Jeff Gelles, Inquirer Business Columnist
If you've been paying attention to banking critics in recent years - including consumer advocacy groups and the Pew Charitable Trusts - the latest news from the Consumer Financial Protection Bureau will hardly be a shocker: A white paper made public Tuesday shows that U.S. banks have become heavily reliant on overdraft and non-sufficient-funds charges, and that a small portion of errant customers are paying the bulk of the bills. In 2011, those two kinds of fees - once considered "nuisance charges" imposed to deter bad behavior - generated about 60 percent of total fees collected on consumers' checking accounts.
You can find the report, a 72-page white paper based on a year-long study of how overdraft fees play out in the marketplace, here. Beyond the many data points it discusses, the report plainly reflects regulators' doubts that the Federal Reserve's three-year-old "opt in" rule does enough to reduce consumers' risks from overdraft fees - doubts, to be sure, that were already evident in February 2012 when the CFPB announced the study.
Opt-in rates vary dramatically, below 10 percent at some banks and above 40 percent at others, which CFPB Director Richard Cordray said raised questions about how the plans are pitched. He said a key concern was that plans presented as offering "protection" to customers "may actually be putting consumers at greater risk of harm.”
Jeff Gelles, Inquirer Business Columnist
In a column last month, I told the latest tale of Patrick Rodgers, who runs an actual store in Queen Village and a virtual store on eBay, and who complained that the online-marketplace giant had treated him like, well, a virtual serf. Earlier this year, eBay had summarily shut down his online business, The MTG Place, for 46 days in a case of mistaken identity. EBay had apparently received complaints against the man who founded The MTG Place and sold it to Rodgers three years ago. Rodgers sued for $5,000 in lost revenue, contending that eBay had no grounds to shut him down before investigating - an inquiry that led to his reinstatement and a sorry-for-the-inconvenience email. Now eBay wants to clarify its position. It says Rodgers essentially had no right to buy the store without its prior consent.
Rodgers is no stranger to the David-vs.-Goliath thing. He's the same Philly homeowner who made national news two years ago with his claim to have "foreclosed on a bank." He had won a default judgment against Wells Fargo in a mortgage dispute, and when the megabank didn't pay a $1,000 fine, Rodgers got a "Sheriff Sale" order for the contents of one of its Philadelphia offices - a small victory but enough to make Rodgers' story go viral after I wrote about for The Inquirer. He even went on The Colbert Report, though Colbert was more interested in the Goth music promoter's cosmetic fangs than his financial victory. How, Colbert demanded, could the rest of the media overlook an obvious vampire?
EBay didn't respond to my questions in time for last month's column, but afterward said it wanted to make its position clear. In an email, spokesman Ryan Moore wrote:
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Jeff Gelles, Inquirer Business Columnist
If the disclosure of a top-secret court order requiring Verizon to turn over call records to the National Security Agency stirred renewed anger at the "surveillance state" that's arisen since 9/11 and passage of the Patriot Act, the latest allegations could prompt a real furor - not to mention lots of gallows humor about who's peeking at your emails and chats.
Britain's Guardian newspaper and the Washington Post both reported Thursday night that under a 2007 program called PRISM, the NSA and FBI have been able to tap into Internet content controlled by Microsoft, Google, Facebook and other leading companies to mine communications involving at least one person believed to be overseas - and that more than so-called "metadata," or records about the communications, is involved.
The Post says that with PRISM, the NSA and FBI are "tapping directly into the central servers of nine leading U.S. Internet companies, extracting audio and video chats, photographs, e-mails, documents, and connection logs that enable analysts to track foreign targets, according to a top-secret document obtained by The Washington Post."
Jeff Gelles, Inquirer Business Columnist
Writing for Britain's The Guardian newspaper, Glenn Greenwald has disclosed a large-scale, top-secret data demand by the U.S. government: The FBI asked the Foreign Intelligence Surveillance Court in April to order Verizon to turn over three months of certain call records - including records of purely domestic calls - to the National Security Agency.
As he has done in the past, Greenwald has focused attention on the vast reach of the post-9/11 U.S. security apparatus. You can read his report here, and find a link to the highly classified document he posted. Greenwald has lifted at least a corner of the veil shrouding the U.S. government's focus on phone records as a counterterrorism tool - a focus reported to date back to the 2001 attacks, or perhaps even before .
Presuming the accuracy of the document - and the White House has already defended the intelligence-gathering practice, though without confirming any details - it's worth noting how much Greenwald's report leaves unclear, and also how it fits into what we already know but don't seem willing to face. For instance:
Jeff Gelles, Inquirer Business Columnist
With a fight looming over the future of the U.S. Court of Appeals for the D.C. Circuit, law professor Tim Wu offers an excellent analysis of one of the most significant legal trends to emerge as supposedly conservative jurists - including some on that key appeals court - have embraced a new avenue of judicial activism: allowing corporations to use the First Amendment as a shield against regulation.
Citizens United v. Federal Election Commission, the 2010 case in which the Supreme Court said corporations were entitled to the same free-speech rights as individuals, is much better known. But Wu sees it as part of a larger, long-term fight against any restrictions on corporate "speech" - a position that, if applied to ordinary commercial speech, can undermine the government's ability to regulate any marketplace activity.
In The Right to Evade Regulation How corporations hijacked the First Amendment in the New Republic, Wu says a key commercial-speech case came a year after Citizens United, when the high court sided with pharmaceutical marketers on free-speech grounds in a data-mining case. In Sorrell v. IMS Health, the court overturned a Vermont law that barred the sale of "de-identified" prescription records to drugmakers - data that identified doctors but not patients, and that enabled drugmakers to target marketing efforts at physicians deemed more likely to prescribe their products. The court said barring data miners from selling their knowledge violated their corporate First Amendment rights.
Jeff Gelles, Inquirer Business Columnist
Patrick Rodgers is back in the news. Two years ago, the Philly homeowner was fighting Wells Fargo over his mortgage, as I described here and in follow-ups here and here. Now he's battling eBay - I'll tell you details in tomorrow's Tech Life column in the Inquirer - here's a link. But in case you missed how Stephen Colbert later exposed Rodgers as a vampire - and lambasted the rest of the media for ignoring the obvious - here's a Comedy Central video from 2011. Turns out Dan Rather would never have made the same mistake.
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Jeff Gelles, Inquirer Business Columnist
With more than $1 trillion in student loans outstanding and jobs still so hard to come by that the Federal Reserve is keeping interest rates at historic lows, Sen. Kirsten Gillibrand (D., N.Y.) has put forward a proposal to help both borrowers and, simultaneously, the broader economy: Let student-loan borrowers refinance all their loans at 4 percent annual interest.
Gillibrand calls her proposal the Federal Student Loan Refinancing Act. Like Sen. Elizabeth Warren (D., Mass.), Gillibrand has warned against the doubling of interest rates on subsidized Stafford Loans that's scheduled to take place in July if Congress fails to act, and is backing a proposal to freeze those rates at 3.4 percent. Warren would go further. Her Bank on Students Loan Fairness Act, which I wrote about here last week, would peg the interest rate on new student loans to the ultra-low discount rate - currently 0.75 percent - that the Fed charges to the nation's largest banks. So far, more than 425,000 people have signed a MoveOn.org petition Warren submitted to stir support for her plan.
Gillibrand's refinancing proposal addresses the broader problem faced by students and former students saddled with unaffordable debt and unable to refinance it - a problem for many in today's marketplace, according to the Consumer Financial Protection Bureau, which has been collecting consumer input and comments about student loans for the last year.
Jeff Gelles, Inquirer Business Columnist
The Federal Communications Commission recently confirmed what many consumers regard as obvious: Cable-TV prices have been climbing relentlessly, much faster than the rate of inflation - an average of 6.1 percent a year between 1995 and 2010. Cable companies like to talk about the "per channel" price as a better benchmark, but last I checked they hadn't managed to increase the number of viewing hours available in anyone's day.
Sen. John McCain (R., Ariz.) has a plan to fix the problem by forcing cable companies to offer a-la-carte pricing. He testified this morning about the proposal, which he calls the Television Consumer Freedom Act of 2013, before the Senate Commerce Committee. (Use promo code W72C to access Bob Fernandez's story at Inquirer.com about McCain's appearance.) His bill would also bar blackouts of local sports events held in publicly financed facilities, and seek to ensure the future of over-the-air television.
McCain says his plan to force a-la-carte pricing is "entirely voluntary," and free of mandates and regulations. In that respect, he's being at least a bit disingenuous and playing to his conservative base. Instead, the plan builds on some basic quirks in the way we already regulate broadcast and pay television - in particular, the so-called "compulsory license" that guarantees a cable company's access to local broadcast channels - and aims to use them to the advantage of cable-TV customers.
Jeff Gelles, Inquirer Business Columnist
With interest rates on federally subsidized student loans set to double this summer unless Congress acts - and where have we heard that story before? - U.S. Sen. Elizabeth Warren is stepping forward with a modest proposal: Skip the debate over whether students should pay 3.4 percent or 6.8 percent, and give them the same great deal as our government gives the big banks that, as she puts it, "destroyed millions of jobs and nearly broke this economy."
Just a symbolic gesture? It's hard to see it differently - especially as congressional Republicans seem to be happily accepting the across-the-board spending cuts known as the sequester that harm Head Start kids, Meals on Wheels recipients, research-grant recipients, and a long, long list of others, particularly in states with a large military presence. But let's let the Massachusetts Democrat make her case. Here are her prepared remarks to the Senate (and you can watch the video below):
Mr. President, on July 1st, the interest rate on new, federally subsidized student loans is set to double from 3.4 to 6.8 percent. That means unless Congress acts, for millions of young people the cost of borrowing money to go to college will double.
Jeff Gelles, Inquirer Business Columnist
Richard Cordray, director of the Consumer Financial Protection Bureau, says they were "wolves in sheep's clothing": purported "debt settlement" firms that sought out financially distressed consumers, often through misleading means, but made things worse for them rather than better.
The CFPB says one of the firms, Mission Settlement Agency, routinely sent letters marked with the Great Seal of the United States and claiming to be from a nonexistent "Office of Disbursement."
With help from federal prosecutors and the U.S. Postal Inspection Service, the CFPB filed suit today seeking to shut down the two operations, based in New York and New Jersey. It says the businesses targeted consumers "in multiple states" via mail and phone or via the Internet, and charged them illegal advance fees for mostly worthless services.





