Facebook Halts Advertising Targeting Cited in Bias Complaints and Lawsuits

From today’s New York Times:

After years of criticism, Facebook announced on Tuesday that it would stop allowing advertisers in key categories to show their messages only to people of a certain race, gender or age group.

The company said that anyone advertising housing, jobs or credit — three areas where federal law prohibits discrimination in ads — would no longer have the option of explicitly aiming ads at people on the basis of those characteristics.

The changes are part of a settlement with groups that have sued Facebook over these practices in recent years, including the American Civil Liberties Union, the National Fair Housing Alliance and the Communications Workers of America. They also cover advertising on Instagram and Messenger, which Facebook owns.

“We think this settlement is historic and will go a long way toward making sure that these types of discriminatory practices can’t happen,” Sheryl Sandberg, the company’s chief operating officer, said in an interview.

The company said it planned to carry out the changes by the end of the year and would pay less than $5 million to settle five lawsuits brought by the groups.

Read the complete article here.

Op-Ed: Consumer rights are worthless without enforcement by the state

From today’s San Francisco Chronicle:

57 years ago, President John F. Kennedy made an impassioned pitch for stronger consumer rights.

“If consumers are offered inferior products, if prices are exorbitant, if drugs are unsafe or worthless, if the consumer is unable to choose on an informed basis, then his dollar is wasted, his health and safety may be threatened, and the national interest suffers.”

Kennedy offered these words of warning on March 15, 1962, a date now celebrated as World Consumer Rights Day. He then called on Congress to enact legislation to protect four fundamental consumer rights: the right to safety, the right to be informed, the right to choose and the right to be heard.

The address has become known as the “consumer bill of rights.” But Kennedy also discussed an equally important issue: how such rights would be enforced. After all, without enforcement, consumer rights are just empty promises.

Consumer rights flourish

The idea of consumer rights was nothing new in 1962.

As I describe in my research on the history of consumer credit regulation, the states took an early interest in protecting ordinary Americans against abuse by lenders and debt collectors, beginning in the earliest days of the republic. Most adopted usury laws limiting the price of credit in the colonial period, exemption laws shielding property from seizure by creditors in the 19th century and more tailored consumer credit regulations in the early and middle 20th century.

What was noteworthy about Kennedy’s address was not his push for more consumer rights, but rather his call for the federal government – “the highest spokesman for all the people” – to act on behalf of consumers instead of ceding the role of consumer protector to the states.

Congress heeded Kennedy’s call and passed a flurry of consumer legislation.

In the 1960s and ‘70s, it required lenders to clearly disclose loan terms through the Truth in Lending Act, mandated fair credit reporting and debt collection practices, created safety standards for cars and other consumer products, and banned discrimination in housing and consumer lending. More recently, in 2010, Congress created the Consumer Financial Protection Bureau and tasked the agency with guarding consumers against unfair, deceptive or abusive acts and practices in financial services.

The states also reinforced their decades-old consumer laws in the 1960s and ’70s by banning unfair and deceptive acts and practices under state “UDAP” laws.

Accordingly, consumer rights today are far more robust than they were when JFK gave his speech. To be sure, new business practices regularly require that existing laws be updated to address unanticipated threats.

But the biggest challenge today is not the need for new consumer rights. Rather, it is ensuring that existing rights are enforced.

Legal fee recovery and class actions

There are basically two ways to enforce a consumer right: privately with a lawsuit or publicly via regulators.

The biggest barrier to effective private enforcement is financial. First of all, the harm to an individual consumer from a rights violation is often small, reducing the economic incentive to sue. Secondly, to sue in court, a consumer generally requires the assistance of an attorney, who must be paid. Finally, even if the individual goes to court and wins, the damage award is frequently too insignificant to deter the violator from engaging in profitable but illegal practices in the future.

Fortunately, two legal innovations have helped consumers overcome some of these hurdles.

One, rules allowing prevailing plaintiffs to recover attorneys’ fees, expanded with the raft of consumer rights legislation of the late 1960s. These provisions gave consumers the right to recover the costs of their legal representation along with any actual damages for some rights violations.

The other was the birth of the modern class action lawsuit in 1966, which allowed consumers who suffer similar monetary harms to aggregate their claims into a single large lawsuit, leading to multimillion dollar settlements.

Public enforcement

The other way to give consumer rights teeth is through public enforcement. And besides the potential for monetary awards, this method opens the door to other types of remedies for consumers.

For example, the New Jersey attorney general recently sued two auto dealerships, alleging that they sold damaged vehicles at unaffordable prices to “financially vulnerable” customers who were then left stranded when the dealers repossessed the cars without advance warning. The complaint seeks to ban the violators from selling car in the future, in addition to monetary relief.

Enforcement shortfalls

Recent developments, however, raise concerns about the future of consumer rights enforcement through both public and private channels.

The strength of public enforcement is subject to the whims of state and federal officials, who may reduce enforcement resources or refuse to bring enforcement actions.

A prime example is the weakening of the Consumer Financial Protection Bureau, which from 2011 through 2017 helped millions of consumers receive nearly $12 billion back from misbehaving financial institutions. A recent study found that CFPB enforcement activity has declined significantly since the end of 2017, when Richard Cordray, its first director, stepped down.

Paper tigers

Compared with 1962, when President Kennedy put consumer concerns on the national agenda, ordinary Americans now have far more robust rights to safety, to information, to choice and to a fair hearing.

But consumer rights do not enforce themselves. Public enforcement requires funding and willing leaders. Private enforcement requires legal devices that allow consumers to pay attorneys for their work.

Without an ongoing commitment to enforcement, consumer rights may become paper tigers, offering the appearance of protection without any teeth.

Read the complete article here.

Spending Is as Easy as Pushing a Button. The Hard Part? Keeping Track.

From today’s New York Times:

How do New York Times journalists use technology in their jobs and in their personal lives? Tara Siegel Bernard, a personal finance reporter, discussed the tech she’s using.

What are your most important tech tools for tracking budgets?

This may sound strange coming from a personal finance reporter, but I’m not a big fan of traditional budgets — I don’t think they work. I try to keep my own spending in check by taking the reverse approach. Instead of tracking every dollar, I focus on what we need to save for: retirement, college or some other goal. After you’ve automated your savings goals and created a bit of a cushion for emergencies, you’re freer to spend without thinking too hard or feeling too guilty. It’s an imperfect system, but it’s better than a failed budget.

That method won’t necessarily work in all situations, especially if you need to tackle debt or establish a stricter spending plan in retirement. And everyone can benefit from tracking personal spending, even if you do it only for a few months or check in only every quarter.

Mint has been around for a while, but it is still a solid way to take stock of where all of your money is going and whether your net worth is moving in the right direction. It also allows you to create a budget, and alerts you when you’ve spent too much. I use it infrequently, and there’s usually at least one kink I need to work out whenever I log in; most recently, it counted all of my retirement accounts twice, which was kind of cruel.

Which basic tools would you recommend for people to increase their savings and investments?

It’s not so much a tool but a technology: automation. After you’ve settled on a low-cost investment provider such as Vanguard, automation is the surest way to set yourself up for success. Automate as much as you can — your Roth I.R.A. contributions, your kids’ 529 college savings accounts. If you have an employer-provided retirement plan like a 401(k), see if it will allow you to automatically increase the percentage you’re saving each year. If not, set a date in your electronic calendar to remind you to revisit all of those amounts annually.

I also like the little revolution that the roboadvisers have started. They lean heavily on technology to help invest and manage your money, though more of them are increasingly integrating human advisers. Betterment and Wealthfront have free tools that will let you play with various goals and savings amounts to see how long it will take you to save what you need.

Read the complete article here.

CBO estimates shutdown cost $11 billion, $3 billion won’t be recovered

From today’s ABC News Online:

The nonpartisan Congressional Budget Office estimates that the longest-running government shutdown in U.S. history came at a price. It cost the economy $11 billion, with $3 billion that will never be recovered, according to a report released Monday.

For the fourth quarter of 2018, the CBO estimated real gross domestic product was reduced by $3 billion compared to what it would have been. The level of real GDP for the first quarter of 2019 is estimated to be $8 billion lower, due to a combination of the partial government shutdown delaying approximately $18 billion in federal spending, suspending services for federal workers and a reduction in demand lowering output in the private sector.

“Risks to the economy were becoming increasingly significant as the shutdown continued,” the report read. “Although their precise effects on economic output are uncertain, the negative effects of such factors would have become increasingly important if the partial shutdown had extended beyond five weeks.”

While CBO anticipates a majority of the lost real GDP will be recovered, about $3 billion will not be. That’s about 0.02 percent of the projected annual GDP in 2019, according to the report.

“Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business,” the report said. “Some of those private-sector entities will never recoup that lost income.”

Read the complete article here.

“Unqualified” Trump appointee set to take over consumer protection agency

From today’s Los Angeles Times:

If all goes according to Republican plan, this is the week a person with no experience in consumer protection will take over the consumer watchdog agency that the party has been steadily weakening to the point of irrelevancy.

Kathy Kraninger, a White House budget official, received the green light for final approval last week after Republican senators shut down debate on her nomination with a party-line vote of 50 to 49. The only wild card is whether memorial services for former President George H.W. Bush will delay action by a few days.

Kraninger would replace White House budget chief Mick Mulvaney, who has been leading the Consumer Financial Protection Bureau on an interim basis and fulfilling President Trump’s pledge to make the agency friendlier to the businesses it was intended to crack down on — banks, payday lenders and others.

“If the Senate approves this unqualified acolyte of Mick Mulvaney, who has no consumer protection or financial regulation experience, expect her to simply follow his playbook,” said Ed Mierzwinski, senior director of the federal consumer program for the U.S. Public Interest Research Group.

That means Kraninger will “leave service members and their families at the mercy of predatory lenders, work with payday lenders to eliminate the payday lending rule even Congress was afraid to vote to repeal, and reduce enforcement penalties, if any, to parking tickets, not punishments,” he said.

Read the complete article here.

FICO Plans Big Shift in Credit-Score Calculations, Potentially Boosting Millions of Borrowers

From today’s Wall Street Journal:

Credit scores for decades have been based mostly on borrowers’ payment histories. That is about to change.

Fair Isaac Corp. FICO -4.72% , creator of the widely used FICO credit score, plans to roll out a new scoring system in early 2019 that factors in how consumers manage the cash in their checking, savings and money-market accounts. It is among the biggest shifts for credit reporting and the FICO scoring system, the bedrock of most consumer-lending decisions in the U.S. since the 1990s.

The UltraFICO Score, as it is called, isn’t meant to weed out applicants. Rather, it is designed to boost the number of approvals for credit cards, personal loans and other debt by taking into account a borrower’s history of cash transactions, which could indicate how likely they are to repay.

The new score, in the works for years, is FICO’s latest answer to lenders who after years of mostly cautious lending are seeking ways to boost loan approvals.

This is occurring at the same time the consumer-credit market appears relatively healthy. Unemployment is low and consumer loan balances—including for credit cards, auto loans and personal loans—are at record highs, and lenders are looking for ways to keep expanding loan volume.

Borrowers currently have little control over what is in their credit reports, save for the ability to contest information they believe is inaccurate. Lenders, collections firms and other parties feed payment-history data to the major credit-reporting firms, Experian PLC,Equifax Inc. and TransUnion, and that information determines consumers’ FICO scores.

Read the complete article here.

Senate approves measure assuring airline passengers of consumer rights

From today’s ABC News Online:

The Senate passed a measure Wednesday that would give airline passengers new rights and should help make an often frustrating experience easier.

But the bill, which authorizes funding for the Federal Aviation Administration for the next five years, doesn’t tackle those pesky airline baggage fees — a big win for the airlines.

No bumping passengers who have already boarded

This is a direct result of the April 2017 incident when United Airlines passenger David Dao was bloodied and dragged off an aircraft after refusing to give up his seat on an overbooked flight. Shortly after the highly-publicized incident, domestic carriers put an end to the practice of asking already-seated passengers to give up their seats. This bill would make that policy change federal law.

No mid-flight cell phone calls

Just because the flight has Wi-Fi, doesn’t mean passengers are allowed to make that business call. The bill would order the Department of Transportation to prohibit customers from making voice calls between takeoff and landing.

Accommodations for pregnant and breastfeeding mothers

Gate agents have long allowed pregnant women to board early along with families with small children, but this bill orders DOT to make that the law. In addition, it requires large and medium-sized airports to provide clean, accessible private rooms for nursing mothers. Changing tables will also have to be in both men’s and women’s bathrooms. The Department of Transportation will provide grants to help airport make the changes.

Orders seat size minimums

The measure, which now goes to the president for his signature, orders the FAA to establish minimum seat standards in pitch (the distance between rows of seats) and width within of year of the president’s signature. Consumer advocates have long argued that shrinking seats create a safety issue, but the FAA presented evidence that evacuating passengers end up waiting in the aisle anyway and current seat sizes have no effect on whether a plane can be emptied in 90 seconds as regulations require.

Read the complete article here.

Freezing Credit Will Now Be Free. Here’s Why You Should Go for It.

From today’s New York Times:

Consumers will soon be able to freeze their credit files without charge. So if you have not yet frozen your files — a recommended step to foil identity theft — now is a good time to take action, consumer advocates say.

Security freezes, often called credit freezes, are “absolutely” the best way to prevent criminals from using your personal information to open new accounts in your name, said Paul Stephens, director of policy and advocacy with Privacy Rights Clearinghouse, a consumer advocacy nonprofit group.

Free freezes, which will be available next Friday, were required as part of broader financial legislation signed in May by President Trump.

Free security freezes were already available in some states and in certain situations, but the federal law requires that they be made available nationally. Two of the three major credit reporting bureaus, Equifax and TransUnion, have already abandoned the fees. The third, Experian, said it would begin offering free credit freezes next Friday. To be effective, freezes must be placed at all three bureaus.

Read the complete article here.

Betsy DeVos loses lawsuit after delaying student loan protection rule

From today’s CNN News:

A federal judge ruled that the Betsy Devos-led Department of Education improperly delayed implementing a rule to give some student loan borrowers relief.

U.S. District Judge Randolph Moss sided with attorneys general from 18 states and the District of Columbia who sued Education Secretary Betsy DeVos after she froze an Obama-era rule known as Borrower Defense to Repayment. The rule is intended to help students receive debt forgiveness if they were cheated by their college.

It was rewritten under the Obama administration in the wake of the collapse of Corinthian College, a for-profit school that misled prospective students with inflated job placement numbers. More than 130,000 borrowers have applied for debt forgiveness since 2015, a majority of whom attended for-profit colleges.

“Today’s decision in federal court is a victory for every family defrauded by a predatory for-profit school and a total rejection of President Trump and Betsy DeVos’s agenda to cheat students and taxpayers,” said Massachusetts Attorney General Maura Healey, who led the coalition.

The rule was due to take effect in July, but DeVos delayed the implementation after a group representing for-profit colleges in California sued the Department of Education seeking to block it from taking effect.

A spokesperson for DeVos said the department is reviewing the ruling. Moss found the department’s argument for delaying the rule “procedurally defective” and said it “was arbitrary and capricious.” In his 57-page opinion, he wrote that some of the department’s legal rationales “lack any meaningful analysis.”

Read the complete article here.

Why Are We All Still Using Venmo?

From today’s Wired Magazine:

VENMO, THE POPULAR payment app owned by PayPal, has become the default way millions of Americans settle a check, pay a friend back for coffee, or buy a concert ticket off Craigslist. Writers have argued that Venmoing makes us petty, and that the app has nearly killed cash. Fewer have questioned whether it’s really the best service for exchanging money, or storing sensitive banking information.

The app has reigned supreme for over half a decade, but in 2018, there are more secure and easier-to-use payment options worth considering as replacements. Venmoing may be standard, but here’s why I’ve switched.

Most Venmo competitors, like Square’s Cash app, share the same core feature: You can send money with a few taps and swipes. Venmo is unique in that it has a social networking component. By default, all peer-to-peer Venmo transactions—aside from the payment amount—are public, to everyone in the world.

Creepy, right? Venmo does give users the ability to limit who can see transactions both before and after they’re sent, but many people don’t choose to adjust their privacy settings. When I opened Venmo recently, the first payment on my news feed was from a friend whose concerns about privacy have led him to delete both his Instagram and Facebook accounts. Despite taking drastic steps to limit his digital footprint, I know who he ate sushi with last night, thanks to Venmo.

Venmo’s insistence on mimicking a social networking app isn’t just weird—it can have unnerving consequences. In July, privacy advocate and designer Hang Do Thi Duc released Public by Default, a site that taps into Venmo’s API to highlight how much information can be gathered about you from your public activity on the app. She was able to trace the exact spending habits of a couple in California, documenting what stores they shopped at, when they took their dog to the vet, and when they made loan payments.

Read the complete article here.