Current Events in April 2016

Shopping for car insurance, like many other types of shopping, has largely moved online, a new J.D. Power study finds, but it adds that while consumers shop for insurance online, many still make the actual purchase through an agent.

The study found that 74% of shoppers use insurer websites or aggregators for obtaining quotes and researching information. While nearly half of customers obtain a quote via insurer websites, only 25% actually purchase their policy online; 50% close through an agent and 22% phone a call center.

“While many customers want to shop online, they often still want to talk to someone when they buy their insurance to make sure they are getting the right coverage or have questions about their policy answered,” said Hoeg. “Insurers need to focus on the delicate balance of providing an easy shopping experience while providing product differentiation and professional service.”

Rankings

Erie Insurance and Liberty Mutual tied for first place in providing a satisfying purchase experience, each with a score of 853. This marks the fourth consecutive year Erie Insurance has ranked highest in the study.

The Hartford ranks third (850); American Family fourth (845); and Automobile Club Group fifth (840).

Now in its 10th year, the J.D. Power U.S. Insurance Shopping Study measures auto insurance shopping, purchase behavior, and purchase experience satisfaction among customers who recently purchased insurance. 

The study found that direct premiums written increased by approximately 4.7% to $199 billion in 2015, with much of that growth coming from new business generated by direct writers.

“Direct writers have invested heavily in digital channels to increase the functionality and ease of using their websites, which has clearly created an advantage for direct distribution relative to traditional agency distribution in some respects and has supported agency distribution in others,” said Greg Hoeg, vice president of U.S. insurance operations at J.D. Power.

Fewer shoppers

Hoeg said the challenge for insurance companies is that there are fewer consumers shopping around for insurance at the moment. Many companies have kept premiums flat or even lowered them, giving consumers fewer reasons to look for cheaper policies.

In addition, customers who do switch are saving an average of $356 on their annual premiums, less than the $388 in savings for those who switched in 2015.

“With more price competition and smaller savings, there simply is not as much motivation for most customers to switch,” said Hoeg. “Many policyholders see insurance as a price-differentiated commodity, and shoppers are opting to remain with their incumbent insurer as they find the savings offered by competitors is not as great as they had expected, or as much as they saved the last time they switched.”

The 2016 U.S. Insurance Shopping Study is based on responses from more than 17,000 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past 9 months and includes more than 50,000 unique customer evaluations of insurers.

Another academic study is blaming high-fructose corn syrup for some of Americans' health issues. The latest comes from UCLA, where researchers contend that fructose, which occurs both naturally in fruits and vegetables but is also an additive, damages brain cells.

Their research also links the sweetener to diabetes, heart disease, Alzheimer's, and ADH. The scientists reached their conclusions after conducting a series of experiments involving laboratory animals. They published their results in The Lancet, a medical journal.

In recent months attention has focused on Americans' consumption of sweetened foods and beverages as a contributor to rising obesity rates. In 2013, California considered mandating warning labels on products with high added sugar content.

A way to reverse the damage

This latest research came up with an antidote, of sorts. It found that when people consumed an omega-3 fatty acid called docosahexaenoic acid, or DHA, it seemed to reverse the damage triggered by fructose.

“DHA changes not just one or two genes; it seems to push the entire gene pattern back to normal, which is remarkable,” said Xia Yang, a senior author of the study and a UCLA assistant professor of integrative biology and physiology.

Brain cells produce some DHA on their own, but the amount is not large enough to help fight disease. Reinforcing natural DHA with foods high in the omega-3 provides adequate reinforcement.

Fernando Gomez-Pinilla, a UCLA professor of neurosurgery and of integrative biology and physiology, says the finding simply reinforces the reason people need to eat the right food. Your body, he says, can't produce all the nutrients it needs – the rest has to come through diet.

Where to get DHA

Sources of DHA include walnuts, fruits, vegetables, wild salmon, and other fish.

High-fructose corn syrup is made from corn starch and is used in a wide variety of processed foods and beverages. The UCLA researchers cite a U.S. Department of Agriculture study which estimates that Americans consumed about 27 pounds of the sweetener in 2014.

While fruit also contains fructose, the researchers say it is less harmful, with the fiber in the fruit slowing the body's absorption of the sweetener. Fruit also contains nutrients that are beneficial to the brain.

“Food is like a pharmaceutical compound that affects the brain,” said Gomez-Pinilla.

To ensure those effects are positive, he suggests avoiding sugary soft drinks, saving desserts for special occasions, and trying to reduce the overall amount of sugar and saturated fate in your diet.

As prime painting season (Memorial Day to Labor Day) draws near, many homeowners may be thinking of changing up the color of their walls.

Indeed, tackling those indoor painting projects during the spring and summer months can be a smart move. Homeowners can open the windows to let in the fresh air, which allows for better circulation, better air quality, and faster drying times.

But while the timing may be right, other aspects of painting may not make it as easy to determine what is “right.” For many homeowners, choosing the right paint color can be one of the hardest parts of painting.

So what should you consider before lugging home several gallons worth of a new wall color?

Lighting

Lighting interacts with color in ways that can lead to a surprising end result. To help ensure the color of your walls matches that of the paint swatch you first swooned over, consider what type of lighting is present in the room.

Is there an abundance of natural light? Or will it be primarily lit by incandescent or florescent bulbs?

The first step toward answering these questions might be to paint squares of primed drywall with the color you’re considering. Periodically moving these squares around the room can help you see what the color will look like under different lighting conditions.

It can also be beneficial to consider how light exposure affects the color in a room. If your room is north-facing, you may see a touch of blue added to your color. Eastern exposure adds a hint of green, southern exposure adds yellow-white, and western exposure will add a bit of warm orange.

Consider color flow

The paint colors in your home should work together to create a symphony. Avoid clashes in your color composition by taking into account the paint colors used in other rooms.

Using lighter or darker shades of the same color throughout your home is one simple way to create color flow, according to the experts at Benjamin Moore.

If you’d prefer to mix it up with different colors, try choosing between three and five favorite colors. Have the colors play different roles -- primary, secondary, or accent -- in different rooms. For example, you might use the wall color in the living room as an accent color in an adjacent room.

Pick a primer 

After you’ve selected a paint color that fits nicely into your home’s color palette, you’ll want to make sure the paint goes on smoothly and evenly. 

Primers help create an even base for your topcoat of paint. The kind of primer you’ll need will depend on what surface you will be painting. A quick guide to choosing an interior primer can be found here.

Jewelry, electronics, and special outings are high on the list of ways celebrate Mother’s Day this year.

The National Retail Federation’s (NRF) annual survey conducted by Prosper Insights and Analytics projects U.S. consumers will spend an average of $172.22 on mom -- almost the same as last year when they shelled out a record $172.63.

That would bring total spending to $21.4 billion, with 84.4% of consumers surveyed paying tribute to their special lady.

“It’s clear that Americans want to honor their mothers this Mother’s Day,” NRF President and CEO Matthew Shay said. “Whether it’s a special meal at her favorite restaurant, jewelry or a new smartphone, families are planning to indulge mom again this year.”

How and where they'll spend

According to the survey, consumers plan to spend $4.2 billion on jewelry (given by 35.3% of shoppers), $4.1 billion on special outings like dinner or brunch (55.2%), $2.4 billion on flowers (66.5%), $2.2 billion on gift cards (43.2%), $1.9 billion each on clothing (35.4%) and consumer electronics (13.8%), and $1.6 billion on personal services, like a day at the spa (22.5%). Greeting cards are projected to be the most-purchased gift (78.4%) but account for only $792 million of the projected spending.

Consumers were asked for the first time about “gifts of experience," like tickets to a sporting event or concert. According to the survey, 24.2% of consumers would like gifts of this nature and 22.3% plan on giving such a gift.

A plurality (33%) of shoppers will head to department stores and 28.7% to specialty stores and another 23.1% will patronize a local small business.

But not everyone will make it to a store: 27.3 % will shop online and 29.6% will research gift ideas on their phones. Of those who use their phone to research gifts, 15.5% will use them to make a purchase.

“Mother’s Day is the time when millions of Americans find special ways to express their love and gratitude for mom,” Prosper Principal Analyst Pam Goodfellow said. “While many will spend a little more than usual to pamper her, some consumers will provide unique experience gifts for the entire family to enjoy together.”

The survey of 7,000 consumers was conducted April 5-13 and has a margin of error of plus or minus 1.2 percentage points.  

The complete survey is available here.

Sporting goods retailer Dick's Sporting Goods is relaunching its Rewards of Sport Credit Cards, issued by Synchrony Bank.

The company said it would continue to offer two different cards under the program. One – the Rewards of Sport Credit Card – remains a private label card for use at all Dick's Sporting Goods, Field & Stream, and Golf Galaxy locations.

The Rewards of Sport MasterCard is a more general purpose card. It can be used at all the same locations, in addition to any other retail location that accepts Mastercard.

Dick's says its cardholders will get some new benefits under the relaunch, including 10% back in rewards on in-store purchases the first day the account is active.

Periodically, consumers using the card may have the option of financing in-store purchases.

Cardholders will also still get upgraded ScoreCard Rewards benefits on purchases. They include 6% back in rewards on routine in-store purchases and 1% back in rewards on purchases in other stores where MasterCard is accepted. That benefit will apply only to Rewards of Sport MasterCard holders.

Other store-issued cards

Store-issued credit cards have become more common in recent years, with retailers using them as a means to build brand loyalty. Some are more rewarding than others, but consumers who choose a store-issued card should make sure the store is a place they shop frequently.

In its analysis of store-issued credit cards, Consumer Reports says most store-issued credit cards carry interest rates much higher than you would pay on other cards. If you are in the habit of paying the balance in full, each month, it's not really an issue.

Often retailers will offer an attractive discount of 15% or so on whatever you happen to be buying if you apply for their card on the spot. While that might be tempting if you are making a very large purchase, consumers should guard against opening too many credit card accounts because of the potential negative impact it can have on credit scores.

At last estimate, about 43 million Americans – mostly young – owed student loans totaling more than $1.3 trillion.

Paying back that money has strapped many consumers, just at the time they are forming households and should be making key purchases, such as homes and cars.

What is important for these borrowers to understand is that they have options when it comes to paying back the money. There is no one-size-fits-all payment plan.

Payback Playbook

To help student loan borrowers understand their range of options, the Consumer Financial Protection Bureau (CFPB) has assembled a Student Loan Payback Playbook, a set of disclosures that can guide borrowers to finding a payment plan that minimizes financial stress.

CFPB Director Richard Cordray says millions of borrowers are falling behind on their student loan debts, probably unaware that federal law gives them the right to an affordable payment. Working with Illinois Attorney General Lisa Madigan and others, Cordray says the CFPB developed a way to make sure student loan servicers provide personalized information to each borrower.

“This will help these borrowers take action, stay on track, and steer clear of financial distress,” Cordray said.

The Department of Education has several repayment plans that afford student loan borrowers with tailor payments that work within their monthly budgets. For example, one plan lets borrowers specify their own payments, based on income.

High default rates

Despite the availability of these repayment options, many borrowers continue to struggle. The CFPB says 25% of student loan borrowers are either behind on their payments or are in default.

The agency believes that part of the problem is a lack of awareness among borrowers that they have options. A recent Government Accountability Office (GAO) study found that 70% of direct federal loan borrowers in default had incomes low enough to qualify for reduced monthly payments.

The Playbook evolved from work begun last year to reform student loan servicing practices. In particular, the CFPB would like to enlist servicers in the effort to help borrowers understand their options, since there is already an established relationship.

The CFPB has taken regulatory action against some companies for alleged illegal student loan servicing practices.

This isn't the CFPB's first effort to inform borrowers of their rights. Last year the agency announced its Revised Pay As You Earn (REPAYE) plan to allow five million more direct loan borrowers to cap their monthly student loan payment amount at 10% of monthly discretionary income.

The REPAYE Plan was an upgrade of the original Pay As You Earn Plan, while extending its protections to all student borrowers with direct loans.

San Francisco has always been an expensive real estate market. Lots of people want to live there.

But in the last five years, San Francisco has gotten to be unaffordable for most people. The Home Value Forecast, produced by Pro Teck Valuation Services, explored some of the reasons.

It found that, as the economy recovered from the Great Recession, San Francisco created 500,000 new jobs. These were the kinds of jobs politicians like to call “good jobs.” Mostly involving technology, they command big salaries.

At the same time, the Great Recession and resulting housing crash resulted in a plunge in home building activity in the region, where land is at a premium. So a half-million new jobs and almost no expansion in housing inventory when supply and demand is way out of balance.

That's resulted in a housing market where the average home lists for $1.2 million, and there is no shortage of buyers.

Long commute

The Forecast recounts the tale of one San Francisco worker who could barely afford a one-bedroom apartment in the metro area. Instead, he rented a two-bedroom apartment in Las Vegas, Nev., commuting to San Francisco four days a week. He estimates his savings at $1,124 per month.

Urban planners are concerned about what this is doing to the character of the city, not to mention the practical question of where the city's vital workers, who don't command high six-figure salaries, are going to live.

“Gentrification, or the influx of capital and higher-income, higher-educated residents into working-class neighborhoods, has already transformed about 10% of Bay Area neighborhoods,” writes the Urban Displacement Project, at the University of California Berkley.

Widespread displacement

Its authors found displacement was forcing residents to move out of 48% of Bay Area neighborhoods because prices had gotten too high. It said these neighborhoods were about evenly divided between low income enclaves and those populated by moderate to high-income residents.

The Home Value Forecast reports many of these displaced residents, who work in San Francisco, are moving to Antioch, Calif. For most, it means a daily one-way commute of more than one hour, landing it on the list of the 50 worst commutes in America.

Real estate marketplace Zillow recently reported that housing markets that provide the best opportunities for advancement – places like San Francisco and Seattle – are now unaffordable for low income consumers who could benefit most.

In two thirds of the metros that Zillow measured, renters had to spend more of their income on rent than the historical average. In major job markets like the Bay Area, New York, and Los Angeles, it takes 40% of the median income to pay the median rent.

It's worse in Los Angeles, where he median worker has to spend nearly half of their income on rent.

The economy was sputtering in the first three months of the year, slowing even further from the anemic performance in the final quarter of 2015.

The Bureau of Economic Analysis (BEA) reports real gross domestic product (GDP) -- the value of the goods and services produced by the nation’s economy -- increased at an annual rate of 0.5% in the first quarter of 2016. GDP grew at an annual rate of 1.4% the previous three months.

This first-quarter “advance estimate” is based on sources that are incomplete or subject to further revision.

The first quarter growth rate was the result of contributions from consumer spending, residential fixed investment, and state and local government spending. Those were partly offset by declines in nonresidential fixed investment, private inventory investment, exports, and federal government spending. Imports -- a subtraction in the calculation of GDP -- increased.

The slowdown in the rate of GDP growth came from a larger decrease in nonresidential fixed investment, a deceleration in consumer spending, a downturn in federal government spending, a rise in imports, and larger decreases in private inventory investment and in exports. Those declines were partly offset by an rise in state and local government spending and an acceleration in residential fixed investment.

GDP inflation and savings

The price index for gross domestic purchases, which measures prices paid by U.S. residents, rose 0.3% in the January-March period, down 0.1% from the fourth quarter. Excluding food and energy prices, the “core” measure of GDP inflation was up 1.4%, versus a 1.0% advance in the prior three months.

Personal saving, which is disposable personal income less personal spending -- was $712.3 billion in the first quarter, compared with $678.3 billion in the fourth. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 5.2%, a gain of 0.2% from the final three months of last year.

The full report is available on the BEA website.

Jobless claims

First-time applications for state unemployment benefits were on the rise last week.

The Department of Labor (DOL) reports initial jobless claims were up by 9,000 in the week ending April 23 to a seasonally adjusted 257,000. The previous week's level was revised up by 1,000 -- from 247,000 to 248,000.

This marks 60 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The four-week moving average, which is less volatile and considered a more accurate gauge of the labor market, fell 4,750 to 256,000 -- the lowest level since December 8, 1973.

The complete jobless claims report is found on the DOL website.

Stile Products of Lakewood, Calif., is expanding its earlier recall of Tern folding bicycles to 220. About 175 were recalled in June 2013.

The bike’s frame can crack at the hinge on the top tube, posing a fall hazard.

The company has received four reports of incidents of the frame hinge cracking, resulting in minor scrapes, bruises and one sprained shoulder.

This recall involves Eclipse S11i and Verge S11i, X10, X20 and X30h models of Tern brand folding bikes. The 24-inch wheel Eclipse model was sold in a silver/black color combination. The 20-inch wheel Verge models were sold in silver/black, orange/white, red/black and yellow/grey color combinations.

“Tern” is printed on the front end of the top tube and on portion of the frame. The model name is printed on the middle of the top tube. The frame has a 10-character alphanumeric serial number that begins with AM1A or from AM1102 through AM1208. The serial number is stamped on the bottom bracket shell of the bike.

The bicycles, manufactured in Taiwan, were sold authorized Stile/Tern dealers nationwide from January 2012, to April 2016, for between $1,800 and $3,000.

What to do

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

Consumers may contact Stile Products toll-free at (888) 570-8376 from 9 a.m. to 4 p.m. (PT) Monday through Friday or online at www.ternbicycles.com and click on Product Alerts at the bottom of the page for more information.

IKEA and the U.S. Consumer Product Safety Commission (CPSC) should immediately recall IKEA MALM dressers that have been involved in the deaths of three children, consumer groups said today. In a letter to CPSC Chairman Elliot Kaye, the groups urged the safety agency to take strong, immediate action to better protect children from the tip-over hazard.

The Philadelphia Inquirer last week reported the February death of Theodore "Ted" McGee, 22 months. He died in his Apple Valley, Minnesota, home when the MALM dresser in his room tipped over on him -- the third confirmed tip-over death from MALM dressers. His parents thought he was napping.

"They didn't hear the dresser fall," attorney Alan Feldman said, the Inquirer reported. "They didn't hear Ted scream."

In July 2015, the CPSC and IKEA launched a repair and education campaign for the dressers that included a wall-anchoring kit for the dressers, but they did not recall them. 

The repair program affected 27 million dressers, including seven million MALM models. It's not known how many consumers actually obtained the anchoring kits. 

CPSC Chairman Elliott Kaye said he agrees that more needs to be done.

"Without commenting on any specific case, companies are on notice that even if there has been a public announcement about a remedy to address a dangerous product, the company must take every possible step to prevent further harm. This is especially the case when a child dies," Kaye said in a statement. "Companies need to move fast and work with us on a comprehensive plan that offers their customers every necessary measure required for the sake of safety. I expect companies to truly put safety first, period.”

Dangers well known

It's not as though the dangers of the dresser are unknown.

In February 2014, a two-year-old boy from West Chester, Pa., died after a MALM 6-drawer chest tipped over and fatally pinned him against his bed. Then, in June 2014, a 23-month old child from Snohomish, Wash., died after he became trapped beneath a three-drawer MALM chest that tipped over. Neither chest had been secured to the wall.

At the time of the 2015 recall, IKEA and the CPSC said they had also received 14 reports of tip-over incidents involving MALM chests, resulting in four injuries. Since 1989, IKEA said it was aware of three additional reports of deaths from tip-overs involving other models of IKEA chests and dressers.

An attorney for one of the victim's families has started a website highlighting the dangers of unanchored furniture. 

Every 24 minutes

A child dies every two weeks and a child is injured every 24 minutes in the U.S. from furniture or TVs tipping over, according to CPSC data. The danger was highlighted in a recent ABC News report.

“To learn that a tipping IKEA Malm dresser killed yet another child, when the company and the CPSC chose not to do a recall after the first two deaths, is beyond heartbreaking – it is unacceptable,” the groups wrote.

Besides failing to recall the dressers, the CPSC and IKEA failed to inform consumers that the MALM dressers do not meet a voluntary safety standard agreed to by the furniture industry.

The standard -- ASTM F2057-14 -- requires that each open dresser drawer be able to withstand a 50-pound weight without the dresser tipping over.

Might have survived

"At less than 2 years old, it is unlikely the child in the most recent death weighed more than 50 pounds. Had the dresser complied with industry standards, he may have survived," the groups said.

“We urge the CPSC to take further action and deem this compliance action a recall,” the groups added. “We recommend a stop sale of the type of furniture that was involved in deaths and that does not meet the ASTM standard, as well as refunds for consumers who want them. For those who want to anchor the furniture, IKEA should develop a program to provide an incentive for consumers to anchor their furniture.”

The groups signing the letter are Kids In Danger (KID), Consumer Federation of America (CFA), Consumers Union, and the National Center for Health Research.

Apple shocked Wall Street this week by reporting its first quarterly earnings drop in 13 years. Sales and revenue were down, along with profits.

Of course, when you are talking about Apple these days, you are mostly talking about the iPhone, which has become the iconic company's principal product. In the U.S., the iPhone makes up about half the smartphone market.

But in what some see as a troubling sign, iPhone sales in the latest quarter were down 16%; the cause is mostly blamed on slowing sales in China. However, Apple's troubles may have less to do with its global marketing efforts than how U.S. consumers are reacting to changes in the smartphone market.

When smartphone makers, like Apple, were posting solid quarterly sales increases year after year, the system was a little different. If you were a customer of one of the major cellphone carriers, you didn't directly pay the full cost when you purchased a new device.

Smartphone subsidies

It was standard in the industry for the carrier to “subsidize” the cost, by selling the newest iPhone or Android device for $199 or less. They were willing to do that because it locked customers into a two-year contract. To repay the company for picking up part of the cost of the phone, consumers had to pay for cell service for two years.

After two years, consumers were on a month-to-month basis with the cellphone company, free to cancel at any time with no early termination fee. However, they were encouraged to upgrade to the very latest smartphone for a subsidized price, triggering the start of another two year contract.

In 2014 major carriers began moving to a different business model. The big profit was in selling data. They revised monthly plans and began phasing out the phone subsidies.

Paying the full price

Now, consumers pay the full price of a phone – either in a lump sum up front or on a payment plan over 18 months to two years. They can cancel their contracts at any time but would have to pay the balance owed on the phones, so the system has the same effect as the old two-year contract.

Carriers are doing quite well with this arrangement, but it remains to be seen what impact it will have on smartphone manufacturers. When consumers have to pay the full price for a new iPhone, will they be as willing to upgrade every two years? The Apple earnings report could be seen as evidence that they are not.

Smartphone developers like Apple may also be victims of their own success. Both iPhone and Android devices are highly sophisticated, with high-quality cameras and lightning-fast processors.

How much better can they get? And if they don't significantly raise the technology bar, will consumers be motivated to spend $600 to buy one, when their current phone seems to be just fine?

When a child uses an app to charge things to Amazon without permission, the liability is Amazon's, not the parents'.

That's the conclusion of a U.S. District Court judge who sided with the Federal Trade Commission (FTC) in its complaint against the online retail giant.

Amazon operates an Appstore in which customers can view and download apps to use on Android mobile devices or Kindle Fire tablets. These apps can take many forms. Some include functions that allow users to play games, watch movies, or read books. Some are free while some charge per download.

Source of confusion

The FTC got involved because it said the evidence showed consumers had difficulty understanding which apps involved charges and which were completely free. Confusion arose in particular, the FTC claimed, when consumers downloaded free apps and then made purchases while using them – charges known as “in-app purchases.”

For example, the court found a child using a “free” app might be prompted to use money – which might appear imaginary and part of the game – to buy things. In reality, the court found, they were spending real money.

The judge in the case also found that Amazon received complaints from parents about these in-app purchases, claiming they were unauthorized. The court ultimately found Amazon' disclosures about free apps potentially carrying charges were not sufficient.

Full refunds?

“We are pleased the federal judge found Amazon liable for unfairly billing consumers for unauthorized in-app purchases by children,” FTC Chairwoman Edith Ramirez, said in a statement. “We look forward to making a case for full refunds to consumers as a result of Amazon’s actions.”

What remains to be determined is exactly how much in the way of refunds Amazon will be required to provide.

Several years ago, Apple found itself in a similar situation over precisely the same practice. In 2013 it agreed to settle a class action lawsuit over unauthorized in-app purchases, paying out a total of $100 million.

The settlement required Amazon to compensate parents whose children charged $30 or less, but all the parents didn't actually receive cash. Instead of getting their money back, parents with an iTunes account received $5 in iTunes store credit. Parents who did not have an iTunes account got $5.

Provisions were made to parents whose children ran up more than $30 in charges, but the parents were required to produce documentation of the charges.

Wells Fargo has agreed to settle a West Virginia lawsuit that dates all the way back to 2005. The company will pay $8 million to settle allegations made against Acordia, an insurance broker that was acquired by Wells Fargo in 2001.

The suit was originally filed by then-West Virginia Attorney General Darrell McGraw; it charged Acordia with favoring certain insurance carriers over others to the detriment of consumers. The lawsuit stated consumers were directed towards choosing these carriers “regardless of whether the insurers provided the best cost, coverage and financial security for the client,” according to Business Insurance report.

Before the lawsuit was filed in 2005, the Attorney General’s office launched a probe to gather information and evidence of any wrong-doing.

According to the Charleston Gazette-Mail, investigators found that brokers and insurance companies had made arrangements for secret “contingent commissions,” wherein the insurance carriers would pay extra money to brokers in order to have clients directed towards their companies; these secret commissions allegedly earned brokers millions in extra fees.

$8 million settlement

Wells Fargo denies any wrong-doing in connection to this case, but has agreed to pay $8 million to the Office of the Attorney General on the state’s behalf.

Current West Virginia Attorney General Patrick Morrisey announced the settlement on Monday, citing it has a victory for citizens of West Virginia.

“I take very seriously my office’s obligation to protect citizens from questionable marketing practices,” he said. “This settlement is yet another example demonstrating that commitment.”

A copy of the settlement can be viewed here.

In many cases, young people have their first experience with credit cards when they go off to college. Some handle the experience better than others.

Lendedu, a student loan marketplace, recently quizzed college students at three different four-year institutions about their credit card knowledge. The results suggest that colleges would do well to add a few personal finance courses to the curriculum.

Off the bat, the survey found that only 38.46% of the students it polled have a credit card in their own name. That means the rest either do not have a credit card or, more likely, use a card that is in their parents' name. As a result, these students never see a credit card bill and have less accountability.

The survey found only 9.44% of students knew the interest rate on their credit card. If you paid off your account in full each month, you would have no real need to know the rate. But the survey shows that, unfortunately, this is not the case.

Two-thirds carry a balance

A full two-third of students – 67.78% – carry a balance on their credit card, exposing them to mounting debt, in addition to any student loans they might have. Perhaps because so many students carry a balance, a fairly large percentage – 58.89% – knew precisely the credit limit on their card.

Not all students have credit cards, and the survey takers wondered why not. Forty-three percent said they had considered applying for a credit card, but had not done so.

Almost the same number admitted the reason they had not applied was the fear they would run up too much debt.

CARD Act

In years past, college freshmen were bombarded with credit card offers as soon as they moved into their dorms. In 2009, Congress passed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act.

The Card Act enacted a number of reforms, including curbs on credit card marketing efforts targeting college students. Students still get credit cards but are under much less pressure to do so.

A credit card can be a useful financial tool if used properly. A rule of thumb is to never charge anything you can't pay for at the end of the month. If you pay the bill in full, you start each billing cycle with a clean slate and won't accumulate debt.

Several credit cards are specifically designed for people who are new to credit, with forgiving features to keep consumers out of trouble. We recently profiled three cards that could be good choices for students who are considering a credit card.

Pending home sales maintained their upward momentum in March, posting their second consecutive monthly advance.

The National Association of Realtors (NRA) reports its Pending Home Sales Index (PHSI), which is based on contract signings, climbed 1.4% to 110.5 -- its highest level in almost a year and 1.4% above its March 2015 level. The PHSI has now increased year-over-year for 19 straight months and is at its highest reading since May 2015.

“Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March,” said NAR Chief Economist Lawrence Yun. “This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth.”

Regional performance

• In the Northeast the PHSI rose 3.2% in March to 97.0 and is now 18.4% above a year ago.
• In the Midwest the index inched 0.2% higher to 112.8 in March and is 4.0% above March 2015.
• Pending home sales in the South rose 3.0% for an index reading of 125.4. However, it remains 0.6% lower than last March.
• The index in the West dipped 1.8% in March to 95.3, and is now 7.9% lower than a year ago.