Current Events in October 2016

A new set of regulations passed by the Obama administration will come as welcome news to air travelers who feel they’ve been nickeled and dimed by excessive fees.

Announced on Wednesday, the new consumer protection rules will guarantee refunds on baggage fees if an airline delays returning luggage after a flight.

Additionally, airliners will be charged with more accurately reporting on-time arrival rates, the number of bungled wheelchair requests, and the rate of lost or mishandled baggage. The new regulations are meant to fulfill the administration’s promise of imposing tougher consumer protections on the airline industry.

“The travel community is grateful that the administration continue to shine a light on many of the more frustrating issues that ail the air travel experience in the U.S.” said Roger Dow, chief executive of travel industry trade group U.S. Travel Assn.

Airline industry pushes back

The changes are meant to provide travelers with a better sense of how well an airliner operates when it comes to factors like handling baggage and being on time, but the industry says that too many regulations may hurt performance.

“Efforts designed to re-regulate how airlines distribute their products and services are bad for airline customers, employees, the communities we serve and our overall U.S. economy,” stated Nicholas Calio, president and chief executive of Airlines for America.

Industry officials point out that airlines are already required by the Department of Transportation to reimburse customers if their bag is lost. Under the new regulations, they would also have to pay customers if luggage is “substantially delayed,” but what the threshold for this term is hasn’t been defined, they say.

Airlines aren’t the only ones subject to the new rules, though. The regulations also provide provisions for online travel agents, who must disclose to fliers if they have a bias based on financial arrangements for offering flights tied to a certain airline.

The new reporting provisions of the regulations are meant to take effect on January 1, 2018, with the rest of the rules slated to be enacted 30 days after changes are published in the Federal Register.

Each year more consumers do more of their shopping online. A recent study by UPS found more than half of all shopping now takes place on the web, increasingly from a mobile device. The company's “Pulse of the Online Shopper" study found 51% of purchases made by its respondents were made online.

“This year’s UPS study revealed that 45% of online shoppers love the thrill of hunting for and finding great deals, and that physical stores continue to play an important role in that experience, Teresa Finley, Chief Marketing Officer at UPS, said at the time.

You tend to notice this trend most around the holidays. Last year, industry sources reported online retailers enjoyed a 16% jump in holiday sales over the Black Friday-Cyber Monday weekend, while in-store sales dropped as much as 10%.

Saving money or saving time?

But it isn't clear whether consumers are buying online to save money or as a matter of convenience. While online retailers make it much easier to comparison shop to find the lowest price, many brick and mortar retailers are quick to match an online price. And unless consumers are taking advantage of a free shipping promotion, getting the purchase sent to them can eat into any savings.

The simple answer is that buying some things online may save you money, but others might not. If you are making the purchase through a deals site, or using a coupon, your purchase might be well below what you would pay in a brick-and-mortar store.

But when the online purchase is more about convenience, don't expect to save as much money. Online grocery shopping is well on its way to becoming 12% of all grocery purchases, according to one study.

Timothy Richards of Arizona State University, who has co-authored a study on the growth of online grocery shopping, says there is less wiggle room for food retailers, which are already dealing with very small margins.

“People are really concerned about the price of groceries,” Richards said. “But if they think buying everything online is going to mean lower food prices, they have another thing coming.”

A New Jersey attorney who taught seminars on elder law and hosted a radio show dispensing advice has been arrested on charges that he stole more than $1.2 million from elderly clients.

The victims in some cases did not have close relatives to guard their interests or suffered from dementia, according to New Jersey Attorney General Christopher S. Porrino.

Detectives of the Division of Criminal Justice arrested Robert Novy, 65, of Brick, N.J., on charges of first-degree money laundering, second-degree theft by unlawful taking, and second-degree misapplication of entrusted property.

The Attorney General’s Office obtained a court order freezing over $3.5 million in assets held in various bank accounts of Novy and his law firm and asked a judge to appoint a trustee to oversee the business operations of the law firm.

$1.2 million

From 2010 through 2015, Novy allegedly stole more than $1.2 million from four clients. He allegedly laundered most of the funds through his attorney trust accounts and/or attorney business accounts. Other transactions are still being studied, investigators said.

Novy has conducted seminars on elder law and hosted a bi-monthly radio program “Inside the Law,” which focused on topics of concern to senior citizens.

“While Novy held himself out as a leading legal advocate for the elderly, we allege that he corruptly used his reputation and his law license to prey on vulnerable seniors, taking control of their finances and stealing more than $1 million from their life savings.” said Porrino. “In his greed, Novy not only betrayed his oath as a lawyer to uphold the law, he betrayed all standards of decency.”

“When senior citizens hire a lawyer to put their financial affairs in order, they should be able to trust that they will be treated honestly and with respect. Instead, Novy is charged with deviously draining his clients’ estates,” said Director Elie Honig of the Division of Criminal Justice. “We urge anyone with information about such thefts by Novy to contact our office.”

Allegations listed

It is alleged that Novy engaged in the following thefts from clients:

• $78,000 from an 88-year-old woman who suffered from dementia, billing the woman and her estate a total of $78,000 that was not supported by any invoice or records showing justification.
• $176,000 from an 85-year-old woman who suffered from Alzheimer’s. Among other things, he allegedly withdrew funds directly from her personal account totaling nearly $60,000, converting them into cashier’s checks and depositing the checks directly into his personal account, prosecutors said.
• $459,000 from an 87-year-old woman. Among other things, he deposited proceeds totaling roughly $387,000 from two annuities into his attorney trust account, and subsequently transferred those funds into his law firm’s business accounts, Porrino said.
• $550,000 from another elderly woman. He allegedly transferred nearly $300,000 that he held for her in his attorney trust account into the firm’s business accounts without any invoices or evidence that legal services were provided.

Photos of latte art, adorable animals, and enviable vacations aren’t all users can find on the popular photo-sharing app Instagram.

Despite Instagram’s ban on hashtags like ‘thinspiration’ or ‘thigh gap’ in 2012, users have continued to post pro-anorexia images. Earlier this year, Wired reported that users simply worked around the ban, changing ‘thinspo’ to ‘thinspooooo’ and ‘thighgap’ to ‘thyghgapp.’

Now, a new feature on Instagram may help those suffering from eating disorders, depression, and other forms of mental illness. Users who come across a photo which may have been posted by someone in need of help can anonymously flag it.

Flagging a photo will prompt a message to the user that reads, “Someone saw one of your posts and thinks you might be going through a difficult time. If you need support we’d like to help.” Users who may be struggling will then receive different options to get help.  

Input from mental health experts

To create the new feature, Instagram worked with organizations like the National Eating Disorders Association and the National Suicide Prevention Lifeline.

“We listen to mental health experts when they tell us that outreach from a loved one can make a real difference for those who may be in distress. At the same time, we understand friends and family often want to offer support but don’t know how best to reach out,” Instagram’s Chief Operating Officer Marne Levine told Seventeen.

Levine explained that the primary goal in putting the new tools into action is to let those suffering from a mental illness know that they are “surrounded by a community that cares” during a time in which the person may desperately need such a reminder.

Support options

Approximately 350 million people suffer from depression, according to the World Health Organization. Recent studies have shown that there's an undeniable link between social media use and depression.

Online sharing can lead to feelings of loneliness, anxiety, and obsessive behavior. On image-driven social media platforms like Instagram and Tumblr, where manicured photos of seemingly perfect lives rack up the most ‘likes’, excessive comparison can often promote negative feelings.

But with Instagram’s new feature, users will receive support options if they search for banned hashtags or post an image which may be associated with mental illness or self-harm.

Since the housing crash eight years ago, it has been widely assumed that Millennials, who were just coming of age at that time, would be a generation of renters.

After all, lenders wanted sterling credit scores and ample down payments before agreeing to a mortgage. Many young people did well just to find a job.

But today, it's Millennials who are driving the housing market. A report by real estate marketplace Zillow shows first-time home buyers, overwhelmingly Millennials, are both buying and selling homes.

Millennial buyers want what the generations before them wanted: a home that's a good investment and a reflection of their personal tastes. But more than previous generations, Millennials' first instinct in searching for a home is to turn to the internet.

Using the internet

“These young adults came of age during a recession, but they are buying their first homes in a high-priced and fast-paced market,” said Zillow chief economist Dr. Svenja Gudell. “They're using every available resource, including online research and real estate professionals, and taking on the challenge with gusto."

But Millennials' entry into the housing market has been more difficult than previous generations. The Zillow report finds this group remained renters longer than previous generations and 52% of buyers said they considered remaining renters a while longer, in part because of the difficulty in raising a down payment, and then finding a house they liked. Fewer than half said they were able to buy the first house on which they made an offer.

When they do make an offer on a house, 83% of Millennials say they want to purchase a single-family home. Nearly half end up purchasing a home in the suburbs.

A different slant

The National Association of Realtors (NAR) has released research of its own, an annual profile of both buyers and sellers. While the Zillow report is the first to be conducted, the NAR research has been done every year since 1981.

Its big takeaway is that, despite the changes in the housing market over time, what consumers are looking for has remained essentially the same.

It differs from the Zillow conclusions in one major area; realtors say the participation of first-time buyers remains “subdued.” NAR chief economist Lawrence Yun says the evidence suggests first-time buyers are struggling against rapidly-rising prices and a dwindling supply of available homes.

“A strong majority of current renters under the age of 34 say they want to own a home in the future, but their impending rise will be a gradual one and is not likely to increase substantially in the 2016 survey,” Yun said.

The Mortgage Bankers Association is reporting a slight uptick of 0.6% in new mortgage applications in the week ending October 14. The tally includes an adjustment for the Columbus Day holiday.

The Refinance Index, on the other hand, dipped 1% from the previous week, with the refinance share of mortgage activity dropping to 61.5% of total applications from 62.4% a week earlier.

The adjustable-rate mortgage (ARM) share of activity was unchanged at 4.1% of total applications, the FHA share rose to 11.3% from 10.9% the previous week, the VA share was up to 12.8% from 12.0%, and the USDA share of total applications held steady at 0.7%.

Contract interest rates

• The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) rose five basis points to its highest level since last June -- 3.73% from 3.68% -- with points increasing to 0.36 from 0.35 (including the origination fee) for 80 % loan-to-value ratio (LTV) loans. The effective rate increased from last week.
• The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) jumped from 3.67% to 2.72%, the highest level since June, with points increasing to 0.29 from 0.24 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 30-year FRMs backed by the FHA was unchanged at 3.54%, with points increasing to 0.30 from 0.23 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 15-year FRMs came in at 3.03%, a gain of six basis points to its highest level since June, with points decreasing to 0.27 from 0.34 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 5/1 ARMs rose to 2.87%, its highest level since last May, with points increasing to 0.41 from 0.28 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

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

Chrysler (FCA US LLC) is recalling 182,308 model year 2016-2017 Jeep Wranglers manufactured June 16, 2015, to August 14, 2016.

In certain crash conditions, the front impact sensor wiring may be pulled until it detaches before a signal can be received by the Occupant Restraint Controller (ORC).

If the ORC module does not receive a signal from the front impact sensor, both front airbags and the seat belt pretensioners will not deploy in the event of a crash, increasing the risk of injury.

What to do

The remedy for this recall is still under development. The manufacturer has not yet provided a notification schedule.

Owners may contact Chrysler customer service at 1-800-853-1403. Chrysler's number for this recall is S76.

LF Products of Singapore is recalling about 114,200 Sawyer barstools sold in the U.S. and Canada.

Screws on the barstools can loosen, posing a fall hazard to the user.

The firm has received 15 reports of loosened hardware resulting in four reports of fall injuries.

This recall involves LF Products Sawyer swivel barstools sold in black, white, distressed blue, and dark brown. The recalled barstools have a tan cushion and were sold in two heights, 24 inches and 30 inches. “LF Products” is printed on a label affixed to the barstool.

The barstools, manufactured in Malaysia and Thailand, were sold exclusively at Bed Bath & Beyond stores nationwide and online at bedbathandbeyond.com from May 2012, through March 2016, for between $90 and $110.

What to do

Consumers should immediately check to ensure that the hardware on their barstools is secure. Consumers with barstools that have loosened screws should download and review the revised assembly instructions at www.bedbathandbeyond.com/sawyerstoolinstructions, and reassemble the barstools.

Consumers may contact Bed Bath & Beyond at 800-462-3966 anytime or online at www.bedbathandbeyond.com and click on “Product Recall Information” for more information.  

Halloween is now the biggest shopping holiday after Christmas, and that's contributing to a rash of pop-up stores selling costumes, treats, and tricks. But consumer protection officials note that pop-up stores can vanish like ghosts when Halloween is over, leaving customers with no way to return merchandise or redeem store credits.

“We want consumers to be aware that these 'pop-up' stores come and go in a flash, so shoppers need to be extra careful when making purchases,” said New Jersey Attorney General Christopher S. Porrino. “Know what questions to ask to avoid getting shortchanged.”

Too often, pop-up stores pack up and clear out of their rented space long before the last piece of Halloween candy has been eaten, said Steve Lee, director of the New Jersey Divison of Consumer Affairs.

“When it comes to pop-up stores, it’s more important than ever for consumers to inspect merchandise thoroughly and know their rights ahead of time,” Lee said. “When a consumer returns to a store to complain about a defective item and finds the merchant has packed up and left without a trace, there is not much hope of getting a refund.”

What to do

Lee offers these tips to avoid a frightening shopping experience:

Ask store personnel how long they plan to occupy the building. If they can’t give you a clear answer, consider that a major red flag that the store may not be on the up and up.

Ask how you would be able to contact the store once it leaves, perhaps by website or an alternate address.

Ask for specific details on returns. What types of merchandise will the store take back? Are unworn costumes returnable after October 31st? Will you get a full refund or store credit? How is store credit redeemable after the shop has closed for the season?

Fully inspect and try on costumes before leaving the store. Halloween stores are busy places and mix ups occur. Don’t assume that the merchandise inside the box matches what’s on the label.

Save all your receipts and pay by credit card so you can dispute unsatisfactory purchases through the card’s issuer.

Your home and the people who live there are worth protecting, but it’s likely that you can’t be there every moment to protect your palace.

Fortunately, there are several low-cost "starter" security systems that can help you keep an eye on your home when you're not there. You can find research on more robust systems in the ConsumerAffairs Best Wireless Security System research report. 

These motion-sensing home security systems can provide the peace of mind that your home or business is safe and protected from intruders. 

Barking dog alarm

Don’t have a dog? Or is your pooch more of a friendly couch potato than a dutiful guard dog? With the Barking Dog Alarm ($70), you don’t have to own a large German Shepherd in order for it to sound like you do.

The device’s radar technology enables it to detect motion through doors, walls, or windows. Potential intruders may be discouraged from breaking into your home upon hearing the sound of a loud, large breed dog inside. If the intruder persists, the realistic sound of the barking dog will become more frequent and threatening.

Ring Video Doorbell

Ring's Video Doorbell security system gives homeowners the ability to see and speak to whoever is at their door. Whether you’re at the office or just upstairs, you’ll be able to see whether the person on the other side of your door is a solicitor, a neighbor, or perhaps an unwanted visitor.

The system connects to your home’s Wi-Fi and sends you a smartphone notification when someone is at your door. Using Ring’s companion app, homeowners can program the system to send a notification either when the doorbell rings or when motion is detected.

The standard Ring Video Doorbell is $199. The Pro version, which comes with a few advanced features, will set you back $249.

Piper

Like Ring, Piper lets you keep tabs on your home from wherever you are. The Wi-Fi connected system will send you an alert when everyone has left your home, which may serve as your cue to arm the system.

Mom or dad can see when the kids have arrived home safely, pet owners can check on their pets throughout the day, and business owners can see when their employees come and go.

Key features of the system include an intruder-deterring siren, a camera with 180-degree views, motion and sound detection, and two-way audio. Piper classic is available for $99. The Piper nv Security Bundle, which comes with three door/window sensors, is $349.

Samsung’s Note7 debacle has truly shaken the mobile division of the company, along with its customers’ confidence. While the South Korean company will be scrambling for some time to mitigate the damage, competitors like Apple are likely to enjoy a bit of a boom.

But how much should the tech company expect to gain from the situation? According to KGI Securities analyst Ming-Chi Kuo, quite a lot. The expert says that Apple will likely gain 5-7 million customers because of Samsung’s phone disaster. Kuo says that many disenchanted Note7 owners will make the leap to the iPhone 7 Plus because of the device’s dual camera, which will be a big drawing point.

The analyst arrived at the prediction after examining sales of the Note7. Before reports surfaced about their tendency to catch on fire, Samsung’s device was a hot commodity; around 12 million of the devices were originally sold.

Half may defect

Kuo says around 50% of those customers are likely to choose an Apple device as a replacement, while the other 50% of customers will consider devices sold by Android manufacturers Huawei and Google, which recently released its new Pixel smartphone.

While Kuo’s prediction is only an educated guess, real numbers on Apple’s performance confirm that the company has been thriving as of late. The company’s stock has risen in recent weeks due to the Note7 issues, and fourth quarter projections look pretty favorable. Investors will be able to learn more when Apple releases its earnings report on October 25.

Meanwhile, Kuo predicts that the Note7 failure will only impact Samsung for a couple more months. However, if more of its devices continue to have technical problems, then its image may take a long-term hit. Customer complaints have flooded in over many the company’s other products recently, so it will likely be something the manufacturer will need to be careful of going forward.

It's not much, but monthly Social Security and Supplemental Security Income (SSI) payments will be going up next year.

The Social Security Administration reports more than 65 million recipients will see a 0.3% increase in their benefits in 2017.

The more than 60 million Social Security beneficiaries will see the cost-of-living adjustment (COLA) starting in January, while increased payments to more than 8 million SSI beneficiaries will begin later this year -- on December 30.

The Social Security Act ties the annual COLA to the increase in the Consumer Price Index (CPI) as determined by the Department of Labor (DOL).

Some give, some take

Other adjustments aren't nearly as pleasant.

Based on the increase in average wages, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will jump to $127,200 from $118,500. That means roughly 12 million workers will pay more because of the increase in the taxable maximum.

Information about Medicare changes for 2017 have yet to be announced, but some beneficiaries may see their benefit increase or be partially or completely wiped out by increases in Medicare premiums.

Consumer prices on the rise

Meanwhile, DOL reports the CPI rose 0.3% last month on a seasonally adjusted basis, due in large part to increases in the costs of gasoline and shelter.

Gasoline prices soared 5.8%, while housing costs were up 0.4% -- the largest increase since May.

Food prices, meanwhile, were unchanged for the third consecutive month, with the food at home (grocery store prices) continuing to decline.

Core inflation

The price of items less food and energy -- the “core” rate of inflation -- was up 0.1% after rising 0.3% in August. For the 12 months ending in August, core inflation is running at a rate of 2.2%.

The complete report is available on the DOL website.

An analysis by personal finance site NerdWallet found the average consumer with a checking account paid nearly $1,000 in fees over a 10-year period. Most of that could have been avoided, the company says, if customers had chosen the most consumer-friendly bank account.

Three fees tended to hit consumers the hardest – monthly maintenance fees, ATM and account use fees, and overdraft and nonsufficient funds fees.

“Checking accounts are the keystone of American personal finance,” said Sean McQuay, credit and banking expert at NerdWallet. “My checking account is the center of my financial life. That’s where all my money goes in and out, so I need to trust my bank.”

There are ways to avoid these fees. The easiest to avoid is the monthly maintenance fee, which can be $10 to $12 at the nation's largest banks. That's $120 or more a year.

There is no reason to pay this fee, which is usually placed on a bank's most basic checking account. By doing a little research, you should be able to find a checking account that not only does not charge a monthly fee, but pays you interest on the balance.

Things you might have to do

These accounts usually require things on your part – perhaps maintaining a minimum balance, a certain number of debit transactions each month, and a direct deposit. With a little planning, most checking account customers should be able to manage these requirements.

The second set of fees, ATM fees, can be avoided by only using your bank network's ATMs. But again, having the right kind of checking account can help as well.

Some rewards checking accounts, offered primarily at credit unions, online banks, and small community banks, offer a set of perks that includes reimbursement of ATM fees. ATM fees can also be avoided by always withdrawing extra cash when making a debit card purchase at the supermarket or some other retail location that allows cash back.

Do not opt in

Overdraft fees can be avoided a couple of ways. First, do not “opt in” for overdraft “protection” from your bank. You bank wants to provide this “service” to you, covering any purchase you make with insufficient funds. However, it will charge you an average of $34 for this service, in the form of an overdraft fee.

That will protect you against overdrafts on debit purchases, but a bounced check will still carry a fee. To avoid bouncing a check, consider keeping your savings in your rewards checking account to pad your balance. Most rewards checking accounts pay a higher interest rate than a passbook savings account. If you do this, however, you'll need to keep careful track of your spending to make sure you don't eat into your savings.

The NerdWallet analysis shows using the most consumer-friendly checking accounts cost consumers just $31 a year, and that's if they have a couple of overdrafts per year, which can be avoided. If all consumers switched to the best free checking accounts available, they could save a total of more than $7 billion a year.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), a gauge of builder confidence in the market for newly constructed single-family homes, dipped in October.

Still, even with a decline of two points to a level of 63, builder confidence stands at its second-highest level of the year.

NAHB Chairman Ed Brady calls that, “a sign that the housing recovery continues to make solid progress,” but notes that builders in many markets “continue to express concerns about shortages of lots and labor.”

The builders' view

The HMI, which is based on a monthly survey, gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor."

The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Two of the three HMI components posted losses in October. The one gauging current sales conditions dropped two points to 69 and the index charting buyer traffic fell one point to 46. On the other hand, the index measuring sales expectations in the next six months rose one point to 72.

The three-month moving averages for regional HMI scores show the West increased two points to 75 while the Northeast, Midwest, and South each posted one-point gains to 43, 56, and 65, respectively.

“The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB Chief Economist Robert Dietz. “Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family market in the months ahead.”