Current Events in February 2019

Instacart has changed its tipping policy after workers argued that it ultimately lowered their take-home pay.

“We heard loud and clear the frustration when your compensation didn’t match the effort you put forth,” Apoorva Mehta, Instacart’s chief executive, wrote in an open letter to Instacart’s contract workers, known as shoppers.

Instacart, an app that lets customers order groceries and other household items and have them delivered, unveiled the update to its compensation policy back in November. Under the policy, Instacart would sometimes reduce its contribution to a worker’s pay if the person received a certain amount in tips.

In one case, an independent contractor was paid 80 cents by Instacart for a delivery job.

"While our intention was to increase the guaranteed payment for small orders, we understand that the inclusion of tips as a part of this guarantee was misguided. We apologize for taking this approach," CEO Apoorva Mehta said in a blog post on Wednesday.

Reversing the policy

After acknowledging the misstep, the platform announced that it will be doing away with the controversial tipping policy.

Instacart says it will now always separate tips from compensation from the company. Additionally, the startup raised the guaranteed pay for some jobs (at least $5 for orders that require only delivering an item, and $7 to $10 for orders that involve picking items off supermarket shelves).

The San Francisco-based startup also promised to also offer back pay to workers who were adversely affected by the previous tipping policy.

"Instacart shouldn't be paying a shopper $0.80 for [an order]," Mehta wrote. "It doesn't matter that this only happens 1 out of 100,000 times -- it happened to one shopper and that's one time too many."

Mehta said the revised tipping policy will increase Instacart’s overall contribution to worker earnings. “We believe that the change in tip structure will separate Instacart from an industry standard that’s no longer working for our shoppers and our customers,” he said.

A Southern California city with one of the country’s largest populations of homeless people will stop ticketing people for sleeping in their cars.

The San Diego City Council this week unanimously decided to repeal the 35-year-old ban after local advocates described it as part of vicious cycle that targets the city’s poorest residents.  

Disability Rights California and The National Law Center on Homelessness & Poverty previously filed a lawsuit to challenge the law. Last August, a federal judge ordered the city to stop ticketing residents who sleep in their cars, arguing that the law was overly broad.

San Diego County last year was estimated to have 7,064 homeless people, the fourth-highest population in the nation. The county also has the nation’s second-largest population of homeless veterans and ranks among the most expensive cities in the nation for housing.

Lack of affordable housing a major problem

San Diego more recently implemented a city-wide ban on parking oversized or recreational vehicles on public streets overnight. Advocates are still fighting to get that measure overturned.

"We're punishing human beings because they have disabilities [and] because they are poor," an attorney with Disability Rights California testified.  "And more and more, we're punishing people who are working full time in this city but can't afford our skyrocketing rents."

The debate in San Diego is emblematic of an affordable housing crisis affecting workers across the nation.

A report last year in Governing magazine found that the amount of Americans sleeping in their vehicles has “exploded” in recent years. The report said that people are turning to their vehicles because they can no longer find affordable housing in Seattle, Portland, Los Angeles, San Francisco, and other cities where real estate is booming. Yet living and sleeping in vehicles remains illegal in most major cities.

Valentine’s Day is next week, and you may be planning an extravagant and expensive surprise for your sweetheart. But wait, you could be stepping on a relationship landmine.

Days ago, we reported there is a significant disconnect between what couples spend on Valentine’s Day and what their partner expects. Now there’s research that suggests going overboard is not just bad financially, it could be a relationship killer.

Personal finance site WalletHub conducted a survey of couples and their Valentine’s Day spending and came up with this shocker: nearly half -- 46 percent -- said they would break off the relationship if their significant other spent irresponsibly.

That’s in line with previous research that shows couples are placing renewed emphasis on financial stability, seeking a partner who knows the value of a dollar and spends it wisely.

“Research shows that some behaviors tend to align with and reinforce our gender-identity – and that includes Valentine’s Day gift-giving behavior,” said Constance Porter, a professor of marketing in the Jones Graduate School of Business at Rice University. “It is well-known that men have assumed the societal role of taking on more of the gift-giving burden on Valentine’s Day. They spend more, and are more willing to go into debt to do it. Doing so could help some men reinforce their sense of male-identity and help them express this identity with others.”

It could backfire

But that could backfire, warns Abigail Schneider, an assistant professor of marketing at Regis University. She says women tend to place greater emphasis on a man’s ability to provide, and financial prudence plays a big role in that.

Since married couples are responsible for one another’s debts, financial compatibility has become more important in relationships. The results of a 2017 study by Bankrate showed that 42 percent of people would use knowledge of a potential partner’s credit score to decide if they would pursue a relationship.

"It's probably not a great idea to ask for someone's financial history on the first date," Mike Cetera, credit card analyst at Bankrate.com, said when the study was released. "However, it's better to know if a potential partner has a history of bad financial decisions before the relationship goes too far, especially if you plan on making large purchases together or sharing bank accounts."

Because of a growing desire for financially-responsible people to get together, there is now a dating site that matches couples based on their credit score. CreditScoreDating.com is like just about every other dating site except that members’ profiles include their credit score.

Some people on both sides of the issue – financial advisors and relationship experts – believe money management is an important relationship topic that is easily overlooked in the first blush of romance. According to Marriage.com’s Top 10 Reasons for Divorce, money is second -- right behind infidelity.

Consolidation in the banking industry continues as BB&T and SunTrust have announced plans to merge, creating what would be the nation’s sixth largest bank. The all-stock merger is valued at $66 billion.

The two banks have $442 billion in assets, $301 billion in loans, and $324 billion in deposits. Their 10 million customers in the United States will have to adjust to a new name since both “BB&T” and “SunTrust” are being retired in favor of a new brand that will be announced prior to closing.

That reflects the idea that neither bank is acquiring the other and both are bringing roughly the same thing to this union.

"This is a true merger of equals, combining the best of both companies to create the premier financial institution of the future," said BB&T Chairman and Chief Executive Officer Kelly King. "It's an extraordinarily attractive financial proposition that provides the scale needed to compete and win in the rapidly evolving world of financial services.”

Terms of the deal

Since the two banks have different values, investors who own shares of SunTrust will get 1.295 shares of BB&T for each share they own. People who own stock in BB&T will own 57 percent of the new bank.

William Rogers, SunTrust’s CEO, said the two banks are a good match culturally, adding that the merger will increase  both banks’ capacity to support transformational technologies for clients.

“With our geographic position, enhanced scale and leading financial profile, these two companies will achieve substantially more for clients, teammates, associates, communities, and shareholders than we could alone,” Rogers said.

King will serve as chairman and CEO of the new bank. Rogers will be president and chief operating officer. The deal is expected to close in the fourth quarter of this year.

Airlines can boost profits if they can sell more of their “premium service” tickets, but to do that they need more premium seats. In most airliners, there are a dozen or so first-class seats, maybe as many in business class, and the rest in coach.

United Airlines has just announced it is reconfiguring at least 100 of its planes to add more space for its upgraded travelers. Those flying economy, however, will likely be giving up some space.

"In an era where many airlines are adding seats to their aircraft to crowd more passengers onto the plane, we're re-configuring more than 100 of our aircraft and doing exactly the opposite – for the benefit of our customers," said Andrew Nocella, United's executive vice president and chief commercial officer.

The extra space will come at an added ticket cost. But the airlines have figured out that most of their profit comes from passengers who want comfort and amenities and are willing to pay for them. In this move, United is adding premium seats on its most traveled and lucrative routes.

Zac Honig, who writes The Points Guy Blog, reports that the retrofitted planes include some of United’s Boeing 767-300 ERs that will have “an exceptionally high number of lie-flat” seats to accommodate passengers on longer flights.

Adding a smaller aircraft

United also announced that it will deploy a fleet of 50-passenger jets on some highly traveled regional routes, and these aircraft will have mostly premium seating. The introduction of the Bombardier CRJ 550 aircraft is subject to government certification, which is expected to be complete by the end of the year.

These mostly first-class aircraft will feature LED lighting, a self-serve beverage and snack station for customers seated in the premium cabin, Wi-Fi, and extra overall legroom. United says the aircraft will also provide four storage closets for storage of carry-on bags.

The CRJ 550 will be configured in two cabins and feature 10 United First seats; 20 Economy Plus seats and 20 Economy seats.

For more than two decades airlines have struggled to raise fares, not daring to raise them too much out of fear of losing the traveler to a competitor. United’s strategy appears to be one aimed at keeping economy fares stable while increasing revenue from travelers willing to pay more in return for a more pleasant experience.

"From adding more premium seats on aircraft that serve some of our most traveled routes, introducing a revolutionary, best-in-class 50-seat experience or simply offering free DIRECTV on more than 200 aircraft, we are committed to making United the airline that our customers choose to fly," Nocella said.

The Democratic-controlled House has wasted no time in pressing the Trump administration on a variety of fronts.

Rep. Frank Pallone, Jr. (D-N.J.), chairman of the Energy and Commerce Subcommittee, has sent a letter to Federal Communications Commission (FCC) Chairman Ajit Pai, pushing the agency to be more responsive to consumer issues.

Pallone, along with Rep. Mike Doyle (D-Pa.), chairman of the Communications and Technology Subcommittee, is requesting information and documents related to the FCC’s current workload. They’ve also asked for information about the operation of FCC bureaus and offices, and the FCC’s interactions with the public through its handling of consumer complaints and Freedom of Information Act requests.

The two lawmakers have voiced frequent Democratic complaints, that the FCC has been unresponsive to requests for information about how the agency is protecting consumers’ rights. Democrats are still smarting over the FCC’s reversal of net neutrality. They also expressed irritation at perceived snubs while Democrats were in the minority in the House.

“Not only have you have failed on numerous occasions to provide Democratic members of this committee with responses to their inquiries, you have also repeatedly denied or delayed responding to legitimate information requests from the public about agency operations,” the chairmen wrote in their letter to Pai.  “These actions have denied the public of a full and fair understanding of how the FCC under your leadership has arrived at public policy decisions that impact Americans every day in communities across the country.”

Complaint response

The lawmakers claim that the FCC under the Trump administration has failed to act in the public interest on a variety of issues. In their letter, the two members of Congress asked for information about how the FCC has responded to consumer complaints, including robocalls, privacy, internet service speed, and wireless service coverage. They note that similar requests were made to Pai’s predecessor during the Obama administration.

But the two Democrats were highly critical of the GOP FCC chairman, charging that he had “repeatedly” failed to act in the public interest while placing the interests of corporations over consumers.

“The FCC should be working to advance the goals of public safety, consumer protection, affordable access and connectivity across the United States,” the chairmen wrote. “To that end, it is incumbent upon the committee’s leadership and its members to oversee the activities of the FCC.”

A spokesman for the FCC said the agency under the Trump administration has been “the most transparent in history.”

Is Amazon too big to trust? Is Google? Facebook?

The answers would be no, no, and yes according to a new survey on “institutional confidence.” Those results came out of the American Institutional Confidence Poll, a survey that canvassed Americans’ satisfaction levels on 20 different topics ranging from banking to healthcare.

Overall, it’s the military that inspires the greatest confidence (52 percent), but digital cornerstones Amazon (36 percent) and Google (27 percent) were right behind. Facebook, Congress, and political parties? You guessed it -- dragging up the rear with the lowest confidence levels, all below 10 percent.

If Amazon told you to...

The study caught the attention of Carolyn Adolph and Joshua Nicholls, hosts of “Prime(d),” an all-things-Amazon podcast from Seattle public radio KUOW, stationed right in Amazon’s backyard.

“You know the saying: If Amazon told you to jump off a bridge, would you do it?,” posed Adolph and Nicholls. “We would never trust Amazon to have that kind of control of our lives, right? Except, we do trust the retail giant from Seattle -- a lot. That's in part because the company is so focused on the customer experience.”

“Amazon has built enormous trust in its users one smiley box at a time, and it’s done so during a very distrusting period,” said Adolph. “And, yet, of all the rich and powerful tech companies out there, none has attracted more interest from antitrust scholars ... quite as much as Amazon.”

“They say Amazon is too big to trust. That it’s amassing way too much market power, and starting to blur lines that shouldn’t blur” -- no doubt a reference to Amazon’s interest in adding groceries, drug prescription fulfillment, and video streaming to the markets it wants to corner.

Yet, there seems to be no stopping the online giant, even though Amazon's muscle places it in a rather precarious position, one that “puts it at risk of being broken apart by regulators” speculates Prime(d)’s hosts.

As proof of Amazon’s tightrope walking, Adolph and Nicholls pointed to the Edelman Trust Barometer, an annual gauge of how much trust Americans put in each of the four major societal institutions -- government, business, media, and NGOs (non-governmental organizations).

That barometer took a big swing in the last year -- a big swing in the wrong direction, from bad to worse.

“I can totally believe that. There are so many institutions that tell you they are going to do something, and then they don’t do it,” Nicholls said. “Or the opposite,” Adolph added. “Facebook tells you they care about you and your privacy and, then, it gives your data to Cambridge Analytica. … We’re supposed to be able to count on government to protect us, but that’s getting harder.”

“I expect us to be scrutinized”

Amazon founder Jeff Bezos doesn’t shy away from the question of his megalopolis being put under the government’s microscope.

“Whether it's the current U.S. administration or any other government agency around the world -- Amazon is now a large corporation and I expect us to be scrutinized... It just makes sense,” Bezos told the San Francisco Chronicle.

“And by the way, it's not personal. I think you can go astray on this if you're the founder of a company -- one of these big tech companies, or any other big institution. If you go astray on this, you might start to take it personally. Like ‘Why are you someone inspecting me?’ And I wish that people would just say, ‘Yes, it's fine.’”

Not too big to fail

At a company-wide meeting in 2018, an Amazon employee put Bezos on the spot about Amazon's future, asking Bezos what lessons he’d learned from the recent bankruptcies of once almighty companies like Sears.

"Amazon is not too big to fail," Bezos replied, in a recording of the meeting obtained by CNBC. "In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years."

"If we start to focus on ourselves, instead of focusing on our customers, that will be the beginning of the end," Bezos contemplated. "We have to try and delay that day for as long as possible."

Ford is recalling about 3,500 model year 2019 Ford Rangers built at Michigan Assembly Plant from June 4, 2018, to January 9, 2019, and sold in the U.S. and Canada.

The PRNDL bezel wiring may interfere with the shifter interlock override, preventing the shifter from locking in the park position and allowing the driver to shift the transmission out of park with the vehicle off and without a foot on the brake pedal.

No accidents or injuries have been reported.

What to do

Dealers will verify shifter interlock functionality by attempting to move the transmission shifter out of park with the vehicle off and without a foot on the brake pedal. If the shifter moves out of park, dealers will look for wiring interference, relocate the wiring and retest.

Owners may contact Ford at (313) 594-3744 or by email at mbrentle@ford.com. Ford's reference number for this recall is 19C02.

Fisher-Price of East Aurora, N.Y., is recalling about 44,000 Power Wheels Barbie Dream Campers.

The ride-on Power Wheels can continue to run after the foot pedal is released, posing an injury hazard.

The firm has received 17 reports of the power wheels continuing to run after the foot pedal was released. No injuries have been reported.

This recall involves children’s Power Wheels Barbie Dream Campers with model number FRC29 with a grey foot pedal. The recalled ride-on vehicles are hot pink with blue accents and have the Barbie logo printed on the back.

They are battery-operated and have a play kitchen, a fold out grill and pretend campfire. The model number is printed on a label under the hood.

The campers, manufactured in Mexico, were sold exclusively at Walmart stores nationwide and online at Walmart.com from July 2018, through January 2019, for about $400.

What to do

Consumers should immediately take the recalled Power Wheels away from children, stop using them and contact Fisher-Price for a free repair.

Consumers may contact Fisher-Price at (800) 348-0751 from 9 a.m. to 6 p.m. (ET) Monday through Friday or online at www.service.mattel.com and click on “Recalls & Safety Alerts” at the top of the page, or www.fisher-price.com and click on “Recall Notice” at the top of the page for more information.

Apple is finding itself in some controversy after tech analysts scolded the company for allegedly endorsing AT&T’s controversial 5G claim.

AT&T has taken a beating lately for rolling out what it calls its 5GE service -- basically an enhanced 4G LTE service. Critics -- some of them AT&T competitors -- say the company is being disingenuous with that label since it really isn’t 5G service, but rather an enhanced 4G service.

MacRumors reports that consumers who have downloaded new iOS 12.2 beta are seeing their iPhones display a '5G E' connection to AT&T's network. Critics charge that’s a misleading name for an "upgraded" version of 4G LTE.

AT&T is branding the service as 5G evolved, saying it is a transitional step toward 5G service. But while both AT&T and Verizon are both slowly deploying 5G service, the technology is in its infancy and there are very few devices that can take advantage of its speed.

MacRumors reports that iPhones in some areas are displaying a "5G E" icon instead of LTE, suggesting that the phone is connected to a 5G network.

“No iPhone that exists right now is capable of connecting to a 5G network, nor is AT&T's network 5G at this time,” MacRumors reports.

‘E’ stands for evolution

AT&T has adopted the 5GE handle, explaining that the “E” stands for evolution. It’s still the 4G LTE network, but it is moving toward the speed of 5G. Many tech analysts have been highly critical of this claim, saying it is misleading.

For its part, AT&T says it has enhanced the old 4G LTE network by adding more “lanes” to transmit data. According to the telecom, 5G Evolution is a significant step forward and is now serving more than 400 markets. The company denies that it is misleading consumers.

According to MacRumors, real 5G smartphones won’t hit the market until the end of this year, and none of them will be iPhones. According to various industry reports, Apple will not introduce its first 5G iPhone until sometime in 2020 at the earliest.

Industry experts say the transformation from 4G to 5G will be a fundamental change, not a transitional one. They say 5G technology will not only increase speed but will allow millions of more devices to be connected to the internet without degradation of service.

Sen. Bernie Sanders (I-Vt.), a long-time critic of drug company pricing policies, has fired off a letter to Catalyst Pharmaceuticals asking the company to explain the price of one particular drug.

Sanders says Catalyst charges $375,000 a year for Firdapse, a drug used to treat a rare neuromuscular disease called Lambert-Eaton myasthenic syndrome (LEMS). But the Vermont lawmaker says patients once received the same drug – known as 3,4-DAP – for free from Jacobus Pharmaceutical under the Food and Drug Administration’s (FDA) compassionate use program.

Sanders says Catalyst licensed the rights to the drug and received exclusive rights to market Firdapse for seven years under the FDA’s orphan drug designation. At the end of last year, Sanders said Catalyst set the list price for Firdapse at $375,000 per year.

Catalyst declined various media requests for a comment.

Not the first time

This isn’t the first time a drug company has hiked the price of an existing, older drug. In 2015, in one of the first cases to cause public outrage, Turing Pharmaceuticals -- headed by a young hedge fund operator, Martin Shkreli -- purchased the rights to Daraprim, which at the time was selling for $13.50 a tablet. Turing raised the price to $750 a pill.

Sanders said he has spoken with a patient in Iowa who is being treated for LEMS. He quotes her as saying her fellow patients can’t afford the drug now and “they’re just going to go to bed when their 3,4 DAP runs out.”

Sanders, who has announced plans to seek the 2020 Democratic presidential nomination, called the price hike an exploitation of patients who depend on the drug.

“By setting such a high price and forcing production and distribution of the older, inexpensive version to cease, you are threatening access that patients had to a cheap version of this product, and handing a completely unwarranted bill to American taxpayers,” Sanders wrote in the letter.

Calling out drug companies over their prices is one issue where Republicans and Democrats might be able to agree in a bitterly divided capital. Both the House and Senate have scheduled hearings on drug prices, and President Trump has been highly critical of sharp increases in drug prices.