Current Events in July 2013

If you're a musician who's been putting videos and performances up on YouTube, and you feel like you're not getting anywhere, there might be a little help in store for you.

Music executive Russell Simmons, who introduced the world to acts like Run DMC, the Beastie Boys and LL Cool J has teamed up with Steve Rifkind, who founded Loud Records back in the 90s, to create a record label that searches for acts on YouTube.

The duo, along with Brian Robbins, a TV and film producer and star of the 80s sitcom "Head of the Class," says the label -- called All Def Music -- will be the first of its kind.

We are, "the first major label-affiliated music company created specifically to sign, develop and promote artists on YouTube," said the group.

A new outlet

All Def Music, which will be under the Universal Music Group (UMG) umbrella, will also develop and promote artist through YouTube. The founders say they want to tap into the vast array of artists who have used the popular video site to get their name out.

"The exponential growth of Internet-based video has created a powerful new outlet for music and music-based content, and the launch of All Def Music is a part of our broader strategy to partner with some of the most experienced entrepreneurs in media and technology to identify future stars and develop powerful content on the world's fastest growing media platform," said the CEO of UMG, Lucian Grainge.

In the last decade or so, the path for musicians to be discovered has changed dramatically. Once, the game plan for most artists was to hone their craft, create a series of demo CDs and then go to every record label, hoping their music wouldn't end up in the demo-junk-drawer.

But once surfing the Internet became synonymous with searching for new music, places like YouTube became the new radio of sorts, not to mention a place where artists could provide visuals for their music.

The landscape changes

In the beginning, the marriage between independent musicians and sites like YouTube was a fruitful one, because both parties in the union gained a lot of attention.

Unknown artists could instantly promote their music on the site and YouTube benefited as well, because more and more consumers turned to the video site to discover up and coming musicians.

But then, that particular avenue became saturated and once a few musicians were actually discovered through YouTube, the flood gates opened to the point where posting a video on the site was the same as blindly mailing a demo CD to a record label.

Breaking new ground

However, that didn't stop people from posting content to YouTube and it didn't stop record executives from going to the site to look for new talent. But this is the first time a major label is using digital media as its main source to build its roster. 

Simmons, who has been a fixture in urban music since the early 80s, with his Def Jam label, says he still looks at YouTube as new territory to conquer, although it's been in full swing for quite some time. 

He compares the relative newness of YouTube to the newness of rap music back in the 80s, when he was trying to get the genre recognized on mainstream levels.

"I look forward to working with the extraordinary talent from the vastly creative YouTube ecosystem in the same way I've worked with musicians, poets, comedians and designers all my life," said Simmons. "This is the most exciting new terrain for me, to move talent across media platforms."

All Def Music will be coupled with All Def Digital Management, launched earlier this year, which develops and promotes new shows, comedians and poets, as well as other acts.

A new management approach

Simmons says although the Internet is a great place for artists to promote their material, there's really no organization to it and he really wants to change that.

"In terms of just taking artists and broadening them across different media, I think that there's no one really there managing them properly," said Simmons. "I just think there's a hole in the market."

The announcement of All Def Music will most likely delight many independent artists, especially the ones who feel like they might be creating and posting videos on YouTube in vain.

But a word of caution for those who think their chances of being discovered on the video site just became a whole lot easier.

If record industry history repeats itself, All Def Music will look for artists with the most YouTube popularity instead of the best music, so they'll have to do a lot more than post a good song to be discovered need thousands -- if not millions -- of hits to even get noticed by folks like Simmons and Rifkind.

Musicians should also take the whole artist-development-thing with a grain of salt as well, because labels don't develop artists anymore. They simply latch on to an already successful person who already has a loyal fan base. But Rifkind says All Def Music will be different and the label will actually nurture talent. 

"Tapping into YouTube's fertile creative platform, we intend to identify, develop and nurture music's next generation of superstar talent," he said.

Independent artists shouldn't hold their breath because All Def Music will probably be just like any other record label. It'll only want to work with people who already have some kind of fame or popularity.

The Chevrolet Impala has returned from oblivion to take top spot in Consumer Reports magazine's sedan rankings, beating our Japanese and European models for the first time in a generation.

The revamped 2014 Impala has gone from the bottom of its class in Consumer Reports ratings, with a mediocre test score of 63 — too low to be CR Recommended — to an “Excellent” 95 that places it not only at the top of its “Large Sedan” category, but also among the top-rated vehicles Consumer Reports has tested.

Only two vehicles have a higher test score; the Tesla Model S hatchback and the BMW 135i coupe. Overall, Consumer Reports found the Impala is competitive with cars that cost $20,000 more, including the Audi A6 and Lexus LS460L, as well as the recently reviewed Acura RLX and Jaguar XF.

It's been a good couple of weeks for the Impala, which won a five-star safety rating earlier this mont. 

“The Impala’s performance is one more indicator of an emerging domestic renaissance,” said Jake Fisher, director of Consumer Reports automotive testing. “We’ve seen a number of redesigned American models — including the Chrysler 300, Ford Escape and Fusion, and Jeep Grand Cherokee —  deliver world-class performance in our tests.”

Consumer Reports engineers found the Impala "rides like a luxury sedan, with a cushy and controlled demeanor, while delivering surprisingly agile handling, capable acceleration, and excellent braking."

The reviewers said the Impala "corners quite well for a large car, with prompt turn-in response and controlled body lean." Steering is nicely weighted; it’s light enough for parking maneuvers and provides decent feedback. When pushed to its handling limits, the Impala proved secure, responsive, balanced, and easy to control, they added.

Safety features

The top safety rating came as part of the National Highway Traffic Safety Administration’s New Car Assessment Program.

“Safety is a key consideration for all car buyers, and Impala sets a new benchmark for Chevrolet’s flagship sedan,” said Gay Kent, GM general director of Vehicle Safety and Crashworthiness. “The 2014 Chevrolet Impala is designed to provide excellent crash safety, and offers customers several safety technologies not previously available in Chevrolets.” 

 It employs advanced technologies – including radar – to help avoid crashes. Visual and audible alerts, depending on the alert feature, help drivers identify potential crash situations and even intervene when a crash threat appears more imminent. The alerts are designed to identify potential threats with sufficient warning to give the driver time to react and make changes.

No reliability data

Despite its high test score, Consumer Reports said the 2014 Impala is too new to have reliability data, so it can’t be "Recommended." To be Recommended, a vehicle must perform well in CR’s battery of tests, have average or better reliability in CR’s Annual Auto Survey, and perform well in government and industry crash tests.

Complete tests results for the Impala, Acura RLX and Jaguar XF, Hyundai Santa Fe, and Kia Sorrento, appear on www.ConsumerReports.org today, and in the September issue of Consumer Reports, on newsstands August 1. Updated daily, ConsumerReports.org is the go-to Website for the latest auto reviews, product news, blogs on breaking news, and car-buying information. Check out CR’s ongoing Twitter feed at @CRCars.

Consumer review sites have empowered consumers to fight back against shoddy business practices and to reward brands and retailers that treat them right.

But the review sites are locked in a constant battle with so-called "reputation management" companies that often engage in fraudulent methods to sneak positive reviews past the editors and algorithms who try to ensure that reviews are genuine.

Some companies are reputable and counsel their clients to respond promptly and honestly to consumer complaints and urge them to use the complaints as a way to improve their business processes. But others simply dummy up fake complaints that are little more than spam and bombard review sites, hoping a least a few will make it through.

The automotive news and review site Edmunds.com is taking an aggressive approach towards the problem. It has filed a lawsuit against online reputation management company Humankind Design Ltd. for allegedly attempting to post fraudulent reviews.

Edmunds filed the suit in Texas after it discovered that Humankind tried to register almost 2,200 fake members on the site, the company said.

Humankind, based in Friendswood, Texas, claims that it can push negative reviews off of Google's first page and improve the ratings its clients get on third-party review sites.

"Imagine owning the first page of Google and Bing with only positive information. You work hard on your business and it's important to put your best face forward," Humankind says on its website. 

Edmunds said it identified 25 dealers who hired Humankind to make up and submit fake reviews. Justin Anderson, owner of Humankind, disputed the allegations in published reports. 

"I can say that we completely disagree with the assertion that we are posting fraudulent reviews online," Anderson told one reporter.

No matter what season you're traveling – summer or winter – weather can throw the airlines' schedules into turmoil. When that happens you can easily find yourself stranded in a strange city's airport.

In recent years airlines have reduced flights and have less capacity than they once did. A few cancelled flights can quickly cause havoc throughout the system.

Recently a Des Moines, Iowa high school group toured France with no travel-related problems until they returned to the U.S. Then, Marcy Baustain and her French Club students found themselves stranded in Detroit when the flight on their final leg, back to Des Moines, was cancelled due to weather.

"Getting re-booked was difficult because it's very tough to find 18 seats on a flight – especially to Des Moines, since bigger planes aren't scheduled through there," said Baustian.

The group spent the night in the Detroit airport before finally getting re-booked on a flight to Kansas City. But then that flight was cancelled because of weather.

Eventually, the group chartered a bus – at extra expense – to get the rest of the way home. The school filed a claim to be reimbursed by the airline for the cost of the ground transportation. Does it have a case?

Legal gray area

"It can be difficult to know when a situation that started as inconvenient has crossed the line into a violation of rights," says Ann Cosimano, General Counsel for ARAG, a company describing itself as a global provider of legal solutions. "Knowing when to be patient – or when to speak up – can take some of the stress out of travel." 

For air travelers these days, it is important to know your rights when you fly.

Delayed or cancelled

“Finally, was notified at around 10:00 PM that the flight has been cancelled, due to crew not being available,” Salig posted at ConsumerAffairs. “Was herded into the customer service line. Waited in line for three hours to receive a $25 voucher which was expired, and an amenity kit, and was told that Delta is not booking any hotels. I received my boarding pass for the next day via the automated kiosk). Hence standing in line for 3 hours till 1:30 am was a waste of time. I was able to get my own hotel (out of pocket costs) + pay $1,200 for a ticket for the pleasure of waiting for six hours and cancellations.” .

ARAG says if your flight is delayed or cancelled for problems beyond anyone's control, like weather or safety issues, most airlines will rebook you on the next available flight at no charge. They may even book you with another airline without charging you extra. However, airlines are not required to provide any amenities, such as meal vouchers or hotel rooms, in this situation.

At the same time, if your flight is delayed or cancelled for something the airline could control, such as a maintenance issue, the airline will likely re-book you on the next available flight, either theirs or another airline's, at no charge. The airline is still not required to provide amenities, but many will provide meal vouchers and even hotel rooms and grooming kits if your delay causes an unexpected overnight stay.

When you're bumped

Bumping is quite common these days because airlines routinely oversell flights. They usually ask for volunteers to step aside, rewarding them with another flight and other compensation.

If no one volunteers and you're bumped involuntarily, ARAG says you should receive a written statement from the airline explaining your rights and how the airline decided which passengers were bumped. If you're not re-booked and scheduled to arrive at your destination within one hour of your originally scheduled arrival time, you are entitled to compensation in the form of a check or cash. The amount will vary and you must have a confirmed reservation and have checked-in with the airline within their deadlines.

On the tarmac

Tarmac delays can be excruciating but fortunately, in the wake of a new law, they are fewer and shorter. If you are delayed on the tarmac of a domestic flight before taking off or after landing, you have rights if the delay is more than three hours. Federal rules bar most U.S. airlines from sitting on the tarmac for more than three hours unless there are safety or security issues.

If you find yourself on the tarmac of a domestic flight, ARAG says you are entitled to food and water no later than two hours after the delay begins. Restrooms must remain operable and medical attention must be available if needed.

Google has agreed to pay $8.5 million to settle a consolidated class action lawsuit over its alleged disclosure to third parties of users' search queries, a practice Google halted in October 2011 when it began encrypting search queries, Courthouse News Service reported.

The lawsuit claimed that Google passed on private information through "referrer headers," allowing others to see which websites users were visiting and also displaying the search terms typed in by the user.

The lead plaintiff, Paloma Gaos, argued that the headers could have revealed confidential information including the users' name, religion, medical conditions and sexual orientation. 

A similar case was filed in Illinois and the suits were later consolidated.

The preliminary settlement calls for Google to pay $8.5 million into a settlement fund that will cover administration expenses, incentive awards to the class representatives, attorneys' fees for class counsel and distributions to seven nonprofits that have agreed to use the funds for public awareness and research related to Internet privacy.

Google would also post disclosures on its website concerning user search queries, including information about whether users' search queries are transmitted to third parties.

The proposed non-profit recipients are World Privacy Forum, Carnegie-Mellon, Chicago-Kent College of Law Center for Information, Society, and Policy, Berkman Center for Internet and Society at Harvard University, Stanford Center for Internet and Society, MacArthur Foundation and AARP Inc.

There are fewer things lower than taking advantage of people who are grief-stricken. And, while undercover inspections of funeral homes by the Federal Trade Commission (FTC) show that it does happen, fortunately it doesn't happen a lot.

Investigators working undercover in eight states detected significant violations of FTC consumer protection requirements in 23 of 127 funeral homes they visited during 2012.

The FTC conducts these inspections every year to make sure funeral homes are complying with its Funeral Rule, which gives consumers important rights when making funeral arrangements. Key provisions of the rule require funeral homes to provide consumers with an itemized price list at the start of an in-person discussion of funeral arrangements, as well as a casket price list before consumers view any caskets. It also prohibits funeral homes from requiring consumers to buy any item, such as a casket, as a condition of obtaining any other funeral good or service. By requiring itemized prices, the Funeral Rule enables consumers to compare prices and buy only the goods and services they want.

Rule breakers

Funeral homes with significant violations can enter a training program designed to increase compliance with the Funeral Rule. The three-year program is known as the Funeral Rule Offenders Program (FROP), and is an alternative to an FTC lawsuit that could lead to a federal court order and civil penalties of up to $16,000 per violation.

It is run by the National Funeral Directors Association (NFDA) and provides participants with a legal review of the price disclosures required by the Funeral Rule, and on-going training, testing and monitoring for compliance with the rule. In addition, funeral homes that participate in the program make a voluntary payment to the U.S. Treasury in place of a civil penalty, and pay annual administrative fees to NFDA.

Recent inspection results

FTC inspections during 2012 encountered varying levels of compliance:

• In Everett, Washington, 4 of the 11 funeral homes inspected had significant violations;
• In Baltimore, Maryland, 1 of the 9 funeral homes inspected had significant violations;
• In Kansas City, Kansas/Missouri, 1 of 21 funeral homes inspected had significant violations.
• In Bayonne and Jersey City, New Jersey, 3 of 26 funeral homes inspected had significant violations.
• In Montgomery and Opelika, Alabama, 2 of 10 funeral homes inspected had significant violations.
• In the McAllen, Texas, area, 4 of 18 funeral homes inspected had significant violations.
• In Brownsville and Harlingen, Texas, 8 of 21 funeral homes inspected had significant violations.
• In Denver, Colorado, 1 of 11 funeral homes inspected had significant violations.

All but one of the funeral homes with significant violations have entered the NFDA’s FROP program, and the one that has not remains under investigation. The names of homes that have entered FROP are not released under the terms of the FROP program, and the FTC does not identify businesses under investigation.

In addition, the FTC identified 43 funeral homes, within the eight states, with only minor compliance deficiencies. In such cases, the FTC contacts the funeral home and requires it to provide evidence that it has corrected the problems. Since the FROP program began in 1996, the FTC has inspected nearly 2,700 funeral homes, 427 of which have agreed to enter the compliance program.

As the number of people diagnosed with diabetes continues to grow, so does the number of illegally sold products promising to prevent, treat, and even cure diabetes.

That's prompted the Food and Drug Administration (FDA) to warn consumers against using such products. The agency cites a number of problems with these products: they may contain harmful ingredients or may be otherwise unsafe, or may improperly be marketed as over-the-counter (OTC) products when they should be marketed as prescription products; they carry an additional risk if they cause consumers to delay or discontinue effective treatments for diabetes. Without proper disease management, people with diabetes are at a greater risk for developing serious health complications.

"People with chronic or incurable diseases may feel desperate and become easy prey,” said Gary Coody, R.Ph., national health fraud coordinator for FDA. “Bogus products for diabetes are particularly troubling because there are effective options available to help manage this serious disease rather than exposing patients to unproven and risky products. Failure to follow well-established treatment plans can lead to, among other things, amputations, kidney disease, blindness and death."

Warning letters issued

In July 2013, FDA issued letters warning 15 companies about selling products for diabetes in violation of federal law. These products are sold as dietary supplements; alternative medicines, such as ayurvedics; prescription drugs and over-the-counter drugs, including homeopathic products: Examples of claims made by these illegally marketed products include:

• "Lower your blood sugar naturally."
• "Lowers A1C levels significantly."
• "You'll lower your chances of having eye disease, kidney disease, nerve damage and heart disease!"
• "It can replace medicine in the treatment of diabetes."
• "For Relief of Diabetic Foot Pain."

Some of the companies also promote unapproved products for other serious diseases, including cancer, sexually transmitted diseases and macular degeneration.

FDA tested products marketed as "all natural" treatments for diabetes and discovered some of them contained one or more active ingredients found in prescription drugs to treat type 2 diabetes.

Undeclared ingredients can cause serious harm. If consumers and their health care professionals are unaware of the actual ingredients in the products they are taking, these products may interact in dangerous ways with other medications. One possible complication: Patients may end up taking a larger combined dose of the diabetic drugs than they intended, and that may cause a significant unsafe drop in blood sugar levels, a condition known as hypoglycemia.

Online pharmacies

FDA also looked at sales of prescription drugs from fraudulent online pharmacies. Signs that indicate an online pharmacy is legitimate include: requiring that patients have a valid prescription; providing a physical address in the U.S.; being licensed by a state pharmacy board; and having a state-licensed pharmacist to answer questions.

Some fraudulent online pharmacies illegally sell drugs that are not approved in the United States, or sell prescription drug products without meeting necessary requirements.

One website that is subject to a warning letter shipped a prescription diabetes drug without requiring a prescription, and even included an unsolicited free sample of a prescription drug for erectile dysfunction. Moreover, the prescription diabetes drug was dispensed without the medication guide and other precautions required by FDA to ensure the drug is used safely and appropriately.

Although some of these websites may offer for sale what appear to be FDA-approved prescription drugs, FDA cannot confirm that the manufacture or the handling of these drugs follows U.S. regulations or that the drugs are safe and effective for their intended uses. Also, there is a risk the drugs may be counterfeit, contaminated, expired or otherwise unsafe.

A major problem

There are 26 million people in the U.S. with diabetes, including about 7 million who are undiagnosed, according to the Centers for Disease Control and Prevention. www.cdc.gov Millions more have pre-diabetes, meaning they have higher than normal blood sugar levels and can reduce their risks of developing diabetes through healthy lifestyle changes, including diet and exercise.

"Products that promise an easy fix might be alluring, but consumers are gambling with their health. In general, diabetes is a chronic disease, but it is manageable and people can lower their risk for developing complications by following treatments prescribed by health care professionals, carefully monitoring blood sugar levels, and sticking to an appropriate diet and exercise program," said Coody.

In some ways, Google is like the young hotshot musician, actor or entrepreneur who peaks too soon. Its search engine and contextual advertising system were such smash hits that everything else seems, well, kind of flat.

But you have to give them credit, the Googlers keep trying when they could just sit around and clip coupons. One problem Google and other great minds of the modern age have been trying to solve is television -- namely, how to rescue TV from its tower and marry it to the Internet.

It's not as though anyone else has solved this conundrum. Apple has struck out several times. Now it's starting to look like both Google and Apple may have been guilty of over-engineering. They both came up with set-top boxes that were monuments to complexity -- something that anyone who has ever tried to master his TV, DVR, cable box, DVD player and audio system needs no more of.

Simple, very simple

So Google, like Apple, has adopted the KISS protocol (come on, you know what this is -- Keep it simple, stupid) and the result is something called Chromecast -- a little $35 thing that looks sort of like a thumb drive. 

OK, it is a thumb drive, but instead of plugging it into your laptop, you plug it into your high-def TV and, voilà, you can stream video from the tablet, computer or smartphone that you have paired with the thumb drive.

If this sounds familiar, it's because it's the way Apple TV works, except that Apple TV costs $99 and restricts you to using Apple-brand devices. Chromecast lets you use Android, Windows, Google's very nifty brower-based Chrome OS and, ahem, Apple. 

Sound confusing? It's not. Here are the stunningly simple set-up instructions from Google: "Plug Chromecast into any HDTV, connect it to WiFi, then send videos and more from your smartphone, tablet or laptop to your TV with the press of a button."

Initially, it works with Netflix, YouTube, Google Play and Chrome but you can expect lots more sources to sign on. It's pretty hard, in fact, to see how any major program producer would want to miss sailing on this boat. And it's also hard to see how this doesn't cause major angina for cable TV executives and the folks at Roku, whose neat little devices have previously been the simplest way to get hold of lots of high-def programming.

To sweeten the deal even further, for the $35 you pay for the Chromecast device, you get three months of free Netflix service -- an offer that applies even to current subscribers. Netflix' most basic plan is $8 per month, so that means Chromecast costs you $11. Cheaper than a Chevy Volt anyday.

Millions of smokers worldwide have begun to embrace the electronic cigarette – or e-cig – as a way to wean themselves off tobacco. Some who have taken advantage of a “free trial” offer from a website selling the devices have reported bad experiences.

Free trial offers hardly ever work out well for a consumer. The company entices you with the free sample of their product, but requires you to supply credit card information so that you can pay a small shipping and handling charge. Many consumers see this as a good deal. It isn't.

Once a company has your credit card information, it can place other charges on your account as well. Free trial offers usually have very stringent terms. By accepting the sample you agree to place a full order – sometimes a full order each month. You can avoid the full charge only by cancelling within the required period of time.

Free samples rarely turn out well

In the past this marketing technique has been used on all sorts of products, from dietary supplements to teeth whiteners. Now a company, e-cig.com, is using it to market its e-cigarettes.

“My husband got their original sample for a S&H charge and now they keep charging my account for $80,” Lorraine, of Westford, Mass., wrote in a ConsumerAffairs post. “Tried to talk to someone and could not understand her and she would not give us to someone else. I finally got the return address and she continued to try to sell me the cigarettes. I spent 45 minutes on the phone trying to resolve this. They also did no good for my husband. Frustrated. Still don't know if we are out the money.”

John, of Bassett, Va., says he was charged $109 after ordering the free trial. He was confused so he called.

“They said I had 14 days to try product,” John writes. “Their 14 days started from the minute free tryout was ordered, not the five days later when it was received, so over one-third of the free tryout was expired before product was received. I called the company and received a runaround about the 14 days, basically my problem. I tried to go up the food chain and listened again to the canned answers. Finally they agreed to refund me $40.00 of the $109 then hung up. Fifteen minutes later, the original rep called me back and said they would be raising the refund to $59.00. They will still be retaining $50.00 of mine for nothing.”

Raymond, of Irving, Tex., said he ordered the product and was told he just had to pay the shipping charge. He thought he understood the terms.

Communication break-down

“I called to cancel future orders,” he writes. “I told two different people that I wanted to cancel and not receive any other charges. They kept telling me they were extending the trial period to July 2nd, 2013. I kept asking why - no clarity in answering my question. I told them over and over I did not want to be charged. They said they would not charge me. I just looked at my account today and much to my surprise, there is a charge for $19.95.”

Raymond says he is filing a complaint with the Texas Attorney General.

Generally, consumers should avoid accepting a free trial offer. In most cases there are just too many strings attached. While many companies comply with the law and post the terms and conditions of the trial, consumers don't always read them and in some cases they can be hard to find.

What to do

The Federal Trade Commission (FTC) requires companies engaging in “negative option” marketing – in which a sale is presumed to have occurred unless the consumer takes action to cancel it – to state the terms in a “clear and conspicuous” manner. Consumers can avoid many of the hassles and headaches associated with negative option marketing by not accepting any free trial offer.

Instead, simply purchase the smallest package of the product at the regular price. If you don't like the product, don't buy it again. Simple as that.

Month after month, new car sales are on the rise. As the economy struggles to recover, car sales remain a major pillar of strength.

How is it that consumers are buying all these new cars? Because they aren't exactly buying them – they're leasing them.

Leasing, it turns out, makes a new car look pretty cheap. You may have seen television commercials for a wide range of vehicles that carry an estimated monthly lease payment of $150 to $200. Even at low interest rates a car payment on a purchase would be at least twice that, along with a hefty down payment.

An analysis conducted by automotive website Edmunds.com projects lease sales will rise 27.6% this year over last. According to the analysis, 25% of the cars sold in the first half of 2013 were leased.

Leases drive sales

"Lease offers have become more important to automakers' and dealers' sales strategies," said Jessica Caldwell, Edmunds.com Senior Analyst. "Luxury brands have for a long time relied on leasing to maximize their sales volumes. Now mainstream brands are riding that wave, drawing buyers with the promise of lower monthly payments through leasing."

Lease payments are lower than purchase payments because you are basically renting the car for a set period, three to five years. Your payment is based primarily on the price of the car, the estimated value of the car when you turn it in, and the prevailing interest rate.

While leasing a car may make more economic sense for consumers than in the past, you still have to tread carefully. Earlier this year Interest.com, a financial website, conducted a study and concluded that most consumers can't afford a new car. But when they focus just on the monthly payment, many consumers conclude that they can afford to lease it.

Defining affordability

“Unfortunately, I think most people define affordability by how much the monthly payment is,” said Mike Sante, managing editor of Interest.com. A lot of people think, if the check doesn't bounce I must be able to afford it.”

An auto lease is, indeed, seductive. It looks much cheaper than buying. The monthly payment is lower and so is the down payment.

In a typical lease, you return the car at the end of three years. The car still has a lot of its value left, which the lessor recoups when they sell the vehicle on the used-car market. You are only paying for the first three years worth of value.

For some people, that's fine. They may need a car only for a short period of time or they have a small car payment as a permanent fixture in their budget. For them, the major concern is not overpaying for a leased vehicle. Sante says you should negotiate the best price on a car that you are leasing, just as though you were buying it.

Cars are better

One of the reasons lease payments are so low these days is a big improvement in the quality of automobiles. The days of “planned obsolescence” in the auto industry are long gone. Today, vehicles last a decade or more and can easily be driven 200,000 miles before they are replaced.

That means that after the first three years on the road, your leased vehicle still has a lot of residual value left. Since your payment is based on the price of the car in the showroom and the value when you turn it in, your payment is lower.

But because cars last for such a long time, purchasing the vehicle might actually make sense. If drivers hope to have a couple years free of car payments and they want a vehicle they can sell or offer as a trade-in someday, then leasing is clearly not for them. They never own the car, so they can't do with it as they please.

Of course, there are also options for consumers who want a used car. Maybe it makes sense to buy one of those three-year-old vehicles that have been turned in on a lease. Or maybe it makes sense to take over someone's lease through a company like Swapalease.com.

There's no hard-and-fast rule that says car shoppers should focus on new or used cars, or if they should buy or lease, says Caldwell. But if a car shopper understands the advantages and disadvantages — as well as the math — behind each option, the choice can be a lot easier.

Considering that it doesn't even have stores in much of the country and hardly advertises, it says something that Trader Joe’s is North America’s favorite grocery store based on customer satisfaction, according to a new study.

The somewhat more traditional Publix and Whole Foods were second and third in the survey of 6,600 consumers conducted by Market Force Information.

All three received high marks for courteous staff, inviting atmosphere and high-quality produce. Hy-Vee also scored well on those measures. 

It's hard to describe the appeal of Trader Joe's to those who aren't familiar with it. The stores tend to be small, even cramped. They stock far fewer items than full-fledged supermarkets but feature great deals on organic concoctions, fish, baked goods and wine.

In fact, one of the founders of Trader Joe's once said that it when it started out in Southern California, it was basically "a 7-Eleven with a great wine selection." It's still sort of like an upscale 7-Eleven, with lots of convenience items and prepared foods and a quirky atmosphere that seems like a throwback to the 60s when everyone grew their hair long and pretended to be friends.

Regional favorites

Market Force also looked at which grocery stores consumers frequent the most, asking where they had spent the majority of their money in the previous 30 days. Market Force parsed out the results by four U.S. regions, as well as Canada. 

• Northeast – Stop & Shop claimed the top spot, garnering 11% of the votes. GIANT (co-owned with Stop & Shop) came in second with 6%, and Wegmans and Market Basket tied for third with 5%.
• South – Kroger ranked first with 16%, followed closely by Publix with 15% and H-E-B a distant third with 5%.
• Midwest – Kroger again led the pack in this region with 11%. Meijer ranked second with 9% and Hy-Vee took the third spot with 8%.
• West – Safeway led by a wide margin with 12%, Kroger earned 9% and Costco received 7%.
• Canada – Loblaws dominated with 15%, while Sobeys took second with 11%. Costco and Safeway tied for third at 7%.

Convenience is key, not coupons

Convenient location is the factor that consumers said they like most about their preferred grocery store – in fact, it ranked higher than prices, which was second on the list, while sales & promotions was third. 

The survey found that although some shoppers are practicing extreme couponing, that doesn’t seem to be a common trend. In fact, the research findings suggest a steady decline in coupon use over the past three years.

Of those who are redeeming coupons, most are clipping them from a newspaper, magazine or other print media. The second most popular source for coupons is the grocery store.

It's commonly accepted that the early adopters of new technologies are pornographers and scam artists. In that spirit, the Securities and Exchange Commission has filed its first fraud case involving Bitcoin, the virtual currency traded on online exchanges for conventional currencies like the U.S. dollar or used to purchase goods or services online. 

The Securities and Exchange Commission (SEC) yesterday charged a Texas man and his company with defrauding investors in a Ponzi scheme involving Bitcoin.

The SEC alleges that Trendon T. Shavers, the founder and operator of Bitcoin Savings and Trust (BTCST), offered and sold Bitcoin-denominated investments through the Internet using the monikers “Pirate” and “pirateat40.”

The SEC says that Shavers raised at least 700,000 Bitcoin in BTCST investments, which amounted to more than $4.5 million based on the average price of Bitcoin in 2011 and 2012 when the investments were offered and sold.  Today the value of 700,000 Bitcoin exceeds $60 million.

“Fraudsters are not beyond the reach of the SEC just because they use Bitcoin or another virtual currency to mislead investors and violate the federal securities laws,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “Shavers preyed on investors in an online forum by claiming his investments carried no risk and huge profits for them while his true intentions were rooted in nothing more than personal greed.”

7 percent weekly return

The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities. 

In reality, the SEC says BTCST was a sham and a Ponzi scheme in which Shavers used Bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding BTCST investments.  Shavers also diverted investors’ Bitcoin for day trading in his account on a Bitcoin currency exchange, and exchanged investors’ Bitcoin for U.S. dollars to pay his personal expenses, the agency said.

The SEC issued an investor alert warning investors about the dangers of potential investment scams involving virtual currencies promoted through the Internet. 

Lengthy tarmac delays by 10 American Eagle Airlines flights last Christmas will cost the carrier a bundle.

The U. S. Department of Transportation (DOT) fined American Eagle $200,000 for delays that took place at Dallas-Fort Worth International Airport on Dec. 25, 2012, and ordered the airline to cease and desist from future violations of the tarmac delay rule.

“Airline passengers have rights, and the Department of Transportation has rules in place to protect them from being stuck on a tarmac waiting hours to get off their plane," said DOT Secretary Anthony Foxx. “We will continue to take enforcement action when airlines violate our tarmac delay rules.”

Waiting too long

According to an investigation by the Department’s Aviation Enforcement Office revealed, 10 American Eagle flights experience tarmac delays that exceeded the three-hour limit last Dec. 25 at Dallas-Fort Worth during a snow and ice storm.

One of the flights, arriving from Sioux Falls, S.D., with 42 passengers landed at 2:48 p.m., but was not assigned a gate until 5:30 p.m.. Passengers were finally allowed to leave the aircraft at 6:36 p.m. after a tarmac delay of three hours, 48 minutes.

A second flight, carrying 37 passengers from Baton Rouge, La, landed at 3:29 p.m., but the aircraft was not dispatched to an area where passengers could deplane until 6:00 p.m.. The plane parked at 7:00 p.m., but passengers were not able to leave the plane until 8:01 p.m., four hours and 32 minutes after landing.

Rules violated

Under DOT rules, U.S. airlines operating aircraft with 30 or more passenger seats cannot keep domestic flights on the tarmac for more than three hours at most U.S. airports without giving passengers an opportunity to leave the plane. Exceptions are allowed only for safety, security or air traffic control-related reasons. The rules require carriers to include the three-hour provision in their tarmac delay contingency plan commitments to passengers.

Under an expansion of the tarmac delay rule that took effect Aug. 23, 2011, international flights at covered U.S. airports are now prohibited from remaining on the tarmac for more than four hours without permitting passengers the opportunity to deplane -- subject to the same exceptions as the rule for domestic flights.

The investigation found that the remaining eight American Eagle flights -- seven domestic flights and one international flight -- experiencing long tarmac delays that day at Dallas-Fort Worth were not violations because they fell under exceptions to the rule.

This is the second fine against American Eagle for violating the tarmac delay rule. In 2011, the airline was fined $900,000 for lengthy tarmac delays that took place at Chicago O’Hare International Airport on May 29, 2011.

The Consumer Financial Protection Bureau is going after (CFPB) a Utah-based mortgage company that it says gave bonuses to loan officers who steered consumers into mortgages with higher interest rates.

In a complaint filed in federal district court, the CFPB is asking that Utah-based Castle & Cooke Mortgage LLC be forced to end to “this unlawful practice,” pay restitution restitution to consumers and be assessed civil money penalties.

“We are taking action against the type of practices that precipitated the financial crisis,” said CFPB Director Richard Cordray. “Consumers should be able to get a mortgage without worrying about how the financial incentives of their loan officers may cause them to pay higher rates than they actually qualify for.”

Castle & Cooke originated approximately $1.3 billion in loans in 2012. The company does business in approximately 22 states and maintains approximately 45 branches across the country.

Outlawed bonuses paid

The CFPB contends that Castle & Cooke, through the actions taken by its president, Matthew A. Pineda, and senior vice-president of capital markets, Buck L. Hawkins, violated the Federal Reserve Board’s Loan Originator Compensation Rule banning compensation based on loan terms such as the interest rate.

It is further alleged that the company violated the rule with its quarterly bonus program, which paid more than 150 Castle & Cooke loan officers greater bonus compensation when they persuaded consumers to take on more expensive loans. The average quarterly bonus ranged from $6,100 to $8,700. By contrast, those loan officers who did not charge consumers higher interest rates did not receive quarterly bonuses.

The CFPB estimates that more than 1,100 illegal quarterly bonuses were paid and that tens of thousands of customers may have been upsold since April 2011. By tying bonuses to the interest rate of the loans in this manner, the CFPB claims Castle & Cooke was in direct violation of the law.

The agency also says it believes Castle & Cooke violated laws that require companies to retain their compliance records for a certain period of time. Creditors are required to retain evidence of compliance with the rule. According to the complaint, Castle & Cooke did not record what portion of each loan officer’s quarterly bonus was attributable to a particular loan and did not reference its quarterly bonus program in each loan originator’s compensation agreement, in violation of federal consumer financial law.

Resolving the complaint

The CFPB’s complaint seeks to:

• prohibit Castle & Cooke from continuing its practice of giving loan officers incentives to upcharge consumers by distributing quarterly bonuses based on the interest rates of loans sold.
• ensure that Castle & Cooke complies with federal law that requires creditors to retain evidence of compliance.
• secure restitution for consumers of Castle & Cooke who may have been upsold.
• obtain civil money penalties for each bonus paid out. The Dodd-Frank Wall Street Reform and Consumer Protection Act allows civil penalty amounts to be determined under a three-tiered framework: up to $5,000 for any violation; up to $25,000 for reckless violations; and up to $1,000,000 for knowing violations.

Sales of new single-family homes rose in June for a fourth straight month.

Figures released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development show newly-constructed hoses sold at an annual rate of 497,000 -- up 8.3% percent from May's revised rate of 459,000. It's also 38.1% above the 360,000 houses sold in June of last year.

Prices, on the other hand, suffered some slippage. The median sales price of new houses sold in June was $249,700 -- down $13,100 from May. The median is the point at which half the prices are higher and half are lower. The average sales price was $295,000, a loss of $12,400 from the previous month.

At the end of the month, there were an estimated 161,000 new homes for sale,representing a supply of 3.9 months at the current sales rate.

Earlier this week, the National Association of Realtors reported that sales of existing homes were down 1.2% in June.

The full report on new home sales is available on the Census Bureau  website.

Mortgage applications

Separately, the Mortgage Bankers Association (MBA) reports mortgage applications decreased 1.2% during the week ending July 19, while applications for refinancings were down 1% from the previous week driven.

The MBA's Weekly Mortgage Applications Survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Those surveyed include mortgage bankers, commercial banks and thrifts.

Robin America Inc., of Lake Zurich, Ill., is recalling about 4,500 portable gasoline generators in the U.S and Canada.

The fuel tank can leak, posing a fire or burn hazard. The company has received four reports of fuel leakage. No injuries or property damage have been reported.

The recalled portable gasoline generators are Subaru models SGX3500, SGX5000 and SGX7500. They have yellow fuel tanks and black frames with collapsible handles. The word “Subaru” is on the fuel tank and is on the control panel under the Subaru logo. The Product, or Spec number and serial number are on the end of the fuel tank above the wheels. Generators with the following product numbers and serial numbers are being recalled:

The generators, manufactured in China, were sold at authorized Subaru Power Equipment dealers nationwide, including authorized Internet dealers, between September 2011, and January 2013, for approximately $920 to $1800.

Consumers should immediately stop using the generators and contact Robin America to schedule a free repair.

Consumers may contact Robin America toll-free at (866) 664-1363 from 8 a.m. and 5 p.m. ET Monday through Friday.

Nan Far Woodworking is recalling about 3,900 Rockland Furniture round cribs.

The crib’s drop-side rails can malfunction, detach or otherwise fail. When this happens, the drop-side rail can fall out of position and create a space where an infant or toddler can become wedged or entrapped, posing a risk of strangulation or suffocation. A child can also fall out of the crib. In addition, drop-side related incidents can also occur due to incorrect assembly and with age-related wear and tear.

No incidents or injuries have been reported.

This recall involves Rockland Furniture round cribs with model number 343-8314. The model number is printed on a label located on the inner-lower portion of the crib rail. The cribs are 44 ½ inches in diameter and were sold in white, ebony and cherry finishes.

The cribs, manufactured in Taiwan, were sold exclusively at J.C. Penney stores and online at jcpenney.com from January 2005, to December 2008, for about $400.

Consumers should immediately stop using the recalled cribs and contact Rockland Furniture for a free repair kit that will immobilize the drop-side rail. Until the crib is repaired, consumers should find an alternate, safe sleep environment for the child such as a bassinet, play yard or toddler bed, depending on the child’s age.

Consumers may contact Rockland Furniture toll-free at (877) 967-5770 anytime.