Current Events in January 2017

Florida officials have announced coordinated settlements with online lenders Western Sky Financial, LLC, CashCall, Inc., WS Funding, LLC, and Delbert Services Corporation.

Florida Attorney General Pam Bondi and Office of Financial Regulation Commissioner Drew Breakspear had charged the companies with running an online lending scheme.

Coincidentally, there is a Florida class action settlement pending in U.S District Court for the Southern District of Florida, resolving charges that the lenders offered, serviced, and collected on Western Sky loans to Florida borrowers with illegal interest rates of more than 18%.

Assuming the court takes final action, officials say some Florida consumers stand to share more than $11 million.

“Lending schemes harm consumers seeking financial assistance, and with these settlements, Florida borrowers will now be better protected from such business practices,” Bondi said. “Thanks to a great partnership with the Office of Financial Regulation, Floridians will receive millions in restitution.”

14,000 consumers to get compensation

Bondi says the settlements are expected to provide payments for approximately 14,000 Florida consumers. To be eligible for a payout under the settlement, consumers must have borrowed from the lenders and paid back the principal plus 18% interest. Bondi says eligible borrowers will be officially notified when details are worked out.

At the same time, Western Sky and its affiliates are barred from collecting more than $15 million in outstanding loans made to Florida consumers.

Back in September a federal court ruled in a case involving the federal government and 16 states, that CashCall's business model did not provide an exemption from fair lending laws. The case was joined by the Consumer Financial Protection Bureau (CFPB), which had challenged CashCall's use of the “tribal model” to make and collect on loans in states that limit interest rates.

Western Sky stopped accepting loan applications in 2013 after tangling in court with a number of states. But CashCall continued to automatically withdraw payments from customers' accounts even though the loans were voided as a result of the state probes, according to an American Banker report.

Western Sky initially claimed immunity from state interest rate caps through its affiliation with the Cheyenne River Sioux tribe.

In recent years hackers have shifted their primary aim from individual consumers to large retailers and corporate networks because it offers more bang for the buck.

It's a good thing too, because most of us individual consumers are sitting ducks.

Make no mistake, hackers still launch attacks on individuals. It's one way they harness millions of individual zombie computers to carry out their various nefarious deeds. And Keeper Security, a cyber security firm, says consumers make it easy for them by using pathetically-easy passwords.

In its blog, the company said it reviewed the passwords that leaked to the internet from data breaches in 2016, looking for the year's most common passwords. Incredibly, it found nearly 17% of consumers are still using “123456” as a password. That was number one. Believe it or not, the eighth most-common password in 2016 was “password.”

Main takeaways

Keeper Security says the main takeaways from its analysis include the fact that the list of most-used passwords hasn't changed much over the years. In other words, we haven't gotten very creative.

“While it’s important for users to be aware of risks, a sizable minority are never going to take the time or effort to protect themselves,” the company writes. “IT administrators and website operators must do the job for them.”

Long passwords are best, but four of the top 10 passwords on Keeper Security's list, and seven of the top 15, are six characters or shorter. Those passwords are no match for hackers' state-of-the-art tools that can break those flimsy passwords in seconds.

Less random than you think

Some consumers may think they're well ahead of the hackers by using passwords like “1q2w3e4r.” When you look at the sequence of numbers and letters it may appear random, but it's not. If you'll glance at a qwerty keyboard, you'll quickly see the combination is assembled by moving diagonally to the right from the number row to the top letter row. It's little more inventive than “123456.”

The company says email providers should be doing a better job of using their services for spam delivery, and the way to do that is by enforcing tougher password rules.

“We can criticize all we want about the chronic failure of users to employ strong passwords. After all, it’s in the user’s best interests to do so,” the company writes. “But the bigger responsibility lies with website owners who fail to enforce the most basic password complexity policies. It isn’t hard to do, but the list makes it clear that many still don’t bother.”

Keeper Security said it had no trouble finding passwords published on the internet. It says there were at least 10 million of them, the result of 2016's data breaches.

As the Trump Administration prepares for take-off, American businesses are cautiously optimistic that the fabled real estate developer will pursue business-friendly policies. But some business sectors are more optimistic than others.

Airlines and the travel industry in general, for example, are hoping that Trump's tirades against Mexico, Cuba, and other nations don't restrict travel to those countries.

Southwest Airlines CEO Gary Kelly expressed concern at an event in Tampa about travel to Cuba, a fast-growing market for Southwest and other carriers.

"Those flights have high demand both from the U.S. and from Cuba and obviously we're hopeful that we can continue to operate them," Kelly said, according to a report in the Tampa Bay Times.  "If the government, for other reasons decides that that's not possible obviously we'll obey the law but we're hoping that's not the case."

Southwest is one of several U.S. airlines to begin flying to Cuba under relaxed policies implemented by the Obama Administration, flying a Havana-Tampa route for the last month. Trump has indicated he may take a harsher approach to relations with the island nation, as well as other Central and South American countries that are on Southwest's radar.

Kelly noted that while Southwest remains a primarily domestic carrier, it has been adding flights to Mexico, Central America, and the Caribbean through a new five-gate international terminal it's building at Fort Lauderdale-Hollywood International Airport.

Changed course

Trump was uncharacteristically silent last week when the Obama White House reversed the decades-old "west foot/dry foot" policy that allowed any Cuban who managed to make it to U.S. shores to remain here legally, although he had said last year that the policy was "not fair."

Although the decision was sudden, there was general agreement that either Congress or Trump would have revoked the special treatment that Cuban refugees have long enjoyed.

Despite the continuing wrangling over Cuban immigration and trade policy, tourism to the long-isolated country is booming, with a record 4 million visitors last year. With new cruise and airline routes now operating, Cuban tourism officials are expecting at least 100,000 more visitors this year.

That could, of course, all change in a tweet. Trump has warned he may scrap the whole Cuba normalization process started by Obama in December 2014 unless the U.S. gets a "better deal." 

Industry experts attending the National Association of Home Builders (NAHB) International Builders' Show in Orlando, Fla., expect the 55+ housing market will continuing growing in the years ahead.

"We know, anecdotally, over the past few years that the 55+ housing market has been growing and is likely to continue to grow for the next decade, and now we have new numbers that back that up," said Paul Emrath, NAHB's vice president of survey and housing policy research. "The return of 55+ data -- now included in the American Community Survey -- will not only show us the size of the entire group of 55+ households, but also will give us information about individual markets, and how they are currently accommodating that growing segment."

In addition, Emrath says, builder confidence has increased over the past several years. "NAHB's 55+ Single-Family Housing Market Index, which is based on a survey of members that measures builder and developer confidence for that market, regularly posted year-over-year gains from 2012 through 2015, and has remained in a very positive position through 2016, with third-quarter reports of sales and current traffic posting increases from the previous year."

Aging boomers fuel the market

As the boomer generation ages, many are looking for a smaller home -- one that's the right size, with a floor plan that makes single-level living possible, but with space for visiting family members and entertaining friends.

"Older home owners, in recent years, have been able to sell their large homes in the suburbs and buy an energy-efficient right-sized home, often in walkable communities with a wealth of opportunities for activities and social engagement," said Jim Chapman, chairman of NAHB's 55+ Housing Industry Council. "Downsizing 55+ buyers do their research -- they know what they want and don't want to settle for less."

However, Chapman warns that not every 55+ household is positioned to buy into such communities, so it's important that local jurisdictions plan to address the growing need for affordable rental housing for seniors as well.

Luc Novovitch remembers being taken by surprise when he learned that a new, 148-mile natural gas pipeline was coming to the Texas county where he had served on the Commissioner’s Court, whether locals wanted it or not.

Brewster County is a rural west Texas county, the population hovering around 9,000, that is popular among tourists for its scenic views and relative short drive to the Big Bend National Park. The desolate region had no massive natural gas pipelines until last year, when Energy Transfer Partners began constructing the Trans-Pecos Pipeline. 

As locals learned in 2015, swaths of land in Brewster County fall in the path of the Trans-Pecos Pipeline project. The pipeline, according to operator Energy Transfer Partners, is expected to deliver 1.4 billion cubic feet of natural gas per day to Mexico. Originating in Texas’ northern Pecos County, the pipeline makes its way through Central West Texas before finally terminating at the United States-Mexico border.

"The Trans-Pecos pipeline will provide new market outlets for domestically produced clean-burning natural gas, thereby encouraging continued production in the U.S. energy sector," Energy Transfer Partners says on their promotional website.

A done deal

By the time Energy Transfer Partners executive Rick Smith made a presentation to the Brewster County Commissioner’s Court about the project in April 2015, Novovitch remembers it was all but a done deal. 

“I tried to bring the attention of the feds about what was going on, and it didn't really help,” Novovitch, who is no longer on the Brewster County Commissioners Court, now tells ConsumerAffairs. 

With incoming President-elect Donald Trump expected to dismantle whatever environmental protections he can come January 20, environmentalists are concerned about what health and ecological dangers the new administration may bring.

But if Donald Trump’s agenda includes fast-tracking as many oil and gas pipelines as possible, he can thank the Obama administration. Regulations that President Barack Obama used his executive authority to enact in 2012 have allowed for expedited reviews of oil and gas pipeline projects, setting what environmentalists warn is a dangerous precedent. 

Obama counters Republican attacks with faster pipeline permits 

In March 2012, as Republicans accused Obama of dragging his feet on approval of the Keystone XL Pipeline amid objections from environmentalists, the president took a trip to Cushing, Oklahoma. It was there, in the heart of oil country, that companies like Keystone XL’s Transcanada aimed to build more pipelines to transport all of the oil and gas produced by the domestic fracking boom.

“We are drilling all over the place. Right now that's not the challenge. That's not the problem. The problem in a place like Cushing is that we’re actually producing so much oil and gas, in places like North Dakota and Colorado, that we don’t have enough pipeline capacity to transport all of it where it needed to go," Obama told the crowd.

At that time, Obama issued a Presidential Memorandum, calling for, as his memo described it, “Expedited Review of Pipeline Projects from Cushing to Port Arthur and Other Domestic Pipeline Infrastructure Projects.” The executive order sounds innocent enough, calling for public government agencies to “coordinate and expedite their reviews, consultations, and other processes as necessary" so as to create "a more efficient domestic pipeline system for the transportation of crude oil."

But people and groups that have attempted to challenge pipeline projects describe the order as little more than a gift to the oil and gas industry. “It is downright foolhardy to cut corners on safety reviews for permitting the southern segment of the Keystone XL pipeline,” National Resources Defense Council’s program officer Susan Casey-Lefkowitz warned in a blog post, shortly after Obama enacted the expedited review process. 

At the same time, the United States Army Corps of Engineers began giving the green light to oil and gas pipeline projects that pass waterways under a quick process called Nationwide Permit 12.

“While the Corps’ use of NWP [Nationwide Permit] 12 is not new,” wrote a coalition of nearly two dozen environmental groups in a recent legal objection, “it is only since 2012 that the Corps began using NWP 12 to approve massive pipeline projects." 

“To the best of our knowledge, prior to 2012, the Corps had never before used NWP 12 to permit hundreds or thousands of water crossings to approve a major pipeline project," the environmental groups added.

Complicated permitting breaks massive pipeline projects into small parts

The trick behind expedited permitting reviews is that they break up what should be one single regulatory action, evaluating the environmental impacts of a massive pipeline project as a whole, into piecemeal parts, according to Coyne Gibson, a volunteer with the Big Bend Conservation Alliance. Gibson and the alliance have been trying to fight the Trans-Pecos pipeline in the courts.  

The Trans Pecos pipeline, Gibson explains, is expected to make 135 water crossings. “They claim that each of those in isolation has no significant impact," Gibson tells ConsumerAffairs. But regulators did not examine the bigger pictire, Gibson says, evaluating the impact of a natural gas pipeline making 135 waterway crossings as a whole. 

Federal energy commissioners give green light

Soon after Trans-Pecos made its presence known in Brewster County, locals like former County Commissioner Novovitch learned how limited federal involvement would be. Even though the pipeline crosses into Mexico, it flows only through one state in the United States. Federal regulators therefore classify the project as an “intrastate” pipeline.

As an intrastate project, the pipeline is subject to limited federal review, as feds claim most of that burden falls onto the state of Texas. In fact, the Federal Energy Regulatory Commission determined that only one small section of the 148-mile pipeline--just over 1,000 feet--should be subject to federal review, because that is the one section crossing the Texas border into Mexico. Otherwise, the feds and pipeline operator alike say it is merely an intrastate project. 

"From [the Texas border town of] Presidio, magically it becomes international, so they have to apply for a presidential permit, just for this section,” Novovitch tells Consumer Affairs.”This is ridiculous. It’s an artifice. I kept asking FERC to consider the cumulative impacts.”

The calls from Novovitch and other pipeline opponents to federal regulators were not heeded. “We have determined that if constructed in accordance with its application and supplements,” the Federal Energy Regulatory Commission wrote about the Trans-Pecos Pipeline January 2016, “approval of this proposal would not constitute a major federal action significantly affecting the quality of the human environment.” FERC officially granted the company its presidential permit in May 2016.

Pipes dot the hills of the Big Bend region, but much of the project is already buried. The Trans-Pecos Pipeline, according to Energy Transfer Partners, is expected to be in service by March 2017.

When federal regulators discovered last fall that Wells Fargo had been creating credit card and checking accounts for its customers without their permission, simply to boost its fees, regulators punished the bank with millions of dollars in fines.

But it turns out consumers have also been punishing the bank.

When Wells Fargo reported its earnings for the latest quarter and full year, it disclosed that new credit card accounts plunged 43% year-over-year and dropped 7% from the previous month.

As for bank accounts, new checking accounts plunged 40% from December 2015. However, they were up slightly from November.

But that bit of good news was overshadowed by the revelation that some current Wells Fargo checking account customers simply stopped using their accounts without closing them. Between November and December, active checking account customers fell by 100,000.

5,300 bank employees fired

Back in September, Wells Fargo reached a settlement with federal agencies and the City of Los Angeles over revelations it had opened millions of accounts without customers' knowledge or permission. In settling with government agencies, Wells Fargo announced that it had fired 5,300 employees and changed sales practices to end incentives to open new accounts.

Regulators charged that, not only was it fraudulent to move money and open accounts without a customer's permission, the customer also incurred fees in the process, costing him or her money.

In the earnings report Friday, Wells Fargo CEO Tim Sloan said the bank is working to regain the trust of consumers, employees and other key stakeholders.

“I am pleased with the progress we have made in customer remediation, the ongoing review of sales practices across the company and fulfilling our regulatory requirements for sales practices matters,” Sloan said. “As planned, we launched our new retail bank compensation program this month, which is based on building lifelong relationships with our customers.”

It should be noted that not everyone is punishing Wells Fargo. Even after reporting its earnings, which fell short of analysts' estimates, the company's stock rose on Wall Street. CNBC reported investors are looking past the bad news and are convinced the bank's profits will still rise in the future.

A popular perception of rural life is it is healthier. There is less crime, less stress, and generally a slower pace of life.

But when it comes to the five most preventable causes of death, a new study by the Centers for Disease Control and Prevention (CDC) finds that the risk of death in rural areas is significantly greater than in the city.

In 2014 the CDC says there were 25,000 deaths in rural areas from heart disease, 19,000 from cancer, 12,000 from unintentional injuries, 11,000 from chronic lower respiratory disease, and 4,000 from stroke.

On a percentage basis, there were fewer deaths in urban areas from these same causes.

Striking gap in health

"This new study shows there is a striking gap in health between rural and urban Americans," said CDC Director Dr. Tom Frieden. "To close this gap, we are working to better understand and address the health threats that put rural Americans at increased risk of early death."

The report's authors point to several demographic, environmental, economic, and social factors that might put the 46 million rural Americans at higher risk of death. Rural consumers tend to be older and sicker than people living in cities. They are more likely to smoke, have high blood pressure, and to be obese.

When quizzed, rural consumers report less physical activity and are less likely to use seatbelts. They are also more likely to be poor and have less access to healthcare and health insurance.

Fewer healthcare resources

In fact, the best health care facilities tend to be in high population areas. Because of a smaller patient population, rural hospitals tend to be smaller and have fewer resources than their urban counterparts. Rural counties also tend to have fewer emergency service resources, meaning someone suffering an accident or heart attack may take longer to get to a medical facility.

Working with other federal agencies, the CDC says there are steps that should be taken in rural communities to improve health services. They include screening patients for high blood pressure and providing treatment for those at risk.

The agency also urges steps to increase cancer screening, education, and detection, while also providing more smoking cessation programs and encouraging healthy lifestyles, such as daily exercise and healthy diets.

Opioid addiction and overdose has also become a growing problem in rural areas, growing faster there than in cities. The CDC urges healthcare providers to follow the agency's guideline when prescribing these drugs for chronic pain.