumers who are more than 270 days behind on paying their student loans.

While it might make sense to punish borrowers who don’t keep up with their obligations to repay debts, taking away their ability to get to work or to actually perform their job duties, seems to perpetuate an environment in which consumers already have few options to get out of debt.

With delinquencies and default rates on the rise, according to reports from the Federal Reserve Bank of New York, more and more consumers face default and the real possibility of losing their licenses. Last year, reports found that nearly one in three borrowers are at least 90 days behind on their student loan payments.

According to Bloomberg, since 2007 Montana has suspended the driver’s licenses of 92 people, while Iowa suspended the licenses of more than 900 residents. The Iowa licenses were reinstated in 2012 after the state moved its student loan portfolio out of state.

As for occupational licenses, Bloomberg found that more than 1,500 professional licenses for nurses, teachers and others have been revoked in Tennessee because of student loan defaults.

Student loan debt collectors say the threat of taking away consumers’ ability to legally drive or work often propels them to deal with their debt.

“It’s more of a deterrent than something that goes all the way to license suspension,” says Cheryl Poelman-Allen, who works in default prevention at the Montana Guaranteed Student Loan Program, a guaranty agency that collects federal student loans in the state, tells Bloomberg.

In Iowa, officials with the Iowa College Student Aid Commission say the ultimatum has produced similar responses.

“Once we served a written notice that we were going to revoke a license, we generally got some action from a borrower,” an executive for the office tells Bloomberg.

Still, consumer advocates and legislators say the threats are unfair and don’t address the underlying reasons why consumers can’t afford student loan debts.

“It’s the most inappropriate consequence, because you are taking away their ability to eventually pay [their loans] back,” Moffie Funk, a Montana state representative who sponsored a bill to repeal the state’s law regarding license revocation, tells Bloomberg.

Several states have introduced legislation that would reverse the measures, although they’ve proven to be slow moving. The bill to repeal the consequence in Iowa stalled because of a procedural obstacle, while the Montana bill introduced by Funk is currently under consideration in the Senate.

These States Will Take Your License for Not Paying Student Loans [Bloomberg]

Uber May Re-Emerge In Portland Under Pilot Program Next Month

Wed, 2015-03-25 19:08

(Darren Sethe)

(Darren Sethe)

After agreeing to suspend its service in Portland, OR last December, Uber could be back on the road in the city by April 15 if officials approve a proposed pilot program.

Upon Uber’s arrival in Portland on Dec. 5, 2014, the company and city officials clashed over whether or not the service was legal. The two sides agreed to a suspension while they worked out a plan for the future of the ride-hailing app.

In just a few weeks, the city council will consider the pilot program at an April 15 meeting, reports KGW News, on recommendations from a task force that looked at the city’s rules regarding private for-hire transportation.

Before that hearing, officials will hear from the task force on April 9 to discuss rules for the pilot program, which include recommendations like driver background checks, vehicle inspections, insurance, access for people with disabilities, data collection, and fares.

If Portland Transportation Director Leah Trent and the city council give the program the go-ahead, it’ll last 120 days and will grant permits to Uber and its rival, Lyft.

Once that’s complete, the city may make permanence changes to its laws that would make ride-hailing and ride-sharing services legal in Portland.

Pilot program could bring Uber back to Portland April [KGW.com]

Restaurant Uses Surveillance Footage To Disprove 1-Star Yelp Review

Wed, 2015-03-25 17:57

dropcamBeing unable to get a seat at a busy restaurant where you don’t have a reservation is probably not a justifiable reason to give the place a one-star writeup on Yelp. But if you are going to put that negative stamp on a restaurant, at least tell the truth.

A man in California recently posted a one-star takedown of a Chinese food eatery in Millbrae, CA, saying that he’d been refused seating — possibly because he was wearing a baseball cap and untucked shirt — that a server had treated him rudely and that he finally left after waiting a minute.

Again, that doesn’t seem like much of a reason to give a restaurant the lowest possible rating, but this is why you have to actually read Yelp reviews rather than just look at the star ratings.

But, as Ratter.com reports, this particular complaint caught the attention of the restaurant owner’s son, who scrubbed through security camera footage to see if he could identify the incident described in the review.

He first posted a 45-minute clip of waiting area footage on the restaurant’s website, writing to Yelper Dan, “If at any time you see yourself walk in and talk to the server, let me know, and I will gladly post a large banner that says ‘I’m sorry Dan for calling you a liar’. Otherwise, you must be hearing voices, because I sure don’t see you talking to anyone in the restaurant.”

The son then posted shorter clips, including one from another angle, showing just the few seconds that Dan was actually in the restaurant. You can see in these videos that the man enters, looks around, talks to no one — not even the others waiting for a table — and then exits without writing his name on the waiting list.

“You spent a total of 22 seconds in the establishment,” writes the owner’s son. “This video also clearly shows that there were other patrons waiting. We are sincerely sorry that we forgot to recognise your very, very ‘VIP’ status… a status so special that you don’t have to sign the waiting list like everyone else… I’ve never been to a restaurant where to refuse to seat people because they’re wearing what you were wearing… You’re dreaming if you think that’s why you didn’t get service.”

Dan later updated his Yelp review to simultaneously and paradoxically claim that (A) the video is not of him, and (B) that he didn’t give permission for his image to be used. He also accused the eatery of bullying him for not giving a positive review.

But the owner of the restaurant tells Ratter that he has no hard feelings about the incident, saying that “If (Dan) comes here I will shake his hand and I will take care of his meal. What can I do to make this person happy? That is my philosophy.”

[via Eater]

Frontier Airlines Strands Passengers At The Gate For 18 Hours

Wed, 2015-03-25 17:24
(Adam Fagen)

(Adam Fagen)

Passengers awaiting a flight from St. Louis to Denver over the weekend could have driven to their destination in less time than it took for their Frontier Airlines flight to actually board.

Denver’s CBS4 reports that passengers on Frontier Flight 287 spent 18 hours sitting at the gate Sunday afternoon before their flight eventually took off down the runway (it takes about 12 hours to drive from St. Louis to Denver).

The flight, which was scheduled to land in Denver at 7 a.m. Sunday morning, finally landed at 2:30 a.m. Monday, after passengers endured delay after delay for mechanical and crew issues.

Passengers on the flight describe the ordeal as a nightmare, with nearly 70 people – including elderly passengers and families – sleeping in chairs and on the floor as they waited at the gate.

Passengers say they weren’t offered compensation or hotel vouchers for their inconvenience, because of a printer issue.

“So at this point people with families had been here 12 hours and were told, ‘You need to be here at midnight for this flight to possibly go out at midnight,’” a passenger recalls.

After nearly 12 hours of delays, the plane was finally ready to go. Only, by this time, there wasn’t a crew readily available to fly the plane and a new team had to be flown in.

“You thought hidden cameras were up and someone was pulling something over your eyes,” one passenger tells CBS4.

When the flight was finally ready to board, passengers tell CBS4 that tensions were so high police had to monitor the process.

Frontier Airlines Leaves Passengers Stranded For 18 Hours Without Compensation [CBS4]

These Ads Use Infomercial Tropes To Sell Shelter Pets

Wed, 2015-03-25 17:22

laptopcozyPet owners know that domestic animals have many uses around the home. Thousands of years ago, that’s why we welcomed them into our dwellings in the first place, and we’ve come to appreciate them for their other skills as well. Cats were originally welcomed inside to catch vermin, and now they are also alarm clocks and are fur-covered laptop cozies. Dogs now guard our houses and clean up crumbs on the floor.

concierge

These ads, produced for the Animal Foundation in Nevada, use the familiar tropes of infomercial spots by showing exaggerated everyday frustrations in black and white that are solved with some kind of gadget, like a Snuggie or an egg tube boiler. In this case, however, the gadget that solves all of your problems is a cat or a dog.

Act now: pets are a valuable investment. They can even increase the value of your home. Sort of. You won’t even have to pay onerous shipping and handling charges. (via AdWeek)

Firefighters Rescue Riders From Clutches Of Universal Orlando’s Incredible Hulk Roller Coaster

Wed, 2015-03-25 17:20

(WKMG 6)

(WKMG 6)

Although we’d like to think that The Incredible Hulk is the kind of guy who’d save a bunch of people trapped on a roller coaster, the ride bearing his name at Universal Orlando proved to be of a different inclination, after 32 passengers had to be rescued by firefighters when the ride stopped 50 yards short of the landing area.

The coaster suffered a technical glitch that prompted the Hulk to shut down short of the unloading platform, reports WKMG 6 in Orlando. A spokesman noted that the glitch caused the system to come to a stop at the safest spot possible, as it’s designed to do.

Orlando Fire Rescue responded to the scene and said that six riders were trapped about 25 feet off the ground. While 20 passengers were able walk down a nearby stairwell, a dozen in the front car had to be rescued by firefighters, and strapped into safety harnesses to be lowered safely down to the ground.

No one was injured, and the ride was reopened this morning. Bruce Banner was not available for comment because he is a fictional person/super hero.

Riders rescued from roller coaster at Universal Orlando [WKMG 6]

Feds Investigating Lumber Liquidators Over Formaldehyde Allegations

Wed, 2015-03-25 16:56

lumberliquIn the wake of a primetime news report alleging that some flooring sold by Lumber Liquidators contained excessive amounts of formaldehyde, federal regulators at the U.S. Consumer Product Safety Commission have confirmed the agency is investigation the lumber company.

In a statement, CPSC Chair Elliot Kaye says the agency is “actively investigating laminate flooring products from Lumber Liquidators,” and that the company has thus far been cooperative.

Formaldehyde is commonly and safely used in the manufacture of laminated wood flooring, but it has to be used sparingly so that the chemical dissipates quickly. If an excess of formaldehyde is used, it can remain in the laminated wood and gradually be emitted over time. Prolonged, continued exposure to formaldehyde has been linked to numerous health problems ranging from nausea to increased cancer risk. Children are more susceptible than adults to the toxic effects of formaldehyde.

A recent report on CBS’ 60 Minutes claimed that the laminated wood Lumber Liquidated sourced from suppliers in China contained more formaldehyde than its domestically sourced laminates and similar products sold by competitor. One sample allegedly contained so much formaldehyde that the lab equipment could not measure it.

Kaye said that while this is an important investigation, a quick conclusion is not in the cards.

“Our work will take some time and often the science does not provide the clarity we all wish it would,” explained Kaye. “Our work will involve testing of samples as well as consideration of home-based exposure scenarios to consider risks.”

Lumber Liquidators continues to defend its products, saying that the testing process used in the CBS report is flawed.

“We have been in direct communication with CPSC staff over the past several weeks and expect them to review our products using sound science and test methods that evaluate finished flooring as used in consumers’ homes,” the company said in a statement. “It is our firm belief that finished product testing, rather than deconstruction, is the best approach to determine consumer safety.”

The company was recently sued by a family in California, alleging that the company misled consumers in that state with labels declaring that flooring complied with California’s strict formaldehyde emission standards. The plaintiffs in the case are seeking class action status to include other Californians who purchased Lumber Liquidators flooring.

Google Fiber To Expand More, Adds Salt Lake City To List Of Lucky Locales

Wed, 2015-03-25 16:48

(Rob Bruce)

(Rob Bruce)


Google said earlier this year that the FCC’s net neutrality rule wouldn’t stop them from investing more in Google Fiber, and it looks like they really meant it. The service is now slated to expand to yet another location: Salt Lake City.

Google posted on their Fiber blog that Salt Lake City is joining other recent Google Fiber cities “in the design phase” of building the network.

It’s not a fast process; the blog specifies that “over the coming months,” Google will work with its new partner cities — not just Salt Lake City, but also the previously announced Atlanta, Nashville, Charlotte, and Raleigh areas — to figure out where, exactly, their speedy fiber-optic cables should go.

Google Fiber is frequently touted as a viable competitor to existing cable monopolies like Comcast, Time Warner Cable, and Charter. Where the service has entered the market, consumers have indeed seen faster internet offerings and lower prices from competitors. However, as of right now, Google Fiber is only available in three markets: Kansas City (MO and KS); Austin, TX; and Provo, UT.

Report: Auto Title Loans Just As Bad, If Not Worse Than Payday Loans; Should Face Same Rules

Wed, 2015-03-25 16:25
(Stephan De Witte)

(Stephan De Witte)

Each year millions of consumers turn to high-interest, short-term loans to make ends meet. While you may be more familiar with payday lenders who charge triple-digit interest rates with the goal of trapping borrowers into taking out new loans to pay off the old ones, a new report finds that payday’s lesser-known relative, auto title loans, have equally destructive repercussions.

According to Pew Charitable Trust’s latest report [PDF] in its long-running Payday Lending in America series, nearly two million American’s spent a total of $3 billion at auto title storefronts across the country to borrow money against the value of their cars.

With nearly 8,000 stores operating in 25 states, title loans are less widely used than payday loans, but can often be even more devastating to consumers’ financial livelihoods.

Auto title loans are currently available in 8,000 stores across 25 states.

Auto title loans are currently available in 8,000 stores across 25 states.

Much like payday loan companies, auto title lenders require borrowers to repay the principal plus a fee within a specified time period. Unlike payday loans which give consumers about two weeks to make the payment, auto title borrowers typically have a month to repay.

However, the amount of money generally tied up in a title loan is often much greater than that of a payday loan. Pew reports the typical auto title loan averages $1,000 and comes with an annual percentage rate of about 300%, while a payday loan averages around $300 with equally high interest rates.

While neither the payday loan or auto title loan model takes into consideration a borrower’s ability to repay, the latter short-term product doesn’t even require borrowers to show proof of income.

On average a typical auto title loan represents nearly 50% of a borrower’s gross monthly income, where as only 36% of an average borrower’s paycheck is taken by payday loan payments.

Most auto title loan borrowers say they can't afford the hefty payments required to retire the loans.

Most auto title loan borrowers say they can’t afford the hefty payments required to retire the loans.

According to the report, two in three title loan borrowers can not afford payments of more than $250 a month, let alone the $1,250 needed to retire a typical lump-sum title loan.

“As with payday loans, this disparity between what title loan customers can afford and what is required to retire the debt leads them to repeatedly renew their loans,” the report states.

Because of this, a majority of title loans due each month are rolled over, creating a business model – much like that of payday loans – that relies heavily on the expectation that borrowers will rollover their debt for additional months, while incurring costly fees.

One industry insider tells Pew that on average the typical 30 day auto title loan is rolled over eight times. These rollovers represent 84% of all title loans in Tennessee and 63% of those in Texas, according to the report.

While consumers fall deeper and deeper into debt with each renewal, when the funds eventually come due borrowers stand to not only lose needed funds, but their vehicles as well.

In fact, one in nine title loan customers has their car repossessed annually for failing to repay the debt.

According to the report, some 15% to 25% of repossessed vehicles are returned to borrowers who pay their overdue loan balances pulse fees. The rest of the vehicles are sold. In all, 120,000 to 222,000 borrowers lose their cars in any given year due to auto title loans.

A majority of auto title loan borrowers favor regulations that would make the loans more affordable.

A majority of auto title loan borrowers favor regulations that would make the loans more affordable.

While borrowers see title loans as providing help and temporary relief at difficult times, they also expressed a desire for more robust regulations over the high-interest loans.

Nearly 66% of the borrowers surveyed by Pew said the industry should be more regulated to ensure that title loans are repayable in affordable, amortizing or principal-reducing installments.

Consumers say this structure would allow for more predictable and realistic payments, reducing their loan balance and providing a clear pathway out of debt.

According to Pew, the striking similarities between payday loans and auto title loans suggest that the latter advance should face the same regulatory reforms as payday loans rules. The Consumer Financial ProtectioN Bureau is expected to release an outline for its long-awaited payday loan rules later this week.

“The Consumer Financial Protection Bureau does not have the authority to regulate interest rates, but it can and should require small-dollar loans to have manageable installment payments and establish certain important safeguards,” the report states.

Pew’s small-dollar loan policy recommendations include:

Ensure that the borrower has the ability to repay the loan as structured. Lenders should be required to determine applicants’ ability to repay based on their income and expenses.

Spread loan costs evenly over the life of the loan. Any fees should be incurred evenly over the life of the loan. Loans should have substantially equal payments, each of which reduces the principal, amortizing smoothly to a zero balance.

Guard against harmful repayment or collections practices. Policymakers should ensure that lenders do not use excessively long repayment periods to increase revenue. Generally, six months is long enough to repay a $500 loan, and one year is long enough to repay $1,000.

Require concise, accurate disclosures of periodic and total costs.

States should continue to set maximum allowable charges. Research shows that loan markets serving those with poor credit histories are not price competitive.

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