Current Events in February 2018

A CarMax customer who argued that the nation’s largest used car dealership violated consumer protection laws in California when it sold her a defective Hyundai can proceed with her case,  a state appellate court ruled this week.

CarMax has dominated the used car industry thanks to its attractive stores, user-friendly website, anti-haggle policy, and the promise of a Certified Quality Inspection on all its inventory. But some consumer groups have charged that it’s all just cover-up for getting “lemons” off the lot at an inflated price.

The Sacramento advocacy group Consumers for Auto Reliability and Safety (CARS) last year found that nearly 25 percent of the inventory at eight CarMax locations was under recall and had not been repaired.

CarMax at the time claimed that “manufacturers do not allow CarMax to complete recall repairs” and that they were transparent with customers about cars under open recalls. But a three judge panel in the Fifth District Court of Appeal in Fresno disagreed, ruling 2-1 that a customer had a valid claim when she argued that CarMax is violating California’s Consumer Legal Remedies Act and the Unfair Competition Law.

The case was hailed by three consumer groups -- CARS, the Center for Auto Safety, and U.S. PIRG -- and filed by three attorneys on behalf of Tammy Gutierrez, a Bakersfield woman who purchased a 2008 Hyundai elantra in 2013.

CarMax open to potential liability

According to the consumer groups following the case, CarMax told Gutierrez that the Hyundai she eventually purchased had passed a rigorous 125-point inspection. But after buying the vehicle, she discovered that it was under recall due to brake lights that could intermittently stop working without warning, a defect that Hyundai warned “could increase the risk of a crash.”

Gutierrez tried to sue in 2016, without the help of an attorney, but a trial court sided with CarMax and dismissed her lawsuit.

Armed with legal help, Gutierrez appealed the decision, leading to last Thursday’s ruling. Legal experts say the case exposes CarMax to potential liability by allowing her lawsuit to go forward.

“They said she can go forward with the process. They didn’t say she will win,” a law professor explained to the Richmond Times-Dispatch.

CarMax told the paper in a statement that “CarMax has led the industry in recall transparency and shares vehicle specific recall information in-store and online. “

The auto-dealer added that “the California Court of Appeal’s opinion supports the disclosure of open recalls when a dealer is aware of them, which is CarMax’s current practice. The opinion is not a final decision in the case.”

After trying and failing twice last year to overturn the Affordable Care Act, also known as Obamacare, Republican leaders are turning once again to the courts.

GOP representatives from twenty states have joined together to sue the U.S. government, claiming the health care law is unconstitutional.

Republicans made this argument once before, stating that the individual mandate for consumers to buy health insurance is unconstitutional. But the U.S. Supreme Court upheld the law, finding that the fine consumers faced for not buying insurance was actually a tax.

Last year, the Trump Administration removed the fine for not buying health insurance, so Republicans argue that the removal of the threat of that "tax" now makes the law unconstitutional.

Removing the fine a key issue

According to Texas Attorney General Ken Paxton, the high court pinned its Obamacare ruling on the "tax." Now that the provision has been removed, Paxton says the law doesn't meet the constitutional standard.

“Obamacare’s irrational design wreaks havoc on health insurance markets,” said Wisconsin Attorney General Brad Schimel. “Obamacare causes premiums to rise and coverage to fall, forcing Wisconsin and other states to take extreme, costly measures to protect their citizens’ health and pocketbooks."

The National Federation of Independent Businesses (NFIB) brought the original court challenge to Obamacare in 2012. While the Constitution does not allow Congress to force individuals to purchase a product, the court narrowly interpreted the penalty for not purchasing health insurance as a tax, which Congress is authorized to levy.

Senate refused to repeal

The GOP-led House had no difficulty passing legislation last year that repealed Obamacare, but the measure faced obstacles in the Senate, where Republicans held only a two seat advantage. A handful of Republican lawmakers balked at repealing a law that resulted in more consumers being covered by health insurance.

The final attempt failed in late July when Sen. John McCain (R-Ariz.), who was battling cancer, dramatically returned to the capital to cast a deciding vote to allow a vote on the Senate's latest effort -- a straight repeal of the Affordable Care Act.

But on Twitter, McCain made clear he was only voting to allow debate on the GOP bill. He wasn't going to support the measure itself.

Health officials say this year’s worse-than-average flu season is finally showing signs of loosening its grip across the U.S. 

Over the last two weeks, there has been a decline in the number of people going to the doctor with flu-like symptoms, according to the U.S. Centers for Disease Control and Prevention (CDC). As of Feb. 17, the agency said that 6.4 percent of visits to doctors were for the flu -- down from 7.5 percent the week before.

However, the CDC says consumers should still take steps to protect themselves against the flu and get the flu shot. 

Not over yet

Experts expect the flu season to continue through March. 

The CDC’s national map of influenza activity showed that flu-linked hospitalization rates rose from 67.9 per 100,000 people for the week ending Feb. 10 to 74.5 per 100,000 people for the week ending Feb. 17. The number of children who have died from the flu is now at 97.

Many of this year’s flu cases can be attributed to the ineffectiveness of the vaccine currently being used; the CDC points out that it is only 25 percent effective against the H3N2 virus, this year’s most widespread form of the flu.

Against all types of influenza, its effectiveness is 36 percent; among children aged 6 months through 8 years, its effectiveness is 59 percent.

Consumers urged to vaccinate

But even though the vaccine isn’t as effective against the most common flu strain, the CDC still recommends that those who haven’t been vaccinated do so. That’s because the vaccine is more effective against other types of the flu that are also currently circulating.

Those who get the vaccine and still get the flu are less likely to experience flu complications (such as pneumonia) since the virus tends to be milder in people who were vaccinated. 

To protect against the flu, the CDC says everyone should: 

• Get a flu shot (for those aged 6 months and older)
• Avoid infected people if possible
• Wash hands frequently
• Cover mouth and nose with a tissue when you cough or sneeze

The Federal Communications Commission (FCC) has proposed new rules aimed at curbing unwanted robocalls, but a coalition of consumer groups argues the rules don't go far enough.

The FCC proposal would allow voice service providers to block some "spoofed" robocalls -- calls that appear to originate from a local number when they could be made from overseas.

But in comments filed with the agency by the National Consumer Law Center, Consumers Union, the Consumer Federation of America, Consumer Action, National Association of Consumer Advocates, and Public Citizen argue the proposed rule is already behind the curve.

“The FCC rules do something: they allow telephone companies to block spoofed calls from numbers that do not actually exist. But spoofers have simply moved to make fraudulent calls from real numbers—meaning that the rules do not cut down on the spoofed calls at all,” said National Consumer Law Center Senior Counsel Margot Saunders.

Saunders likens it to closing one door of a double door to keep the mice out, but if the second door is open, the mice will simply use it.

"Moreover, the rules are not even mandatory so telephone companies are free to ignore them,” she said.

Recommendations

The groups call for some type of meaningful authentication for all calls, along with a robust robocall-blocking tool. That, they say, would take care of most of the problem.

Scammers have made extensive use of robocalls in recent years, since the technology allows one operator to make a large number of calls at once. When a recipient answers, a recorded voice is designed to keep them on the line. Since a large percentage of scam calls end in hang ups, it allows a fraudster to focus on the few potential victims who are still listening when the message ends.

The consumer groups say the FCC rule should require telephone companies to provide free, effective caller ID authentication for every call, along with free call-blocking services. Some mobile providers already have that capability.

“Bad actors are continuing to find ways around the rules to prevent fraudulent robocalls and take advantage of consumers, but there is more that can be done to protect consumers,” said Maureen Mahoney, policy analyst at Consumers Union.

“The FCC should ensure that consumers can control the calls they receive by requiring that phone companies provide blocking technology free of charge to consumers.”

Staggering number of robocalls

In 2016, the YouMail National Robocall Index (YNRI) estimated that somewhere around 2.3 billion robocalls were made in the U.S. in the month of January alone, a staggering 51,523 calls per minute.

The Federal Trade Commission (FTC) says some types of robocalls are permitted under the law. For example, your doctor's office may use a robocall to remind you of an appointment. Political messages may be delivered with a robocall, as can messages from debt collectors.

However, using a robocall to sell any type of product or service is illegal. When you get one of these calls, you should hang up immediately, the FTC advises.

Airbnb has announced that it will expand its selection of travel accommodation options available to customers to include hotels, new housing categories, and a loyalty program.

The new plans for the 10-year-old company were announced Thursday by co-founder and CEO Brian Chesky at an official Airbnb event.

The plans include the incorporation of a tiered program, which starts with Airbnb Plus -- a category for higher-end homes that are vetted by the company to ensure they meet certain requirements.

“Every Airbnb Plus home is one-of-a-kind, thoughtfully designed, and equipped with a standard set of amenities -- whether you’re in a private room or have the entire place to yourself,” reads the website for Airbnb Plus.

All Airbnb Plus homes are visited by a human inspector “to ensure comfort, consistency, and design,” the site says. “They are checked for 100-plus things that guests told us they love, from must-have amenities to the art on the walls.”

Chesky also unveiled a new brand called Beyond by Airbnb -- a separate platform comprised exclusively of mansions and penthouses that will open this spring. This luxury tier of properties will include “custom-designed trips of a lifetime” at the “world’s finest homes, custom experiences, and world-class hospitality.”

Recognizing hotels

In a marked shift from its former stance as a rival of hotels, Airbnb announced that it’s officially recognizing hotels on its platform.

Hotels and bed and breakfasts were previously allowed to be listed on the site, but now the company will be giving these properties official classification. Airbnb hopes this will make it easier for customers to find those listings through online travel agencies like Expedia and Priceline.

Additionally, the company will roll out a rewards plan called “Superguest” that will offer benefits to frequent customers. Superguests will get benefits such as flight upgrades, discounts, and benefits. Airbnb will launch the new rewards program this summer following a pilot with 10,000 guests.

Recent surveys show U.S. consumers don't have that much confidence in self-driving cars.

Nearly 60 percent of drivers who currently own a connected car -- defined as a vehicle with certain “smart” technology features -- said they wouldn’t buy a self-driving car even if money wasn’t an issue, according to a survey conducted by Solace.

But money almost certainly will be an issue. Automotive experts who tend to be autonomous vehicle advocates are reluctant to talk about what one of these self-driving cars will cost.

A 2014 article in Fast Company put a price tag on an autonomous Toyota Prius, used to demonstrate how a self-driving car can give new mobility to a vision-impaired consumer. After adding up the cost of all that technology, the publication determined that the Prius cost more than a Ferrari 599, with a price tag of $320,000.

That's why many automotive experts believe that self-driving cars will not be individually owned, but part of the “shared” economy. Nissan has apparently adopted that point of view.

Nissan getting into ride-sharing

Nissan plans to not only make autonomous cars, but operate them in a ride-sharing business model. According to Reuters, the Japanese automaker is “preparing for a future in which self-driving cars are anticipated to curb vehicle ownership.”

The report says Nissan is developing and testing a service it calls Easy Ride, which uses ride-hailing software to control its fleet of self-driving cars by putting it in the same business as Uber and Lyft.

Nissan is the first automaker to take this step, but it is unlikely to be the last. Ford and GM are both heavily involved in autonomous vehicle research and testing, and it's not a stretch to assume they might also consider a business model in which they operate some of the cars they produce.

So where does that leave consumers who are open and trusting of the emerging autonomous vehicle technology? As with any technology, the price is likely to come down over time.

Still, there is a lot of room between $320,000 and $30,000 – the average amount consumers now spend on a new vehicle. In the future, consumers may ride in a self-driving car, but it may not be parked in their garage.

The plans for Amazon Go, Amazon’s revolutionary convenience store, just ramped up further with up to six more storefronts expected in 2018, according to a Recode report.

The company will keep its brick-and-mortar experiment close to home, adding more in Seattle where the first location opened, last month, with the next stop likely being Los Angeles.

Amazon Go is another peg in the company’s effort to flip the way people shop. With its sights set on a piece of the $550 billion U.S. convenience store niche, the move builds on Amazon’s jump into the grocery world’s fray with its purchase of Whole Foods, as well as the rollout of 13 physical bookstores.

True get-it-and-go

In what may sound like The Jetsons-meet-shoplifting, Amazon’s Just Walk Out Technology allows shoppers to scan their phone when they enter the store, grab what they want, and walk out without having to stop at a cash register to pay.

Artificial intelligence charges the customer’s credit card every time an item is picked up. If you change your mind and put it back on the shelf, the software removes it from your account.

Amazon doesn’t see this ingenuity of Amazon Go as another competitor to full-service stores like Wal-Mart but rather an automated convenience store stocked with snacks, ready-prep meals, day-to-day basics, and beer & wine.

Still, it won’t be putting its toe in this water alone. Kroger announced that it has plans for its initiative called Scan, Bag, Go at 400+ locations by the end of 2018.

While Kroger’s move seems like Amazon is entering a dogfight, the plans for Amazon Go are a little more deliberate with the goal of finding out if a cashier-less experience is even viable. The company’s announcement to expand implies initial trials are going as planned, but those have all been in Amazon’s backyard in Seattle. Greenlighting metros outside its comfort zone appears to be a move toward finding out how the rest of the world will react.

Are jobs at risk?

As of 2016, there were more than 3.5 million cashiers in the United States making an average of $20,180 per year. The Bureau of Labor Statistics had already projected that about 30,000 of those would go away by 2026, but digital shopping forays like Amazon’s and Kroger’s may grow those numbers higher if the technology behind Amazon Go catches on.

However, Amazon’s thrown a towel over that crystal ball, saying Go’s technology won’t eliminate jobs, but rather change jobs its employees do. “We’ve just put associates on different kinds of tasks where we think it adds to the customer experience,” Gianna Puerini, the executive in charge of Amazon Go, told the New York Times.

Those job tasks will likely shift toward restocking Go’s shelves and assisting customers with any technical issues or pointing them in the right direction. Although the store’s concept is “cashierless,” someone will be needed to check I.D.s before taking beer or wine home.