Current Events in December 2013

October was a banner month for new home sales.

Figures released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development show sales of new single-family houses shot up 25.4% in to a seasonally adjusted annual rate of 444,000. That's 21.6% above the same month a year ago when houses sold at a rate of 365,000.

Despite the sales improvement, home prices were mixed. The median sales price of new houses sold in October was $245,800 down $11,600 from September. The median price is the point at which half are higher and half are lower. The average sales price rose $7,800 from September -- to $321,700.

The estimate of new houses for sale at the end of October was 183,000, which represents a supply of 4.9 months at the current sales rate.

The full report can be found on the Census Bureau website.

Mortgage Applications

There was a big drop in mortgage applications during the Thanksgiving holiday-shortened week of November 29.

Data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey show applications were down 12.8% from the previous week. In addition, the Refinance Index decreased 18% from the previous week -- to its lowest level since the week ending September 6, 2013.

The refinance share of mortgage activity stood at 63%, a loss of 3% from 66 percent the previous week, while the adjustable-rate mortgage (ARM) share of activity was unchanged at 8% of total applications.

Contract interest rates

The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) increased to 4.51% from 4.48%, with points increasing to 0.38 from 0.31 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) rose one basis point to 4.49%, with points increasing to 0.24 from 0.15 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year FRMs backed by the FHA increased to 4.17% from 4.16%, with points increasing to 0.36 from 0.24 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year FRMs was 3.56% -- up 4 basis points from 3.52%, with points increasing to 0.32 from 0.31 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs fell to 3.09% from 3.18%, with points decreasing to 0.28 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

From all the hype, you would think that Black Friday and Cyber Monday were days when humanity scaled new heights, achieved new dreams or otherwise hung the moon.

But although it gets a little tedious listening to all the blather, the fact is that Cyber Monday blew it out the tailpipe this year, according to new figures released by comScore, which ranks this year's Cyber Monday as the heaviest U.S. online spending day in history.

Sales for the day reached $1.735 billion, up 18% from a year ago, while online spending for the five-day period beginning Thanksgiving totaled $5.3 billion, up 22%.

"Any notion that Cyber Monday is declining in importance appears to be completely unfounded," said Gian Fulgoni, the chairman of comScore. "While it's true that many retailers are bleeding their Cyber Monday promotions into the weekend before and the days afterward, Cyber Monday itself continues to be the most important day of the online holiday shopping season."

For the holiday season to date, $23.9 billion has been spent online, marking an 8 percent increase versus the corresponding days last year (and a 25 percent increase if using the alternate comparison of the 4-week period preceding Thanksgiving).

The weekend after Thanksgiving posted particularly strong growth online, raking in $1.594 billion in spending for an increase of 34 percent compared to the same weekend last year. For the five-day period from Thanksgiving through Cyber Monday, online buying from desktop computers totaled $5.3 billion, up 22 percent versus last year.  

Electronics led the way

Not surprisingly, electronics of all kinds led the way, as consumers snapped up smartphones, tablets, big-screen TVs and other goodies.

During the five-day period from Thanksgiving through Cyber Monday, consumer electronics ranked as the fastest-gaining product category versus year ago, followed by video game consoles & accessories, home & garden, apparel & accessories and sport & fitness.

There may be a problem -- a serious one -- with the HeartStart automated external defibrillator (AED).

The U.S. Food and Drug Administration (FDA) says devices, made by Philips Medical Systems, may be unable to deliver needed defibrillator shock in a cardiac emergency situation.

The new FDA safety communication for users of these previously recalled devices includes recommendations to better inspect and monitor the readiness of these devices, as well as steps to follow if someone must use a recalled device in an emergency situation.

Benefits outweigh risks

“The FDA advises keeping all recalled HeartStart AEDs in service until you obtain a replacement from Philips Healthcare or another AED manufacturer, even if the device indicates it has detected an error during a self-test,” said Steve Silverman, director of the Office of Compliance in the FDA’s Center for Devices and Radiological Health. “Despite current manufacturing and performance problems, the FDA considers the benefits of attempting to use an AED in a cardiac arrest emergency greater than the risk of not attempting to use the defibrillator.”

These devices were manufactured and distributed between 2005 and 2012 under the names HeartStart FRx, HeartStart HS1 Home, and HeartStart HS1 OnSite. Users, who may include consumers and first responders, should contact Philips Healthcare disclaimer icon immediately for a replacement AED unit.

An AED is a device that automatically analyzes the heart rhythm in victims of sudden cardiac arrest and delivers an electrical shock to restore its normal rhythm. AEDs help save lives of cardiac arrest victims when they are working properly and used correctly. Each year, nearly 300,000 Americans collapse from sudden cardiac arrest. When normal heart rhythms are not restored quickly, sudden cardiac arrest can cause death.

Devices recalled

In September 2012, Philips Healthcare initiated the recall of HeartStart FRx, HeartStart HS1 Home, and HeartStart HS1 OnSite AEDs due to the failure of an internal electrical component. The recall affected approximately 700,000 devices.

In a Medical Device Safety Notice dated November 19, 2013, Philips provided consumers with updated information about the failure of an internal electrical component that could cause the AEDs to fail to deliver a shock. The notification also directed users to a Maintenance Advisory disclaimer icon .

The FDA will continue to closely monitor all AED manufacturers’ quality system practices and manufacturing changes that have persistently contributed to recall and adverse events associated with AEDs.

In March 2013, the FDA issued a proposed order that if finalized would require manufacturers of AEDs and accessories to submit premarket approval applications that focus specifically on the critical requirements necessary to assure AEDs are safe and effective. The main objective of this proposed regulatory approach is to improve the reliability of AEDs so that they can continue to save lives.

K2 Sports of Seattle, Wash., is recaaling about 400 K2 Revo Kick kickboards/scooters.

The front assembly of the kickboards/scooters can break and the handle can detach or partially detach, causing loss of control or loss of balance. This poses a fall hazard to the rider.

This recall involves K2 Revo Kick kickboards/scooters with item code I10700100. Revo Kick and the item code are printed on a sticker on the underside of the deck. The kickboard/scooter is made of aluminum, has three wheels, a wooden deck and a vertical handle with a round grip. The kickboards/scooters measure about 32 inches long and 40 inches high. The deck has a red, white and blue design with K2 printed on it.

The kickboards/scooters, manufactured in China, were sold at sporting goods stores nationwide and online at K2skates.com from March 2010, through September 2013, for about $200.

Consumers should immediately stop using the recalled kickboards/scooters and contact K2 Sports for a full refund.

Consumers may contact K2 Sports toll-free at (866) 302-9996 from 7 a.m. to 5 p.m. PT Monday through Friday, or by email at kickboard@k2sports.com.

It may be a few days before there are estimates of how much consumers spent between Thanksgiving and Cyber Monday but we already know how they shopped. They did it with their computers, tablets and smartphones.

Akamai is a web content distribution network that powers 96 of the 100 top U.S. retailers’ websites and closely tracks how those websites are being used. Akamai's publicly accessible Net Usage Index (NUI) tool tracks traffic to these sites in real time. It showed an astonishing start to Cyber Monday with the retail NUI showing over 9.1 million page views per minute – 283% over normal – as of 11 a.m. ET on Cyber Monday.

Margaret Kuchler, Director of Industry Marketing for Akamai Technologies, has been tracking web traffic to retailers' sites on an ongoing basis. The trend of holiday shoppers moving from brick and mortar stores to the online marketplace has suddenly accelerated this year.

20% increase over last year

“What we're seeing this year is at least a 20% increase in peak page views per minute over last year,” Kuchler said. “On Black Friday, specifically, we saw a really big traffic day.”

Black Friday was the biggest day last week but just barely. Thanksgiving Day, which has emerged as a holiday shopping day only in the last couple of years, had almost as much retailer web traffic as Black Friday.

On Black Friday there were 9.3 million peak page views per minute at 1 p.m. ET, according to Kuchler's charts. Thanksgiving Day peaked nearly as high, but what is more notable, Kuchler says, is the longer sustained periods of web traffic than Thanksgiving Day 2012.

Page views don't necessarily translate into purchases. There can be many reasons why a consumer would visit a website and not make a purchase. But it correlates fairly closely. And it isn't unreasonable to assume that there has been a seismic shift in the way consumers do their holiday shopping.

“I think this suggests that shoppers are shifting more of their shopping and spending to the web,” Kuchler said. “I think mobile is playing a major role in that as well.”

Role of mobile

The data bears that out. Akamai Research based on data for 30-plus retailers found 38% of consumers visiting those sites on Saturday were using a mobile device. The company estimates that 89% of consumers use their smartphones while shopping in stores. The Internet – in particular mobile – has become a powerful took for savvy consumers.

“They've got a lot of power at their finger tips,” Kuchler said. “They also have a sounding board through social networks and review sites so that if they are dissatisfied it's easy to share their experiences, good or bad.”

This powerful tool puts pressure on retailers. Online they have to make sure their websites are optimized for performance and keep people engaged long enough to make a purchase. It also works to the benefit of consumers shopping in stores.

Stores 'going digital'

“A lot of stores are getting more digital, enabling their associates to have iPads so they can look up inventory or give a demo of a product,” Kuchler said. “People have that access on their own but if you leave it to them they might pull up your competitor's site.”

So instead of fighting the Internet, retailers have embraced it with the evidence showing up in this year's web traffic numbers. And while the Cyber Monday numbers may surpass those of Thanksgiving and Black Friday, it raises the question – is there really any need for a Cyber Monday?

“Years ago Cyber Monday was such a big event because broadband adoption was not that advanced at the consumer level,” Kuchler said. “You shopped at work because you got good broadband connectivity there. Now that consumers have connectivity at home we're seeing large amounts of traffic from Thanksgiving through Cyber Monday.”

As Akamai sums it up, we no longer go online. We are online.

If you are a parent you probably know exactly what your child wants as a gift. More than likely you hear about it several times each day. But what if you are shopping for a grandchild, a niece or the child of a friend? Do you know what makes a good gift?

While it's always gratifying to get children a gift they'll like, it's more important to buy gifts that are safe and age-appropriate. Just to be safe check a list of recalled toys. These are toys that don't meet the safety standards published by the Consumer Product Safety Commission (CPSC). 

Consulting the list is a good idea if you bought a toy months ago and set it aside. On the off-chance that it was recalled after you purchased it, the list will let you know.

Consider the child's age

If you don't know the child very well it can sometimes be hard to know whether they might like the toy you have in mind. That's where the age factor can be a help. To increase your odds of pleasing the recipient, select something that is appropriate for their age.

You will usually find the recommended age range printed on the package or in the instruction manual like this: 5-6 years or +5 years. There is a safety issue here – a toy in the hands of an older child might be perfectly safe but not for a child who is much younger.

But age plays another role. You don't want to select something that is too advanced for the recipient or something they'll consider “lame” because it is for a younger child.

Federal safety experts suggest you avoid buying toys with sharp points or toys that shoot projectiles for any child under eight. These types of toys can cause serious injuries.

Check for lead

Despite regulations against its use lead is sometimes found in children's toys, resulting in a recall. Read labels carefully to make sure the item you are considering isn't one that has slipped through the regulatory cracks. Lead is a toxic substance, especially for small children.

If you are buying a battery-operated toy, make sure the battery compartment can't be opened by a child. Also, it's advisable to avoid toys that have to be plugged in or that use electrical wires.

Suggestions

Now that we've told you what not to buy, you probably would like a couple of suggestions for what you should buy. Parent's Choice includes among its suggestions Spot It! Party, a refreshing break from video games. In this game players try to be the first person to identify matches on various game cards. It's appropriate for ages 10 and up. 

For ages two and up Parents.com recommends Animal Hospital, with three animals and realistic tools, including a stethoscope and pet vitamins. 

In the video game department, Parenting.com has a list of the best PlayStation 3 games for kids, the best XBox 360 games for kids and a list of the Top 10 violent video games to avoid. 

Finally, the National Parenting Center recently released its list of toys earning its Seal of Approval. The list is heavily dominated by educational toys and items designed to appeal to a child's sense of creativity.

Remember, when a child opens a toy, immediately throw away packaging, including plastic wrappers, boxes, string or other packaging. Children can accidentally choke or harm themselves if they play with them.

At any given time there’s always a certain percentage of Americans looking to buy a house, and if you’re one of them we warn you: if you want a single-family home (as opposed to a condominium or townhouse where you and your neighbors share ownership of walls, roofs and other structures) avoid any real-estate purchase that requires you to join a homeowners’ association, or HOA.

The Platonic ideal of the HOA is a group of community-minded property owners getting together to maintain and manage any commonly owned property — which is why avoiding an HOA, co-op board or any equivalent is impossible if you’re buying a condo. In developments of single-family homes, an HOA might oversee community playgrounds or swimming pools — but can also dictate everything from what color you paint your house to what plants you grow in your yard, and everything in between.

Defenders and supporters of HOAs will say such rules are necessary to prevent neighbors from turning their homes into auto junkyards, or using outhouses in lieu of sewers. Of course, most municipal building and zoning codes already outlaw such behaviors regardless of HOAs. The nastier and pettier HOAs prefer to stamp out behaviors like toddlers who make chalk sidewalk drawings, or residents who put up the wrong sort of Christmas lights.

Tis the season for that. In Myrtle Beach, South Carolina, WMBF news reporter Monique Blair let readers know that “HOAs prevent residents from putting up Christmas lights early.”

A viewer contacted us and showed us a picture a woman who received a letter from her HOA stating she had to take her outdoor decorations down, because she put them up too early. We found out it's actually a rather common rule to have set dates when holiday decorations are allowed, even though not everyone thinks these rules are fair.

In Emmens Preserve, "the HOA rule, as I understand it, is we are not allowed to put up lights before November 30th," said Joe Hope. At the Bay Pointe Apartment Complex, "we can't really put our lights up until December 1," said Daymuion Wilson.

(Disclaimer: in our household, we put up Christmas decorations on Thanksgiving night, which fell on Nov. 28 this year. This is the first time we’ve ever discussed our holiday decorating habits in a professional journalism context, because we always figured: who besides us actually cares when we put up our lights and garlands? Turns out the answer is: HOA boards across America, including Bay Pointe and Emmens Preserve.)

There really are people who find unseasonable holiday lighting such a threat, they seek to actually ban it. An Emmons Preserve resident said the HOA rule is “a good idea, that way it keeps people from having their lights up until May." He did not say what harm would befall him if small outdoor lights on a neighbor’s home did stay up that long.

Cars and garbage cans

Elsewhere in South Carolina, the Moultrie News had a more cheerful tale to tell: after many months of frustraingly hard work, members of a local homeowners’ association finally succeeded in making some long-desired changes to their HOA’s rules and covenants.

“New amendments now allowed homeowners to put out garbage cans, recycle containers and yard debris the night before pick-up (which had been prohibited, but which many homeowners do anyway) for convenience. Another change permits homeowners to park their passenger vehicles in their driveways regardless of the capacity of their garages.”

So HOA members no longer have to wake up extra-early on garbage day, and are henceforth allowed to park their own vehicles in their own driveways. That’s genuinely good news for them, yet arguably sad that such things qualify as “a major step forward” rather than “the common-sense status quo all along.”

But rogue holiday decorations and driveways with cars in them aren’t the only threat HOAs stamp out. In Newport News, Va., the Villages of Kiln Creek Owners Association is suing homeowners Bill and Janeth Garlette for $300,000 over an eight-year-old backyard koi pond. As WVEC news reports, Garlette built the pond eight years ago and the HOA approved it every year since then—until last summer.

The most recent "OK" came in July. Within a month, however, he'd received a letter from the Association outlining more than two dozen violations - some related to the pond and others like excessive debris and bushes and trees that need to be trimmed.

The Association also claims Garlette harassed and intimidated association officials and threatened bodily harm.

Garlette believes he was targeted after a neighbor started complaining about his property. So he ripped out anything up that could be construed as a violation. That only led to more accusations.

"They have continued to say I'm burying toxic waste. I'm threatening to kill persons and there are all these things. They had police stationed at the HOA office because they felt threatened from me," says Garlette.

We’re not environmental lawyers, but we’d think that if a man really were burying toxic waste in his suburban backyard, that would be very easy for any HOA to prove—and there’d be no shortage of state and federal government officials eager to prosecute that man as a result. WVEC mentioned that a judge had already dismissed one neighbor's claim against Garlette.

Meanwhile, in Los Angeles, an anonymous homeowner this week wrote seeking advice from an LA Times business and real estate reporter:

A majority of titleholders want to abandon our present homeowners association. Several thousand homes were to be built in our new subdivision, but fewer than 60 have been purchased. …. When we purchased our homes, we asked to see the association's governing documents, rules and covenants, conditions and restrictions; nothing made sense to us. Had we understood what a developer-controlled association meant, most of us would not have purchased our homes here. Recently we received notice of a dues increase and were told part of it is retroactive to April 1, 2012. We are being charged for many common area things that the association is not taking care of. … We don't know what's going on because the board is non-responsive. Does the board have a legal right to keep increasing dues?

The LA Times’ response started out by saying “This is a terrible situation with little viable redress for owners,” and grew steadily more discouraging from there.

With the holiday shopping season now well underway, it only make sense that more attention is being focused on toy safety.

In fiscal year 2013, the U.S. Consumer Product Safety Commission (CPSC) issued only 31 toy recalls -- none of which involved a lead violation. This compares with 172 toy recalls in fiscal year 2008 (19 of which were due to excessive lead); 50 recalls in 2009 (14 for lead); 46 recalls in fiscal year 2010 (3 for lead); 34 recalls in 2011 (4 for lead); and 38 recalls in 2012 (3 for lead). The majority of toy recalls announced last year involved ingestion hazards, including chemical and magnetic dangers.

During the past five years, CPSC and U.S. Customs and Border Protection (CBP) have stopped more than 9.8 million units of about 3,000 different toys that violated applicable standards. These products never made it onto store shelves and were kept out of consumers’ homes.

“When parents and grandparents walk into a toy store or visit an e-retailer, they can have confidence that the toys they see have likely been independently tested to ensure compliance with strong safety standards,” said former CPSC Chairman Inez Tenenbaum, who recently retired from the commission after completing her term.

Toy-related deaths

Toy-related deaths involving children younger than 15 decreased from 19 in 2010, to 17 in 2011, and 11 in 2012 (based on reports to date). As more death reports are received, CPSC staff expects the total for 2012 to be higher than 11.

The majority of these toy-related fatalities in 2012 were attributed to riding toys, including tricycles and nonmotorized scooters. Four victims were found in swimming pools with their tricycles, and one child received a fatal head injury after his tricycle toppled over.

In addition, two fatalities were reported where children rode nonmotorized scooters into traffic and were hit by motor vehicles. Asphyxiation and aspiration were the next leading causes of toy-related fatalities, including two reports involving balloons and one report involving a stuffed animal.

Various toy injuries

A new CPSC report estimates 192,000 toy-related, emergency department-treated injuries in 2012 to children younger than 15 years. Many of the incidents were associated with, but not necessarily caused by, a toy.

For example, CPSC received these three hospital emergency-room treated reports last year:

• A two-year-old boy who was hit in the face by a metal toy thrown by a sibling received facial lacerations.
• A four-year-old boy hit himself in the eye with a toy dinosaur, which led to eye redness and blurred vision.
• A seven-year-old girl fell off of a scooter and hit her mouth on the concrete and injured her mouth, including a broken tooth.

CPSC has also received reports of children injured in 2012 while using toys that broke, including:

• A three-year-old girl who received a laceration to the foot while playing with a toy made of plastic and glass that broke.
• A four-year-old girl who cut her wrist when a porcelain doll broke.
• A nine-year-old girl who was riding a scooter when the handlebar broke was treated for a chin laceration.

For children under 15 years old, nonmotorized scooters continued to be the category of toys associated with the most injuries in 2012. Frequently, these injuries involved lacerations, contusions and abrasions to the child’s face and head.

What to do

Here are some safety tips for consumers to keep in mind this holiday season:

• Balloons -- Children can choke or suffocate on deflated or broken balloons. Keep deflated balloons away from children younger than eight years old. Discard broken balloons immediately.
• Small balls and other toys with small parts -- For children younger than age three, avoid toys with small parts, which can cause choking.
• Scooters and other riding toys -- Riding toys, skateboards and in-line skates go fast, and falls could be deadly. Helmets and safety gear should be worn properly at all times and they should be sized to fit.
• Magnets -- Children's magnetic toys are covered by a strong safety standard that requires the magnets to be encapsulated. High-powered magnet sets have loose magnets, which is a key difference from children's magnetic toys. High-powered magnet sets are dangerous and should be kept away from children. Whether marketed for children or adults, building and play sets with small magnets should also be kept away from small children.

Once gifts are open:

• Immediately discard plastic wrapping or other toy packaging before the wrapping and packaging become dangerous play things.
• Keep toys appropriate for older children away from younger siblings.
• Battery charging should be supervised by adults. Chargers and adapters can pose thermal burn hazards to young children. Pay attention to instructions and warnings on battery chargers. Some chargers lack any mechanism to prevent overcharging.  

Student loans have become the nation's second largest consumer debt market and, in a weak job market, there has been a rapid rise in borrower delinquency in recent years. 

The Consumer Financial Protection Bureau (CFPB) is bringing new oversight to nonbank student loan serviers, issuing new rules intended to protect borrowers from unscrupulous lenders.

“Student loan borrowers should be able to rest assured that when they make a payment toward their loans, the company that takes their money is playing by the rules,” said CFPB Director Richard Cordray. “This rule brings new oversight to those large student loan servicers that touch tens of millions of borrowers.”

More than 40 million Americans with student debt depend on student loan servicers to serve as their primary point of contact about their loans. Student loan servicers’ duties typically include managing borrowers’ accounts, processing monthly payments, and communicating directly with borrowers.

Earlier this year, the CFPB announced that outstanding student debt totals approximately $1.2 trillion. The Bureau also estimates that 7 million student loan borrowers are now in default on their debt. 

When facing unemployment or other financial hardship, borrowers contact student loan servicers in order to enroll in alternative repayment plans, obtain deferments or forbearances, or request a modification of loan terms.

A servicer is often different than the lender itself, and a borrower typically has no control or choice over which company services a loan. When problems arise because of servicing concerns, student loan borrowers may end up in trouble. They may miss a payment, owe more money because of additional interest on principal, or face future difficulties with credit because of a poor payment history.

Supervision expanded

The Bureau currently oversees student loan servicing at the largest banks. Today’s rule expands that supervision to any nonbank student loan servicer that handles more than one million borrower accounts, regardless of whether they service federal or private loans.

Under the rule, those servicers will be considered “larger participants,” and the Bureau may oversee their activity to ensure they are complying with federal consumer financial laws. 

Under today’s final rule, which was proposed in March, the Bureau estimates that it will have authority to supervise the seven largest student loan servicers. Combined, those seven service the loans of more than 49 million borrower accounts, representing most of the activity in the student loan servicing market.

Many student loan servicers perform their functions well. But the recent annual report by the Bureau’s Student Loan Ombudsman identified a broad range of concerns voiced by student loan borrowers in complaints to the CFPB. Borrowers submitted complaints to the Bureau highlighting:

• Prepayment Stumbling Blocks: Since options to refinance high-rate private student loans are limited, many consumers attempt to pay off their loans in order to reduce the amount of interest owed over the life of the loan. But many consumers express confusion about how to pay off their loans early. For example, borrowers complained that servicers applied their payments in excess of the amount due across all their loans, not to the highest-interest rate loan that they would prefer to pay off first.
• Partial Payment Snags: When borrowers have multiple loans with one servicer and are unable to pay their bill in full, many servicers instruct borrowers to make whatever payment they can afford. Many complaints described how servicers often divide up the partial payment and apply it evenly across all of the loans in their account. This maximizes the late fees charged to the consumer, and it can exacerbate the negative credit impact of a single late payment.
• Servicing Transfer Surprises: When borrowers’ loans are transferred between servicers, borrowers say they experience lost paperwork, processing errors that result in late fees, and interruptions of routine communication, such as billing statements. Consumers complained that payment-processing policies can vary depending on the servicer. And, consumers said when they make decisions on the previous servicer’s practices, they can get penalized.

Say what you want about the news media, the very definition of news is that it's written and edited by disinterested journalists -- "disinterested" meaning the reporters and editors have no financial stake in the outcome.

The constant persecution of legitimate news outlets by loudmouthed bullies and the sprouting of talking-head channels that do nothing but spout opinion and call it news have helped destroy public confidence in an institution that is essential to democratic government.

But neither of these is anywhere near as dangerous as the latest craze sweeping the media world. It's called "sponsored content" and, very simply, it amounts to commercial interests paying media outlets to run a story supplied by the sponsor. It's generally regarded as reprehensible by Ivory Tower dwellers. Struggling publications counter that, as long as it is clearly labeled, there's nothing wrong with it.

For some reason, advertisers and marketing types have adopted the term "native content" to describe the practice of placing paid stories in media outlets. What's "native" about it is a mystery but it's not the first time advertising has adopted innocuous names for dubious practices.

So far, there hasn't been much of a fuss about this latest form of corporate propagandizing but tomorrow, the Federal Trade Commission is hosting an informal workshop for advertisers, publishers and legal experts. The conference title pretty well says it all: "Blurred Lines: Advertising or Content?"

The commission says the conference isn't a hearing or investigation of sponsored content or its practitioners. But it could serve as a jumping-off point for the FTC, which is charged with preventing unfair or deceptive advertising practices, to eventually establish guidelines governing sponsored-content practices.

The FTC's interest is nothing if not timely. Spending on sponsored content is expected to grow 24% this year to $1.9 billion. That's a lot of articles about superior pest control, flawless lawn manicuring and brilliant software innovation.

A lot of the largesse goes to Facebook, Yahoo and other social and search media, which probably aren't of much interest to purists. But "legitimate" publications are also accepting sponsored content in growing numbers. Critics say they're hastening their own demise by destroying the credibility that sets them apart from social media and the more ludicrous content farms that infest the web.

A Canadian telemarketer and four companies he owns are under court order to pay more than $5.1 million to U.S. and Canadian consumers who were duped into paying hundreds of dollars based on false claims that the defendants had buyers lined up for their cars, and that refunds would be provided if the cars weren’t sold.

The court also permanently banned the defendants from telemarketing and payment processing.

'Simply false'

According to the Federal Trade Commission’s (FTC) complaint against Matthew J. Loewen and his companies, the defendants called consumers who listed vehicles for sale on websites such as craigslist.org or ebay.com. The defendants falsely claimed that, in exchange for a fee -- typically $399, they would put the consumer in touch with a buyer, often telling consumers they had undervalued the vehicle and that the price the buyer was willing to pay would cover the defendants’ fee. The defendants also offered $99 “refund insurance,” falsely promising consumers who purchased it a risk-free refund of their initial fee if the vehicle was not sold in 90 days.

On October 29, 2013, the U.S. District Court for the Western District of Washington found the FTC’s allegations to be true and ruled that the defendants’ telemarketing operation violated the FTC Act and the FTC’s Telemarketing Sales Rule. According to the Court, the defendants’ promises to match consumers with car buyers was “simply false,” and the impression they conveyed of easily obtainable refunds was “decidedly deceptive.”

The Court also noted that, in order to evade detection, the defendants operated under a series of ever-changing corporate names (including Auto Marketing Group, Secure Auto Sales, and Vehicle Stars). It also cited the defendants’ high rate of credit card chargebacks -- in which consumers dispute charges and get them reversed -- as further proof of the fraudulent nature of the defendants’ operation.

Court order terms

In addition to the Order requiring Loewen and his co-defendants to pay $5.1 million, the court permanently banned Loewen and his companies from telemarketing and payment processing. The court order also permanently prohibits the defendants from misrepresenting any material fact in selling used cars, including that they have identified potential buyers for a consumer’s vehicle and that, for a fee, they will put them in touch with the buyers.

The defendants are also barred from misrepresenting that those who buy their services are highly likely to sell their vehicle, and that some or all of the initial fee will be refunded if the consumer buys a refund insurance policy and the vehicle is not sold within some period of time.

The order also bars the defendants from misrepresenting material facts about any goods or services, selling or otherwise benefiting from consumers’ personal information, failing to properly dispose of customer information, and violating the Telemarketing Sales Rule.

Who knew holiday shopping was such a contact sport? This year, overexuberance at the mall led to cuts, bruises and at least two gunshot wounds. How much savings it produced has yet to be tallied up.

On Thanksgiving evening a suspected shoplifter was driving away from a Kohl's department store in suburban Chicago when a police officer gave chase. According to the Chicago Tribune the officer was dragged through the parking lot before shots were fired. The suspected shoplifter was wounded and two others were reportedly arrested. 

Walmart melee

Things got tense at a Walmart in Rialto, Calif., when an argument among customers waiting to get inside turned into a full-blown melee. According to local media reports at least one police officer who tried to break up the fight was injured severely enough to be taken to a hospital for treatment. 

Once the doors opened the hostilities continued inside. Police reported at least two additional fights inside the store as customers battled for merchandise. At a Walmart in Garfield, N.J., police used pepper spray on a shopper who was reportedly fighting with another shopper over the television set.

A shocking display

A fight among female shoppers at a Philadelphia area shopping mall was captured on amateur video. The clip below appears to show one of the combatants using a taser on her opponent. No arrests were made. Security escorted both shoppers from the mall.

In Las Vegas, a shopper was able to purchase a big screen TV at Target without incident, but getting home with his purchase was another matter. Police say the man was shot in the leg as he walked the short distance to his apartment complex. 

Cyber Monday

Cyber Monday shopping promises to be a lot safer, at least physically. Cyber security experts have warned consumers to be extra careful to avoid the surge in expected phishing scams. Avoid clicking on any links you find in emails, even if you think the email has come from a legitimate source.

Retailers that have been offering online deals throughout November are expected to pull out all the stops for Cyber Monday specials. Over the weekend, Amazon.com provided a sneak peak at its offerings, saying it will roll out a new deal every 10 minutes during the next week.

The deals include a Samsung 46-Inch 1080p 60Hz LED HDTV for $477.99, a Nikon COOLPIX P520 with bag and memory card for under $300 and a Marcato pasta machine for $59.99.

Results

Meanwhile, retailers report Black Friday sales appear to have been better than expected. Both Walmart and Target reported heavy traffic both Thanksgiving night and all day Friday. The Wall Street Journal reports many retailers are reporting a similar story. 

Target released no numbers but said it was pleased with the results of the offcial start to the holiday shopping season.

“Whether online, on their mobile devices, or in our stores, guests shopped Target in unprecedented numbers,” said Gregg Steinhafel, chairman, president and chief executive officer, Target.

The company said Target.com, where nearly all doorbusters were available on Thanksgiving Day, racked up traffic and sales among the highest Target has seen in a single day. It said that in the early morning hours after the doorbusters first became available, Target.com saw two times more orders versus last year at that time.

The National Retail Federation estimates as many as 140 million people shopped over the Thanksgiving weekend. It had predicted 97 million would turn out on Black Friday itself.

Cyber Monday will most likely be a banner day for online retailers but even if it doesn't quite meet sales forecasts, it will be a bonanza for state and local governments now that Amazon and other major e-retailers are collecting sales taxes. 

In fact, even without Cyber Monday, holiday shoppers have already pumped huge amounts of money into local governments -- online sales in the U.S. on Black Fridayreached nearly $1.2 billion from desktop and laptop computers alone, according to Web analytics company firm comScore. 

All but five states charge sales tax but it has generally been accepted that unless an e-retailer had a "significant physical presence" in a state, it was not obligated to collect taxes for sales in that state.

New York, however, brushed that aside and began insisting that Amazon start charging sales tax on all items shipped into New York. Amazon and other online retailers have been challenging state laws mandating that they start paying the tax but today the Supreme Court declined to review a decision by New York’s highest court upholding that state’s 2008 law requiring sales tax collections.

The high court, as is typical, gave no reason for turning down the retailers' appeal.

The effect on state and local coffees should be dramatic. It amounts to a major tax increase without local politicos having to face angry taxpayers. 

“Online retailers are collecting more sales tax on this cyber Monday than ever before, marking progress for consumers, online retailers, and state tax collectors.  This is the first Cyber Mondaywhere Amazon is collecting sales tax for over half the country, and next year it will be even more,” said Steve DelBianco, executive director of NetChoice, a Washington-based trade association of online retailers. 

What effect the Supreme Court's will have on brick-and-mortar retailers remains to be seen; they have been claiming that online retailers had an unfair advantage over local stores. Whether today's non-decision truly levels the playing field won't be known for some time. 

“A new online tax system is not going to save main street stores from their big-box competitors. New tax burdens will extinguish their last hope of reaching new customers, and expose them to audits from dozens of distant state tax collectors.”

DelBianco's group has long argued that online sales tax make it difficult for smaller merchants to conduct business, because of the varying tax rates and regulations imposed by different states.

The other day, we ordered some memory chips for a computer we were messing with. We placed the order about 10 a.m. on Amazon and the confirmation said delivery would be by 8 p.m. the same day.

Actually, the chips didn't show up until after 9 p.m. but it was still pretty impressive, and gave us time to get the chips in and working before the next grueling day of sorting through consumer grins and gripes.

Amazon has been working towards same-day delivery for quite some time but the company's founder and CEO. Jeff Bezos, unveiled a potential quantum leap last night in an interview with Charlie Rose on the CBS News show "60 Minutes" -- a small drone that Bezos says will be able to deliver packages up to 8 pounds within half an hour.

Now these aren't the drones the U.S. uses to kill people, although Bezos admits there are still some safety issues to be addressed and he cautioned that it will likely be several years before the drones come whirring to a neighborhood near you, bearing DVDs, books, dog treats, gluten-free flour and the other tidbits consumers turn to Amazon for.

The prototype that Bezos displayed last night looks sort of a like a mechanical octopus and the prototype was appropriately called an "octocopter" or, more formally a Prime Air Vehicle.

“I know this looks like science fiction. It’s not,” Bezos insisted. 

Story continues after video

Prime delivery

The octocopters will be an upgrade for Amazon's millions of "Prime" customers, who now get free two-day shipping for $79 a year.

Bezos said the octocopters have a range of about 10 miles, which puts them in reach of millions of customers in major urban areas. Of course, those major urban areas also have a lot of other things going on and it's not too hard to imagine an octocopter colliding with a bicyclist or passing pigeon but Bezos said technology is being developed to handle such bothersome issues.

No one has yet mentioned plans for delivering to apartment buildings, which are, after all, pretty common in urban areas. Is the octocopter going to be able to ring the intercom and wait to be buzzed in? Can it tip the doorman?

There will also doubtless be some lengthy discussions with the Federal Aviation Administration (FAA). This, after all, is the agency that took decades to decide it would be OK for people to use their wireless devices in flight. How likely is it the FAA will simply nod and say, "Sure, whatever" when presented with the spector of hordes of flying delivery drones zipping through the atmosphere?

Actually, says Amazon, the FAA is already aware of the issue and is beginning to cogitate about it.

"The FAA is actively working on rules and an approach for unmanned aerial vehicles that will prioritize public safety. Safety will be our top priority, and our vehicles will be built with multiple redundancies and designed to commercial aviation standards," Amazon said in a press release.

"One day, Prime Air vehicles will be as normal as seeing mail trucks on the road today," the press release claimed.

An excellent credit score makes life a lot easier. It's easier to get an auto loan or mortgage and you usually get the best rate.

Having an excellent credit score can also get you a credit card with rewards and perks. These cards are reserved for consumers with the best credit.

The Capital One Venture One Rewards Card offers 1.25 travel miles for every dollar on purchases. It starts you off with 20,000 bonus miles after you have spent $2,000 on purchases during the first three months the account is open. That adds up to about $200 in travel. 

Miles easy to use

If you've found it difficult to redeem airline miles in the past, never fear. The miles on this card can be used on hotel rooms and rental cars, in addition to air fare. Even using the miles on airline tickets might be a bit easier since they are good on any airline with no blackout dates.

Another nice feature of this card is the 0% interest rate on purchases until December 2014. As you would expect with any rewards card, there is no annual fee.

The BankAmericard Cash Rewards Card gives you a $100 cash rewards bonus if you spend $500 on purchases in the first 90 days the account is open. Instead of miles, this card gives you cash back. 

You get 1% cash back on all purchases. You get 2% cash back on grocery store purchases and 3% on gasoline purchases for the first $1,500 you spend on any combination of gasoline and groceries each quarter.

Extra bonus

If you have a Bank of America checking or savings account and have your rewards dollars direct deposited to that account, you get a 10% bonus. You also get a 0% interest rate on purchases for the first 12 billing periods. There's no annual fee and your rewards don't expire.

The Citi Hilton HHonors Visa Signature Card gives you 40,000 Hilton HHonors bonus points after you spend $1,000 within the first four months the account is open. You earn six HHonors bonus points for every dollar spent at a participating hotel within the Hilton HHonors portfolio. 

In addition you get three HHonors bonus points for every dollar spent at supermarkets, drugstores and gas stations. You get two HHonors bonus points for every dollar spent on all other purchases.

Keeping it simple

The Citi Simplicity Card rewards you in other ways than points, miles or cash. It advertises that you never have to pay a late fee, a penalty rate or annual fee. It also offers a 0% balance transfer rate for 18 months, but the 3% transfer fee makes that much less rewarding if you have a big balance. 

The Capital One Venture Rewards Card gives you two travel miles for every dollar spent on purchases. If you spend $2,000 on purchases within the first three months the account is open you earn an additional 20,000 bonus miles. 

You can redeem these miles for any travel expense, flying on any airline at any time with no blackout dates. There is no annual fee the first year, but after that it will cost you $59 a year to have this card in your wallet.

Improving your credit score

You say you don't have excellent credit? There are steps you can take to improve it so that in the future you can qualify for one of these rewards cards.

According to Experian, the most important thing you can do to improve your credit score is pay all your bills on time. Delinquent payments and collection will deliver a huge hit to your creditworthiness.

Keep your credit card balances low, especially in relation to your credit limit. Having “credit to spare” makes you look like a good credit risk.

Finally, pay down debt as much as possible. It's not always easy to do but whenever you come into some extra money, apply it to your credit balance.  

We often hear from readers whose complaints boil down to “As a customer of this particular company, I am thoroughly unhappy with the behavior of said company’s employees.”

But sometimes, honestly, it’s not the employees’ fault; they’re working under conditions that make it impossible for them to do their jobs well (from a customer's perspective). For example, many a fast-food customer has been annoyed by constant upsell attempts: “Hi! I'd like a small hamburger, nothing more. No, I don’t want fries with that. No, I don’t want to supersize it. No, I don’t want a hundred-ounce soda for only 50 cents extra, just a burger. No, I don’t want….”

Annoying as this is, 99.99 percent of the time it’s not the employees’ fault; company policy requires them to follow the upsell script, and if they don’t they’ll be fired.

We mention this because last month we told you the story of several people who bought Sears maintenance agreements and ultimately concluded they weren’t worth it; consumers complained of long waits for repairs, repairmen not showing up when scheduled, or repairmen not being offered at all. 

Last month, Sears did not respond to our request for comment (we sent them a fresh request before writing this follow-up story, and will let you know if we hear anything). However, this week we did get a response to our old article — not from a Sears spokesman but from Brian, who said he spent almost three years as a Sears repairman in an eastern state, but no longer works for the company.

A technician's view

“Even though this article is a month old, I just finally got to read it,” Brian said.  “I just want to hopefully clear up some things from a technician’s view. I am not by any means standing up for Sears or representing Sears. In all honesty, I do not like their practices or treatment of employees and customers.”

All right: a possibly disgruntled ex-employee, so take his claims with as many grains of salt as you deem necessary. But we found his stories very believable.

In our last article, we mentioned several customers who complained of waiting at home for Sears repairmen who never showed. (Even worse, many of these stood-up people had taken time off work to stay home—all for nothing.)

Brian sympathized, but said, “Maintenance agreement customers are not put at the bottom of any list … where a person lives can also affect why service takes too long, because some areas just do not have enough technicians available. Especially rural areas, where travel time is very high.  Also, Sears doesn't hire enough or keep enough people to handle the workloads.”

Kristine from Illinois was the woman who cancelled her maintenance agreement on suspicion that it put her at the bottom of the “list.” Here’s one of the anecdotes she told us in support of this theory:

“One day my dryer wouldn't work; I called Sears and someone came out the next day and fixed it. No maintenance agreement on the dryer. A few months later my freezer broke and I had a maintenance agreement. They couldn't come out for almost a week. It was fixed, but I lost hundreds of dollars in food.”

In response, Brian said, “I want to address the lady that got her washer fixed quickly, but had to wait a week for the freezer. Sears appliance technicians are specialized in either refrigeration, laundry, or cooking/dish. HVAC techs are a different department.  Each specialty has its own busy seasons. More than likely the laundry season was slow, so she was taken care of quickly. On the other hand the refrigerator season may have been busy, so she was a week out.”

Makes little difference

We must admit Brian’s explanation makes sense, and weakens the theory “Maintenance agreements put you at the bottom of a priority list”… though this distinction makes little difference to maintenance agreement holders forced to go a week or more without use of a vital appliance.

What about customers who complained about repairmen blowing off appointments again and again? According to Brian: “The main reasons for no shows is because the company sets the workload higher than can be accomplished.  We had technicians as high as 160% workload every day ….  Our routing team will not remove calls when it gets late.  We are expected to call the customers ourselves to give them the bad news.  I will admit I canceled calls and went home without contacting people at 9pm. I felt bad, but I had a 2-hour drive home and was getting tired of the customers chewing me out.”

Ouch. From the perspective of a customer who’s been waiting all day for a repairman who never arrives, a customer who maybe had to use some vacation or sick time to leave work in hope of meeting that repairman, we say: that’s absolutely irresponsible. But from the perspective of an ordinary person who dislikes being yelled at for any reason, let alone for refusal to accomplish the impossible … that’s absolutely understandable.

Autism has been growing at an alarming rate, and a new study suggests that air pollution may be a major contributor, at least in people who already have a genetic predisposition towards the disorder.

"Our research shows that children with both the risk genotype and exposure to high air pollutant levels were at increased risk of autism spectrum disorder compared to those without the risk genotype and lower air pollution exposure," said the study's first author, Heather E. Volk, Ph.D., M.P.H., assistant professor of research in preventive medicine and pediatrics at the Keck School of Medicine at the University of Southern California. 

Autism is a physical condition linked to abnormal biology and chemistry in the brain. Just a few years ago, the Centers for Disease Control and Prevention (CDC) estimated one in 88 school children had some form of autism. Now, the CDC estimates the prevalence is closer to one in 50.

The USC study, "Autism spectrum disorder: Interaction of air pollution with the MET receptor tyrosine kinase gene," is scheduled to appear in the January 2014 edition of Epidemiology.

"Although gene-environment interactions are widely believed to contribute to autism risk, this is the first demonstration of a specific interaction between a well-established genetic risk factor and an environmental factor that independently contribute to autism risk," said Daniel B. Campbell, Ph.D., assistant professor of psychiatry and the behavioral sciences at the Keck School of Medicine of USC and the study's senior author.

Campbell and Volk's team studied 408 children between 2 and 5 years of age from the Childhood Autism Risks From Genetics and the Environment Study, a population-based, case-control study of preschool children from California. Of those, 252 met the criteria for autism or autism spectrum disorder. Air pollution exposure was determined based on the past residences of the children and their mothers, local traffic-related sources, and regional air quality measures. MET genotype was determined through blood sampling.

This is the time of year when refrigerators are stuffed to the gills with Thanksgiving leftovers, and food safety experts say it's time to call it a day.

“Ideally, you should eat your turkey within 3-4 days, but gravy and stuffing should be discarded within 48 hours,” said Liz Weinandy, a registered and licensed dietitian at The Ohio State University Wexner Medical Center.

There are dangers in how leftovers are handled and stored. Weinandy says leftovers should be refrigerated two hours after the meal is served, turkey should be cut from the bone and all leftovers should be stored in shallow containers, 2 inches deep or less. 

Many consumers take food safety for granted, but Weinandy said that on any given day, 350 people are hospitalized for food poisoning, and the risk of getting sick goes up around Thanksgiving and other major holidays.

Often, families will host several guests for Thanksgiving dinner, which can mean more people handling food, more cutting boards and utensils being shared and more people getting sick as a result.

“It’s very easy to cross-contaminate food this time of year, especially with so many cooks in the kitchen,” Weinandy said. “If you need help in the kitchen, make sure people are in charge of specific duties, so you can limit contact during food preparation.” 

Under terms of a court order, a Bakersfield, Calif., food company has agreed not to process or distribute food until after it cleans up unsanitary conditions.

Judge Garland E. Burrell, Jr. of the Eastern District of California has approved a consent decree of permanent injunction against Alfred Louie, Inc., and its owners, Gordon Louie and Victor Louie, for contamination in the company’s sprouts and facility, among other violations.

The company receives, processes, manufactures, prepares, packs, holds and distributes ready-to-eat mung bean and soybean sprouts and wheat flour noodles. It also packs and/or distributes various dry, refrigerated and frozen food items, such as flour, nuts, rice, tea and spices received from other manufacturers.

Deficiencies found

Since 2000, Food and Drug Administration (FDA) inspections have documented numerous deficiencies in the company’s processing facility. In addition, laboratory testing by the FDA in April and May 2013 revealed Listeria monocytogenes in its sprouts and in the company’s facility. The FDA repeatedly advised the firm and its owners of the unsanitary conditions at the facility.

Listeriosis, the illness caused by Listeria monocytogenes, can be serious and sometimes can cause fatal infections in young children, frail or older people, and others with weakened immune systems. Although healthy individuals may experience only short-term symptoms such as high fever, severe headache, stiffness, nausea, abdominal pain and diarrhea, Listeria infection in pregnant women can cause miscarriage and stillbirth.

Although no illnesses have been reported from Alfred Louie Inc.’s products, individuals who have eaten these products and experience any of the symptoms of Listeriosis should contact their healthcare professional.

Settlement terms

Under the consent decree, the defendants cannot process or distribute food until they demonstrate that their facility and processing equipment are suitable to prevent contamination in the food that they process, prepare, store and handle. They must, among other things, retain an independent laboratory to collect and analyze samples for the presence of Listeria monocytogenes, retain an independent sanitation expert and develop a program to control Listeria monocytogenes and to eliminate unsanitary conditions at its facility.

Once the company is permitted to resume operations, the FDA may still require the company to recall products or cease production if the agency discovers future violations of food safety practices.

“Companies have a responsibility to ensure that the food they produce is safe to eat and is made in accordance with federal law,” said Melinda K. Plaisier, the FDA’s associate commissioner for regulatory affairs. “When a company continues to produce food that presents a risk for consumers, the FDA will take whatever steps necessary to protect public health.”