I've written a lot over the years about the need for government to step in when markets fail to protect consumers. The FCC's decision last month to reclassify broadband companies as common carriers was one such case - though, as I wrote Sunday, consumers might actually benefit from more of the "utility-style" regulation that Chairman Tom Wheeler has vowed to eschew. Others include the Federal Reserve's crackdown on credit-card traps and Dodd-Frank's creation of the Consumer Financial Protection Bureau.
Nearly every time, I get angry push-back from tea-party types and libertarians who question any intervention - even against monopolists or near-monopolists. Among the rare exceptions: the nation's three main credit-reporting agencies, which generate anger that crosses all political and ideological bounds. They're the quintessential example of companies you've got to deal with whether you want to or not, and they don't also deliver stuff you partiicularly like. Seriously, would you rather watch House of Cards or view your credit report?
That lack of consumer affection has never much restrained the credit reporting agencies (CRAs), since their business model has never depended on our voluntary patronage. So let's all credit New York Attorney General Eric T. Schneiderman, who yesterday announced what both sides call major changes to improve the credit-agency experience for consumers - including, at long last, an end to the infuriating practice of allowing a creditor to "verify" a disputed line on a credit report merely by verifying that the creditor said one more time that it was true. The settlement requires that "when a creditor verifies a disputed credit item through the automated dispute resolution system, the CRA will not automatically reject the consumer’s dispute, but rather, a CRA employee with discretion to resolve the dispute must review the supporting documentation," the New York AG's office says.
That political survey robocall? Agree to answer the questions, and you just might end up with something beyond insight into what's on politicians' minds. Some consumers instead discovered in that a "survey" was a thinly veiled pitch for a Bahamas cruise, according to an enforcement action announced today by the Federal Trade Commission.
The FTC and 10 states took action against a Florida cruise company and seven affilliates that federal officials said engaged in "a massive telemarketing campaign resulting in billions of robocalls" in 2011 and 2012. The survey-call ruse was designed because, as savvy consumers know, political surveys are among the exceptions to the federal Do Not Call list. The FTC says the companies made millions of dollars from the scheme, and have agreed to pay $500,000 in penalties in a settlement. The FTC says the scheme, which averaged 12 to 15 million illegal sales calls a day, used the surveys as a cover:
Consumers who answered the Cruise Call Telemarketers’ robocalls heard the following prerecorded message, or a nearly identical version:
American Banker - for good reason - is celebrating the counterintuitive: Despite the seemingly endless flow of data breaches, identity theft complaints and associated losses dropped for the second year in a row, according to a new survey by Javelin Strategy & Research. True, about 12.7 million Americans suffered $16 billion in losses, but 2014's victim count was down by 3 percent, and ID theft's costs to victims fell by 11 percent.
Al Pascual, Javelin's director of fraud and security, credited financial institutions that are upping their game. "What we've seen is an extraordinary response," he told the Banker, including the replacement of 95 percent of the credit and debit cards compromised in the Target breach in 2013, compared to the usual fraction, which he said was in the single digits. "That's an extreme response. That does not happen," Pascual said.
Other factors? The Banker said:
FCC Chairman Tom Wheeler just unveiled the first details of his plan to protect net neutrality by accepting the obvious: that broadband Internet is a "telecommunications service" under the definitions of federal law - a so-called "Title II" service - and not a loosely overseen "information service." His plan is outlined in an FCC fact sheet here. A senior FCC official said the new rules plainly answer objections raised a year ago by the D.C. Circuit Court of Appeals when it sided with Verizon and rejected the FCC's last attempt to write net-neutrality rules without such a reclassification.
Earlier today, Wheeler offered a plain-language preview of his move - sure to be challenged by network owners - in an op-ed in Wired (here). Both came a day before the FCC itself was scheduled to announce initial details of his proposal, which Wheeler will propose to the five-member commission and hopes will be backed at least by its two other Democrats at its Feb. 26 meeting. As neutrality's defenders have for a decade, Wheeler reached back into telecom history to illustrate why FCC rules guaranteeing net neutrality aren't "regulating the Internet" in new ways, as opponents like to argue, but preserving basic principles that have governed telecommunications for decades - principles that, as Wheeler puts it, have made the Internet "an unprecedented platform for innovation and human expression":
The internet wouldn’t have emerged as it did, for instance, if the FCC hadn’t mandated open access for network equipment in the late 1960s. Before then, AT&T prohibited anyone from attaching non-AT&T equipment to the network. The modems that enabled the internet were usable only because the FCC required the network to be open.
I just spent a week at International CES, the gigantic annual tech extravaganza in Las Vegas. I saw 3-D scanners and printers right out of Star Trek, robots that could deliver a can of beer, and the Internet of Damned-Near-Everything. Still, I'm not sure I saw anything more inventive that Ikea's innovation for 2015, which connects to your brain directly through your hands and eyes:
Amazing technology, huh? As the Ikea dude says, it’s totally wireless and operates with absolutely no lag. “Each crystal-clear page loads instantaneously, no matter how fast you scroll.” Not only that, but you can speed-browse, use bookmarks, and download it directly from your mailbox. (Note: The Ikea device is not to be confused with the BookBook, a passive, secure system for worldwide access to your iPad or other Apple device – otherwise known as a leather case.)
Just yesterday, it seems, I was giving T-Mobile credit for targeting another wireless industry "gotcha" - tricky sales methods for online data that it says cost consumer billions of dollars a year. Today, T-Mobile is taking the Business Walk of Shame: settling charges that it profited by allowing tricky third-party billers to bilk its unsuspecting customers by "cramming" pointless charges onto their phone bills. The Federal Communications Commission says the fourth-place "Un-Carrier" has agreed to pay $90 miillion to put the embarrassing allegations behind it.
This is a long story, and nearly every carrier - landline as well as wireless - seems to have gotten into the game. Just this Wednesday, the Consumer Financial Protection Bureau sued third-place Sprint over cramming, accusing it of profiting from "tens of millions of dollars" in unauthorized third-party charges on its bills, and ignoring red flags that should have made the trickery clear. In October, AT&T agreed to pay $105 million to settle cramming charges.
It was actually a third Washington agency that brought T-Mobile's cramming to light. The Federal Trade Commission sued the carrier this summer, accusing it of collecting hundreds of millions of dollars from its customers for services such as flirting tips, horoscopes, and antivirus scans - items that typically cost T-Mobile subscribers $9.99 a month, which is about the limit for companies' trying to sneak these maybe-no-one-will-notice charges onto your bills. Worst of all: Even prepaid customers, who never received any bills showing them, were dinged.
I'll have more to say about this later on, but the news that T-Mobile touted today as "huge" and "so big we had to keep it a surprise" is at least modestly significant - and, once again, a disruption aimed at challenging Verizon and AT&T: The "Un-carrier" says it will offer new and existing subscribers a "Data Stash," allowing them to roll-over their unused gigabytes at the end of each month.
Sometime in January, each customer who qualifies will get a "gift" of 10 gigs to start with. Once those are used up, customers will get to stash unused data each month, and keep it for up to a year.
T-Mobile already doesn't charge for data overruns. If you're a customer and run through, say, your 1-gigabyte or 3-gigabyte allotment, you simply get throttled to 2G speeds. But T-Mobile CEO John Legere says his competitors collect about $1.5 billion a year for data overages - pure margin, he says. And more to the point, he says, the threat of those charges prompts many people to pay for far more data than they actually need - he estimates about 3 extra gigs a month per subscriber.
Federal regulators are extending the recall of potentially defective Takata airbags to the whole country, not just the hot and humid regions that were the focus of the original recalls of nearly 8 million vehicles.
The National Highway Traffic Safety Administration announced the widened recall late Tuesday afternoon, saying it had found evidence that "a recent driver’s side air bag failure in a vehicle outside the current regional recall area" was similar to five previous driver’s-side airbag ruptures in vehicles covered by the initial recalls, which targeted vehicles from 10 manufacturers.
Takata had limited the scope of the initial recalls to roughly 1 in 3 of the similarly designed airbags by insisting that the horrific incidents linked to the devices - in which shards from their inflators pierce victims like shrapnel from military explosives - were occurring only in regions where the inflators were subject to consistently hot, humid weather. Outside experts such as Clarence Ditlow of the Center for Auto Safety said incidents reported outside such areas suggested Takata and the automakers were underplaying the risk.