Current Events in July 2014

It's mid-July, which means that American parents of school-aged offspring have seven weeks at most before they must send their children back to school, equipped with a formidable array of school supplies.

Earlier this week, when my colleague James Limbach discussed the start of this year's official back-to-school shopping season, he noted some ominous (from a parental-finances perspective) statistics: back-to-school season is second only to the Christmas/December holiday shopping season, in terms of how much attention it gets from retailers, brand marketers, and other people whose livelihoods involve convincing consumers like you to hand over as much of your money as possible to them.

Also: this year, the average supplies-list parents are expected to provide for each student is longer than ever before, covering not just traditional students' tools like notebooks, paper and pencils or pens, but supplies for the actual classroom, including things like tissue boxes, disposable hand wipes and resealable plastic bags.

Spending season

As a savvy spender you already know to be extra cautious during any time of year retailers and marketers call an important “season.” And with the back-to-school season kicking in, you also know that the best time to actually start buying school supplies was “several months ago” or, better yet, “in dribs and drabs all throughout the year, whenever you find certain supplies at a good price.”

The one advantage parents have is this: most school-supply purchases are non-perishable and completely predictable, and so (depending on how much storage space you have, how often you're likely to move and other variables) you can stockpile certain school supplies months or even years in advance, whenever you find a particularly good price.

Notebooks (the paper kind, not laptop computers), loose-leaf paper, three-ring binders, pencils and pens … today's fourth- and fifth-graders will still need such things in high school, and even in college. Today's toddlers will eventually need such things too, but first they'll need crayons and primary writing paper for a couple of years in elementary school.

Stock up

One trick you might try (it might be too late to do much before the start of this school year, but remember the years to come): stop thinking of school-supply shopping as a seasonal task, one of the first signs of approaching autumn. Instead, set aside a supply shelf, cabinet, box, or some other storage area in your home – the exact size varies based not only on how much space you have available, but how many children you have, and how many more years of school they must finish.

Of course your immediate short-term goal for now is getting your kids supplied for school in a few weeks. But in addition, you also want to keep an eye out for good prices on any sort of school supplies they're likely to need, because you're also working toward the long-term goal of maintaining a well-stocked supply shelf. The ultimate goal is that when your kids need anything for school, you can find it in your own closet rather than spend money at the store that day.

You probably recognize this idea as basically a school-specific variant of the well-known frugal tip “Buy things you'll need before you need them, when you find them at a good price, rather than wait until you actually do need it and are forced by necessity to pay whatever price you can find.”

I maintain a well-stocked school-supply cabinet at home because, due to the post-graduate career path I've followed, I never stopped needed many of these things for myself; it's just that at some point, I stopped calling them “school supplies” and started calling them “office supplies” or “work stuff” instead.

I haven't had to buy loose-leaf paper in years, not since the day I visited a “surplus” store one January, and they were selling 200-sheet packets of loose-leaf paper at three for a dollar. (Of course, whenever I'd visit that particular store anytime in August or early September – back to school season, when people are far more likely to immediately need loose-leaf paper – all they had were 100-count packets which actually cost more, per sheet of paper, than the price you'd expect at a regular non-surplus retail store.)

Granted, I didn't actually “need” any loose-leaf paper when I bought all those three-for-a-dollar packs – I still had a couple unopened packs in my supply cabinet – but I predicted (accurately, as it turned out) that when I did go through all the paper I had and actually needed more loose-leaf paper, I wasn't likely to find any as cheaply as 600 sheets for a dollar.

Off-season bargains

If you're regularly in the habit of browsing surplus, overstock, job lot or other low-price bargain stores with unpredictable inventories, chances are you will, at some point, find incredible deals on the sorts of things that appear on mandatory school-supply lists every September.

But you're not likely to find these incredible deals in September, or August, or any time comprising “back to school season.” That's why, in the long run, your best chance to save money on such things is to shop to keep your supply cabinet well-stocked at a good price, rather than shop to get your kids supplied just in time for them to start school this September.

NXT-ID, a biometric authentication company, is rolling out a new product it believes will replace the traditional wallet, while significantly reducing the threat of identity theft.

The product is Wocket Wallet, a slender wallet with a small space for your drivers license and picture of your kids and an electronic device that stores all your credit cards.

The company has begun taking orders for Wocket Wallet and this week began airing a commercial for it on cable network CNBC.

It's an intriguing idea. The stored data is only accessible by the owner through a combination of biometrics, personal PIN or pattern. Once the device verifies your identity, you use the touch screen display to select whatever soft-card or information you want. In some configurations, the device will respond to your voice commands.

What it stores

The company says the Wocket will store credit, debit, ATM, loyalty, gift, ID, membership, insurance, ticket, emergency, medical, business, contacts, coupon, and virtually any other card that currently makes your wallet as thick as a phone book.

At $149.99, it's considerably more expensive than any wallet you've ever owned, unless you tend to shop at luxury retailers.

It stores all payment cards and other dynamic stripe cards by swiping them directly into the device during the initial set-up process. Bar codes and text, such as voter registration, loyalty and/or membership cards, may all be scanned or entered into the device as well.

Once stored, all information is encrypted by the owner’s personal biometric stamp and can be accessed via a low power touch screen or optionally, a voice command. But how do you actually buy something with it?

It took a little digging through the promotional material to find out. Pictures of the Wocket show it as a device too thick to slide through a card reader.

But it doesn't have to. The Wocket is actually two parts – the device that stores all the data and a plastic card that temporarily receives the chosen card's data for a single transaction. This brief video clip illustrates the process.

Some adjustment

The process might require a bit of getting used to. Selecting a card electronically requires a few more steps than simply reaching into your wallet and pulling out a card.

But NXT-ID is pointing to the trade-offs. Users don't have to dig through all those cards whenever they buy something. And the information on the cards is secure. If lost or stolen, it can't be used by someone else.

Because it's an electronic device, you'll have to recharge the Wocket Wallet – something you obviously don't have to do with your old fashioned wallet. And when using two cards back to back – a loyalty card and credit card, for example, it's a two step process.

There are other digital wallets and digital wallet apps for your smartphone. Google Wallet, for example, was released in 2011, providing a way for users to store cards on their phones. However, it requires a PayPass terminal to make a purchase.

Soundview Technology Group, a technology-focused investment banking firm, issued a favorable report on the Wocket at the end of June, based on observing consumer interaction with the product at a launch event in New York.

“All the feedback we received from attending suggests that consumers who get a chance to see and understand it, immediately want one,” the firm said in a release.

If you've gone shopping for a home you know that houses come in all kinds of condition. Some are move-in ready. Expect to pay top dollar for those.

Others may need some work. These houses tend to be priced below the market, reflecting the need for added expense once you move in.

Distressed properties – foreclosures in particular – tend to be in the worst shape. Sometimes the angry former owners cause some damage on their way out.

More often the homeowner has been struggling financially for some time and couldn't afford to keep the home in good repair. It might have a broken window, rotted eaves and need other essential repairs.

For buyers who have the skills and willingness to undertake these projects it presents an opportunity to save money. But there is one significant obstacle.

Can't pass inspection

Mortgage lenders will inspect the property before making a loan. If inspectors find material defects – and something as minor as a broken window qualifies – they will not approve the loan.

If the owner agrees to make necessary repairs before settlement, that's fine. But some can't, or won't.

Banks that have repossessed houses through foreclosure fall into the latter category. For some reason, lenders will not spend a few hundred dollars repairing a property. Instead, they discount the price by thousands -- maybe tens of thousands -- of dollars.

Advantage, investors

That's why investors have been so eager to move into real estate. A foreclosed property with issues preventing it from passing inspection is not only heavily discounted, it's most easily purchased by a buyer paying cash.

A cash deal is not only neater and cleaner for the bank, it is sometimes the only deal available. But it doesn't have to be.

Someone who wants to buy a fixer-upper but needs to obtain financing can do so with a renovation loan. These loans tend to be more expensive, but for owner occupants, a government renovation loan can be an efficient and affordable way to go.

The FHA 203(k) loan is guaranteed by the U.S. government, just like a regular FHA loan. But in addition to financing the purchase price, the loan can also include money to repair and remodel the property.

Regular and streamlined

There are two types of FHA 203k loans -- regular and streamlined. Regular 203k loans are for homes that need structural repairs, and streamlined loans are for those that need non-structural repairs.

In order to qualify, homeowners must plan to live in the home they are repairing. These loans are not for investors.

The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area. The value of the property is determined by either the value of the property before rehabilitation plus the cost of rehabilitation, or 110 percent of the appraised value of the property after rehabilitation, whichever is less.

The rehab funds can be used to address all the issues that prevent the dwelling from passing an FHA financing inspection. But they can also be used to make cosmetic improvements, such as updating a kitchen or bath.

Growing popularity

Since the 2008 housing crash and foreclosure crisis, more lenders have offered the FHA 203(k) loan.

"This loan is vastly advantageous for the individual seeking to purchase distressed properties or refinance and renovate an existing home," said Robert Briden, Vice President and Director of Loan Originations at Admirals Bank, which recently began offering the loan. "Buyers looking to acquire homes that offer everything they are looking for, such as proximity to good school systems and work, often take advantage of this loan to procure and rehabilitate desired properties. Otherwise, they might have to wait years to gain sufficient equity in market appreciation."

In 2012 the National Association of Realtors (NAR) pushed the Department of Housing and Urban Development (HUD) to expand the FHA 203 (k) program. The trade group said these loans save the borrower’s time and money, and also protect lenders by allowing them to have the loan insured even before the condition and value of the property may offer adequate security.  

When gangsters and other public enemies are ordered confined to their homes, they're often saddled with an electronic bracelet or anklet that alerts police if the detainee starts to slip away.

Now LG Electronics has come up with a kid's version -- the KizON wristband, enabling America's children to get used to constant surveillance at an early age.

LG didn't put it quite that way in its announcement, of course. Instead, it chirped happily that its new device would "extend the wearable experience to parents with children."

"KizON is LG’s new wearable designed exclusively for pre-school and primary school children that offers parents a convenient way to keep track of their young children’s whereabouts," LG said. "Utilizing GPS and Wi-Fi, KizON provides real-time location information allowing parents to track their children’s whereabouts on a smartphone."

But wait there's more. Not only can parents track their children's every step, they can also communicate with them and the kids can press a single button and be connected with their parents.

If a child fails to answer a parent's call, KizON will automatically connect the call to let the parents listen to what their child is doing through the built-in microphone.

“Children as well as the elderly are ideal customers for wearable technologies,” said Dr. Jong-seok Park, president and CEO of LG Electronics Mobile Communications Company. “Wearables allow us to stay connected without the worry of losing a device or the inconvenience of having to carry a large item in a pocket. At LG, we’re committed to exploring more ways to incorporate wearable devices into consumers lives in line with our vision to become a leader in wearables.”

KizON will debut in South Korea on July 10 before its introduction in North America and Europe later this year. 

Are you torked off at people a lot, feel like you're carrying the weight of the world, and always in a funk? You could be a candidate for a stroke.

New research in the American Heart Association journal Stroke says these are some of the factors associated with significantly increased risk of stroke or transient ischemic attack (TIA) in middle-age and older adults.

A TIA is a stroke caused by a temporary blockage of blood flow to the brain.

How's your head?

Researchers investigated how psychological factors might influence risk for chronic disease, using data from the Multi-Ethnic Study of Atherosclerosis (MESA), a continuing study on cardiovascular disease risk factors in participants living in six U.S. cities.

More than 6,700 adults (ages 45-84; 53 percent women) completed questionnaires assessing chronic stress, depressive symptoms, anger and hostility over two years. Participants were 38.5% white, 27.8% black, 11.8% Chinese and 21.9% Hispanic. All were free of cardiovascular disease at the start of the study.

In follow-up for an additional 8.5 to 11 years, 147 strokes and 48 TIAs occurred.

Compared with people with the lowest psychological scores, those with highest scores were:

• 86% more likely to have a stroke or TIA for high depressive symptoms.
• 59% more likely to have a stroke or TIA for the highest chronic stress scores.
• More than twice as likely to have a stroke or TIA for the highest hostility scores.
• No significant increased risk was linked to anger.

Outside the box

"There's such a focus on traditional risk factors -- cholesterol levels, blood pressure, smoking and so forth -- and those are all very important, but studies like this one show that psychological characteristics are equally important," said Susan Everson-Rose, Ph.D., M.P.H., study lead author and associate professor of medicine at the University of Minnesota in Minneapolis.

These associations noted in the study were significant even when researchers accounted for age, race, sex, health behaviors and other known risk factors of stroke.

"Given our aging population, it's important to consider these other factors that might play a role in disease risk. Stroke is a disease of the elderly predominantly, and so learning more about things that can influence risk for stroke as people age is important."

A closer look

Researchers measured chronic stress in five domains: personal health problems, health problems of others close to the participant, job or ability to work, relationships and finances.

They assessed depressive symptoms with a 20-question scale, and analyzed anger with a 10-item scale that captured the extent and frequency of experiencing that emotion. Hostility, which is a negative way of viewing the world, was measured by assessing a person's cynical expectations of other people's motives.

"One thing we didn't assess is coping strategies," Everson-Rose said. "If someone is experiencing depressive symptoms or feeling a lot of stress or hostility, we don't know how they manage those, so it's possible that positive coping strategies could ameliorate some of these associations or effects," she said. "We did not inquire about coping. I would say that's one of the tasks for future studies."

Researchers didn't identify potential racial and ethnic differences or sex differences in the observed associations, but were not able to fully examine such differences due to the smaller numbers of strokes in some groups.

There's a good chance that if you are extremely obese, you're going to die at a relatively young age.

An analysis of data pooled from 20 large studies of people from three countries, shows such people have increased risks of dying earlier than they might otherwise as a result of cancer and many other causes including heart disease, stroke, diabetes, and kidney and liver diseases.

The study, whose findings appeared recently in PLOS Medicine, was led by researchers from the National Cancer Institute (NCI), part of the National Institutes of Health. It found that people with class III (or extreme) obesity had a dramatic reduction in life expectancy compared with people of normal weight.

Extreme obesity on the rise

"While once a relatively uncommon condition, the prevalence of class III, or extreme, obesity is on the rise. In the United States, for example, 6% of adults are now classified as extremely obese, which, for a person of average height, is more than 100 pounds over the recommended range for normal weight," said Cari Kitahara, Ph.D., Division of Cancer Epidemiology and Genetics, NCI, and lead author of the study. "Prior to our study, little had been known about the risk of premature death associated with extreme obesity."

In the study, researchers classified participants according to their body mass index (BMI), which is a measure of total body fat and is calculated by dividing a person's weight in kilograms by their height in meters squared. BMI classifications (kilogram/meter-squared) are:

• Normal weight: 18.5-24.9
• Overweight: 25.0- 29.9
• Class I obesity: 30.0-34.9
• Class II obesity: 35.0-39.9
• Class III obesity: 40.0 or higher

The 20 studies that were analyzed included adults from the United States, Sweden and Australia. These groups form a major part of the NCI Cohort Consortium, which is a large-scale partnership that identifies risk factors for cancer death.

After excluding individuals who had ever smoked or had a history of certain diseases, the researchers evaluated the risk of premature death overall and the risk of premature death from specific causes in more than 9,500 individuals who were class III obese and 304,000 others who were classified as normal weight.

Greater risk of early death

The researchers found that the risk of dying overall and from most major health causes rose continuously with increasing BMI within the class III obesity group. Statistical analyses of the pooled data indicated that the excess numbers of deaths in the class III obesity group were mostly due to heart disease, cancer and diabetes.

Years of life lost ranged from 6.5 years for participants with a BMI of 40-44.9 to 13.7 years for a BMI of 55-59.9. To provide context, the researchers found that the number of years of life lost for class III obesity was equal or higher than that of current (versus never) cigarette smokers among normal-weight participants in the same study.

Study limitations

The accuracy of the study findings is limited by the use of mostly self-reported height and weight measurements and by the use of BMI as the sole measure of obesity. Nevertheless, the researchers noted, the results highlight the need to develop more effective interventions to combat the growing public health problem of extreme obesity.

"Given our findings,” said Patricia Hartge, Sc.D., Division of Cancer Epidemiology and Genetics, and senior author of the study, “it appears that class III obesity is increasing and may soon emerge as a major cause of early death in this and other countries worldwide."  

If you're the parent of a preteens or teen, a major goal is keeping the kids healthy and safe during all the fun stuff they have planned for the summer.

But eventually, they'll be going back to school and that usually means vaccinations, which most states require before school starts again.

There are 4 vaccines recommended to help protect your preteens and teen-aged children, their friends and their family members. While your kids should get a flu vaccine every year, the 3 other preteen vaccines should be given when kids are 11- 12 years old. Teens may also need a booster of a vaccine that requires more than one dose to be protected completely.

What they need

The following vaccines are recommended by the American Academy of Pediatrics, the American Academy of Family Physicians, other medical societies and Centers for Disease Control and Prevention (CDC):

• HPV vaccine: Human papillomavirus (HPV) vaccines help protect both girls and boys from HPV infection and cancers caused by HPV. HPV vaccine protects girls from the types of HPV that cause most cervical cancer. HPV vaccine also helps protect both girls and boys from anal cancer and genital warts. Girls and boys should start and finish the HPV vaccine series when they are 11 or 12 years old. Preteens and teens who have not gotten all HPV shots should ask their doctor or nurse about getting them now.
• Meningococcal conjugate vaccine: Meningococcal conjugate vaccine (MenACWY) protects against some of the bacteria that can cause meningitis (swelling of the lining around the brain and spinal cord) and sepsis (an infection in the blood). Meningitis can be very serious, even fatal. Preteens need the meningococcal shot when they are 11 or 12 years old and then a booster shot at age 16. Teens who got the meningococcal shot when they were 13, 14, or 15 years old should still get a booster at 16 years. Older teens who haven't gotten any meningococcal shots should get one as soon as possible.
• Tdap vaccine: Tdap vaccine protects against 3 serious diseases: tetanus, diphtheria and pertussis (also called whooping cough). The Tdap vaccine takes the place of what used to be called the tetanus booster. Preteens should get Tdap at age 11 or 12. If your teen didn't get a Tdap shot as a preteen, ask their doctor or nurse about getting the shot now.
• Flu vaccine: Flu vaccine protects against flu and the other health problems flu can cause, like dehydration (loss of body fluids), making asthma or diabetes worse, or even pneumonia. Preteens and teens should get the flu vaccine every year as soon as it's available, usually in the fall. It is very important for preteens and teens with chronic health conditions like asthma or diabetes to get the flu shot, but the flu can be serious for even healthy preteens and teens.

Safe and effective

The vaccines for preteens are very safe. Some kids might have some mild side effects from shots, such as redness and soreness in the arm. Some preteens and teens may faint after getting a shot or any other medical procedure. Sitting or lying down for about 15 minutes after getting shots can help prevent fainting. Most side effects from vaccines are very minor, especially compared with the serious diseases that these vaccines prevent.

Be sure to check with the doctor to make sure that your teen has received all of the vaccines recommended for them. They may need to "catch up" on vaccines they might have missed when they were younger.

Paying a problem?

Most health insurance plans cover the cost of vaccines. If you don't have insurance, or if it does not cover vaccines, the Vaccines for Children (VFC) program may be able to help.

The VFC program provides vaccines for children ages 18 years and younger, who are not insured or under-insured, Medicaid-eligible, American Indian or Alaska Native.

The common wisdom is that one -- or maybe even two -- drinks per day are good for you. But a new University of Pennsylvania study finds otherwise.

The study found that individuals who consume 17% less alcohol per week have on average a 10% reduced risk of coronary heart disease, lower blood pressure and a lower body mass index.

"These new results are critically important to our understanding of how alcohol affects heart disease. Contrary to what earlier reports have shown, it now appears that any exposure to alcohol has a negative impact upon heart health," says co-lead author Michael Holmes, MD, PhD, research assistant professor in the department of Transplant Surgery at the Perelman School of Medicine at the University of Pennsylvania.

"For some time, observational studies have suggested that only heavy drinking was detrimental to cardiovascular health, and that light consumption may actually be beneficial. This has led some people to drink moderately based on the belief that it would lower their risk of heart disease," Holmes said. "However, what we're seeing with this new study, which uses an investigative approach similar to a randomized clinical trial, is that reduced consumption of alcohol, even for light-to-moderate drinkers, may lead to improved cardiovascular health."

The new research reviewed evidence from more than 50 studies that linked drinking habits and cardiovascular health for over 260,000 people. Researchers found that individuals who carry a specific gene which typically leads to lower alcohol consumption over time have, on average, superior cardiovascular health records. 

Researchers examined the cardiovascular health of individuals who carry a genetic variant of the 'alcohol dehydrogenase 1B' gene, which is known to breakdown alcohol at a quicker pace. This rapid breakdown causes unpleasant symptoms including nausea and facial flushing, and has been found to lead to lower levels of alcohol consumption over time.

By using this genetic marker as an indicator of lower alcohol consumption, the research team was able to identify links between these individuals and improved cardiovascular health.

Chrysler Group is recalling 651,130 model year 2011-2014 Dodge Durango and Jeep Grand Cherokee vehicles manufactured January 5, 2010, through December 11, 2013.

The vanity lamp in the sun visor in the affected vehicles, the wiring for may short circuit after a service repair is performed. Increasing the risk of fire.

Chrysler will notify owners, and dealers will inspect and repair any damaged wiring, and install a new sun visor that properly routes the wire, free of charge. The recall is expected to begin in August 2014.

Owners may contact Chrysler customer service at 1-800-853-1403. Chrysler's number for this recall is P36.

On television and in the movies, when the undead rise up and go on a rampage, it isn't good for anyone. The same is true when a house in foreclosure becomes a zombie.

A foreclosure becomes a zombie during that in-between time; the owner has moved out but the lender has yet to repossess. So the house sits, unoccupied, with grass growing unmowed and with no sign of life.

What happens next is fairly predictable. Vandals break in and do their thing. Thieves take anything of value, including the copper pipes and fixtures. If you live next door or across the street, it's not very pleasant.

Drawn-out process

Zombie foreclosures are usually the result of lengthy foreclosure timelines and changing state foreclosure laws. Many of these properties are not only likely to be eyesores but may also drive down the values of surrounding homes and erode local government tax revenue.

Distressed homeowners, once they realize they are going to lose the property, often don't hang around. They may not realize, however, they are still responsible for and owe property taxes on the zombie foreclosure.

As a result, tax revenue goes unpaid to the local government taxing entity. RealtyTrac, a foreclosure marketing compay, estimates that more than $400 million in property tax revenue nationwide is likely delinquent because of these zombie foreclosures.

The homeowner who has just lost their home now faces a mounting tax bill. The legal website Nolo.com advises that homeowners facing foreclosure should not abandon their homes until they are forced to. Otherwise, they could be on the hook for taxes, HOA dues and even some maintenance costs.

With a slowdown in foreclosures nationwide, there has been a reduction in zombie foreclosures. But there are still more than a healthy real estate market can easily absorb.

20% are zombies

RealtyTrac recently analyzed zombie foreclosures for the second quarter of 2014 — properties that have started the foreclosure process but never been foreclosed and the homeowner has vacated the property. It found that 1 in 5 foreclosures – 20% – are zombie foreclosures.

Nationwide, the trend is on the decline. Zombie foreclosures were down 7% from the first quarter of 2014 and down 16% from the same period a year ago. However, 24 states and the District of Columbia saw an increase from the previous quarter.

Ten states and the District of Columbia saw an increase from a year ago, with New Jersey up 58% and New York up 38%. The problem is especially bad in Florida, which accounted for more than a third of all zombie foreclosures.

Daren Blomquist, vice president at RealtyTrac, says most of these states have something in common; while foreclosures nationally are on the decline, they have increased dramatically in those states.

“For example, New Jersey foreclosure activity year-to-date is up 57% from a year ago, Maryland up 23%, Delaware up 16%, Maine up 12%, Wyoming up 27%, and Iowa up 6%,” Blomquist said. “These states are bucking the national trend, where foreclosure activity is down 23% compared to a year ago. New York is about flat in terms of foreclosure activity year-to-date, but it’s coming off a long string of increases that ended in March this year. Prior to March, foreclosure activity in New York had increased on a year-over-year basis for 23 consecutive months.”

Some states have taken action to reduce the number of foreclosed left abandoned by both their former owners and lenders. Florida and Illinois have passed foreclosure “fast track” laws to move these properties through the system more quickly.

Blomquist says New York is considering legislation that goes a step further, making lenders responsible for the upkeep of vacant homes during the foreclosure process.

What to do

Absent changes in the law, neighbors can apply pressure on lenders to maintain a vacant property. Calling a Realtor to learn which bank owns the property is a first step.

Next, an organized phone call, letter-writing and email campaign by neighbors on the street may yield some results.

Neighbors, after all, have the most at stake. A foreclosure on the block will reduce the value of other nearby homes. A zombie foreclosure will reduce property values even more and make it difficult to sell a nearby home.

It's easy to spend money on Amazon.com, which may be OK if you're an adult and it's your money. But when children run up huge in-app bills on their parents' accounts, that's another story.

First of all, debts incurred by minors aren't collectible and even if they were, Amazon doesn't verify that the person making in-app purchases is, in fact, the account holder, according to a lawsuit filed by the Federal Trade Commission, which says Amazon has billed parents for millions of dollars in unauthorized in-app charges incurred by children.

What's an in-app charge? It's a charge for a virtual item -- a "coin," "star" or, perhaps, "acorn" -- that kids buy when playing one of the many games sold ini Amazon's app store for use on the Kindle Fire and other devices. 

“Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission,” said FTC Chairwoman Edith Ramirez. “Even Amazon's own employees recognized the serious problem its process created. We are seeking refunds for affected parents and a court order to ensure that Amazon gets parents' consent for in-app purchases."

The FTC earlier sued Apple, alleging similar problems. The agency is seeking full refunds for all affected consumers, disgorgement of Amazon’s ill-gotten gains, and a court order ensuring that in the future Amazon obtains permission before imposing charges for in-app purchases. 

Apple also agreed in 2013 to pay $100 million to settle a class action lawsuit to parents whose children made in-app iTunes purchases. 

Amazon attorney Andrew DeVore said it was "deeply disappointing" that the FTC was proceeding with the action and said the company's actions have been "responsible, customer-focused, and lawful, including prominent notice of in-app purchasing, effective parental controls, real-time notice of every in-app purchase, and world-class customer service."

Consumer groups were quick to jump on Amazon nevertheless. Hudson Kingston, legal director of the Center for Digital Democracy, called Amazon's policies "irresponsible and unfair."

"Today’s FTC action shows that consumers who have been charged for their kids unauthorized in-app purchases should not have to foot the bill. Amazon’s failure to deal fairly with people who purchased its devices and use its apps suggests it places making money as quickly as possible over serving the interests of their consumers," Kingston said. "As Amazon gears up to release a new phone, and expands its impact on the mobile industry and consumers, the FTC’s complaint should serve as a wake-up call for better corporate ethics.”  

'Clearly causing problems'

The complaint alleges that when Amazon introduced in-app charges to the Amazon Appstore in November 2011, there were no password requirements of any kind on in-app charges, including in kids’ games and other apps that appeal to children. According to the complaint, this left parents to foot the bill for charges they didn’t authorize.

According to the complaint, kids’ games often encourage children to acquire virtual items in ways that blur the lines between what costs virtual currency and what costs real money.

In the app “Ice Age Village,” for example, the complaint noted that children can use “coins” and “acorns” to buy items in the game without a real-money charge. However, they can also purchase additional “coins” and “acorns” using real money on a screen that is visually similar to the one that has no real-money charge. The largest quantity purchase available in the app would cost $99.99.

The complaint highlights internal communications among Amazon employees as early as December 2011 that said allowing unlimited in-app charges without any password was “…clearly causing problems for a large percentage of our customers,” adding that the situation was a “near house on fire.”

In March 2012, according to the complaint, Amazon updated its in-app charge system to require an account owner to enter a password only for individual in-app charges over $20. As the complaint notes, Amazon continued to allow children to make an unlimited number of individual purchases of less than $20 without a parent’s approval.

'House on fire'

An Amazon employee noted at the time of the change that “it’s much easier to get upset about Amazon letting your child purchase a $99 product without any password protection than a $20 product,” according to the complaint. In July 2012, as set forth in the complaint, internal emails again described consumer complaints about in-app charges as a “house on fire” situation.

According to the complaint, thousands of parents complained to Amazon about in-app charges their children incurred without their authorization, amounting to millions of dollars of charges.

For example, one mother noted in the FTC complaint told Amazon that her daughter was able to rack up $358.42 in unauthorized charges, while others complained that even children who could not read were able to “click a lot of buttons at random” and incur several unauthorized charges.

The company’s stated policy is that all in-app charges are final and nonrefundable. According to the complaint, even parents who have sought an exception to that policy have faced a refund process that is unclear and confusing, involving statements that do not explain how to seek refunds for in-app charges or suggest consumers cannot get a refund for these charges.

Rapidly evolving

Amazon's DeVore, however, said that Amazon's procedures already meet the requirements of the consent decree that Apple entered into after it was sued by the FTC.

"In-app purchasing was and remains a new and rapidly evolving segment, and we have consistently improved the customer experience in response to data," he said in a letter to the FTC's Ramirez. "Pursuing litigation against a company whose practices were lawful from the onset and that already meet or exceed the requirements of the Apple consent order makes no sense."

The Direct Marketing Association came to Amazon's defense. 

"The Federal Trade Commission should be encouraging innovation in the growing mobile industry, which benefits consumers and competition.  Instead, the Commission seems focused on using novel legal theories and scarce enforcement resources to go after America's leading tech companies in court," said Rachel Nyswander Thomas, the DMA's vice president for government affairs. "Amazon reportedly has already done the right thing by enhancing its app market and providing consumer refunds, so consumers have nothing to gain and plenty to lose from the Commission's lawsuit.  Nothing will discourage future innovation faster than punishing good deeds."

Book seller Amazon has taken another step in its ongoing contract dispute with publisher Hachette Book Group by offering to sell to sell e-books of Hachette titles and give 100% of the proceeds to the authors, with nothing going to Amazon or Hachette.

Amazon made the offer to certain Hachette authors only a week after an Amazon executive publicly stated that the dispute with Hachette was intended to benefit book-buying customers, by getting lower prices for them.

The New York Times and Wall Street Journal first reported Amazon's e-book offer this week: the Times described it by saying “The confrontation between Amazon and Hachette is growing louder and meaner, as the combatants drop all pretense that this is a reasonable dispute among reasonable people.

David Naggar, Amazon's vice-prsident of Kindle content, e-mailed the offer to a few Hachette authors. The letter, which Gigoam has printed in full, starts out by saying:

“Dear XX

I wanted to ask your opinion about an idea we’ve had that would take authors out of the middle of the Hachette-Amazon dispute (actually it would be a big windfall for authors) and would motivate both Hachette and Amazon to work faster to resolve the situation.”

The next paragraph is an Amazon-friendly summary of the dispute to date, with Amazon making repeated reasonable offers to Hachette, which stubbornly and unreasonably refuses to play along. The third paragraph assures authors that Amazon sympathizes deeply with them:

We agree that authors are caught in the middle while these negotiations drag on, and we’re particularly sensitive to the effect on debut and midlist authors. But Hachette’s unresponsiveness and unwillingness to talk until we took action put us in this position, and unless Hachette dramatically changes their negotiating tempo, this is going to take a really long time.

After spelling out the details of its e-book sales plan, the letter goes on to say:

We haven’t sent this offer to Hachette yet — we’re sending this to a few authors and agents to get feedback first.

What do you think?  Would this be helpful, especially for midlist and debut authors?

Can we talk on the phone later today or tomorrow once you’ve had a chance to digest?

Thanks and look forward to talking

Hachette, for its part, responded with a public statement saying:

“Amazon has just sent us a brief proposal.  We invite Amazon to withdraw the sanctions they have unilaterally imposed, and we will continue to negotiate in good faith and with the hope of a swift conclusion. We believe that the best outcome for the writers we publish is a contract with Amazon that brings genuine marketing benefits and whose terms allow Hachette to continue to invest in writers, marketing, and innovation.  We look forward to resolving this dispute soon and to the benefit of the writers who have trusted their books to us.”

Not much interest

Yet Amazon clearly has no interest in resolving the dispute “soon;” the company responded to Hachette's statement with a new statement of its own:

We call baloney. Hachette is part of a $10 billion global conglomerate. It wouldn’t be ‘suicide.' They can afford it. What they’re really making clear is that they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage. All the while, they are stalling and refusing to negotiate, despite the pain caused to their authors. Our offer is sincere. They should take us up on it.

Amazon's mention of “suicide” was in response to something a Hachette spokeperson said to the New York Times, that giving up all of e-book revenue from Amazon sales “would be a suicidal action” for Hachette.

ACE Cash Express has agreed to pay $5 million in penalties and $5 million in refunds to consumers, after the Consumer Financial Protection Bureau (CFPB) charged that ACE, one of the largest payday lenders in the United States, pushed payday borrowers into a cycle of debt.

The CFPB found that ACE used illegal debt collection tactics – including harassment and false threats of lawsuits or criminal prosecution – to pressure overdue borrowers into taking out additional loans they could not afford. 

“ACE used false threats, intimidation, and harassing calls to bully payday borrowers into a cycle of debt,” said CFPB Director Richard Cordray. “This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back. The CFPB was created to stand up for consumers and today we are taking action to put an end to this illegal, predatory behavior.”

Threats and harassment

The CFPB found that ACE collectors engaged in a number of aggressive and unlawful collections practices, including:

• Threatening to sue or criminally prosecute: ACE debt collectors led consumers to believe that they would be sued or subject to criminal prosecution if they did not make payments. Collectors would use legal jargon in calls to consumers, such as telling a consumer he could be subject to “immediate proceedings based on the law” even though ACE did not actually sue consumers or attempt to bring criminal charges against them for non-payment of debts.
• Threatening to charge extra fees and report consumers to credit reporting agencies: As a matter of corporate policy, ACE’s debt collectors, whether in-house or third-party, cannot charge collection fees and cannot report non-payment to credit reporting agencies. The collectors, however, told consumers all of these would occur or were possible.
• Harassing consumers with collection calls: Some ACE in-house and third-party collectors abused and harassed consumers by making an excessive number of collection calls. In some of these cases, ACE repeatedly called the consumers’ employers and relatives and shared the details of the debt.

Cycle of debt

The Bureau found that ACE used these illegal debt collection tactics to create a false sense of urgency to lure overdue borrowers into payday debt traps. ACE would encourage overdue borrowers to temporarily pay off their loans and then quickly re-borrow from ACE.

Even after consumers explained to ACE that they could not afford to repay the loan, ACE would continue to pressure them into taking on more debt. Borrowers would pay new fees each time they took out another payday loan from ACE. The Bureau found that ACE’s creation of the false sense of urgency to get delinquent borrowers to take out more payday loans is abusive.

ACE’s 2011 training manual has a graphic illustrating this cycle of debt. According to the graphic, consumers begin by applying to ACE for a loan, which ACE approves.

Next, if the consumer “exhausts the cash and does not have the ability to pay,” ACE “contacts the customer for payment or offers the option to refinance or extend the loan.” Then, when the consumer “does not make a payment and the account enters collections,” the cycle starts all over again—with the formerly overdue borrower applying for another payday loan.

Penalties

The CFPB’s order requires ACE to: 

• Pay $5 million in consumer refunds: ACE must provide $5 million in refunds to the overdue borrowers harmed by the illegal debt collection tactics during the period covered by the order. These borrowers will receive a refund of their payments to ACE, including fees and finance charges. ACE consumers will be contacted by a third-party settlement administrator about how to make a claim for a refund.
• End illegal debt collection threats and harassment: The order requires ACE to ensure that it will not engage in unfair and deceptive collections practices. Those practices include, but are not limited to, disclosing debts to unauthorized third parties; directly contacting consumers who are represented by an attorney; and falsely threatening to sue consumers, report to credit bureaus, or add collection fees.
• Stop pressuring consumers into cycles of debt: ACE’s collectors will no longer pressure delinquent borrowers to pay off a loan and then quickly take out a new loan from ACE. The Consent Order explicitly states that ACE may not use any abusive tactics.
• Pay a $5 million fine: ACE will make a $5 million penalty payment to the CFPB’s Civil Penalty Fund.

It's not exactly news that consumers are increasingly dependent upon their mobile devices. One only has to observe people in restaurants, movie theaters and walking down the street to know that.

But a survey conducted by Bank of America is a bit surprising, in that nearly half the consumers questioned confessed they probably couldn't go a day without their smartphone.

Many of the respondents said their mobile device was more important than other things they probably couldn't do without, like coffee and television.

The survey found that connectivity on the go is so critical the smartphone falls below only the Internet and personal hygiene when ranked by importance to people’s daily lives. To put it in context, 91% said their mobile phone is just as important as their car and deodorant.

When asked what they would give up to regain access to their mobile phone, nearly 4 in 5 – 79% – said they would forgo alcohol or chocolate.

Sudden dependence

How did this dependence develop so quickly? Remember, these devices for the most part didn't even exist before 2007. Perhaps for that reason, the survey found that the youngest Millennials, between the ages of 18 and 24 and who don't really recall a time before smartphones, are most dependent.

Bank of America is interested in this topic because it, like all banks, is actively encouraging customers to use mobile banking services. On that point its survey did not disappoint.

“Mobile phones have changed the way we live our daily lives, and that extends to our finances,” said Marc Warshawsky, senior vice president and mobile solutions executive at Bank of America. “Bank of America now has more than 15 million active mobile banking users who access their accounts on a mobile device over 165 million times per month. We’ve seen this number continue to grow and recently the number of monthly mobile banking logins surpassed online banking logins for the first time.”

Addiction?

Not everyone sees consumers' near-obsession with their smartphones as a positive trend. Dr. Ira Hyman, a professor of psychology at Western Washington University, writes in Psychology Today that being dependent on your device is one thing, but if you are unable to control your use of it, that dependence has crossed over to addiction.

He describes an experiment in which college students were asked to imagine receiving a text from a friend, asking for a reply “when you can.” The students could immediately text back or, if they waited for a period of time before replying, they would receive a cash reward.

“Most students wanted to text now and pass on the extra money that would come with waiting,” Hyman writes. “Texting immediately was more important than extra money.”

College professors will tell you it is impossible to get students to put away their smartphones in class. When these students get jobs and join the workforce, this addiction then becomes their employers' problem.

Why fight it?

A researcher at Kansas State University suggests businesses give in to the inevitable and encourage employees to take short breaks during the day to check Facebook or play a game. Sooyeol Kim, doctoral student in psychological sciences, found that allowing employees to take smartphone microbreaks may be a benefit — rather than a disruption — for businesses.

By studying 72 full-time workers from various industries, Kim said he discovered that employees only spend an average of 22 minutes out of an eight-hour workday playing on their smartphones. He also found that employees who take smartphone breaks throughout the day are happier at the end of the workday.

"A smartphone microbreak can be beneficial for both the employee and the organization," Kim said.  

A Wisconsin agency says it's been getting reports from consumers who've received notices from taxing agencies in other states, even though the consumers didn't earn income, own property or file tax returns in those states.

This should be a red flag, says the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP).

“Don’t assume the letter is just a clerical error. If a tax return was filed using your personal information, you may be the victim of identity theft,” said Sandy Chalmers, Division Administrator for Trade and Consumer Protection. “Take immediate steps to protect your identity.”

Identity thieves use personal information to file fraudulent tax returns in hopes of getting a refund. If you believe you may be the victim of identity theft, DATCP recommends these immediate first steps:

• Contact one of the three major credit reporting bureaus to place a fraud alert;
• Order your credit reports and review them for unexpected activities; and
• File a police report about the incident

The Wisconsin agency has an online fact sheet about identity theft.

Getting from point A to point B isn't always as straightforward as we might like, which is where companies like Expedia, Kayak and Uber come in. They use the Internet to put travelers together with airplanes, cars and the occasional train.

But what about the lowly bus? That turf has been staked out by Busbud.com, which helps travelers search, compare and book bus trips online at a global level.

“It’s easy to find and book plane tickets on sites like Expedia or Kayak. Booking bus tickets online is a whole other story,” said L.P. Maurice, CEO and co-founder of Busbud. “For example, a bus ticket from Rio de Janeiro to São Paulo during the World Cup can be as low as $29. That information used to be hard to find for international travelers. Now they can find it on Busbud.com and book their ticket directly, without taking that extra trip to the bus station.”

Busbud says its database includes the ground networks of nearly 1,500 bus companies around the world, providing coach scheduling information and booking options for over 10,460 cities in 89 countries.

Maurice, a Harvard Business School graduate, had the idea for Busbud while backpacking across South America in early 2011. Later that year, he co-founded Busbud with two long-time friends: Microsoft veteran Mike Gradek, now CTO, and Chief Analytics Officer Frederic Thouin.

The company recently raised $9 million in venture capital. 

“Companies like Uber, Lyft, Hailo and Sidecar are using technology to revolutionize transport for consumers locally. In a similar vein, Busbud is using technology to bring clarity and consistency to the global bus industry, which otherwise operates in a fragmented market,” said David Golden, Managing Partner at Revolution Ventures, one of the firms investing in Busbad.

Didn't school just let out for the summer? Thought so. And yet moms and dads are already stocking up for the school year ahead.

The National Retail Federation (NRF) reports approximately 52 million parents are heading to the stores this back-to-school season, with retailers and marketers are trying earlier than ever to earn their business.

And while parents have always been on the hook for traditional school supplies like notebooks and pens, they're now being asked to provide everything from tissues to hand wipes to plastic bags to keep classrooms running smoothly.

Growing shopping lists

The result? School supply lists that are longer than ever, according to the experts at the National School Supply Lists Directory, and a shopping season second only to Christmas in its attention from major retailers and brand marketers.

"The average 2014 required school supply list now contains 18 items," said Tim Sullivan, founder of TeacherLists.com, the national online platform that already hosts more than 400,000 of those supply lists. "That's a 29% increase from 2013 with almost the entire increase coming from more and more types of consumable supplies being added to lists. It's not so much more glue and notebooks -- it's glue and notebooks plus tissues and re-sealable bags and hand wipes."

For retailers this means even more spending while for parents it means more focus on sales and promotions on required items. "This has led to retailers starting promotions earlier than ever before," said Sullivan.

The NRF points out that 24% of K-12 parents were looking for early sales in 2013. Additionally, 45% of K-12 parents are planning to shop sales more often this year, according to a survey conducted by the NRF last month.

Marketing bonanza

Brand marketers, too, are getting into the mix as much as possible with coupon offers and incentives that try to make their brands the preferred brands of teachers and back-to-school shoppers. With $5 billion in spending on the line, it's no wonder.

"It's amazing how much the annual school supply list drives sales," noted Sullivan. Teachers and schools often request generic glue or paper, but if they request a brand name there's usually a reason for that preference and parents follow suit. Brands know this and work hard to earn a spot on those lists."

First time applications for state unemployment benefits plunged by 11,000 in the week ending July 5, taking the total number of initial claims to 304,000. That's the fewest new claims since the end of May, and well below the Briefing.com consensus forecast of 311,000.

The government also reports the 4-week moving average was 311,500, down 3,500 the previous week, and close to levels last seen in October 2007. The moving average is less volatile than the weekly number and is considered a more accurate gauge of the labor situation.

Analysts say the initial claims level is probably due to normal volatility because of the Independence Day holiday and does not signal a change in trend. Still, they add, data over the past few weeks indicate labor market conditions are improving.

The full report is available on the Labor Department website.

The skies weren't all that friendly during May.

The nation’s largest airlines posted an on-time arrival rate of 76.9% during the month -- down 3% from April and 2.5% from May 2013, according to the U.S. Department of Transportation’s (DOT) Air Travel Consumer Report .

In addition, the carriers canceled 1.9% of their scheduled domestic flights in May -- up 0.8% from the rates posted the month before and the previous year.

Finally, the airlines reported 4 tarmac delays of more than 3 hours on domestic flights and 1 tarmac delay of more than 4 hours on an international flight. DOT is investigating the delays.

Reporting requirements

All U.S. and foreign airlines operating at least one aircraft with 30 or more passenger seats must report lengthy tarmac delays at U.S. airports. The larger U.S. airlines have been required to file complete reports on their long tarmac delays for domestic flights since October 2008.

Under a rule that took effect Aug. 23, 2011, all U.S. and foreign airlines operating at least one aircraft with 30 or more passenger seats must report lengthy tarmac delays at U.S. airports.

Other areas

The consumer report also includes data on chronically delayed flights and the causes of flight delays filed with the DOT’s Bureau of Transportation Statistics by the reporting carriers. In addition, there's information on mishandled baggage reports filed by consumers with the carriers and airline service complaints.

The consumer report also includes reports of incidents involving the loss, death, or injury of pets traveling by air, as required to be filed by U.S. carriers.

The full report is available on the DOT website.