Current Events in July 2014

Oil traders, it seems, are giving U.S. consumers a break at the gas pump. Gasoline prices have dipped in recent days, due largely to a decline in the price of crude oil.

By midweek the national average price of regular unleaded gasoline had fallen a nickel a gallon in 7 days to $3.59 a gallon, according to the AAA Fuel Gauge Survey. That's actually 4 cents lower than the price a year ago.

But gasoline prices spent the spring and early summer at above-normal levels as oil prices remained well above $100 a barrel. The recent slide in oil is, as usual, being attributed to a number of geopolitical factors.

A more peaceful world?

Analysts at AAA cite what they call a stabilizing situation in Iraq. A report last weekend by the Sydney Morning Herald credits an improved situation in Libya for the drop in oil prices.

The newspaper notes Libyan rebels have lifted their blockade of shipping lanes, clearing the way for shipment of more Libyan oil to refineries. It quotes an oil industry analyst as saying the initial drop in oil prices prompted traders to sell their futures contracts rather than buy more at the lower price.

By virtue of the way oil is bought and sold, what U.S. motorists pay at the pump is largely influenced by the whims of the futures market. If traders are filled with optimism that oil is about to become more scarce, or hard to deliver, they tend to bid higher amounts for futures contracts.

If they believe that supplies of oil are too plentiful, they refrain from investing and prices tend to fall. That appears to be what's happening now.

Too much oil

What may be pushing oil prices lower at the moment is not geopolitical tranquility – after all, Israel and Palestine are about the explode. Rather, the market sees “too much oil” for its comfort.

Last week the U.S. Energy Information Administration (EIA) dramatically lowered its forecast for world oil consumption for the rest of the year. The July Short Term Energy Outlook also predicts 2015 U.S. oil production will reach its highest level in 42 years.

As a result, EIA believes U.S. consumers can expect lower gasoline prices in the coming year. While prices are expected to average around $3.54 a gallon throughout 2014, EIA believes the average price next year should be around $3.45.

Current prices

As usual, Hawaii leads the market with the most expensive price per gallon, followed by Alaska and California, with all three states paying well over $4 a gallon.

While prices in many states remain high, AAA reports that pump prices in 45 states and Washington D.C. have fallen over the past week with the biggest savings occurring in the Midwest.

Indiana leads the decline with a drop of 13 cents a gallon. Also scoring double digit declines were Michigan, down 12 cents, and Kentucky, with a drop of 10 cents a gallon.

States with the lowest gasoline prices this week are clustered in the southeast and Midwest. South Carolina has the lowest average price, $3.33 a gallon. Alabama is second at $3.35.

It's fairly well known that if you have the misfortune of being shot, stabbed or otherwise traumatized, you should hope you're taken to a big-city hospital where such wounds are an everyday occurrence. It's called the "practice makes perfect" effect.

Now a new study suggests the same is true of other types of emergencies as well. In other words, your risk of dying from a severe medical emergency is lowest at the busiest emergency rooms. 

In fact, the analysis finds that patients admitted to a hospital after an emergency had a 10% lower chance of dying in the hospital if they initially went to one of the nation's busiest emergency departments, compared with the least busy.

The risk of dying differed even more for patients with potentially fatal, time-sensitive conditions. People with sepsis had a 26% lower death rate at the busiest emergency centers compared with the least busy, even after the researchers adjusted for a range of patient and hospital characteristics. For lung failure patients, the difference was 22%. Even heart attack death rates differed.

24,000 fewer deaths

The new findings, based on national data on 17.5 million emergency patients treated at nearly 3,000 hospitals, appear in an Annals of Emergency Medicine paper by a University of Michigan Medical School team. Using U-M Department of Emergency Medicine funding, they analyzed data from the Nationwide Inpatient Sample database compiled by the Agency for Healthcare Research and Quality.

The authors calculate that if all emergency patients received the kind of care that the busiest emergency centers give, 24,000 fewer people would die each year.

"It's too early to say that based on these results, patients and first responders should change their decision about which hospital to choose in an emergency," says Keith Kocher, M.D., MPH, the lead author of the new study and a U-M Health System emergency physician. "But the bottom line is that emergency departments and hospitals perform differently, there really are differences in care and they matter."

This is the first time a relationship has been shown on a national, broad-based scale between the volume of emergency patients seen at a hospital and the chance those patients will survive their hospital stay.

Time-critical conditions

Kocher and his colleagues focused on eight high-risk, time-critical conditions. They were: Pneumonia, congestive heart failure, sepsis, the type of heart attack known as an acute myocardial infarction, stroke, respiratory failure, gastrointestinal bleeding and acute respiratory failure.

All require emergency providers to use a certain level of diagnostic skill and technology, and successful treatment depends on the ability of emergency and inpatient teams to deliver specialized treatment. All carry a death risk of at least 3%, and rank among the top 25 reasons emergency patients get admitted to a hospital.

Their results don't give insights into why the differences in survival occur – but for the first time, they show that they do occur, so that further research can probe deeper.

"The take-home message for patients is that you should still call 911 or seek the closest emergency care, because you don't know exactly what you're experiencing," says Kocher, an assistant professor of emergency medicine. "What makes one hospital better than another is still a black box, and emergency medicine is still in its infancy in terms of figuring that out. For those who study and want to improve emergency care, and post-emergency care, we hope these findings will inform the way we identify conditions in the pre-hospital setting, where we send patients, and what we do once they arrive at the emergency department and we admit them to an inpatient bed."

Construction of new homes was down sharply in June, the second straight month of declines.

Figures released by the Census Bureau show housing starts were down 9.3% to a seasonally adjusted annual rate of 893,000. Even with that decline, starts came in 7.5% higher than the same month a year ago.

Single-family housing starts were down 9.0% -- to a rate of 575,000, while the June rate for apartment buildings was 305,000.

Looking ahead

The outlook for the near term isn't very encouraging.

Applications for building permits, an indication of planned construction, fell 4.2% last month to a seasonally adjusted annual rate of 963,000. Withing that, single-family authorizations were at a rate of 631,000 and apartment buildings were at a rate of 301,000.

The complete report is available on the Commerce Department website.

Jobless claims

First-time applications for state unemployment benefits came in lower than expected during the week ending July 12.

The government says initial applications were down by 3,000 to a seasonally adjusted 302,000. The consensus of economists surveyed by Briefing.com was for an increase to 311,000.

Analysts say that if the declining trend in jobless claims that has developed over the last few months continues, they expect to see monthly job creation in the 300,000 range.

The 4-week moving average, which strips out the weekly volatility and is considered a more accurate barometer of the labor market, was down 3,000 to 309,000 -- the lowest level since June 2, 2007 when it was 307,500.

The full jobless claims report can be found on the Labor Department website.

A new study by researchers at Wake Forest Baptist Medical Center suggests that the use of cholesterol-lowering statins may help prolong the lives of people with diabetic cardiovascular disease.

Heart disease and stroke are the leading causes of death and disability among people with Type 2 diabetes. In fact, at least 65% of people with diabetes die from some form of heart disease or stroke, according to the American Heart Association.

"Although our study was not a clinical trial, it did show that people with diabetes and heart disease can still live quite a few years by taking statins," said Don Bowden, Ph.D., professor of biochemistry at Wake Forest Baptist and lead author of the study.

The research team studied data from 371 patients who had participated in the Diabetes Heart Study. At the beginning of the study, the participants received a CT scan to determine their levels of coronary artery calcium (CAC); a CAC score greater than 1,000 indicates an increased risk for cardiovascular disease (CVD).

The team compared the baseline characteristics of 153 patients who died during an average 8.2 years of follow-up and 218 who survived. The researchers assumed that risk for mortality would be consistently high among the study participants. However, 60% were still living after more than eight years.

The use of cholesterol-lowering statins at the baseline exam was the only modifiable risk factor identified to be protective against mortality. The participants taking statins at the beginning of the study had a 50% increased chance of being alive as compared to those who didn't.

Bowden said this highlights the importance of widespread prescription of cholesterol-lowering medications among individuals with Type 2 diabetes who have existing high CVD risk, but added that in previous studies the rates of statins prescribed for diabetic patients have been low.

"These data suggest that cholesterol-lowering medications may be used less than recommended and need to be more aggressively targeted as a critical modifiable risk factor," he said.

The study is published in the current online edition of Diabetes Care.

BMW is recalling 1.6 million vehicles in what it calls a “voluntary precautionary measure that aims at minimizing the risk of faulty airbag activation.”

The recall involves the passenger airbags 3 Series vehicles (pre-predecessor generation E46) produced between 05/1999 and 8/2006.

According to the German automaker, potential problems with gas generators may rupture in vehicles produced by its competitors using similar systems from the same supplier have become evident in rare cases.

BMW says it is not aware of a case involving a BMW vehicle.

According to the company, this is an extension of last year's recall campaign in which 240 000 3 Series vehicles (E46) of the pre-predecessor generation were pulled in. Those vehicles are excluded from the current replacement campaign.

BMW says affected customers will be notified.

At the halfway point of the month, it's clear that July is a pretty good time to shop for a new car. Dealers are starting to think about making room for 2015 models and are offering more attractive financing deals.

At most times during the year, there are only deals on certain makes and models – usually not the ones you want. But in July there appears to be strong incentives and lease deals on most types of vehicles, and especially attractive offers on large SUVs and full-size trucks.

"July is turning out to be a great time to buy a SUV or full-size truck," said Jesse Toprak, chief analyst for Cars.com, an automotive website. "Consumers can find some of the most generous incentives for large vehicles during the summer, which makes now the time to buy as opposed to winter when the discounts are generally not as high."

Fuel-efficient cars too

But not everyone wants a large SUV or full-sized truck at today's gasoline prices. Not to worry. Toprak says there are also some pretty good lease deals available on more fuel-efficient vehicles, such as the 2014 Toyota Prius.

How good? These Prius leases through Toyota run as low as $179 and $249 per month, depending on the state.

For the rest of the month you can lease a 2014 Nissan Altima for $189 a month for 36 months, with $1,999 down. A 2014 Volkswagen Jetta can be leased for $199 a month for 36 months, with $2.349 down.

There are also some pretty attractive financing deals this month. The 2014 Kia Forte and 2014 Cadillac SRX come with 0% financing for 60 months for qualified buyers. The Forte even gives you $500 cash back.

July cash incentives

Speaking of cash incentives, the 2014 Dodge Ram 1500 gives purchasers up to $3,500 cash allowance. The Ford F150 Supercab comes with a $3,250 cash allowance and the Lincoln Navigator gives buyers a $3,000 allowance.

When dealers and manufacturers start piling on the incentives that usually isn't a good sign for sales. And coming on the heels of a sales decline in June, it might be reasonable to conclude recent red hot car sales are cooling off.

"The industry will see lots of year-over-year and month-over-month declines, but that doesn't mean that June was a bad month for sales," said Senior Analyst Jessica Caldwell, of automotive site Edmunds.com. "It's important to remember that there were fewer sales days in June 2014 than in June last year or in May 2014. In fact, shoppers this month bought 2,700 more cars per day than they bought in June 2013. So the momentum is still very much alive."

Cash incentives on leases

Edmunds also points out that cash incentives are available on many makes and models when you lease, not just when you purchase. They're called dealer incentives, which are cash or credit provided by a manufacturer to its dealers to incentivize sales of certain models or styles.

Dealer eligibility varies based on dealer location, and is not based on consumer location. These incentives are not advertised, since dealers have the option to pass on all or a portion of incentives to consumers. That means you should always ask about it.

Packing up the kids for camp? How about the dog? Yes Max, Bella, Bailey and Lucy are all going, only not to summer camp, they're going to fat camp.

As America has gotten more and more overweight, our dogs are becoming overweight along with us. According to the American Veterinary Medical Association, obesity is the fourth leading cause for canine deaths, and as many as 20% of dogs in North America are currently overweight.

At Indigo Ranch Doggie Fat Camp in Vernonia, Oregon, they start by having you take your dog to the vet for a health check-up. Just as with humans who need to lose weight, they want to make sure your dog is in good health before beginning a weight loss plan.

During Indigo Doggie Fat Camp, your dog stays Monday through Friday, and comes home on the weekend. During the weekend your dog packs home pre-measured food portions and specific instructions so you can keep him on his individual plan. The average weight loss program can range from four to eight weeks, depending on how much weight the dog needs to lose. It can cost up to $800 for a four-week stay.

The vets at the Morris Animal Inn in Morristown, N.J., for example, offer swimming and “canine cardio” (running on treadmills or up and down the stairs), along with daily check-ups and weigh-ins. Dogs are rewarded for their hard work with healthy snacks, like yogurt parfaits and a dip in the doggie jacuzzi if they’ve performed well.

For the last seven years, the University of Tennessee College of Veterinary Medicine has offered a fat camp for dogs, both inpatient and outpatient. But the dogs who live at the clinic tend to be more successful, said Dr. Angela Witzel, a veterinarian at the university who specializes in animal nutrition.

There is a simple solution to all of this. Put down the dog treats while you watch Animal Planet and get outside and exercise with your dog. It's a lot cheaper then shipping them off to camp. More fun too.

There are all kinds of safety devices for pets but it's not easy for consumers to evaluate just how effective a given device really is. The Center for Pet Safety hopes to change that.

The Reston, Va.,-based research and consumer advocacy organization, today published its certification program, providing guidelines for pet product manufacturers.

The test protocol, which is a result of the 2013 Harness Crashworthiness Study conducted by the center, outlines a consistent test methodology and evaluation program to ensure pet safety harness restraints offer crash protection.

“The Center for Pet Safety took great care evaluating the data returned from our 2013 study to understand what safety harness products should do to protect life,” said Lindsey Wolko, the organization's founder. "Pet product manufacturers have a responsibility to ensure that these safety devices protect human life and provide the best chance of survival to the pet in the case of an accident.”

More information is available on the organization's website. 

Thirty-three states reached a settlement today in their e-book price-fixing lawsuit against Apple Inc. Consumers nationwide will receive $400 million if the district court’s liability holding is affirmed.

"This settlement – contingent on the outcome of Apple's appeal – represents a fair and equitable effort by all parties to resolve this litigation," said Connecticut Attorney General George Jepsen. "Consumers across the country have already received compensation from $166 million in settlement funds paid by the five publishers involved in this price-fixing conspiracy. Through the terms of this settlement, they will receive additional compensation from another $400 million should the states prevail in the appeal."

Last year, a U.S. District Court judge ruled that evidence presented at trial showed Apple played a central role in facilitating and executing a conspiracy designed to eliminate retail price competition in order to raise e-book prices. Apple has appealed that decision to the U.S. Court of Appeals for the Second Circuit.  

Under the settlement announced today, if Apple loses its appeal, it has agreed pay $400 million in compensation to e-book consumers.

“The price-fixing conspiracy between Apple and the publishers caused an immediate increase in cost to these consumers. We’re pleased that additional ill-gotten profits may ultimately be returned to consumers,” saidColorado Attorney General John W. Suthers.

Apple's  appeal is currently pending before the United States Court of Appeals for the Second Circuit. The settlement is subject to approval by the U.S. District Court for the Southern District of New York.

So you’ve just received orders, and you’re due to deploy. Before you go, there are a number of steps you should take to protect your family and financial future.

Know your rights

The federal Servicemembers Civil Relief Act provides protection for active military servicemembers. The law’s purpose is to postpone or suspend certain civil obligations so active duty members of the Armed Forces can focus their full attention on their military responsibilities without adverse consequences for them or their families.

The SCRA offers the following protections:

• Interest rates can be capped at 6% for most preexisting loans, including mortgages, credit cards and auto loans.
• Automobile leases can be terminated without an early termination fee.
• Cellphone service contracts can be terminated without an early termination fee.
• Residential leases can be terminated without an early termination fee.
• Active duty servicemembers and their dependents may not be evicted without a court order.
• An active duty servicemember’s home may not be foreclosed upon without a court order.

Take care of your finances

Granting a trusted family member or your spouse power of attorney allows that person to handle financial matters in your absence. They’ll have the legal right to sign important documents and take other actions on your behalf. Granting a power of attorney gives that person significant authority to spend your money and take on debt in your name. If that isn’t something you are comfortable with, the power of attorney can be limited to a specific area of your financial affairs and limited to a certain period of time. It can also be revoked by you at any time.

Make sure your financial records are accurate and up-to-date. This means giving the person who will be handling your financial affairs all bank account and credit card numbers, outstanding debts, typical expenses and all phone numbers and addresses necessary for dealing with financial matters.

Before deployment, decide how your taxes will be filed and who will file them. If your spouse will be taking on tax duty, make sure he or she has all necessary documents. The IRS also allows military personnel to file for an extension by using Form 2350.

Guard your identity

The threat of identity theft can be exacerbated while you’re on active duty because watching over your credit is much more difficult. Take steps to protect your identity by placing an “active duty alert” on your credit report at no cost. An active duty alert on a credit report means businesses must take extra steps before granting credit in your name. Active duty alerts last for one year and can be renewed to match the deployment period.

To place an active duty alert, contact each of the three nationwide credit reporting agencies:

Equifax: 1-800-525-6285 or www.equifax.com
Experian: 1-888-397-3742 or www.experian.com
TransUnion: 1-800-680-7289 or www.transunion.com

Watch out for high pressure lending practices and scams

While a payday loan may sound enticing if you need quick cash, these loans come at a high price. Servicemembers instead may be able to obtain financial assistance from military aid societies, such as the Army Emergency Relief, Navy-Marine Corps Relief Society, Air Force Aid Society or Coast Guard Mutual Aid.

The federal Fair Debt Collections Practices Act governs the practices of collection agencies. Military servicemembers have the same rights under laws governing debt collection as civilians. For example, a debt collector may contact an individual’s supervisor or Commanding Officer, but only to find out where the person lives, his or her phone number and where the individual works.

Also be on guard against scammers that send you or your spouse unsolicited emails or text messages that appear to be from the military or VA. These types of phony emails mimic official entities in order to solicit money, financial information or personal data, such as social security numbers.

Military spouses should be particularly cautious while their partners are on active duty. It’s all too easy to be fooled by an official-looking document or a seemingly great deal on a major purchase or repair. Make sure your spouse is supplied with all the information and documents they’ll need while you are away. And know that if a deal seems too good to be true, it usually is.

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Pam Bondi is the Attorney General of Florida

Remember the Ab Circle Pro? Promoters of the abdominal exercise device promised consumers using the gadget for just three minutes a day would cause them to lose 10 pounds in two weeks.

Not so, said the Federal Trade Commission, which in 2012 reached a settlement with the company, providing partial refunds to customers.

An administrator working for the FTC is now mailing 196,969 checks averaging $47.51 each to consumers who purchased the Ab Circle Pro, a fiberglass disk with stationary handlebars and two knee rests that roll on the edge of the disk, allowing consumers to kneel and rotate side-to-side -- supposedly equivalent to doing 100 sit ups.

In the infomercial, pitchwoman Jennifer Nicole Lee compared the Ab Circle Pro to a gym workout, saying, “You can either do 30 minutes of abs and cardio or just three minutes a day. The choice is yours.” 

The checks, which total $9.3 million, must be cashed within 60 days after they are issued. The deadline for filing a refund request has expired. Consumers who have questions should call 1-866-402-4752. For general refund information, see www.FTC.gov/refunds. The FTC never requires consumers to pay money or provide information before redress checks can be cashed.

After posting their first increase in four weeks a week ago, mortgage applications fell during the week ending July 11.

According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey, applications were down 3.6%. Results from the week of July 4 included an adjustment for the Independence Day.

The average loan size for purchase applications was $268,500 -- the lowest amount since February 2014.

The Refinance Index inched 0.1% lower from the previous week, with the refinance share of mortgage activity increasing 2% from the week before -- to 54% of total applications. The adjustable-rate mortgage (ARM) share of activity was unchanged at 8% of total applications. The average loan size for purchase applications was $268,500, the lowest amount since February 2014.

Contract interest rate

• The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) edged up 1 basis point -- from 4.32% to 4.33%, with points rising to 0.20 from 0.16 (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) decreased to 4.23% from 4.24%, with points increasing to 0.26 from 0.16 (including the origination fee) for 80% LTV loans. The effective rate was up from last week.
• The average contract interest rate for 30-year FRMs backed by the FHA rose 2 basis points to 4.04%, with points rising to 0.02 from -0.03 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 15-year FRMs stood at to 3.41% -- up from 3.40%, with points increasing to 0.23 from 0.22 (including the origination fee) for 80% LTV loans. The effective rate was higher than last week.
• The average contract interest rate for 5/1 ARMs fell 7 basis points to 3.17%, with points increasing to 0.34 from 0.31 (including the origination fee) for 80% LTV loans. The effective rate was lower than last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications.

It's been a while coming, but July marks the first time since last January that more home builders view sales conditions as good than poor.

Confidence in the market for newly-built single-family homes reached rose 4 points this month to a reading of 53 on the National Association of Home Builders (NAHB) /Wells Fargo Housing Market Index (HMI). Any reading over 50 indicates that more builders view sales conditions as good than poor.

NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del., calls topping the 50 milestone “an important sign" that the housing market is strengthening "as pent-up demand brings more buyers into the marketplace.”

Across the board gains posted

Derived from a monthly survey, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”

Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted gains in July. The index gauging current sales conditions increased 4 points to 57, while the index measuring expectations for future sales rose 6 points to 64 and the index gauging traffic of prospective buyers increased 3 points to 39.

The HMI three-month moving average was up in all four regions, with the Northeast and Midwest posting 1--and 2-point gains to 35 and 48, respectively. The West registered a 5-point gain to 52 while the South rose 2 points to 51.

“An improving job market goes hand-in-hand with a rise in builder confidence,” said NAHB Chief Economist David Crowe. “As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home.”

CORRECTION 7/22/2014: Although our story published July 16 correctly quotes the lawsuit, the lawsuit misstates the defendant. The correct defendant should have been Direct Auto Insurance Company, 330 S. Wells Street, Suite 910, Chicago, Illinois, 60606.  Direct Auto Insurance Company is not and has never been affiliated with Direct General Insurance Agency of Tennessee, Inc., d/b/a Direct Auto Insurance or any other member of the Direct General Group of Companies.

Direct Auto Insurance Agency issued the following statement:

Direct General Insurance Agency of Tennessee, Inc. and its affiliated insurance agencies, d/b/a Direct Auto Insurance, 1281 Murfreesboro Pike, Nashville, Tennessee, is proud of its reputation and the services it provides to the thousands of customers who rely on Direct Auto Insurance for their auto insurance needs. The company has spent years building its brand and creating awareness of its name, logo and advertising images.

A class-action lawsuit was filed in Cook County Chancery Court naming as the defendant “Direct General Insurance Agency of Tennessee, Inc. d/b/a Direct Auto Insurance Company.”  However, the plaintiff named the wrong party.  The actual defendant should have been Direct Auto Insurance Company, 330 S. Wells Street, Suite 910, Chicago, Illinois 60606.

Direct Auto Insurance Company is not and has never been affiliated with Direct General Insurance Agency of Tennessee, Inc. d/b/a Direct Auto Insurance or any other member of the Direct General Group of Companies. Direct General Insurance Agency of Tennessee, Inc. and its employee agents have never produced business for Direct Auto Insurance Company. The allegations in the lawsuit are not applicable to Direct General Insurance Agency of Tennessee, Inc., its employee agents or affiliates. Accordingly, Direct General has requested that plaintiff’s counsel dismiss Direct General from the lawsuit and believe that they will do so. In the event that does not occur, Direct General will be submitting a filing with the court for the company to be dismissed from the suit.

Regrettably, images of the logo and advertising associated with Direct General Insurance Agency of Tennessee, Inc. d/b/a Direct Auto Insurance have been incorrectly used by certain media outlets to illustrate news stories about the lawsuit without first consulting the company.

“There has been confusion in the past about the two companies with similar names, which translated most recently into this lawsuit that incorrectly names Direct General Insurance Agency of Tennessee, Inc. d/b/a Direct Auto Insurance as a defendant. Many media outlets then began reporting this error using our company’s logo and advertising images. Because we were not provided a chance to address the error prior to its distribution, the company must now insist on corrective action. We are in the process of having our name removed from the lawsuit, and we request that the reported misinformation be corrected as quickly as possible so there is no confusion in the minds of consumers,” said John Arena, Senior Vice President and General Counsel, Direct General Group of Companies.

About Direct Auto Insurance

Direct General Corporation is an insurance holding company and through its subsidiaries, is a leading provider of personal auto insurance, life insurance, and vehicle, and accident protection plans. Direct is headquartered in Nashville, Tennessee, and has more than 400 local offices in 13 states primarily the Southeast with annual revenue of over $450 million. Direct markets and sells its products and services under the Direct Auto Insurance brand through its retail store outlets, by phone through its call center and via the internet.

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The original story:

A class action suit in Chicago's Cook County Court charges that Direct Auto Insurance targets low-income minorities for its "worthless" car insurance policies, profiting from the premiums but refusing to honor claims, Courthouse News Service reports.

"Direct Auto Insurance Company developed a business strategy wherein the company planned to secure customers by offering auto insurance at premiums that were substantially lower than its competitors and market rates," said lead plaintiff Norbert May in her complaint.

"Direct Auto Insurance Company intentionally targeted consumers with low to moderate incomes, including a high percentage of African-American and Hispanic individuals, who did not have the financial ability to hire legal representation to defend them against defendant's predatory practices," May alleged.

The suit charges that Direct Auto's policy of filing meritless declaratory judgment actions on the basis of misrepresentations in policy applications shows that the insurance company never intended to honor any claims on the policies it issued.

May seeks class certification and damages for fraud, breach of contract, and alleged violations of the Illinois insurance code. 

May is represented by Edward McCauley with Kelleher & Buckley in North Barrington, and Daniel Konicek with Konicke & Dillon in Geneva.

Nantucket Distributing of Middleboro, Mass., is recalling about 4,000 resin wicker outdoor patio set chairs.

The rear legs of the chair can break, posing a fall hazard.

The firm has received two reports of the rear chair legs breaking. No injuries have been reported.

The recall includes Nantucket Distributing resin wicker outdoor patio set chairs. The set includes two brown powder coated outdoor metal resin wicker chairs and a round table with aluminum top with brown resin wicker trim. The chairs measures about 23 inches wide by 23 inches deep by 32 inches high. The table measures about 24.75 inches in diameter. The chairs were sold with a hang tag with item number RT043SET.

The chairs, manufactured in China, were sold at Christmas Tree Shops, andThat!, and Christmas Tree Shops andThat! stores nationwide in March 2014 for about $60 for the entire set.

Consumers should immediately stop using these recalled chairs and return the set or chairs to any Christmas Tree Shops, andThat!, or Christmas Tree Shops andThat! to receive a full refund for the set or $17.50 for each chair.

Consumers may contact Christmas Tree Shops toll-free at (888) 287-3232.

After the stock market closed Monday Apollo Education Group, Inc., which operates University of Phoenix (UP), disclosed that its course offerings will be reviewed by a federal agency.

The company's stock dropped 5% in after-hours trading.

The company's Form 8-K filing with the Securities and Exchange Commission said that it has been informed by the U.S. Department of Education that the government plans to conduct an ordinary course program review of University of Phoenix's administration of federal student financial aid (Title IV) programs in which the UP participates.

The review, which is scheduled to begin August 4, 2014, will focus on federal financial aid years 2012-2013 and 2013-2014, as well as compliance with other policies and regulations.

Typically, neither the government entity conducting the review nor the entity being reviewed comments or elaborates on the process. Apollo Education Group was required to issue the 8-K in order to notify shareholders of a “major event” concerning the company.

UP is one of the largest and best known of the for-profit colleges, which have been a focus of recent concern over rising student loan balances and default rates. It, like many colleges, derives a lot of its income from students who have tapped into Title IV federal aid.

Title IV

According to the Department of Education, Title IV programs are the major source of federal student aid. They include Federal Family Education Loans, direct loans and Federal Perkins Loans.

Title IV aid also comes in the form of grants, including the Federal Pell Grant, Academic Competitiveness Grant, National SMART Grant and Federal Supplemental Education Opportunity Grant.

Default rates

The Department of Education has found that for-profit colleges continue to have the highest average 2 and 3-year cohort default rates (CDR) at 13.6% and 21.8%, respectively. By comparison, public institutions were at 9.6% for the 2-year rate and 13% for the 3-year rate. Private non-profit institutions had the lowest rates at 5.2% for the 2-year rate and 8.2% for the 3-year rate.

The 2-year CDR increased in 2013 over 2012’s 2-year rates for both the public and for-profit sectors, rising from 8.3% to 9.6% for public institutions, and from 12.9% to 13.6% for for-profit institutions. CDRs held steady for private non-profit institutions at 5.2%.

According to the Center for Responsible Lending, for-profit colleges absorb around 25% of the more than $32 billion in federal student aid. In addition to Title IV aid, military veterans may take advantage of education loans that do not fall under Title IV.

DoD education aid

Back in 2012 Holly Petraeus of the Consumer Financial Protection Bureau raised warnings about the amount of DoD education aid going to for-profit institutions.

“On my trips to military communities, I’ve heard stories that raise concerns about the practices of some for-profit colleges,” Petraeus said in a speech. “Marketing is aggressive and relentless; servicemembers are urged to take out private student loans rather than seeking out quality programs whose costs would be covered in full by their military benefits; and poor service and treatment is common at some institutions once service members are enrolled.”

Petraeus said between 2006 and 2010, combined VA and DoD education benefits received by just 20 for-profit education companies increased from $66.6 million in 2006 to an estimated $521.2 million in 2010, a 683% increase.    

There's a variety of rules to follow at the supermarket if you want to keep your grocery costs in check – keep an eyeon unit prices rather than assume the lowest up-front cost must always be the best; use coupons only for discounts on things you intended to buy anyway, rather than buy things solely because you have a coupon for them – but the one rule I find most effective these days is, “Don't pay more for items just because they have the word 'organic' or 'natural' on their label somewhere.”

Granted, I personally have never been convinced that the alleged health benefits of organic foods, if they exist at all, are enough to justify their vastly higher cost. (For what it's worth: I'm in generally good health and, according to my latest checkup, suffer from no nutritional deficiencies or buildups of “toxins,” despite my non-organic diet.)

There is a fallacy some people believe, to the effect of “The more expensive option must always be the better one, just because it's more expensive.” Take the debate between fresh versus frozen or canned produce, for example.

Frozen vegetables and fruits are actually healthier and more nutritious than most “fresh” produce you find for sale, in addition to being far more convenient. That said: it's also true that a just-picked, in-season fruit or vegetable, if you can eat it right away, often tastes better than its equivalent you can buy at the supermarket. Even so, we are all very lucky to live in a time and place where our own fruit and vegetable consumption is not limited to whatever's local and in-season.

Yet I've known more than a few people who are not only convinced that fresh produce is guaranteed better/healthier than frozen, they'll even go so far as to say that frozen vegetables are mere “processed junk,” as ABC News put it in a recent report.

Expensive not always healthier

After all: frozen veggies are cheaper, easier and more convenient than fresh, ergo they've got to be inferior, right?

Is something similar in play regarding the idea that “organic” must always mean “healthier?” Maybe … or maybe not. In Britain last week, the Guardian reported “clear differences between organic and non-organic foods, study finds,” specifically that organic food “has more of the antioxidant compounds linked to better health than regular food, and lower levels of toxic metals and pesticides, according to the most comprehensive scientific analysis to date,” according to the headline and first paragraph.

Yet read a little further and you discover that “comperehensive scientific analysis” has some pretty serious flaws:

The findings will bring to the boil a long-simmering row over whether those differences mean organic food is better for people, with one expert calling the work sexed up.

Tom Sanders, a professor of nutrition at King's College London, said the research did show some differences. "But the question is are they within natural variation? And are they nutritionally relevant? I am not convinced."

Bigger not always better

Some of the skepticism stems from the sheer size of the analysis, which looked at 343 different peer-reviewed studies from around the world. Ordinarily, this would be a good thing in a scientific analysis: all else being equal, the bigger the sample size, the better the results. But in this case, maybe not:

“The research is certain to be criticised: the inclusion of so many studies in the analysis could mean poor quality work skews the results, although the team did "sensitivity analyses" and found that excluding weaker work did not significantly change the outcome. … A further criticism is that the differences seen may result from different climate, soil types and crop varieties, and not from organic farming, though the researchers argue that combining many studies should average out these other differences.”

From a scientific-rigor perspective, you might raise an eyebrow at the notion that there's no need to exclude “weaker work” from a study since it doesn't change the outcome anyway – and, in a study specifically trying to determine whether organic farming methods result in more nutritious food, the idea that all other variables should be lumped together rather than isolated and studied separately might raise your other eyebrow.

Natural not always preferable

That said: the “organic” food mentioned in the Guardian primarily seems to involve organic farming methods – foods raised without the use of pesticides or chemical fertilizers, for example. That's different from “organic” as opposed to genetically modified (GMO) food. As my colleague Mischa Popoff pointed out last month, many GMO foods are modified solely to make them more nutritious, and save people from nutritional deficiencies, yet “organic” activists promoting the “natural must always be better than artifical” fallacy oppose them anyway:

Consider Golden Rice, genetically spliced with β-carotene over 10 years ago to prevent millions in the Third World from going blind and dying. It remains in regulatory limbo thanks to organic activists who claim it will contaminate organic rice.

Since they reject genetic engineering, organic activists claim genetically-modified organisms (GMOs) represent a threat to organic crops. And they have actually gone to court and lost three times, insisting on zero tolerance for GMOs …. [although] not a single health effect has ever been observed from GMOs on the environment, animals or on humans.

In all fairness, though, the issue of rich people actively campaigning against something to help poor people is not remotely limited to organic-food activism. However: assuming you focus on “organic food” strictly to mean “food raised via organic farming methods” (whether or not the crops are genetically modified), there is another variable to consider: organic, rather than “artificial,” farming methods are probably not sufficient to feed a planet whose current human population of 7.5 billion is expected to top off at around 10 billion in a generation or so.

Remember the reason artificial fertilizers, pesticides and other farm innovations became so popular in the first place: in the late 19th century, during the so-called “Second Industrial Revolution,” the chemical industry as we know it first came into existence. The new nation of Germany was particlarly renowned for its chemists and chemical discoveries, including the first artificial fertilizers, which led to skyrocketing crop yields for the farmers who used them.

But the worldwide increase in food production spawned by the chemical/industrial revolution of the 19th and early 20th centuries paled in comparison to the food increases of the so-called Green Revolution starting in the 1960s.

The late Dr. Norman Borlaug, who pioneered the use of wheat genetically modified to have increased resistance to pests and produce two or three times as much grain as unmodified wheat, is credited with saving one billion (with a “B”) people, mainly in poor countries, who otherwise would have died of starvation in the past few decades. Indeed, the world has actually reached the point where, especially in the developed nations, the main food-related health problem most people have involves too much food of some sort, rather than too little: obesity or Type 2 diabetes, rather than starvation or malnutrition.

Even so, humanity has a long way to go before everybody can afford the modern Western luxury of ignoring the past century and a half of technological advances, and paying more for foods grown without them.

In what is being hailed as good news for the unionized employees of the financially beleaguered Post Office (though not necessarily for the post office itself, nor for ordinary customers who want to buy stamps, mail letters or purchase other postal services), the Staples office-supply chain has agreed to abandon its trial program of offering postal services in its stores.

Most Staples customers won't even notice, as the yearlong pilot program had only been tried at select locations in California, Georgia, Pennsylvania and Massachusetts.

The American Postal Workers Union opposed it from the start, fearing that it would cost some postal workers their jobs.

In April, for example, the APWU organized a protest of postal workers who stepped off the job to picket at various Staples stores. Dena Briscoe, head of the APWU's Washington, D.C. chapter, said at the time: "I'm a third-generation postal worker. It was very important for my family to be able to have a living wage and provide for our families … I want the next generation to be able to have opportunities, such as we had."

The same threat

In June, the Motley Fool financial blog analyzed the situation in a post explaining “Why your local postal workers hate Staples.”

Ironically, Staples, the post office and its employees' financial problems all stem from the same threat: the rise of computers, smartphones, the Internet and other inexpensive and commonplace data-storage and mass-communication technologies.

As Motley Fool explained, Staples' bottom line has been falling for years due to declining sales of its core products such as PCs, computer paper and ink (in March, Staples had to close 225 of its stores), so it's completely understandable why the company tried forming a partnership with the Post Office: perhaps revenue from the sale of postal supplies and services could help offset the massive decline of sales in paper-based office supplies.

The Internet also explains why the post office has had financial problems for so long, and why they won't go away: the rise of email, online discussion forums and other social media, free long-distance phone calls, Skype and other super-cheap and lightning-fast communication technologies have killed much of the market for first-class mail. If you want to keep in touch with out-of-state friends and relatives nowadays, you have much faster and cheaper options than writing and mailing a letter.

Declining revenues

With USPS revenues declining despite increases in the price of postage stamps, the post office has naturally explored ways to cut costs, including proposals to end Saturday service and door-to-door delivery.

But the APWU opposes any cost-cutting measure that will result in less postal-worker jobs, or lower pay for those who hold them. As the Motley Fool said last month:

It's pretty obvious why the APWU is putting so much effort into pressuring Staples to end its mini-post office pilot (known as the Retail Partner Expansion Program). Postal clerks are paid an average of $25 per hour according to the union; meanwhile, a typical Staples store employee makes less than $10 per hour.

With the USPS consistently losing money and mail volumes declining, the postal service is always looking to cut costs. If the USPS were to outsource a significant amount of mail handling to lower-paying subcontractors, it could significantly cut its costs. As a result, the APWU sees low-paid Staples employees as a serious threat to its members' jobs.

In addition to protests, the APWU also promoted a boycott against Staples. This week, the American Federation of Teachers joined in the boycott (and teachers, of course, are major customers of school supplies such as Staples sells). Shortly after the AFT announced its support for the boycott, Staples announced it would abandon the USPS pilot program after all.

However, the Wall Street Journal's Corporate Intelligence blog noted that the APWU is not yet ready to declate victory in this battle:

A statement from APWU president Mark Dimondstein called the USPS and Staples announcements a “ruse”, and said the discontinuation of the pilot program doesn’t go far enough. The company should stop offering postal services altogether, he said.

But while the union has yet to call its campaign a success, it said the boycott is getting results. “This attempt at trickery shows that the ‘Don’t Buy Staples’ movement is having an effect,” Mr. Dimondstein said. “We intend to keep up the pressure until Staples gets out of the mail business.”