Current Events in June 2013

What makes a good credit card? Personal finance experts will tell you it all depends on how you plan to use it.

Some cards have annual fees, others don't. Some provide cash back. Others provide rewards points. Some have high interest rates, others have lower rates. You get the picture.

If you are choosing from one of the many card solicitations you have received in recent weeks, it might be wise to first look at the annual fee. Before the 2008 credit crisis, almost no credit card imposed an annual fee. Most still don't but a recent survey from Bankrate.com shows 22% of cash-back cards are now charging an annual fee, up from 18% last year.

The same survey shows that more cards – 55% of the offers – provide some type of bonus for signing up. Even so, the bonuses aren't quite as generous as before and require more spending in order to redeem them.

Get some cash back

More than half the cards in the survey provide 1% cash back on purchases. Almost as many provide higher payout for certain categories of spending. For example, if you need a card to pay for gasoline, choosing a card with the highest cash-back amount for fuel purchases makes the most sense. Other cards may pay more when you charge groceries or restaurant meals.

When considering a rewards card, make sure you check to see how long you have to cash in the rewards. Sixty-five percent of the cards in the survey don't have expiration dates on their rewards, about the same number as last year.

"As long as you pay your balance in full every month, a rewards card is a good way to get some of that money back," said Greg McBride, Bankrate.com's senior financial analyst. "Make sure to find the card that offers the best fit for your lifestyle.”

For some, a low rate is important

If you pay off your balance every month – and you should – the interest rate might not be that important. But if you carry a balance, a low rate will save you money each month.

Some credit cards give you a low introductory rate for new large purchases. Obviously, the lower the rate and the longer the introductory period, the better.

The lowest rate, of course, is 0%. Fortunately there are several cards that offer an introductory 0% rate on new purchases. You should choose from one of those before considering a card that actually charges interest – even low interest – for the first six months.

Compare fees

With interest rates going up, credit card companies may adjust, not only their rates but their fees as well. Odysseas Papadimitriou, CEO of Card Hub, a credit card comparison website, says consumers need to look carefully at all fees associated with a credit card.

“The things that consumers care about and look at, like transaction fees, are going down,” he said in a recent interview. “The things that consumers are not paying attention to, like cash advance fees, are going up. When most people apply for a credit card, they don't expect to use it for a cash advance.”

Checking out fees is especially important if you are selecting a card designed to help you rebuild a damaged credit profile. All too often the cards in this category have the worst terms for consumers.

What not to do

The worst way to select a credit card is not to simply select one of the many advertising mailers that land in your mailbox. The best strategy is to think about what you want from a credit card and compare as many options in that category as possible.

Make sure the research material you consult about a particular credit card is up to date, since credit card companies change fees, interest rates and terms and conditions from time to time.

All right, so you've just plopped down on the couch after a hard day, and the only thing you want to do is zone out in front of the television. There really isn't anything specific that you want to watch, but you figure with over 400 channels, you'll be able to find something. But many times that simply isn't the case.

So how much are people really getting from cable television? Especially in these days when you can practically watch anything you want online and on your mobile device.

According to a report released by CouponCabin.com, 45% of people believe cable TV is a total waste of money. In addition, 11% of folks in the U.S. said they used to have satellite or cable TV, but they eventually got rid of it.

In a separate survey conducted by the consulting firm Altman Vilandrie & Company, it showed that 20% of consumers have cut down on the number of services they have and chose to spend less money for cable than they did one year prior.

Nothing to watch

Many experts say it's not just the rising cost of cable television that convinces people to either change or cancel their service, it's the fact that a lot of people just don't watch shows when they actually air on television.

According to findings released by the site Deal.com, 193.1 million people will be watching full length programs online by 2014, which is a substantial increase from 2010 when the number was 147.5 million. 

In fact, since 2009, the number of people choosing online programming over cable has increased quite steadily.

Statistics show that in 2009, 49.6 million people watched online programming instead of television. In 2010, 58.9 million people did the same thing. And in 2011, 72.2 million people chose to stream a program instead of watching one on TV.

And when it comes to the cost between subscribing to online services and paying for cable, the difference is pretty substantial.

Based on a report commissioned by the NPD Group, the average monthly cost for cable is $86, compared to the cost of a monthly Netflix subscription which is $7.99.

And a monthly subscription to Amazon Prime, which allows you to stream online programming and receive free two-day shipping on Amazon products, costs $6.67 a month.

In addition, the CouponCabin report shows that 69% of U.S. adults spend $1 to $100 on either cable or satellite, 16% spend $101 to $149, 10% spend $150 to $199 and 5% spend $200 or more each month.

Despite the cost ...

But despite the costs, 81% of folks still subscribe to cable television, and Senior Savings Adviser Jackie Warrick says it'll probably take a while before more people cut their cable chords for good.

"Despite the big bills that arrive month after month for TV services, most Americans continue to subscribe," said Warrick. "In fact, 15% of cable subscribers we surveyed said they would never consider dropping cable TV services. 

"As more viewing options arise at lower price points, though, it's likely more consumers will pull the plug."

But Scott Mirer, Netflix's director of product management, says people shouldn't expect cable TV to go away completely, regardless of how much costs increase.

"Clearly, a lot of people would like this to be a reality, that there's this evolution coming, that everything's going to be different, but that's probably not going to be the reality," said Mirer in an interview with PC Magazine.

Diehard sports fans

And it probably won't be a reality for sports fans either, as 43% said they have no desire to cut their cable services, due to all the live sports they're able to watch.

When sports fans were asked what would make them cancel their cable subscription, 56% said they would do so if there was a cheaper alternative.

Additionally, 55% said they'd cancel cable if they could no longer afford it, 27% would cancel it if they stopped watching the same amount of television and 17% they'd cancel cable if there were other ways to watch live sports broadcasts.

Duncan Stewart, who's the director of research, technology and communications for Deloitte, says the change of seasons is another reason a lot of people can't get rid of their cable service.

"Another thing that happens is that people cancel cable subscriptions and enjoy a month or two of the outdoors, or pursuing other hobbies," he said in a published interview. "And then winter comes, or the new television season, and the show they love isn't available on the Internet, so they sign up again."

Additional research shows that by the year 2014, 77% of Internet users will be watching their programming online instead of on TV, but whether they'll cut their cable services altogether remains to be seen.

To hear enthusiastic foodies tell it, olive oil is the nectar of the gods, able to cure what ails you and keep your taste buds working overtime.

Well, OK, extra virgin, first-press olive oil does have a distinctive taste but as for the health benefits, most of them are lost when olive oil is heated and used in cooking. That's according to a new study by researchers from Portugal’s University of Porto.

It's the antioxidants and phenolic compounds in olive oil that are thought to help ward off cancer and other diseases. But it's also those very elements that are degraded when they're heated, the researchers found. 

Too much heat

Writing in the journal Food Research International, they said their research showed that any kind of heating reduced the power of the phenolic compounds in the oil.

"Virgin olive oil consumption, as final seasoning or within cooked foods, is increasing worldwide, mainly due to its recognized nutritional benefits," the researchers wrote. "However, different cooking practices, from common frying, to boiling and microwave cooking, undoubtedly modify the olive oil chemical profile."

Note that no one is saying you shouldn't use olive oil. Even after it's heated it is still just as healthy as vegetable oil. And using it as salad dressing or adding it to food that has just been served is fine, since it preserves the healthful compounds.

To be a true Italiano, put a small serving of olive oil on the bread plate and dip your bread in it instead of using butter or margarine. Much tastier, and much healthier as well. 

In Italy, some people actually drink olive oil, often with a "chaser" of Chianti. That's fine too but keep an eye on the calories, dieticians caution.   

But as far as saving money, the Portuguese researchers say you might as well use vegetable oil for cooking. It does the job and costs less than olive oil. If you really value the taste of olive oil, just keep adding a dab or two during the cooking process, so it doesn't get too hot for too long. That will help preserve the healthful elements.

You've seen the headlines; Americans are obese, eat the wrong kinds of food, get no exercise, suffer from high blood pressure and stress and generally are physical wrecks. Maybe the reality is not as bad as all that, but there's no question there is room for improvement.

But how do you go from an unhealthy lifestyle to a healthy one? It's not as hard as you think, but it requires a little focus and discipline. Here are four steps that can put you on the path to better health.

1. Address unhealthy habits

This one is so obvious and so important that it has to be number one. Many of us do things every day that damage our health. If you smoke, for example, nothing you can do will improve your health more than stopping. If you don't think you can go cold turkey, slowly reduce the number of cigarettes you smoke each day.

Alcohol consumption is another area that may need adjustment. If you are a heavy drinker, reduce the number of alcoholic beverages you drink per week. Keep in mind that most health experts consider someone who has 21 or more alcoholic drinks per week to be a heavy drinker.

When you do drink, do so in moderation. Excessive alcohol use not only makes you more vulnerable to accidents, it can lead to liver disease and high blood pressure.

2. Eat a healthy diet

Increasingly consumers eat meals at restaurants or at home, out of a box. As a result, we tend to eat the wrong kinds of food and too much of it.

Over the years serving portions have increased in size, especially at restaurants. Typically, an upscale, gourmet restaurant serves up tiny portions of exquisitely-prepared, and yes, expensive dishes. Your typical franchise restaurant, meanwhile, attracts customers with huge portions of calorie-laden food at a moderate price.

For example, farmers can now grow huge potatoes. Slathered with butter and sour cream, one of these giant potatoes can pack enough calories to last most of the day. Health experts say the proper size for a baked potato is about the same dimensions as a computer mouse.

A healthy diet means choosing a wide variety of food and drink from all the food groups and consuming them in moderation. It doesn't mean depriving yourself of good tasting food, you just shouldn't eat very much of it. Now that you are an adult, no one is forcing you to clean your plate.

Fresh fruit is an easy way to add nutritious food to your diet since it requires little or no preparation. Find some fruit that you enjoy and keep it on hand.

A recent survey conducted on behalf of The Vitamin Shoppe found that 82% of Americans don't eat three balanced meals per day. The most frequent excuses they cite for skimping on healthy eating are “healthy cooking takes too much time” and that “they work too much.” Thirty-five percent of respondents said they have gone one week or longer without eating a single fresh vegetable.

"It can be very difficult to maintain a balanced a diet when they are so consumed with work and family," said Sharon Richter, a Registered Dietician based in New York City.

The survey found that there is a deep lack of knowledge among young Americans. One in four Americans between ages 18-34 are more likely to know the names of the Kardashian sisters than the five food groups.

3. Get plenty of exercise

The rise in obesity has coincided with a number of unhealthy trends, chief among them is a lack of exercise. Children no longer clamor to go outside and play if there's something on TV or they have a new video game. Adults also tend to spend too much time in front of TV and their computers.

You don't have to join a health club in order to get healthy amounts of exercise. In fact, sometimes a health club can be an excuse not to exercise since you might not have time to go to the gym that often.

But everyone has time to take a walk, and doing so each day can improve your health. Dr. Edward Laskowski, of the Mayo Clinic, suggests adults should get at least 150 minutes of moderate aerobic activity – or 75 minutes of strenuous activity – each week.

Moderate aerobic exercise includes everyday activities like walking or mowing the lawn. Vigorous aerobic exercise includes such activities as running and aerobic dancing. Laskowski says ideally, you should aim for at least 30 minutes of activity each day.

4. Reduce stress

Modern life can be full of stress and not properly dealing with it can be a detriment to your health. Make a list of the stress factors in your life so that you are fully aware of them, then take steps to counter them.

Increasingly, many people are turning to the practice of “mindfulness” to relieve stress and improve both health and productivity. Mindfulness is associated with meditation. It's a spiritual or psychological faculty believed to be an important step on the road to enlightenment. It's reached by establishing a state of calm through meditation and relaxation exercises.

Consider setting aside some time each day to meditate, reflect, listen to soft music, or simply stare at the wall. Your relaxed mental state will also have positive physical repercussions.

How will you know the above steps are working? Chances are you'll feel it, both physically and mentally. You will probably look healthier too, drawing compliments from family and friends.

If you are overweight or obese, be sure to discuss with your health care provider any changes in exercise routine and diet.

More than 9,600 websites that illegally sell potentially dangerous, unapproved prescription medicines to consumers have found themselves on the receiving end of actions by U.S. Food and Drug Administration, and international regulatory and law enforcement agencies

Among these actions were the issuance of regulatory warnings, and seizure of offending websites along with $41,104,386 worth of illegal medicines worldwide.

The action occurred as part of a continuing global cooperative effort to combat the online sale and distribution of potentially counterfeit and illegal medical products. As part of this year’s international effort, 1,677 illegal pharmacy websites were seized and shut down from June 18 to June 25.

Slick operations

Many of these websites appeared to be operating as a part of an organized criminal network that falsely purported its websites to be “Canadian Pharmacies,” officials contend. They displayed fake licenses and certifications to convince U.S. consumers to purchase drugs they advertised as “brand name” and “FDA approved.”

The drugs were not from Canada, and were neither brand name nor FDA approved. These websites also used certain major U.S. pharmacy retailer names to trick U.S. consumers into believing an affiliation existed with these retailers.

The FDA’s Office of Criminal Investigations Cybercrime Investigations Unit banner  is now displayed on seized websites to help consumers identify them as illegal.

“Illegal online pharmacies put American consumers’ health at risk by selling potentially dangerous products,” said John Roth, director of the FDA’s Office of Criminal Investigations. “This is an ongoing battle in the United States and abroad, and the FDA will continue its criminal law enforcement and regulatory efforts.”

Risky business

During the operation, the FDA targeted websites selling unapproved and potentially dangerous prescription medicines that could pose significant public health risks. Products purchased from the targeted websites also bypassed existing safety controls required by the FDA, and the protections provided when used under a doctor’s care. In general, prescription medicines, including those purchased online, should only be used with a valid prescription and under the supervision of a licensed health care provider.

Some of the medicines that were sold illegally by the targeted websites included:

• Avandaryl: FDA-approved Avandaryl (glimepiride and rosiglitazone) is used to treat type 2 diabetes and to minimize potential associated risks, including edema caused by fluid retention, worsening the condition of the heart, or heart failure. Avandaryl must be prescribed by a certified healthcare provider and dispensed by a certified pharmacy with a medication guide explaining the potential risks.
• “Generic Celebrex”: “Generic Celebrex” sold online is not an FDA-approved product. FDA-approved Celebrex (celecoxib) is a non-steroidal anti-inflammatory product used to treat the signs and symptoms of osteoarthritis and rheumatoid arthritis and to manage acute pain in adults. To minimize the potential associated risks, including gastrointestinal bleeding, heart attack, or stroke, in some people with long term use, Celebrex must be dispensed with a medication guide explaining the potential risks.
• “Levitra Super Force” and “Viagra Super Force”: While Levitra (vardenafil) and Viagra (sildenafil) are FDA-approved medicines used to treat erectile dysfunction (ED), Levitra Super Force and Viagra Super Force are not FDA-approved products and claim to contain dapoxetine. The FDA has not determined the safety or efficacy of dapoxetine. People with certain heart conditions should not take ED medicines containing vardenafil or sildenafil. There are also potentially dangerous drug interactions or serious adverse effects with these drugs, such as loss of hearing or vision.

Suggestions that the Federal Reserve could begin tapering its bond purchases later this year are being given some of the blame for a spurt in home mortgage rates.

Freddie Mac reports the 30-year fixed-rate mortgage (FRM) averaged 4.46% this week with an average 0.8 point. That's a surge of 53 basis point from last weeks reading of 3.93% -- the largest weekly increase since the week ended April 17, 1987. It's also the highest the average for the 30-year FRM has been since the week of July 28, 2011.

The 15-year FRM averaged 3.50% with an average 0.8 point, up from last week's 3.04% and the year-ago average of 2.94%.

The average for the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) was 3.08% with an average 0.7 point. Last week, it averaged 2.79% and last year at this time it was 2.79%.

The 1-year Treasury-indexed ARM averaged 2.66% with an average 0.5 point, up 9 basis points from last week. At this time last year, the 1-year ARM averaged 2.74%.

"Following Fed chief Bernanke's remarks on June 19th about the possible timing of reduced bond purchases, Treasury bond yields jumped over the week and mortgage rates followed,” said Frank Nothaft, vice president and chief economist, Freddie Mac. “He indicated that the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014.”

Nothaft expressed concern that higher mortgage rates may dampen some housing market activity, but added, “the effect will be muted by the high level of buyer affordability, and home sales should remain strong.” He points out that existing home sales in May rose to its strongest pace since November 2009 and new home sales were the most seen since July 2008.

Other housing news

The National Association of Realtors (NAR) reports pending home sales rose in May to the highest level since late 2006, implying a possible spark as mortgage interest rates began to rise.

The Pending Home Sales Index, which is based on contract signings, increased 6.7% last month -- to 112.3, from a downwardly revised 105.2 in April. The index is 12.1 percent above it's year-ago reading.

The real estate lobbying group also reported that contract activity is at the strongest pace since December 2006 when it reached 112.8; pending sales have been above year-ago levels for the past 25 months.

There may be what's known as a fence-jumping effect. “Even with limited choices,” said NAR Chief Economist Lawrence Yun, “it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher. This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”

Yun upgraded the price forecast for 2013, with the national median existing-home price expected to rise more than 10% -- to nearly $195,000. This would be the strongest increase since 2005 when the median increased 12.4%.

In addition, existing-home sales are projected to increase 8.5 to 9.0%, reaching about 5.07 million in 2013 -- the highest in seven years and the best since 2007.

When an airline oversells a flight, Department of Transportation (DOT) regulations require it to seek volunteers willing to give up their seats for compensation. If there aren't enough volunteers, the airline then bumps passengers involuntarily.

Passengers are entitled to a written statement describing their rights and explaining how the airline decides whom it will bump first. In most cases, those bumped involuntarily also are entitled to cash compensation of up to $1,300 depending on the value of their tickets and the length of time they're delayed.

DOT says Delta Air Lines broke rules outlining those passenger rights, and has fined the carrier $750,000. The airline was also ordered to cease and desist from further violations.

“Airline passengers deserve to be treated fairly, especially if they are forced to miss a flight because an airline oversold seats,” said U.S. Transportation Secretary Ray LaHood. “Consumers have rights, and we will continue to take enforcement action when airlines violate our rules to protect the traveling public.”

Numerous incidents

In March 2012, DOT found that -- in a number of instances -- Delta failed to seek volunteers before bumping passengers involuntarily, or bumped passengers involuntarily without providing them a written notice describing their rights or informing them that they had a right to cash compensation.

In addition, the carrier classified some passengers who were bumped involuntarily as having volunteered to give up their seats, which both violated the passengers’ rights to compensation and resulted in inaccurate bumping reports filed with DOT. Delta also violated its published customer commitment, which included a pledge to obey DOT’s bumping regulations.

Delta may use up to $425,000 of the penalty to buy electronic tablets to record consumers’ decisions on whether they agreed to leave a flight and accept compensation offered by the airline, as well to train its personnel on using the tablets. The data collected can be used to help correct any problems the airline may have in complying with the bumping rules.

This is Delta’s second violation of the bumping rules in the past four years. On July 9, 2009, it was fined $375,000 for violations similar to those included in today’s consent order.

Stile Products is recalling about 175 Tern folding bicycles.

The bike’s frame can crack at the hinge on the top tube, posing a fall hazard. The company has received two reports of incidents of the frame hinge cracking, resulting in minor scrapes and bruises.

The recall involves Eclipse S11i and Verge S11i, X10, X20 and X30h models of Tern brand folding bikes. The 24-inch wheel Eclipse model was sold in a silver/black color combination. The 20-inch wheel Verge models were sold in silver/black, orange/white, red/black and yellow/grey color combinations. “Tern” is printed on the front end of the top tube and on portion of the frame. The model name is printed on the middle of the top tube. The frame has a 10-character alphanumeric serial number that begins with AM1A or from AM1102 through AM1207. The serial number is stamped on the bottom bracket shell of the bike. An alphanumeric service tag number located on the front of the seat tube will be requested. .

The bicycles, manufactured in Taiwan, were sold at authorized Stile/Tern dealers nationwide from January 2012, to May 2013, for between $1,800 and $3,000.

Consumers should immediately stop riding the bicycle and contact Stile Products or take the bike to an authorized dealer. Consumers will receive a free frame and have it installed at no cost.

Consumers may contact Stile Products toll-free at (888) 570-8376 from 9 a.m. to 4 p.m. PT Monday through Friday.

Pre-paid debit cards have always had a bad reputation with consumer advocates who have complained about their numerous and high fees. These cards can be expensive to use.

But when you ask the consumers who use them, they rarely mention the fees. Perhaps at this point they have become resigned to the cost of using these banking alternatives. But that doesn't mean they don't have complaints. Far from it.

Pre-paid card users posting on ConsumerAffairs often complain about poor customer service and policies that suddenly block them from accessing their money. In fact, it's a constant refrain.

Rhonda, of Janesville, Minn., complains that her Green Dot card was blocked after she spent hours in the emergency room, waiting for her mother to receive treatment.

Excessive use

“While I was sitting in the ER for hours, I started playing games on my phone and buying coins,” she wrote in a ConsumerAffairs post. “After a few hours of playing, my card was blocked and the account was closed for excessive use.”

The problem, however, was Rhonda still had money on her card that she was no longer able to access.

“It took me from May 15 until June 20 to get refunded with the $300 I had on my card,” she wrote. “From now on I will never use a Green Dot card.”

Another big complaint about all pre-paid cards is customer service. When things go wrong with the card – and they do – consumers complain it's very hard to get help straightening it out. Peter, of Buxton, Me., says he purchased a Green Dot card for $80 and went home to activate it online.

“After completing the information form and selections on the first page I found it would not 'continue' when I pressed the button-link,” Peter writes.

No humans available

When Peter called the customer service number, he hit a dead end.

“There are no options to speak to a customer service representative and any pertinent options require you already be in their system, which is why I was calling them in the first place.” he writes. “I finally got someone in the 'lost and stolen card department' who could not help me and only inform me that it was now three minutes past customer service quitting time.”

Matthew, from Pennsylvania, got his 2012 federal tax refund from TurboTax on a Netspend card. He writes that after he purchased a PlayStation 3, Netspend blocked his account, saying the expensive purchase triggered a fraud alert.

One reason pre-paid card companies say they are quick to freeze accounts is to prevent fraud, which can be a problem with any financial instrument. But despite these security measures, Toni, of Colorado Springs, Colo., said she discovered someone was draining money from her Netspend card. In a panic, she called the customer service number.

Time is money

“While on hold with NetSpend for a total of almost 45 minutes, waiting to speak to a live representative, every last dollar was spent, down to the last penny I had to my name,” Toni writes. “I was hysterical, as you can imagine, and all they did was transfer me to another person, then another, then another. After over three hours on the phone with several different representatives and a mix of misguided information that went against what the last person told me, I still had no answers as to who, how and when my money would be returned. It’s been seven days.”

Even the Bluebird card from American Express, which generally gets the highest marks among pre-paid cards, can be problematic for some consumers. Maria, of Corona, Calif., writes that she purchased a card for her husband, a truck driver, but something triggered a loss-prevention lock, making the card unusable by her husband, who was already on the road.

“He called American Express the next day, waiting one hour and fifteen minutes, but they did not resolve the problem,” Maria wrote. “They said I need to get another card in order to transfer money to him. I went to Walmart, bought another card, registered and started to transfer money to his card everything was okay. My statement said I transfered money to his account. I called him and he said the card is locked again and has already spent two days with no food.”

The unbanked

For Maria, Rhonda and many others, pre-paid debit cards are about their only option for managing money in an account since they are unable, or can't afford, to open bank accounts. In recent years, monthly bank fees and service charges have priced millions out of the banking system.

In 2011 the Federal Deposit Insurance Corporation (FDIC) estimated 10 million households in the U.S. – or 8.2% – had no bank accounts. The report found that the highest “unbanked” and “underbanked” rates are found among non-Asian minorities, lower-income households, younger households, and unemployed households. Close to half of all households in these groups are unbanked or underbanked compared to slightly more than one-quarter of all households.

If you've ever driven through a town that hosts a military base, you can't help but notice the number of used car lots offering “great deals” for G.I.'s who need a vehicle. It's also hard not to have a feeling deep down that something may not be on the up-and-up.

Those feelings are vindicated with today's order by the Consumer Financial Protection Bureau (CFPB) for U.S. Bank and one of its nonbank partner companies, Dealers’ Financial Services (DFS), to end deceptive marketing and lending practices targeting active-duty military.

The two have to return about $6.5 million to servicemembers for failing to properly disclose all the fees that were charged in the companies’ Military Installment Loans and Educational Services (MILES) auto loans program, and for misrepresenting the true cost and coverage of add-on products financed along with the auto loans.

“The CFPB has a special mission to protect servicemembers,” said CFPB Director Richard Cordray. “The MILES program failed to properly disclose costs associated with repaying auto loans through the military allotments system and the expensive auto add-on products sold to active-duty military. We will continue our work to ensure that servicemembers are treated fairly.”

Branching out

U.S. Bank and DFS created the MILES program to finance subprime auto loans to active-duty military. While U.S. Bank is no longer the program's only lender, it is still responsible for financing the substantial majority of the MILES program loans. DFS is responsible for managing the consumer-facing aspects of the MILES program, which includes marketing the program; recruiting and maintaining the 700 participants in the MILES auto dealer network; managing the MILES website; and processing the loan applications before they are passed on to U.S. Bank.

The MILES program required servicemembers to repay their auto loans using the military allotment system, which deducts payments directly from the paycheck before that salary is deposited in the service member's bank account. The allotment system was created decades ago to help deployed servicemembers send money home to their families and pay their creditors at a time when automatic bank payments and electronic transfers didn't exist.

Vulnerable to abuse

Today, the military allotment system may be vulnerable to misuse. When servicemembers pay by allotment, the lenders often require servicemembers to use third-party processors that charge one or more fees. If lenders require payments by allotment, military consumers could be left with no choice but to pay this additional processing fee in order to qualify and pay for the loan. This can cost servicemembers more in fees than alternatives like online banking, which are often free.

U.S. Bank violations

CFPB examinations found that U.S. Bank:

• Failed to inform servicemembers properly about fees associated with the loan: Servicemembers were charged a monthly processing fee for their automatic payroll allotments that was not properly disclosed. Over the life of a typical 60-month MILES loan, a borrower would pay approximately $180 in these fees.
• Failed to disclose the schedule of payments properly: U.S. Bank should have informed servicemembers that they had to make payments twice per month. However, it told them that payments were due only once a month and only credited their accounts once a month.

DFS violations

CFPB examinations found that DFS:

• Understated the costs of the vehicle service contract: Marketing materials claimed that the vehicle service contract would add just “a few dollars” to the customer’s monthly payment when it actually added an average of $43 per month.
• Understated the costs of the insurance: Some customers were told that the insurance policy would cost only a few cents a day, when the true cost averaged 42 cents a day, or more than $100 a year.
• Misled consumers about product benefits: The MILES marketing materials deceptively suggested that the vehicle service contract would protect servicemembers from all expensive car repairs, when many basic parts were not covered.

Fixing the problem

Under the CFPB orders, the companies have agreed to:

• Stop deceptive practices: U.S. Bank and DFS must end deceptive marketing and lending practices and will be prohibited from making misleading claims or omissions when marketing add-on products through MILES or similar programs in the future.
• Pay restitution to servicemembers: U.S. Bank will pay at least $3.2 million and DFS will pay $3.3 million to over 50,000 servicemember victims for violating the Truth in Lending Act and federal laws that prohibit deceptive marketing and lending practices. Servicemembers who had outstanding MILES loans between January 1, 2010 and today may receive restitution.
• Provide refunds or credits without any further action by consumers: Servicemembers are not required to take any action to receive their reimbursement. Both companies will provide the reimbursements to the victims as an account credit or as a check in the mail.
• Stop requiring the use of allotments: U.S. Bank and DFS have agreed to modify the MILES program so servicemembers are not required to use allotments in order to participate.
• Improve disclosures: The companies will take steps to improve their disclosures to servicemembers regarding the cost and other material terms of add-on products.
• Required reporting: Under the orders, both companies will be required to submit a redress plan that the CFPB must approve. They must also provide reports to the bureau to demonstrate their compliance with the orders.

Apple has settled a class action lawsuit over the practice of so-called “in-app purchases,” agreeing to pay a total of $100 million to parents whose children made in-app purchases on games in iTunes.

Under the terms of the settlement, parents whose children charged $30 or less in an app will receive $5 in iTunes Store credit. Parents who don’t have an iTunes account anymore will get $5 cash instead. If a child charged more than $30, the parent must produce documentation showing the amount and date of each purchase.

Claims can be filed online at the settlement website, itunesinapppurchasesettlement.com.

Continuing uproar

The public uproar over in-app purchases began in February 2011, when The Washington Post published a story detailing, among other horrors,  a Rockville, Maryland girl who racked up an eye-popping $1,400 bill while playing the game Smurfs’ Village.

Within weeks, the Federal Trade Commission (FTC) announced that it was reviewing Apple’s in-app purchase policy. The review came at the request of Rep. Ed Markey (D-Mass.), who sent the FTC a letter after reading the story in the Post.

Then-FTC Chairman Jon Leibowitz told Markey in a letter that the FTC “fully share[s] your concern that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases."

"Let me assure you we will look closely at the current industry practice with respect to the marketing and delivery of these types of applications," Leibowitz said.

The month after the Post story was published, Apple announced that it had changed its policy, now requiring passwords for in-app purchases in recently-downloaded apps.

Consumer complaints

ConsumerAffairs has heard from consumers shocked to find the sizable Apple charges on their credit card.

Last year, we detailed the saga of Kristy from Portland, Michigan, whose eight-year-old son racked up over $1,140 in charges while playing the “free” game Dragonvale.

“On March 30, he made 15 purchases totaling $720 in less than one hour,” Kristi wrote in a ConsumerAffairs post. “On March 31, the charges totaled over $420 in under 20 minutes.”

After investigating, Kristy found that the in-app purchases were for things like sacks of food, dragon treats, and bags of gems to be used in the game.

A federal judge is allowing a multi-million-dollar class action against an alleged cellphone spammer to go forward. Wise Media is accused of charging millions of consumers for services they didn't want or order.

The plaintiffs filed their case in October 2012, saying they had received unsolicited text messages from Wise offering flirting tips, horoscopes, celebrity gossip and weight loss advice, Courthouse News Service reported. 

The Federal Trade Commission is also on Wise's case. It filed a complaint in April, asking the court to freeze the defendants’ assets immediately and order them to stop their “deceptive and unfair practices.”

It's the first time the FTC has gone after an alleged cellphone crammer.

Flirting tips 

The class action charges that a typical initial text sent to cellphone users by Wise Media stated: "Lovegenietips Flirting Tips; 3msg/week for $9.99/m T&Cs: lovegenietips.com Msg&data rates may apply. Reply HELP for help, STOP to cancel." 

Then through a process called "cramming," Wise allegedly used middlemen to place charges on millions of consumers' cellphone bills, even when consumers rejected the offers or simply didn't respond. 

The suit also names Mobile Messenger Americas, mBlox Incorporated and Motricity, aggregators that it says acted as Wise's middlemen. Mobile Messenger had moved for dismissal of the claims against it but  U.S. District Judge William Alsup, of the Northern California district, refused and allowed the case to go forward.

Alsup left the class's actions for conversion, negligence -- and the common law counts of unjust enrichment and money had and received -- intact. He found that at this stage of the proceedings, there was sufficient cause to believe that money was taken from cellphone users and restitution must be paid.

Lead plaintiffs in the case are Edward Fields, Cathie O'Hanks, Erik Kristianson, Richard Parmentier, Kimberly Brewster and Kristian Kunder.

Not a new idea

The concept of ‘cramming’ charges on to phone bills is a not a new one,” said FTC Chairwoman Edith Ramirez. “As more and more consumers move to mobile phones, scammers have adapted to this new technology, and the commission will continue its efforts to protect consumers from their unlawful practices.”

In many instances, the FTC complaint maintains, Wise Media sent text messages to consumers that suggested they were subscribed to the service, which many consumers dismissed as spam and ignored. Even if consumers responded via text indicating that they did not want the services, they were charged on their mobile phone bills on a continuing basis.

Caught unaware

The commission says Wise Media and its operators took advantage of the fact that consumers may not expect their mobile phone bills to contain charges from third parties and that these charges appear on bills in an abbreviated manner that does not always clearly designate the company as the source of the charge.

As a result, it says, many consumers didn’t notice or understand the charges and paid the bills. To the extent that consumers did notice the charges, the process of obtaining refunds was difficult and often unsuccessful according to the complaint.

Wise Media is accused of going to great lengths to hide its contact information from consumers. And it says, when consumers were finally able to find a phone number for Wise Media, the company's call center employees frequently promised refunds that were never provided.

A California woman is suing Monster Beverage Corp., claiming her son died of a heart attack brought on by ingesting a "toxic amount of caffeine and other stimulants."

Paula Morris says her son, Alex, 19, was having sex with his girlfriend when he went into cardiac arrest and died. He had earlier downed two Monster Energy drinks, the suit alleges, Courthouse News Service reported.

The suit says that the youth had regularly consumed at least two 16-ounce cans of Monster Energy drinks per day for the past three years.  He died during the early morning hours of July 1, 2012, after becoming unresponsive while having a sexual encounter with his girlfriend.

An autopsy report identifies the cause of death as "cardiac arrhythmia due to cardiomyopathy," the complaint states.

"Massive amount"

Morris claims Monster Energy loads its drinks with "massive amounts of caffeine" though it knows that excessive caffeine consumption can cause many health problems, including heart arrhythmia.

"In addition to caffeine, Monster Energy drinks contain guarana and taurine. Guarana is a plant extract that contains caffeine. Taurine has an effect on cardiac muscles similar to that of caffeine. Studies have shown that the synergistic effect of caffeine, guarana, taurine and/or other like substances can produce significant adverse health effects, including cardiac arrest," the complaint states.

Morris claims Monster conceals the risks associated with drinking its products through misleading advertisements, labels and promotions that assure consumers they are safe.

She says her son would not have drunk two Monster Energy drinks a day for three years if Monster had "properly disclosed and warned of the significant risk of suffering adverse cardiac episodes."

The suit, filed in Alameda County, Calif., court, seeks punitive damages for wrongful death, product liability, negligence, fraudulent concealment and other charges. She also seeks medical expenses and funeral costs. She is represented by Alexander Wheeler with the R. Rex Parris Law Firm in Lancaster, Calif., and Kevin Goldberg with Goldberg, Finnegan & Mester of Silver Spring, Md.

In a stunning decision Tuesday that shook the legal community and outraged civil rights leaders, the Supreme Court struck down a key portion of the Voting Right Act of 1965, leaving the future of the law in jeopardy.

In a 5-4 ruling, the Court ruled that the formula for “preclearance” -- the process by which the U.S. Department of Justice must approve proposed changes to voting protocol in states with a history of discrimination -- is unconstitutional.

Chief Justice John Roberts, who wrote the opinion for the majority, said that “[o]ur country has changed, and while any racial discrimination in voting is too much, Congress must ensure that the legislation it passes to remedy that problem speaks to current conditions.”

As evidence for his proposition that the law is outdated, Roberts pointed to census information showing that, in five of the states originally affected by the law, African-American voters turn out to vote more often than their white counterparts.

Key civil rights legislation

The decision is a major blow to a law passed during the heat of the civil rights movement. Signed in 1965 by President Lyndon B. Johnson -- who had signed the Civil Rights Act the previous year -- the Voting Right Act forbids states from creating a "voting qualification or prerequisite to voting, or standard, practice, or procedure ... to deny or abridge the right of any citizen of the United States to vote on account of race or color.”

Although the law was signed during a tumultuous period in history, it had long been considered uncontroversial. The law has been renewed by Congress four times, most recently in 2006 by margins of 390-33 in the House of Representatives and 98-0 in the Senate.

Preclearance and formula requirements

The Supreme Court’s decision focused mainly on Section 4 of the Act, which sets forth procedures to minimize discrimination. In its opinion, the majority said that “[t]he conditions that originally justified [the measures in Section 4] no longer characterize voting in the covered jurisdictions.”

Section 4(a) of the Act states that “no citizen shall be denied the right to vote in any Federal, State, or local election because of his failure to comply with any test or device.” This provision was designed to stop practices such as literacy tests that denied swaths of otherwise eligible citizens the ability to vote.

Under Section 5 of the Act, “covered jurisdictions” -- states and counties that have a history of discriminating against minority voters -- must have any proposed changes to voting protocol approved by the U.S. Department of Justice before those changes can be put into effect. This practice is often referred to as “preclearance.” Section 4(b) -- the section that the Court ruled unconstitutional -- laid out a formula to determine which jurisdictions are required to comply with preclearance..

“If Congress had started from scratch in 2006  [when the act was renewed], it plainly could not have enacted the present coverage formula,” the majority wrote. “It would have been irrational for Congress to distinguish between States in such a fundamental way based on 40-year-old data, when today’s statistics tell an entirely different story.”

The decision does not actually condemn preclearance itself, although Congress would have to draft a new formula in order for the practice to continue.

A dissent written by Justice Ruth Bader Ginsburg called the majority opinion an act of “hubris.”

Leaders react

In a statement, President Obama said he was “deeply disappointed with the Supreme Court’s decision.”

“As a nation, we’ve made a great deal of progress towards guaranteeing every American the right to vote,” Obama said. “But, as the Supreme Court recognized, voting discrimination still exists.”

And Rep. John Lewis, a civil rights icon who was beaten by police during the Selma to Montgomery March, told MSNBC that “what the court did today is stab the Voting Rights Act of 1965 in its very heart.”

Cash registers were buzzing, or ringing, or whatever it is they do, a little more during May.

The government reports consumer spending rose 0.3% after falling that much in April. Personal income, meanwhile was up 0.5% May following a miniscule gain of 0.1% the previous month.

The income increase exceeded the expectation of economists surveyed by Briefing.com , who projected a rise of just 0.2%. However the spending gain fell short of analysts' forecast of a 0.4% advance.

The full report can be found at the Bureau of Economic Analysis website.

Jobless claims

The line for state unemployment benefits was a little shorter last week.

First-time jobless claims were down by 9,000 during the week ending June 22, to 346,000. Briefing.com analysts had called for a total of 345,000.

The 4-week moving average, which is less volatile than the weekly number and considered a more accurate gauge of the labor market, was 345,750 -- a decrease of 2,750 from the previous week's revised average of 348,500.

The complete reports is available at Labor Department website.

Things are not looking good for the current crop of American adolescents as far as their health is concerned.

Researchers at the National Institutes of Health (NIH) say only about half of them are physically active five or more days a week, and less than a-third eat fruits and vegetables every day.

In a 39-state survey, NIH researchers questioned nearly 10,000 students between 11 and 16 years old about their activity levels and eating habits. They also asked them to describe their emotional health, body image and general satisfaction with life.

'Surprising' results

“The students showed a surprising variability in eating patterns,” said lead author Ronald J. Iannotti, Ph.D., of the Prevention Research Branch of the Eunice Kennedy Shriver National Institute of Child Health and Human Development (NICHD), the NIH Institute in which the study was conducted. “But most -- about 74 percent -- did not have a healthy pattern.”

The findings appear in the Journal of Adolescent Health.

Wide-ranging study

The researchers found that the adolescents’ diet and activity habits could be classified into three general categories. The first group, described as “unhealthful,” accounted for 26% of participants. The second group, 27%, was classified as “healthful.” Because it was the largest group -- including 47% of participants -- the researchers classified the third group as “typical.”

The researchers surveyed participants about: their daily amount of physical activity, the amount of time they spent in front of a computer screen or other electronic screen, and the amount of healthy and unhealthy foods they consumed. Other questions sought information on symptoms of depression and self-satisfaction with their bodies.

Bad habits abound

The analysis of the survey results showed that the “typical” youth were least likely to exercise five or more days each week or to eat fruits and vegetables at least once a day. They were more likely to spend time watching TV, playing video games or on a computer than the healthful group, and less likely to do so than the unhealthful group. They infrequently ate fruits and vegetables but also infrequently ate sweets, chips or fries, or had soft drinks. Youth in this group were more likely than youth in the other two groups to be overweight or obese and to be dissatisfied with the appearance of their bodies.

The “unhealthful” group consumed the most sweets, chips, french fries, and soft drinks. They also were more likely than the other groups to report watching TV, playing video games and using a computer more than two hours a day. Despite the caloric foods they consumed, youth in the unhealthful group were more likely to be underweight and to report needing to put on weight. They also were more likely to report symptoms of depression and of poor physical health, such as backaches, stomachaches, headaches or feeling dizzy.

Nearly 65 percent of students in the group that the researchers termed “healthful” reported exercising five or more days per week -- the highest rate of the three groups. These students were least likely to spend time in front of a screen and were most likely to report eating fruits and vegetables at least once a day. They also were least likely to consume sweets, soft drinks, chips and French fries, and reported the lowest rates of depressive symptoms and the highest life satisfaction ratings.

All three groups could stand to improve their health habits, Dr. Iannotti said, whether walking or biking between home and school or eating more fresh produce each day.

The U.S. Department of Health and Human Services’ Physical Activity Guidelines for Americans recommends children and adolescents get one hour or more of moderate or vigorous aerobic physical activity a day, including vigorous intensity physical activity at least three days a week.