"This is almost unbelievable," Daryl Allen, a semi-retired engineer, commented after reading ConsumerAffairs' first story on the Volkswagen "Dirty Diesel" scandal last Sept. 18.
The story reported that the U.S. Environmental Protection Agency and California's clean air regulators had charged that VW -- one of the most trusted brands on earth -- had installed secret software on its TDI Clean Diesel engines to enable them to pass emissions tests while polluting merrily the rest of the time at up to 40 times the legal limit.
Volkswagen's response did nothing to instill confidence. It admitted the software existed, but top executives claimed to have no idea how it got there or who was responsible, while promising to get to the bottom of it. Critics compared this to O.J. Simpson's claim that he would stop at nothing to find the fiend who murdered his wife and her friend.
By year's end, VW had fired numerous executives and engineers but had made little progress on recalling and fixing the millions of cars affected worldwide. It faces billions of dollars in potential fines and costs and untold damage to its brand.
By any measure, VW's brand suicide was the top consumer story of the year. Although it directly affected fewer than half a million VW owners in the U.S., it fed into the hands of those who believe that businesses routinely lie, cheat, and steal.
The end of two-year cellphone contracts
The way consumers buy wireless service changed in 2015, as one carrier after another moved away from the two-year contract that subsidized the cost of the device. The move was led by prepaid providers, like Cricket Wireless, that sold phones and wireless service on a month to month basis.
Among the Big Four providers, T-Mobile became a disruptive force when it dropped the two-year contract and offered to pay the early termination fees other providers charge if consumers would leave their two-year contracts early.
In August, Verizon became the last cell phone carrier to abandon the two-year contract for new subscribers. As a result, it also abandoned the phone subsidy. Now, customers at all providers pay full price for their phones – either up front or in monthly installments that usually extend for – you guessed it – two years.
For-profit schools retrench
A slower but no less ignominious fate befell Corinthian Colleges, Inc., the once-high-flying chain of for-profit colleges that collapsed into bankruptcy after the U.S. Education Department began restricting the free flow of taxpayer money to Corinthian students.
Congressional hearings and numerous investigations had uncovered charges that Corinthian and other for-profit schools had been inflating or lying about post-graduation job-placement rates, teaching courses whose credits were not accepted by reputable universities or state professional-licensing boards, even engaging in what the Consumer Financial Protection Bureau called “predatory lending scheme[s].”
While Corinthian's collapse was dramatic, it was by no means the only for-profit school affected. Across the country, for-profit schools large and small were feeling the heat as state and federal agencies began probing charges that the schools preyed on vulnerable prospective students, enticing them into taking out government-backed loans that they would be hard-pressed to pay back.
Takata airbag shrapnel
Takata Corporation's reputation wound up as shredded as a blown airbag by year's end. After neglecting to disclose the dangers of its airbag inflators, which caused numerous deaths and injuries, the company was fined $70 million by federal regulators and stood to lose $130 million more if it did not comply with the dictates of a court order, or if new violations were found.
Millions of vehicles have already been recalled and millions more are awaiting repairs. Several major automakers have decided to not use Takata airbag inflators that have ammonium nitrate in future models, including Ford, Honda, Toyota, and Nissan.
Pressure on the company did not just come from business partners. U.S. senators were vocal about making sure that Takata was held responsible for its products, even if the result is bankruptcy. They called the fines “meager” and stated that they would not deter the company from “continuing reprehensible and irresponsible behavior that costs countless preventable injuries and lives.”
A close second was FCA US (a/k/a Chrysler) agreeing to pay up to $105 million to settle federal charges that it dragged its feet on critical safety recalls, including fires in various Jeep models.
Fantasy sports – gambling or skill?
The courts will eventually rule, but, for now, the fantasy sports controversy is raging at the state level.
New Jersey Governor and GOP presidential candidate Chris Christie may have summed it up best in a recent debate when he said, “We have $19 trillion in debt, we have people out of work, we have ISIS and al-Qaeda attacking us, and we’re talking about fantasy football? Can we stop? Enough on fantasy football, let people play. Who cares?”
Well, obviously a lot of people do.
Regulators in Nevada and New York claimed that these enterprises were gambling operations that require a license. Major daily fantasy sports (DFS) enterprises – primarily FanDuel and DraftKings – insist they are games of skill.
The games, incredibly popular nationwide, were declared illegal gambling by New York Attorney General Eric Schneiderman, who filed suit to enforce a cease and desist order.
A New York Supreme Court justice granted a motion to enjoin DraftKings and FanDuel “from doing business in the State of New York, accepting entry fees, wagers or bets from New York consumers in regards to any competition, game or contest run on” their websites, but that was suspended by an appeals court.
One thing you CAN bet on: This isn't likely to be resolved in the short term.
Rising rent impedes home buying
Renters in 2015 found themselves stuck between rising rents and stagnant wages, making it harder for them to save for a down payment on a house. The collapse of the housing market and the wave of foreclosures that followed prompted millions of people who, before 2007, might have been homeowners, to remain renters.
As home prices plunged and interest rates dropped to record lows, a house payment was nearly the same as some car payments. Yet many kept renting because they either didn't have the down payment or couldn't qualify for a mortgage under the stricter rules imposesd after the financial crisis of a few years ago.
A look at Census Bureau figures revealed a significant disparity in the incomes of people who owned homes and those who were renters. Homeowners on average earn $65,514 per year, compared to $31,888 for renters. Despite challenges faced by renters, one study found that renters, as a consumer group, could benefit from targeted financial literacy education in order to improve their chances of becoming home buyers.
Same-sex marriage recognized
In late June, the Supreme Court ruled that same-sex marriage is legal and protected by the Constitution. While the social impact of the decision was extraordinary, the economic implications for same-sex couples were also notable.
At the time, researchers estimated that states would experience an economic surge from same-sex marriages to the tune of $2.5 billion, mostly in industries that deal in the institution of marriage, such as florists, wedding and event planners, and catering companies. Tourism, researchers believed, would also feel the impact.
At the federal level, same-sex couples are able to enjoy federal marriage benefits for the first time. Couples had been denied these rights in the past if their state did not recognize their union, but the Supreme Court decision effectively overrode this obstacle.
Social Security benefits remain flat
It's all because of the low rate of inflation.
Social Security recipients -- seniors mostly -- who were hoping to find a little something extra in their monthly checks next year have come up empty. For only the third time in 40 years they will not be getting a cost-of-living increase when we turn the corner into 2016. Strange as it may sound, it's all because consumer prices haven't been rising fast enough.
The Social Security Cost-of-Living Adjustment (COLA) is based on the percentage increase in the Consumer Price Index (CPI). And, because consumer prices were actually lower over the past year, monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 65 million recipients will not increase in 2016.
Still there is a bit of good news. About 70% of recipients who have Medicare premiums deducted from their monthly checks won't see a premium increase next year. However, the 30% not covered by something called the “hold harmless” clause, including people with higher incomes, federal retirees, and new Medicare enrollees, could see their premiums rise as much as 52%.
China flooring uprooted
Takata and FCA (Chrysler) aside, safety recalls don't usually attract too much attention. And when's the last time anyone recalled a floor? Lumber Liquidators became the first when it pulled all its Chinese-made laminate flooring amid concerns about chemical emissions.
Initial alarm was raised early in the year by Wall Street short seller Xuhua Zhou, who claimed that flooring from the company contained “toxic” levels of the suspected human carcinogen formaldehyde. In May, CBS News’ “60 Minutes” aired a report about the issue.
Lumber Liquidators' stock price plunged in the wake of the charges. The company faced an investigation by the U.S. Consumer Product Safety Commission as well as hundreds of lawsuits after the CBS News “60 Minutes” report.
In early March, Lumber Liquidators began offering free indoor air quality screening to customers who had purchased laminate flooring sourced from China. In November, the company committed to a new policy requiring its suppliers to end all use of reprocessed vinyl plastic in vinyl flooring and to limit lead content to less than 100 parts per million.
Using the human body to fight cancer
In 2015, medical researchers took another step toward achieving the Holy Grail of medicine – a cure for cancer. In the last two years, researchers speculated that the body's T-cells could be programmed to attack cancer cells, as an alternative to injecting drugs into the body, that often damaged healthy cells as well as cancerous ones.
In July, researchers at the University of California at San Francisco were able to “edit” human genes, replacing components of T-cells with stronger elements that can protect the body against many chronic diseases, including diabetes and cancer.
Two weeks later, former President Jimmy Carter announced he had cancer of the liver that had moved to the brain. After undergoing two months of immunotherapy, a new cancer treatment that stimulates the patient's immune system to work harder, or smarter, to attack cancer cells, the former President announced he was cancer-free.
Additional reporting by Mark Huffman, James Limbach, Sarah Young and James R. Hood