Current Events in May 2020

Word came down from Netflix corporate on Friday that inactive subscriptions run the risk of being canceled. The company is asking subscribers who haven't used the service in a year or more to let them know that they still want to be a member -- even if they're going to keep their membership turned off until further notice.

According to Netflix' Eddy Wu, the inactive accounts represent less than half of one percent of its overall member base -- about a few hundred thousand.

Expect a nudge

Netflix will be sending out email and in-app nudges over the next few weeks to find out what the dormant subscribers want to do. If the service doesn't receive a user's confirmation, their service will be canceled with no penalties or fees.

"If anyone changes their mind later, it's really easy to restart Netflix," Wu said. "As always, anyone who cancels their account and then rejoins within 10 months will still have their favorites, profiles, viewing preferences and account details just as they left them. In the meantime, we hope this new approach saves people some hard-earned cash."

CNBC's Jessica Bursztynsky called Netflix move "extremely unusual among companies that charge an annual subscription, and shows a measure of confidence in Netflix's value proposition for customers." 

Bursztynsky also thinks a little "hello, remember us" nudge may help Netflix retain some top-of-mind recall -- especially as new competitors like Disney+ and NBCUniversal's Peacock continue elbowing in for a piece of the streaming service action.

Credit card companies slammed on the brakes in March as millions of consumers lost their jobs. The number of new credit card accounts plunged 73 percent between March 15th and April 15th, according to a survey by CompareCards.

While it’s not surprising that lenders would try to reduce their risk in the face of rising unemployment, the speed in which they acted is unprecedented. Then again, the economic disaster from the coronavirus (COVID-19) shutdown happened virtually overnight. 

Prior to the pandemic, credit card companies aggressively sought to open new accounts because of a robust economy. In the new environment, consumers may find it will be much harder to get all types of credit.

Economic uncertainty

Compared to the March-to-April periods from 2017 to 2019, the number of new cards slowed to a trickle this year. When lenders did issue cards, the credit limits were on average $700 lower.

“When the economy is uncertain, as we are currently witnessing, plans change and lenders get nervous,” CompareCards wrote in a blog post. “When lenders become wary, they resort to reducing credit limits on existing accounts, or even close those accounts altogether, because all that available credit just looks like unnecessary risk to the bank.”

Even if you already have a credit card, it doesn’t mean you’re going to keep it. As unemployment surged in late March, credit card companies moved quickly to close some customers’ accounts. 

At the end of April, about 25 percent of consumers reported that their credit card company had closed an account or lowered their credit limit.

‘High risk of failure to pay’

ConsumerAffairs has received scores of complaints from consumers like Robert, of Houston, who told us he had several credit cards with Synchrony, which he said had continued to increase his credit limits over the years.

“Then, in one single day, Synchrony closed every single account without notice,” Robert wrote in his ConsumerAffairs post. ”Received a letter stating ‘Activity on accounts indicative of high risk of failure to pay.’ How is that possible when there was less than $3k total on just 2 of the several accounts I had with them?”

Robert also said his credit score dropped by more than 100 points because of the loss of credit, which he says significantly increased his debt ratio.

Credit card companies are often quick to react to perceived risk because credit card debt is not secured by any kind of collateral. If an account holder doesn’t pay, there is no means to secure payment without going to court.

But in the wake of the coronavirus, some lenders are even worried about secured debt. Earlier this month, Wells Fargo announced it was temporarily suspending new home equity lines of credit (HELOC), joining other major banks moving to reduce their credit exposure.

Consumers whose credit card accounts have been closed by their lender may be able to restore access by applying for a secured credit card. ConsumerAffairs has researched the best secured credit card companies here.

On Thursday, Facebook CEO Mark Zuckerberg said he anticipates that half of the company’s employees could be working remotely on a permanent basis within the next five to 10 years. 

"We are going to be the most forward-leaning company on remote work at our scale, with a thoughtful and responsible plan for how to do this," Zuckerberg said on his weekly livestream with employees. "We're going to do it in a measured way over time."

The executive said Facebook will begin allowing some employees to work remotely full time and will request that they notify the company if they move to a different location by Jan. 1, 2021. For accounting and tax reasons, the executive said employee pay could be adjusted in cases where employees change locations.

“We’ll adjust salary to your location at that point,” said Zuckerberg. “There’ll be severe ramifications for people who are not honest about this.”

Opening up opportunities 

Going forward, Zuckerberg says Facebook will be “aggressively” increasing hiring of remote workers and gradually allowing existing employees to fill remote work positions. 

He also said he predicts that opening up more remote work positions will help improve employee retention and make it possible to bring on talented people who don’t live near Facebook’s offices and wouldn’t have considered moving. 

“When you limit hiring to people who either live in a small number of big cities or are willing to move there, that cuts out a lot of people who live in different communities, different backgrounds or may have different perspectives,” Zuckerberg said. "It doesn't seem that good to constrain hiring to people who live around offices.”

Expanding permanent work-from-home positions

Due to the coronavirus pandemic, nearly all of Facebook’s employees are working remotely. Zuckerberg said Facebook employees were recently asked to respond to a survey about the change, and 50 percent said they were as productive working from home as they were at the office. 

Existing employees will be offered the option of working remotely permanently if they meet certain criteria. The company will consider the strength of recent performance and experience level, among other things. New hires with less experience will need to work from offices once they reopen. 

Twitter CEO Jack Dorsey said recently that his platform will be adopting a long-term remote work policy even after the threat of the virus has abated. 

“Opening offices will be our decision,” a company spokesperson said in May. “When and if our employees come back, will be theirs.”

While it’s true that far fewer motorists are expected to be on the road this Memorial Day weekend, those who are traveling will probably face rising gasoline prices. Still, the prices will be a lot lower than at this time last year.

The AAA Fuel Gauge Survey shows the national average price of regular gas is $1.94 a gallon, eight cents higher than last weekend. But that’s 90 cents less per gallon than last Memorial Day weekend. The average price of premium gas is $2.54 a gallon, five cents higher than last Friday. The average price of diesel fuel is $2.41, about the same as last week.

Even though gas prices have started to move higher in the last 10 days as coronavirus (COVID-19) restrictions have begun to be lifted, prices are still historically low.

“Gas prices around Memorial Day have not been this cheap in nearly 20 years,” said Jeanette Casselano, AAA’s spokesperson. “However, as the country continues to practice social distancing, this year’s unofficial kick-off to summer is not going to drive the typical millions of Americans to travel. Despite inexpensive gas prices, AAA anticipates this year’s holiday will likely set a record low for travel volume.”

AAA says motorists can expect gas prices to continue to rise and perhaps go back over $2 a gallon in the next week. As states reopen, demand for gas will increase. At the same time, stations will switch over to summer blends of gasoline, which will cost more.

But consumers shouldn’t face sudden spikes in prices since oil prices remain low and demand may be slow to reach pre-shutdown levels.

The states with the most expensive gas

These states currently have the highest prices for regular gas, according to the AAA Fuel Gauge Survey:

• Hawaii ($3.18)

• California ($2.83)

• Washington ($2.48)

• Oregon ($2.41) 

• Nevada ($2.37)

•  Pennsylvania ($2.20)

• Illinois ($2.18)

• New York ($2.17)

• Utah ($2.14)

• Alaska ($2.11)

The states with the cheapest regular gas

The survey found these states currently have the lowest prices for regular gas:

• Mississippi ($1.55)

• Arkansas ($1.58)

• Oklahoma ($1.59)

• Texas ($1.59)

• Alabama ($1.60)

• Missouri ($1.61)

• Louisiana ($1.63)

• Kansas ($1.64)

• South Carolina ($1.64)

• Tennessee ($1.66)

Volkswagen Group of America is recalling 3,024 model year 2019 Audi Q3s.

The passenger air bag may not deploy properly through the instrument panel tear seam.

The passenger air bag may not properly deploy and inflate in a crash, and small plastic parts may enter the cabin, increasing the risk of injury.

What to do

Audi will notify owners, and dealers will inspect the instrument panel and replace it -- if necessary -- free of charge.

The recall is expected to begin June 12, 2020.

Owners may contact Audi customer service at (800) 822-2834. Volkswagen's number for this recall is 70H7.

New Hoque and Sons of Maspeth, N.Y., is recalling Radhuni Curry Powder.

The product maybe contaminated with Salmonella.

No illnesses have been reported to date.

The recalled product, which comes in 400-g clear, plastic bottles, with an expiration date of 01/02/2022 on the side of the container, was sold in grocery stores in New York City including Jamaica, Jackson Heights and the Bronx, from April 17 – 21, 2020.

What to do

Customers who purchased the recalled product should return it to the place of purchase for a full refund.

Consumers with questions may contact the company at (718) 391-0992 from Monday - Friday between 9am and 5pm (EST).

Coronavirus (COVID-19) tally as compiled by Johns Hopkins University. (Previous numbers in parentheses.)

Total U.S. confirmed cases: 1,555,537 (1,532,212)

Total U.S. deaths: 93,606 (92,128)

Total global cases: 5,034,458 (4,931,057)

Total global deaths: 329,186 (324,240)

TSA issues new rules for summer travel

The Transportation Security Administration (TSA) has issued a package of guidelines for summer travel, and the regulations make big changes to adapt to the coronavirus (COVID-19). In one of the biggest changes, passengers will retain control of their boarding passes at all times with no TSA agent touching them.

Passengers are also encouraged to wear face masks, especially since some airlines now require them for all passengers. TSA says passengers may be asked to adjust their masks during the screening process.

“In the interest of TSA frontline workers and traveler health, TSA is committed to making prudent changes to our screening processes to limit physical contact and increase physical distance as much as possible,” said TSA Administrator David Pekoske. “We continue to evaluate our security measures with an eye towards making smart, timely decisions benefiting health and safety, as well as the traveler experience.”

New unemployment claims still slowing

The Labor Department reported today that initial claims for unemployment benefits increased in the previous week by 2.43 million -- still an extremely large number but a slowdown from previous weeks.

In fact, it’s a decrease of 249,000 from the previous week's revised level. The previous week's level was revised down by 294,000 from 2,981,000 to 2,687,000. 

The four-week moving average was 3,042,000, a decrease of 501,000 from the previous week's revised average. The previous week's average was revised down by 73,500 from 3,616,500 to 3,543,000.  

April home sales plunge

Sales of existing home sales sank 17.8 percent in April as the coronavirus lockdown kept buyers on the sidelines. The National Association of Realtors (NAR) reports that all of the four major regions of the country experienced a decline in month-over-month and year-over-year sales, with the West seeing the greatest dip in both categories.

“The economic lockdowns – occurring from mid-March through April in most states – have temporarily disrupted home sales,” said Lawrence Yun, NAR’s chief economist. “But the listings that are on the market are still attracting buyers and boosting home prices.”

New testing centers in Arizona

CVS Health has announced plans to expand its COVID-19 testing program in Arizona by opening 16 additional test sites at select CVS Pharmacy drive-thru locations across the state.

The new centers will open tomorrow and increase the number of CVS testing locations in Arizona to 25.

The testing locations will use self-swab tests and will mark the next phase of the CVS’s nationwide COVID-19 testing strategy announced last month. The pharmacy retailer expects to have nearly 1,000 locations across the country offering this service by the end of May.

"As we move into a new phase of combatting the pandemic and as communities begin to safely open up their local economies, we need testing to be easily accessible," said Dr. Troyen Brennan, chief medical officer and executive vice president at CVS Health. "By further expanding the number of drive-thru test sites available across our retail network, more people can be tested closer to home in a familiar setting."

COVID-19 may delay Amazon’s Prime Day

Amazon’s highly successful Prime Day shopping spree, typically staged in mid-July, is reportedly being pushed back to September. The Wall Street Journal reports that the online retailer is still trying to keep up with the avalanche of orders from home-bound consumers seeking basic supplies. 

The reported postponement would allow Amazon to be able to more quickly fill orders for a wider variety of products. Currently, non-essential items can take a week or more to receive.

Amazon has declined to comment on the report.

Around the nation

• Indiana: To accommodate consumers during the Memorial Day weekend, state officials are lifting COVID-19 restrictions tomorrow, two days early. Gov. Eric Holcomb said a new state order will allow social gatherings of up to 100 people and retail stores and malls to operate at 75 percent capacity.

• Oklahoma: The Oklahoma Secondary School Activities Association (OSSAA) reportedly plans to restart high school activities in three phases. The Oklahoman reports the OSSAA board will meet tomorrow to discuss the plan before sending it to school administrators and coaches.

• Tennessee: The Tennessee Economic Recovery Group has updated its guidelines for restaurants and retail stores to reduce capacity restrictions. It also issued new guidance to help attractions and large venues to reopen while remaining safe. Gov. Bill Lee’s office says the new guidelines will go into effect tomorrow.

This Memorial Day weekend, the official kickoff to summer, will be unlike almost any other, with the coronavirus (COVID-19) still keeping most people at home.

There are expected to be so few cars on the road and passengers in airports that AAA has decided -- for the first time in 20 years -- not to issue a Memorial Day weekend travel forecast. Even though a growing number of states have slowly lifted restrictions, AAA expects fewer people will travel.

“Last year, 43 million Americans traveled for Memorial Day weekend – the second-highest travel volume on record since AAA began tracking holiday travel volumes in 2000,” said Paula Twidale, senior vice president, AAA Travel. “With social distancing guidelines still in practice, this holiday weekend’s travel volume is likely to set a record low.”

To do that, holiday travel volume would have to be lower than Memorial Day 2009, when it hit a record low of 31 million. That came months after the financial crisis and at the tail end of the Great Recession.

Cars.com forecast

Digital automotive marketplace Cars.com has done its own research and estimates that only 36 percent of people will take a trip over the holiday weekend, with about 75 percent planning to travel by car.

The survey found that those who do plan to take a trip don’t plan to go very far from home and will likely adhere to local safety guidelines. The research also found that a third of consumers who said they are in the market for a car will plan to purchase one this weekend.

"Americans love the freedom and safety that personal car ownership provides, especially in the current environment," said Jenni Newman, Cars.com editor-in-chief. "We are seeing more people considering purchasing a car to use as an extension of their home, a much-needed escape and safe mode of transportation.”

It could be a busy weekend at car dealers

Dealerships have reopened for visits in many states, but sales have continued during the lockdown. Dealers are finding ways to sell cars without coming face to face with buyers by offering virtual test drives and appointments with home delivery options.

Karl Brauer, executive editor at Kelley Blue Book and Autotrader, believes pent up demand from the last two months could mean Memorial Day weekend will be busy at the nation’s car dealers, which are eager to get consumers back into their showrooms.

“There are some unprecedented offers available to buyers, such as 0 percent for 84 months and deferred payments for two to three months,” Brauer told ConsumerAffairs in a recent interview.

Brauer says everything is in place, short of a booming economy, to have active car-buying through the Tuesday after Memorial Day.

While many consumers struggle to find that perfect work-life balance, a new study explored how work-related stressors can impact consumers’ mental health. 

According to researchers from Indiana University, consumers can be at an increased risk of depressive symptoms and premature death when their jobs come with excessive stress. 

“We examined how job control -- or the amount of autonomy employees have at work -- and cognitive ability -- or people’s ability to learn and solve problems -- influence how work stressors such as time pressure or workload affect mental and physical health and, ultimately, death,” said researcher Erik Gonzaelz-Mulé. “We found that work stressors are more likely to cause depression and death as a result of jobs in which workers have little or for people with lower cognitive ability.” 

Managing stress

To understand the relationship between work and stress, and the subsequent health effects, the researchers evaluated over 3,100 responses to the Midlife in the U.S. Survey. Participants reported on their current job status, their stress levels, and their attitudes towards their jobs. 

The study revealed that consumers’ feelings about their jobs can greatly influence their mental and physical health. The findings showed that being loaded down with job-induced stressors, or having too many responsibilities, can increase the likelihood that consumers’ mental health takes a hit. Similarly, the same risk is likely when consumers feel as though they have no freedom or control over their job. 

“When job demands are greater than the control afforded by the job or an individual’s ability to deal with those demands, there is a deterioration of their mental health and, accordingly, an increased likelihood of death,” Gonzaelz-Mulé said. 

Control is key

Control was an important factor for many of the participants. The researchers found that when workers felt more autonomy in their job responsibilities, they reported better physical and mental health outcomes. 

With many consumers now working from home during the coronavirus pandemic, job roles and attitudes about work in general are being seen and felt in a different light. It’s important for both employees and employers to consider the toll that work can have on overall well-being. 

“COVID-19 might be causing more mental health issues, so it’s particularly important that work not exacerbate those problems” said Gonzaelz-Mulé. “This includes managing and perhaps reducing employee demands, being aware of employees’ cognitive capability to handle demands, and providing employees with autonomy are even more important than before the pandemic began.” 

Democratic lawmakers said Wednesday that Uber purchasing Grubhub would “raise serious competition issues” in many cities. 

In a letter to the nation’s top antitrust enforcers, a handful of democratic lawmakers -- led by Senator Amy Klobuchar (D - Minn.) -- said that if Uber bought Grubhub, the newly combined company would each get 48 percent of the U.S. market, while Doordash would have 42 percent. 

Combined, Uber Eats and Grubhub would have almost 80 percent of the market in New York, 68 percent in Boston, 65 percent in Miami, 60 percent in Chicago, and 51 percent in Atlanta. Klobuchar said that a merger of Uber and Grubhub would combine two of the three biggest food delivery providers in the nation.  

“We have been hearing about the exorbitant fees that these online delivery app companies charge to restaurants, which are then forced to pass these excessive costs on to consumers,” the lawmakers wrote. “It is particularly troubling that this merger is being contemplated during a pandemic, when consumer demand has increased and when restaurants are more desperate for revenue than ever.”

Might eliminate competition

Klobuchar and her colleagues added that the market shares the two entities stand to gain by merging are “staggering, particularly in light of the leverage that these online delivery companies already wield over restaurants, delivery workers, and consumers, especially during this pandemic.”

“We urge the Department of Justice and the Federal Trade Commission to closely monitor the negotiations of this potential transaction and to initiate an investigation if the parties reach an agreement to merge,” the lawmakers added. 

In their letter, the regulators said the competitive effects of the merger would be felt most prominently at the local level. 

“Consumers should be able to look forward to a future in which online food delivery is more efficient, more innovative, and less expensive,” they said. "A merger of two of the three biggest rivals in an already concentrated market risks depriving consumers of that outcome by potentially eliminating competition between the existing market participants.”

“We urge you to keep track of this potential acquisition and initiate an investigation if the parties reach a merger agreement to ensure that competition is preserved,” the lawmakers concluded. 

AT&T will stop labeling its LTE network as “5G Evolution” in response to a recommendation from the National Advertising Review Board (NARB), a board run by the Better Business Bureau. 

The carrier had previously said its “5GE” label was intended to show consumers that it was on the road to 5G, saying in a slogan that it signified “5G Evolution, the First Step to 5G.” The NARB has found that the addition of the word “Evolution” wasn’t transparent. Consumers might believe that AT&T's network had evolved into an early stage of 5G, the Board said. 

AT&T says it “respectfully disagrees” with the Board’s decision but will comply with the recommendation to change the slogan. 

“AT&T respectfully disagrees with the reasoning and result reached by the Panel majority. AT&T’s customers nationwide continue to benefit from dramatically superior speeds and performance that its current network provides,” the company said in a statement. “As a supporter of the self-regulatory process, however, AT&T will comply with the NARB’s decision.” 

The company didn’t say whether the 5GE icon will still appear on consumers’ devices. 

AT&T’s 5GE slogan has drawn a significant amount of criticism from carriers and consumers alike, with many saying the marketing term is misleading. The carrier said the “E” stands for evolution, meaning that it's moving toward the speed of 5G but not there yet. 

However, critics have argued that the term is misleading and could make consumers believe their phone is capable of connecting to 5G networks even though it’s still using 4G connections.

Homeowners hammered by the economic fallout from the coronavirus (COVID-19) are already having trouble making their mortgage payments.

Mortgage delinquencies increased in April by 1.6 million, the largest one-month increase ever. Black Knight, the data analytics firm that compiled the report, says it’s more evidence that the millions of people thrown out of work by the virus-related economic shutdown are struggling to pay bills.

The April numbers pushed the mortgage delinquency rate from 3.06 percent in March to 6.45 percent last month. According to Black Knight, no other single month on record comes close to that increase, not even in the aftermath of the 2008 financial crisis.

The number of homes that were 30 or more days past due in April, but not in foreclosure, totaled 3,400,000. That’s 1,588,000 more than in April 2019.

Where delinquencies are highest

According to Black Knight, the five states with the largest percentage of delinquent mortgages in April were:

• Mississippi -- 11.90 percent

• Louisiana -- 10.91 percent

• New York -- 9.79 percent

• New Jersey -- 9.36 percent

• Connecticut -- 8.94 percent

April delinquencies include homeowners who have enrolled in mortgage forbearance plans, established under the CARES Act. Borrowers with loans backed by Freddie Mac or Fannie Mae can defer mortgage payments for up to a year, with the missed payments added to the end of the loan.

Last month, the Mortgage Bankers Association (MBA) reported that the percentage of mortgage loans that were placed in forbearance rose from 2.73 percent during the last week of March to 3.74 during the first week of April.

Struggling homeowners interested in enrolling in a forbearance program should contact their loan servicer to see if they qualify.

Worst on record

In an interview with USA Today, Black Knight Director of Market Research Andy Walden said it took a year and a half before the financial crisis produced a 1.6 million increase in mortgage delinquencies.

“The impact of COVID-19 on the housing and mortgage markets has already been substantial," Walden says. "It will be some months before we can gauge the full extent of that impact. Whatever the ultimate scope, it is almost certain the effects will resonate for many months to come.”

The damage may not be over, as the Labor Department reports that an additional 2,438,000 people filed initial claims for unemployment benefits in the previous week. The report shows more than 25 million people continue to draw jobless benefits.