Current Events in March 2018

The Federal Reserve Open Market Committee meets this week and is widely expected to boost a key interest rate by 0.25 percent.

The Fed meeting, the first under new chairman Jerome Powell, may indicate how aggressive the Fed intends to be in raising its discount rate back to "normal" levels. Rates have not been normal since the 2008 financial crisis, when the Fed cut them to zero percent in an effort to revive the economy.

Since then, the economy has slowly recovered and unemployment remains near historic lows. A 0.25 percent increase in the discount rate this week would only raise it to 1.75 percent.

By comparison, the Fed's discount rate in May 2007, just before the housing market crash, was 6.25 percent.

Rate hike would affect consumers

Whether the Fed raises rates, and by how much, is largely a concern of stock market investors. Rising rates will make stocks appear overvalued and send their prices lower.

However, consumers also have a stake. Holden Lewis, a research analyst at NerdWallet, says a rising discount rate will make it more expensive for both businesses and consumers to borrow money.

"If you have credit cards or a HELOC (home equity line of credit), every Fed rate hike affects your bottom line," Lewis told ConsumerAffairs. "The interest rates on your credit cards and HELOC go up whenever the Fed raises short-term rates."

So if the Fed increases the discount rate by a quarter of a percentage point, that means your credit card interest rates will go up by the same amount. You should notice it in a billing cycle or two.

Three or four rate hikes this year

Last year, when the Fed raised interest rates three times by 0.25 percent, consumers with credit cards and homeowners with home equity lines of credit saw their interest rates increase by three-quarters of a percentage point.

"Expect the Fed to keep raising rates this year, with this being the first of what's expected to be a total of three or four hikes of a quarter-point each in 2018," Lewis said.

That's because all indications show the economy is fairly strong and getting stronger, which raises the possibility of inflation. The Fed policymakers use their discount rate as a way to slow the economy a bit when things start to heat up.

By any measure, interest rates are still very low. Lewis says the Fed will likely use this opportunity to push them back toward normal levels so that it can reduce them again when the economy eventually softens.

A new study suggests that Splenda and other zero-calorie sugar substitutes can worsen gut inflammation, which is a symptom of Crohn’s disease.

Researchers from Case Western Reserve School of Medicine found that mice with Crohn’s-like diseases who drank water with Splenda had greater numbers of Proteobacteria or microbes that include pathogens, such as E. coli and salmonella, in their intestines compared to mice fed plain water.

Mice without the condition were not affected by sucralose (which goes by the brand name Splenda), the six-week long study revealed.

Induces biological changes

In addition to intensifying gut inflammation, researchers found that mice models who consumed the artificial sweetener had increased activity of the enzyme myeloperoxidase. Myeloperoxidase is an enzyme in leukocytes (white blood cells) that attacks disease-causing microorganisms.

“Our findings suggest that patients with Crohn’s disease should think carefully about consuming Splenda or similar products,” Alex Rodriguez-Palacios, study author and assistant professor of medicine at Case Western Reserve University, said in a statement.

The study showed that the sweetener induces changes in gut bacteria and gut wall immune cell reactivity, which could result in inflammation or disease flare-ups in susceptible people.

"On the other hand, the study suggests that individuals free of intestinal diseases may not need to be overly concerned,” Rodriguez-Palacios said.

Next steps

Splenda, which includes sucralose and a digestible sweetener called maltodextrin, is about 600 times as sweet as sugar.

The researchers say the study on animal models is “perhaps the closest we can get to provide experimental evidence that these ingredients together induce biological changes known to cause inflammation which could be harmful over time to susceptible animal subjects.”

"Our next step would be to run experiments directly in patients, but that is more difficult to conduct given the large variability that is inherent to human genetics, microbiome and diet,” Rodriguez-Palacios said.

Crohn's disease is an inflammatory bowel disease of the digestive tract, which can cause symptoms including abdominal pain, severe diarrhea, weight loss, and fatigue. Around 1.3 percent of adults in the U.S. have inflammatory bowel diseases like Crohn’s disease, according to statistics from the U.S. Centers for Disease Control and Prevention.

The full study has been published in the journal Inflammatory Bowel Diseases.

Chrysler (FCA US LLC) is recalling 270,254 model year 2009-2012 Dodge Ram 1500 trucks currently, or ever registered, in Connecticut, Delaware, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, West Virginia, Wisconsin and the District of Columbia.

Exposure to environmental conditions such as water mixed with road salt may cause the front fuel tank strap frame "T-Slot" bracket to corrode, possibly causing the fuel tank to drop and make contact with the ground.

If the fuel tank were to drop and contact the ground, a fuel leak could result. Additionally, in the event of a crash, the fuel tank may not remain secured to the vehicle, possibly causing a fuel leak. A fuel leak in the presence in an ignition source, can increase the risk of a fire.

What to do

Chrysler will notify owners and dealers will bolt a bracket reinforcement to the frame, free of charge.

The recall is expected to begin April 27, 2018.

Owners may contact Chrysler customer service at 1-800-853-1403. Chrysler's number for this recall is U04.

Nissan North America is recalling 22 model year 2018 Nissan 370Zs.

The driver's side curtain airbag may have been installed incorrectly during production, possibly affecting its deployment, increasing the risk of injury.

What to do

Nissan will notify owners, and dealers will inspect the curtain airbag, correcting its installation as necessary, free of charge.

The manufacturer has not yet provided a notification schedule.

Owners may contact Nissan customer service at 1-800-867-7669.

The Trump administration has reportedly drawn up a plan to fight opioid addiction that includes the death penalty for drug dealers, in some cases.

In an exclusive report, Politico cites internal documents that it says have circulated among administration officials in recent weeks. It says the plan calls for new treatment and preventive measures sought by many public health officials, but it also takes a harder line on law enforcement.

The report drew a strong reaction from some Democrats. Sen. Edward Markey (D-Mass.) released a statement, saying the report -- if true -- would be a major misstep in dealing with the opioid epidemic.

“We will not incarcerate or execute our way out of the opioid epidemic,” Markey said. “We are still paying the costs for one failed War on Drugs, and now President Trump is drawing up battle plans for another.”

'Extreme proposals'

Markey warned that enacting what he called "extreme proposals" would backfire, perpetuating a stigma associated with opioid use disorders.

"Patients and families suffering in this opioid crisis don’t need toughness, they need treatment," Markey said.

The White House has not commented on the report, but Politico says the President could announce his plan early next week when he is scheduled to visit New Hampshire, a state hard hit by opioid abuse.

Other features of the reported plan

According to the Politico report, the administration plan would change how government agencies pay for opioid drugs as a way to limit access. It would also recommend to Congress changes in the Medicaid law to make it easier for people addicted to the painkillers to get treatment.

There were more than 63,000 drug overdose deaths in the U.S. in 2016, according to the Centers for Disease Control and Prevention (CDC). A large number occurred in rural New England states.

Late last month, the state of Maine reported it suffered 418 drug-induced deaths in 2017. Drug overdose deaths increased by 11 percent in 2017, driven by a sharp increase in deaths due to illegal fentanyl and fentanyl analogs. At the same time, heroin deaths decreased.

Intel is banking on a new chipset to end recently discovered security concerns over flaws in the company’s chips and processors.

It’s been a tough first quarter for the world's second largest semiconductor chip maker. In January, reports came to light about design flaws in certain Intel computer processor chips -- dubbed Spectre and Meltdown -- that put millions of computer users at heightened risk of a cyberattack.

Soon after, Intel’s attempt at a patch against those threats caused those computers to slow down and occasionally reboot. Then, in February, Intel was hit with over 30 class-action lawsuits relating to the Spectre and Meltdown chipset vulnerability.

Left with few options, the company announced yesterday that its Xeon Cascade Lake chip and 8th Generation Core processor should deliver the performance improvements people expect.

“Our goal is to offer not only the best performance, but also the best secure performance,” said Brian Krzanich, the CEO of Intel Corporation. “There is still work to do. The security landscape is constantly evolving and we know that there will always be new threats.”

What computer users can expect

Intel’s expected ship date for the new chips and processors is in the second half of this year.

Krzanich says that the newly redesigned parts will have features that protect against different variants of the Spectre and Meltdown vulnerabilities. He likens the features to 'protective walls' that can create additional obstacles for would-be hackers to overcome.

If you have a computer that employed the old chipsets, Krzanich offered that Intel has published updates for “100% of Intel products launched in the past five years that require protection.”

On Thursday, Intel published those updates in “Facts About the New Security Research Findings and Intel Products,” an outline which includes resources that computer owners can use to protect their computer system.

There’s some work involved from the user’s end, though. While Intel’s software and firmware updates are supposed to mitigate the issues, the company says that end users should check with their operating system vendors and system manufacturers and apply updates as soon as possible.

Intel wants computer users to know that, albeit hopeful, it’s not promising the moon with its new chips.

“Our work is not done. This is not a singular event; it is a long-term commitment. With these updates now available, I encourage everyone to make sure they are always keeping their systems up-to-date. It's one of the easiest ways to stay protected," Krzanich said.

A new legislation would allow consumers to finally get free credit freezes at each of the three big credit reporting bureaus following last year’s Equifax data breach  -- but not all consumer advocates support the bill, or Congress’ inaction up to this point.

On Wednesday, the Senate passed a bill that would loosen banking regulations created by Dodd-Frank. It would indirectly address Equifax’s massive data breach, which six months ago exposed the personal data of roughly 150 million people.

The new Senate bill includes free credit freezes for consumers, which means credit bureaus like Equifax, Experian, and TransUnion would miss out on the $5 to $15 consumers typically pay for credit freezes.

While consumers would benefit from free credit freezes, advocate groups say the bill would override stronger state regulations and preempt the states from enacting better protections of consumer data.

Too little too late

If passed, the new law would make placing, temporarily lifting, and permanently removing freezes free for everyone. It would require agencies like Equifax to fulfill the request within one business day if made online or over the phone (or within three business days if requested by mail).

"Free credit freezes are a good thing. The problem is it would replace stronger state laws already on the books and preempt states from taking stronger action in the future," said US PIRG consumer program director Mike Litt.

“For all of this talk about action, all of these months after the data breach Congress hasn’t done anything,” Litt said.

The Senate passed the legislation on Wednesday but it hasn’t yet been passed by the House, meaning free credit freezes aren’t guaranteed just yet.

General Motors (GM) reportedly plans to enter the car sharing market later this summer by establishing a pilot program for owners of GM vehicles to rent their cars to other consumers.

Bloomberg News cites people close to the alleged plans, reporting that the test will use GM's existing car-sharing platform, Maven. According to these sources, owners of GM cars will be able to list their vehicles on Maven and share any rental income with the automaker.

GM has declined to comment on the story, but such a move might be another step in the auto industry's transformation from a business producing cars for every consumer to one selling transportation services.

Lots of competition

Should GM enter this market, it will have plenty of company.

Turo (an Authorized Partner) is an app that works a lot like Airbnb. Individual car owners list their vehicles for rent to other consumers in need of a rental car.

Instead of going to Hertz or Enterprise, Turo (an Authorized Partner) users meet the person with the car at a prearranged location and get the keys, as explained in the TV commercial Turo (an Authorized Partner) is airing nationally.

Zipcar pioneered the car-sharing business model, launching in 2000. With Zipcar, users receive a card that unlocks the car when they pick it up. The keys are left inside.

Turo (an Authorized Partner) uses a peer-to-peer business model, and both Turo (an Authorized Partner) and Zipcar claim it's easier to rent from them than a traditional car rental business.

Who's sharing their cars?

Not every car owner is comfortable turning over their car to a perfect stranger, even if they are being paid to do it. So who are the customers and suppliers in this emerging business?

A 2013 report by Oregon Public Broadcasting found the business model had gained a foothold in Portland, with some people renting their cars for cash while others tried to make a political statement.

Jesse Engum said he makes about $1,000 a year renting his car, but he told the network he doesn't do it for the money.

“It doesn’t pay for the car,” he said. “But really, my motivation is just to support this type of movement.”

One concern about peer-to-peer car rentals, besides someone spilling a soft drink in the seat, is insurance. Your car insurance policy probably won't cover your vehicle while you're making money on it.

To answer that concern, peer-to-peer rental services have started offering their own insurance policies. Turo now offers a policy on listed cars that cover the replacement cost of the vehicle and provide $1 million in liability coverage.

Following its decision to file for IPO in a non-traditional public listing, Spotify announced that its stock will start trading directly to consumers on April 3. The company will trade under the ticker name “SPOT” on the New York Stock Exchange.

The music-streaming service announced the date at its “Investor Day,” a live-streamed, open-to-the-public event designed to introduce the company to public market investors.

CEO Daniel Ek said he chose to go public via direct listing because “going public has not been about the pomp and circumstance of it all.” Spotify will forgo the traditional roadshow meetings and media interviews typically involved in an IPO.

The company says the goal of this offering is simply to "offer liquidity for shareholders."

Ups and downs expected

The nature of direct listing is likely to result in ups and downs during its early days on the market. Spotify said in its filing that "the trading volume and price of our ordinary shares may be more volatile."

Last year, the music-streaming company had an operating loss of $461.3 million and revenue of $4.99 billion. As of December, it had 71 million paying subscribers and more than 159 million monthly active listeners -- “but we’re just getting started,” Ek said in his “Investor Day” presentation.

Transparency will be a key focus for Spotify going forward. Ek said the company plans to focus on upgrading free users to premium subscribers, reaching scale across multiple platforms, and adding personalization (both for users and for the company to collect data on users’ habits).

The Food and Drug Administration (FDA) announced Thursday that it is taking a “historic” step toward making cigarettes less addictive.

The agency is considering limiting the amount of nicotine it will allow in cigarettes to 0.3, 0.4, or 0.5 milligrams of nicotine per gram of tobacco filler. For context, most regular cigarettes contain about 10 to 14 mg of nicotine.

“Cigarettes are the only legal consumer product that, when used as intended, will kill half of all long-term users,” FDA Commissioner Scott Gottlieb said in statement, noting that 480,000 Americans die every year due to tobacco-related causes.

8 million fewer deaths

An FDA-funded analysis found that reducing nicotine levels could lower the smoking rate from 15 percent of adults to just 1.4 percent, which would result in around 8 million fewer tobacco-related deaths by the end of the century -- “an undeniable public health benefit,” Gottlieb said.

Under the Family Smoking Prevention and Tobacco Control Act, the FDA is legally prohibited from completely eliminating nicotine from cigarettes.

Mitch Zeller, director of the FDA’s Center for Tobacco Products, said cutting nicotine levels would reduce their addictive power over individuals, which would help more adults succeed in quitting smoking. It could also potentially help keep young people who may be experimenting with smoking from becoming addicted.

The nicotine notice follows Gottlieb’s announcement last summer that the FDA would pursue a comprehensive plan on tobacco and nicotine regulation in an effort to prevent millions of tobacco-related deaths.

Open for public comment

The notice will be open for public debate for 90 days. During that time, the agency is seeking input on what maximum nicotine level would best protect the public’s health and whether a new limit should be implemented gradually or all at once.

Gottlieb is also seeking opinions on whether addicted smokers would compensate by smoking more or create a black market for high-nicotine cigarettes.

“It’s critical that our policies reflect the latest science and is informed by the input we receive” from groups and individuals with a stake in the outcome, he added.

A federal appeals court has driven the final nail in the coffin of the fiduciary rule, an Obama Administration proposal designed to protect investors and retirement savers.

The Fifth Circuit Court of Appeals Thursday struck down the yet to be fully implemented policy, saying it was unlawful. The court held that the Department of Labor exceeded its authority in expanding the definition of what constituted fiduciary investment advice.

As proposed by the Obama Labor Department, the fiduciary rule had a simple premise. It stated that financial advisers must give clients investment advice that is in their best interests, without regard to the interests of the adviser.

Conflict of interest

The measure was proposed as a way to root out conflicts of interest in the financial services industry, preventing advisers from recommending investments that rewarded themselves with high commissions but might not help their clients build wealth.

The Trump Administration delayed key provisions of the rule from going into effect, but the U.S. Chamber of Commerce and other groups challenged the entire rule in court. They claimed the rule was too burdensome and would deprive the average investor of any financial advice.

That suggests that if financial advisers were required to give advice that did not reward themselves in some way, they would be forced to charge steep fees for their unbiased advice, fees the average investor could not afford.

Because of that, the Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, and Securities Industry and Financial Markets Association, say the appeals court ruling is a victory for retirement savers, preserving their access to free advice.

In a joint statement, those groups said they support the development of a "best interest standard of care," and called on the Securities and Exchange Commission (SEC) to take the lead in developing one.

Favored by consumer groups

AARP was one of the original backers of the fiduciary rule, warning that retirement savers were being shortchanged by financial advice that was not always in their best interests. Last year the Economic Policy Institute (EPI) put a price on it.

Heidi Shierholz, policy director of EPI, told the Labor Department that just delaying the key elements of the rule would end up costing retirement savers $10.9 billion over 30 years.

Shierholz said she arrived at that figure by assuming the delay of the enforcement provisions would result in about a 50 percent compliance rate. The numbers, she says, could actually range from $5.5 billion to $16.3 billion, based on actual compliance with the rule.

There are steps investors and retirement savers should take to make sure the financial advice they are receiving will benefit them as much as the adviser. Ask specific questions about fees and commissions associated with any recommended investment.

When offered a recommendation, ask the adviser to suggest a couple of alternatives that are similar. Also, make sure you are dealing with an actual adviser and not a salesperson. You can do that by asking the person you are dealing with how he or she is paid.

Mercedes-Benz USA (MBUSA) is recalling 99 model year 2018 Mercedes Benz C43 AMGs, C63S AMGs, E63 S AMG Sedans and E63S AMG Stationwagons fitted with AMG performance seats.

The backrest rail and backrest fitting may not be properly welded on the driver and front passenger seats.

The incorrect welding may result in the seats failing in the event of a crash, increasing the risk of injury.

What to do

MBUSA will notify owners, and dealers will inspect the welds of the backrest frames, replacing the backrests as necessary, free of charge.

The recall is expected to begin May 4, 2018.

Owners may contact MBUSA customer service at 1-800-367-6372.

PDX Aromatics of Portland, Ore., doing business as Kraken Kratom, Phytoextractum, and Soul Speciosa, is recalling kratom-containing powder products.

The products may be contaminated with Salmonella.

One confirmed illness has been associated with the recalled products.

Kratom, according to WebMD, is a herb that advocates say “offers relief from pain, depression, and anxiety,” and “may hold the key to treating chronic pain and may even be a tool to combat addiction to opioid medications.”

The Drug Enforcement Administration, on the other hand, has called kratom an “imminent hazard to public safety,” advocated making it a Schedule 1 drug -- the same as heroin, LSD, marijuana, and ecstasy."

The following products, packaged in plastic heat sealed pouches and sold in 28, 56 and 112 grams, are being recalled:

The products total an estimated 10,000 units and were sold directly to consumers on company websites between January 18, 2018, and February 18, 2018.

What to do

Customers who purchased the recalled products should not consume them, but return them to PDX Aromatics.

Consumers wishing to receive a refund should visit the site from which they purchased the products (http://krakenkratom.com/recall, http://phytoextractum.com/recall, or http://soulspeciosa.com/recall) and follow all instructions for returning recalled products within 14 business days.

Consumers with questions may contact PDX Aromatics at 503-850-9225, 9am – 5pm (PT), Monday-Friday or by email at media@pdxaromatics.com.

Helvetia Sports of Peterborough, Ontario, Canada, is recalling about 750 SwissStop EXOTherm disc brake pads.

The brake pads can separate from the backplate, posing a fall hazard to the user.

The firm has received two reports of the brake pads separating from the backplate. No injuries have been reported.

This recall involves SwissStop EXOTherm cycling disc brake pads sold separately as aftermarket spare parts. Only disc pads with models listed below are included in the recall:

The brake pads, manufactured in Taiwan, were sold at various cycling shops nationwide from October 2015, through June 2017, for between $40 and $50.

What to do

Consumers should return the recalled brake pads to the store where purchased for full refund.

Consumers may contact Helvetia Sports toll-free at 866-358-5218 between 8:30 a.m. and 5 p.m. (ET) Monday through Friday, by email at steve@helvetiasports.com or online at www.helvetiasports.com for more information.

Current and former Tesla employees say the automaker is manufacturing a surprisingly high ratio of parts that are flawed and need to be reworked, leading to Model 3 production delays.

An employee told CNBC that “40 percent of the parts made or received at its Fremont factory require rework. The need for reviews of parts coming off the line, and rework, has contributed to Model 3 delays.”

“Another current employee from Tesla’s Fremont factory said the company’s defect rate is so high that it’s hard to hit production targets. Inability to hit the numbers is in turn hurting employee morale,” the report said.

Last weekend, the company confirmed that it had been forced to halt production on its Model 3 cars.

Tesla denies report

Tesla denied the claim and said CNBC is conflating “remanufacturing” and “rework.”

“Remanufacturing is a process that literally every automaker on earth performs. CNBC is extracting a few lines from two job descriptions posted online and making gross assumptions about the roles that are inaccurate.”

"Our remanufacturing team does not 'rework' cars," a spokesperson said. The company also said every vehicle is subjected to rigorous quality control involving more than 500 inspections and tests.

Elon Musk previously claimed the company planned to produce 20,000 vehicles per month by the end of 2017. Current estimates place the actual figure at 5,000 units per month by the summer.