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Mobile Apps May Violate Fair Credit Reporting Act: FTC

2012-02-07T02:39:00Z

The Federal Trade Commission is warning marketers that background screenings through six mobile applications may be violating the Fair Credit Reporting Act.

The FCRA protects the privacy of personal information in background reports and ensures that the information is accurate.

The FTC warned the marketers that they must comply with the FCRA, if they have reason to believe the background reports provided by the apps are being used for employment screenings, housing, credit, or other similar purposes.

According to the FTC, some of the apps include criminal record histories, the type of information that is typically used in employment and tenant screenings.

The agency sent a letter to the marketers of the six mobile apps that offer background checks.

“If you have reason to believe that your background reports are being used for employment or other FCRA purposes, you and your customers who are using your reports for such purposes must comply with the FCRA,” the letter says. “This is true even if you have a disclaimer on your website indicating that your reports should not be used for employment or other FCRA purposes.”

The agency has made no determination whether the companies are violating the FCRA, but encourages them to review their apps, and their policies and procedures, to be sure they comply with the FCRA.

Agency’s Tally of Credit Card, Mortgage Complaints: 13,210

2012-02-07T00:46:12Z

The Consumer Financial Protection Bureau received 13,210 complaints from credit card and mortgage holders between July 21, 2011, when the agency was launched, and Dec. 31.

The agency’s consumer response team began taking credit card complaints on July 21, and mortgage complaints on December 1, 2011. That explains the lopsided percentage of credit card complaints (9,307) compared to grips about mortgages (2,326).

The CFPB expects to handle consumer complaints on all financial products and services within its authority by the end of 2012.

The CFPB’s statistics for 2011 can be found in its semi-annual report.

Since the Bureau started, 44 percent of all complaints have been submitted through the agency’s website and 14.7 percent via telephone calls. Referrals from other regulators accounted for 34.9 percent of all complaints received. The rest were submitted by mail, email and fax.

Approximately 9,885, or 75 percent, of all complaints received between July 21 and December 31, 2011 have been sent to companies for review and response.

Companies have responded to 88.1 percent of the complaints sent to them. Companies report closing over 55 percent of complaints with relief and approximately 31 percent without relief.

In its first six months, the CFPB reports that it has begun:

resolving consumer complaints about credit cards and mortgages;
launching a supervision program that will promote compliance with consumer protection laws within the Bureau’s jurisdiction by financial companies of all kinds;
evaluating and developing disclosures that make the costs and risks of financial products easier for consumers to understand;
working to implement statutory protections for consumers who rely on consumer financial products, such as mortgages;
launching the Bureau’s website – http://ConsumerFinance.gov – and using it to engage the public in a range of projects;
creating several ways in which individuals can alert the CFPB about potential violations of consumer protection laws in the Bureau’s jurisdiction; and
improving information about the structure of consumer financial markets and consumer behavior through practical market intelligence and independent research.

Eastwood Ad Pays Tribute to Chrysler, Michigan Comeback

2012-02-06T20:37:38Z

In his trademark raspy, no-nonsense delivery, Clint Eastwood narrated a tribute to Chrysler and the rest of the Michigan auto industry in a TV ad during halftime of yesterday’s Super Bowl.

It was a very timely and heartfelt reminder of the U.S. auto industry’s comeback – at least for Chrysler and General Motors – that was much more dramatic and challenging than the Giants retaking the lead from the Patriots.

Eastwood spoke about “halftime in America” in the TV spot from Chrysler, interlaced with images of Detroit, close-ups of Michigan citizens in black and white, glimpses of autoworkers, first-responders and flashes of new vehicles.

“People are out of work and they’re hurting. And they’re all wondering what they’re going to do to make a comeback. And we’re all scared, because this isn’t a game,” Eastwood said. “The people of Detroit know a little something about this. They almost lost everything. But we all pulled together, now Motor City is fighting again.”

The U.S. auto industry was virtually brought down by the 2007-2009 financial crisis and recession, and the downturn in U.S. auto sales that sent Chrysler and General Motors into bankruptcy.

The region’s jobless rate reached as high as 16.6 percent in July 2009, before coming down to the current 9.7 percent.

Chrysler Group LLC recently reported a net profit of $183 million for 2011, swinging back into the black from a loss of $652 million in 2010 – exceeding targets set by CEO Sergio Marchionne when Fiat SpA took over Chrysler in 2009.

It was the first time the Auburn Hills, Michigan automaker has reported an annual profit since 1997.

General Motors (GM) is likely to post about $8 billion in earnings for 2011 when automaker makes its announcement next week, the Wall Street Journal reported today. Meanwhile, GM has regained its title as the world’s largest auto manufacturer.

CEO Marchionne said the ad was not meant to be political, although it brushes up on issues such as the U.S. bailout of the auto industry and unemployment, two hot topics in this presidential election year.

“It was not intended to be any type of a political overture on our part,” Marchionne said today an interview on WJR-AM, a Detroit radio station. “Nobody inside Chrysler was attempting to influence decisions. The message is sufficiently universal and neutral that it should be appealing to everybody in this country and I sincerely hope that it doesn’t get utilized as political fodder in a debate.”

He said Eastwood was expressing his own views and that the actor donated his fee to charity. Eastwood’s 2008 film, “Gran Torino,” focused on the heroics of a retired Detroit autoworker.

Here is the rest of Eastwood’s narrative from the Chrysler ad (Watch the video below):

“I’ve seen a lot of tough eras, a lot of downturns in my life. And, times when we didn’t understand each other. It seems like we’ve lost our heart at times. When the fog of division, discord, and blame made it hard to see what lies ahead.

But after those trials, we all rallied around what was right, and acted as one. Because that’s what we do. We find a way through tough times, and if we can’t find a way, then we’ll make one.

All that matters now is what’s ahead. How do we come from behind? How do we come together? And, how do we win?

Detroit’s showing us it can be done. And, what’s true about them is true about all of us.

This country can’t be knocked out with one punch. We get right back up again and when we do the world is going to hear the roar of our engines.

Yeah, it’s halftime America. And, our second half is about to begin.”

New Consumer Agency, FTC Agree to Coordinate Efforts

2012-02-06T21:42:02Z

The venerable Federal Trade Commission had been working to protect consumers from unfair business practices for 96 years when Wall Street reform in 2010 created the Consumer Financial Protection Bureau to expand and centralize protections against unfair lending practices.

Now, the two agencies are officially cooperating with each other, having signed a Memorandum of Understanding.

“Entering this agreement with the FTC is important to making sure markets for consumer financial products are getting efficient and effective federal government oversight,” said Richard Cordray, director of the CFPB. “We are both motivated by the same thing: To do right by consumers. We look forward to this partnership.”

Said Jon Leibowitz, Chairman of the FTC: “Now we have another cop on the beat, and this agreement ensures that businesses will not be double-teamed by the two agencies.”

The FTC was established in 1914 with a mission to promote consumer protection and address anti-competitive business practices.

The CFPB was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It launched operations on July 21, 2011. Its mandate was to protect Americans against unfair or deceptive lending practices by banks and many nonbank lenders.

President Obama last month installed Cordray, the former Ohio attorney general, as CFPB director, defying GOP opposition to the structure and accountability of the new agency.

Dodd-Frank requires the CFPB and the FTC to work together to coordinate their enforcement activities and promote consistent regulations of consumer financial products and services.

The two agencies have agreed to:

Meet regularly to coordinate upcoming law enforcement, rulemaking, and other activities;
Inform the other agency, absent exigent circumstances, prior to initiating an investigation or bringing an enforcement action. This notice will prevent duplicative or conflicting enforcement efforts and undue burdens on industry;
Consult on rule-making and guidance initiatives to promote consistency and reflect the experience and expertise of both agencies;
Cooperate on consumer education efforts to promote consistency of messages and maximum use of resources;
Share consumer complaints.

The CFPB has set up various methods for consumers to submit complaints or comments through the agency’s website: ConsumerFinance.gov.

To file a complaint in English or Spanish with the FTC, visit its online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).

Used Car Prices Forecast to Jump Again in 2012: NADA

2012-02-06T14:27:53Z

A still rising demand for used cars and truck, along with a decline in their supply, will result in higher prices in 2012, according to the National Automobile Dealers Association (NADA) Used Car Guide.

The Used Car Guide predicts that used vehicle prices will increase by 1.8 percent by the end of the year, peaking in April and May. Used vehicle prices jumped 3 percent in 2011.

It would mark the third consecutive year that used-car prices — near record highs – would have risen.

“Consumers shopping for either a new or used vehicle will benefit this year from higher trade-in values along with loosening credit,” says Jonathan Banks, executive automotive analyst with the Used Car Guide, at a press briefing Friday during the NADA Convention and Expo in Las Vegas. “For dealers, reliance on customer trade-ins will increase as they strive to meet the challenges of growing demand in a supply-constrained market.”

Since the financial crisis of 2008, consumers have been holding on to their cars longer during these tough economic times. Vehicle makers cut production, slowing new vehicle shipments to rental-car companies. That slowed the flow of vehicles into used car lots.

Demand for previously owned vehicles continues this year as thrifty consumers continue to vie for good deals, while auto makers keep production and incentives at conservative levels.

A midsize used car less than five years old is expected to sell at an average price of $11,850 this year, NADA said.. Two years ago, the same car would have sold for $10,325.

“The slowing rate of depreciation on used vehicles over the course of the year will lead to even stronger trade-in values and enhance the equity that a consumer has in their vehicle,” Banks said.

Fuel prices hovering at $3.50 a gallon, or closing in on $4 a gallon, would increase demand for fuel-efficient compact and midsize cars, with prices up by 2.7 percent and 2.1 percent, respectively, by the end of the year, Banks said.

The NADA Used Car Guide predicts prices for large SUVs will increase by 1.4 percent this year.

“A 15 percent drop year-over-year in the used supply of large SUVs will offset the elevated price of gasoline,” he said.

Obama, Bernanke Spotlight Housing as Path to U.S. Recovery

2012-02-05T17:33:06Z

Both President Obama and Federal Reserve Chairman Ben Bernanke have come under fire for their respective responses to the economic crisis, including actions tied to or affecting the depressed housing market.

In recent days, both have spotlighted the vital role of housing in the overall economic picture. In doing so, they agree that a robust U.S. recovery is impossible without lifting residential sales, home prices and easing the foreclosure crisis substantially.

“Both residential sales and construction remain depressed,” Bernanke said in prepared testimony Thursday before the U.S. House Budget Committee. “A persistent excess supply of vacant homes, largely stemming from foreclosures, is keeping downward pressure on prices and limiting the demand for new construction.”

Bernanke’s reference to the housing market drew a statement of support from the National Association of Realtors (NAR).

“We fully support Chairman Bernanke’s comments that the lack of available and affordable mortgage financing, low home values and high foreclosure inventories are inhibiting a meaningful housing market recovery,” said NAR President Moe Veissi.

Veissi said there is more that Congress and the president can do to address the lack of “available and affordable mortgage financing to creditworthy borrowers” and stem the rising inventory of foreclosed homes.

Bernanke’s comments came before a contentious hearing led by Committee Chairman Paul Ryan, R-Wisconsin, who suggested that the Fed may want to allow higher inflation to fulfill the other part of the central bank’s congressional mandate – promoting job growth.

The Fed last month set a 2 percent annual inflation goal after saying that it would keep its benchmark federal funds interest rate at near zero through 2014.

Bernanke said the Fed is not seeking, nor would it tolerate, higher inflation. He told lawmakers that they should focus on reducing the deficit.

But Ryan and other lawmakers have criticized Bernanke for treading on their territory, particularly providing possible solutions to housing woes. Last month, that criticism peaked when Bernanke presented congressional leaders with a white paper entitled: “The U.S. Housing Market: Current Conditions and Policy Considerations.”

The Fed’s paper offers several scenarios for easing the foreclosure crisis, although they involve higher short-term risks for Fannie Mae and Freddie Mac, the taxpayer-subsidized mortgage financing companies.

In a whirlwind of activity in recent days, the Obama Administration has responded – although not directly to the Fed’s white paper – with proposals to help distressed homeowners and address the questionable actions of lenders in processing mortgage securities.

On Feb. 1, Obama unveiled a sweeping new refinancing plan to help millions of “underwater” homeowners save $3,000 a year on average – if Congress approves his program with a price tag of $5 billion to $10 billion.

A week before, U.S. Attorney General Eric Holder said that 11 financial institutions were recently issued subpoenas related to a newly expanded federal-state effort to crack down on misconduct in the mortgage-backed securities market.

And this past week, New York Attorney General Eric Schneiderman said his state has sued the largest U.S. banks – Bank of America, JPMorgan Chase and Wells Fargo – charging that the private “mortgage electronic registry system,” known as MERS, has resulted in deceptive and fraudulent foreclosure filings.

Meanwhile, this coming week could finally see a settlement – as high as $25 billion – between states and the nation’s top lenders over improperly processed foreclosures, the nationwide probe triggered by the “robo-signing” of affidavits.

FTC Stops Bogus Credit Card Telemarketing Scheme

2012-02-05T02:21:10Z

A federal judge has temporarily halted a telemarketing scheme the peddled bogus credit cards for an advance fee of up to $99 – and then took money from consumers’ bank accounts without their consent, according to the Federal Trade Commission.

The judge ordered the defendants’ assets frozen and appointed a receiver to control the business, pending resolution of the case.

The FTC’s complaint claims the operation took in at least $4.82 million in less than three years, including more than 10,000 sales in a recent two-month period. Doing business as Platinum Trust Card and Express Platinum Card, they operated primarily in the Philadelphia area.

The scheme operators targeted those who recently applied online for a payday loan and offered them a general-purpose credit card with a credit limit of up to $9,500, in exchange for an advance fee of up to $99 and a monthly $19 fee, the FTC said.

They falsely claim their cards could be used anywhere that accepts Visa, MasterCard, or American Express, the FTC said. They also said that the cards would help rebuild consumers’ credit ratings, another false claim, the FTC complaint alleges.

“The defendants do not report to credit bureaus, and their ‘credit cards’ only access an online store the defendants operate, which offers a variety of off-brand, outrageously overpriced products, most of which can be purchased only in bulk quantities,” the FTC said.

The telemarketing operation already had personal and bank account information about the targeted consumers, obtained from online payday loan applications. Using this information, they often withdrew fees from the accounts of consumers who rejected the “credit card” offer, the FTC said.

According to the FTC, the defendants are Blake Rubin, also doing business as Platinum Trust Card, Express Platinum Card, CR Ventures LLC, and Maxim Management Group LLC; Chase Rubin, also doing business under those names and as Oakmont Management Services; Apogee One Enterprises LLC, also doing business as Apogee Enterprises LLC, Platinum Trust Card and Express Platinum Card; Marquee Marketing LLC, also doing business as Express Platinum Card; Jules Shore; and Justin Diaczuk.

Read the FTC’s complaint.

To learn more about telemarketing scams, read the FTC’s Who’s Calling? Recognize and Report Phone Fraud.

Limiting Immunity for Banks Key in Foreclosure ‘Robo’ Deal

2012-02-04T21:56:09Z

This coming week may finally see a settlement – as high as $25 billion – between states and the nation’s top lenders over improperly processed foreclosures by hired “robo-signers.”

In the final stretch, immunity for the banks against future legal actions has emerged as a key issue in the talks that have entered a second year.

The deadline for states to decide whether to join the settlement with banks was delayed to Feb. 6 from Feb. 3, according to the office of Iowa Attorney General Tom Miller, who has been leading the talks.

There has been dissention among state officials who argue that the settlement is too lenient on the lenders: Bank of America, JPMorgan Chase & Co., Citigroup, Wells Fargo and Ally Financial.

One potential hurdle to this issue is limiting immunity for the banks from separate and future mortgage litigation, especially actions taken by affected homeowners. Criminal prosecutions against the lenders may also be left on the table.

The biggest dissenter has been California Attorney General Kamala Harris who has walked away from the talks out of concerns that residents of her state won’t receive proper compensation. The settlement might drop to $19 billion from $25 billion if California doesn’t sign on.

Affected homeowners would get principal write-downs or favorable refinancing terms under the proposed settlement.

About 1 million homeowners who are “underwater” on their mortgages – owing more in mortgage principal than the value of their homes — could be eligible for as much as $20,000 in write-downs.

“All I would say is that we are making good progress there,” said U.S. Housing and Urban Development Secretary Shaun Donovan said Wednesday during a White House briefing. “I think you know that documents have been shared with the attorneys general. They are making decisions as we speak. A number of them have already announced support for it and it will be finalized, I would expect, in the coming days.”

The settlement will also likely include an overhaul of mortgage restructuring procedures to help more homeowners avoid foreclosures.

Borrowers who lost their homes to foreclosure are unlikely to get their homes back or reap much financially from the $25 billion settlement. About 750,000 Americans would be eligible for $1,800 checks, according to media reports last month.

Geithner Responds to GOP Attacks on Financial Reform

2012-02-04T17:19:27Z

U.S. Treasury Secretary Timothy Geithner has provided a list of Wall Street reform’s accomplishments as GOP presidential candidates have vigorously assailed the Dodd-Frank legislation of 2010, the impetus for much of the financial system’s overhaul.

Republican presidential contenders Mitt Romney and Newt Gingrich have repeatedly called for the repeal of Dodd-Frank as a cure for the housing market crisis. In a Florida debate last month, both cited the reform law’s regulatory burden on financial institutions.

Romney said that Dodd-Frank has “made it harder for banks to re-negotiate mortgages to help people get out.”

Gingrich said it has “let the biggest banks to get bigger.” He even suggested that the housing market would start to recover the day after Dodd-Frank was to be repealed.

Geithner’s response: If they want to go back to 2008 and 2009, the peak of the financial crisis, then let them repeal it.

“If you want to choose that future, then you should be in favor of the repeal of the law,” he told reporters during a news conference Thursday.

Geithner addressed financial reform on the first meeting day of yet another Dodd-Frank by-product, the Financial Stability Oversight Council, a panel of regulators headed by Geithner that will monitor the soundness of the financial system and take action against the largest firms if the U.S. economy is threatened.

“The financial system is getting stronger and safer,” Geithner said in prepared remarks. “Much of the excess risk-taking and careless and damaging financial practices that caused so much damage have been forced out of the financial system. These gains will erode over time if we are not able to put our full reforms into place.”

Geithner said financial reform has forced the largest firms to raise a substantial amount of new capital, to reduce the size and scope of their businesses where necessary and build stronger “cushions of liquidity.”

“We moved quickly to wean the financial system off the emergency programs we were forced to put in place in the crisis to protect the economy from broader financial collapse,” Geithner said. “Banks have increased common equity by more than $350 billion since 2009.”

Here’s an overview of Geithner’s reform highlights:

Housing finance reform:
This year, Geithner said the administration will build the foundation for reforms to the mortgage market in the United States, including a path for winding down Fannie Mae and Freddie Mac, the two mortgage financing giants subsidized by taxpayers. “We expect to lay out more detail around approaches to reform in the spring, and we plan to begin exploring options for legislation more intensively…”

Consumer protection:
Dodd-Frank’s Consumer Financial Protection Bureau has already improved disclosure on mortgages and credit cards, including consolidation of the two required mortgage disclosure forms into one, and developed new standards for a qualified mortgage. “Consumers are already relying on the CFPB to help settle disputes with financial companies, and the CFPB is making sure that all financial companies—from big banks to payday lenders—are playing by the same rules,” Geithner said.

Protections against the “too big to fail” institutions:
There are now tougher limits on the size of financial institutions, which will prevent the largest banks from becoming too large relative to the size of the financial system. And a bankruptcy-type framework to manage the failure of large financial firms, a “resolution authority” that prohibits bailouts for private investors, protects the taxpayer, and forces the financial system to bear the costs of future crisis.

Banks’ risk-taking:
Banks now face a much tougher set of limits on how much risk they can take. New rules on capital and liquidity will limit leverage by requiring banks to hold more financial reserves against risk and to fund themselves more conservatively.

Derivatives market:
The derivatives markets are coming under a comprehensive framework of transparency requirements, margin rules, and other safeguards. These reforms are designed to move standardized contracts to clearing houses and trading platforms, which should lower costs to those who use these products.

‘Zero’ Net Jobs for Small Businesses in January: NFIB Survey

2012-02-04T04:43:53Z

A prominent member organization of small businesses was quick to respond to today’s uplifting jobs report from the U.S. Labor Department, saying that few of these jobs “are being created on Main Street.”

The National Federation of Independent Business reported that its random survey of 2,155 members for January reflected no net change in employment per firm.

“The Bureau of Labor Statistics announced a drop in the unemployment rate this morning,” said NFIB chief economist William C. Dunkelberg. “Unfortunately, few of these jobs are being created on Main Street.”

For small employers, Dunkelberg said, “the net change in employment per firm (seasonally adjusted) was zero.”

The government reported that the unemployment rate declined by 0.2 percentage point in January to 8.3 percent, the lowest level since February 2009. Total nonfarm payrolls rose by 243,000 in January, surpassing all analysts’ expectations

But the NFIB January survey of small and independent business owners painted a much more subdued job market. The NFIB said full results are slated for release Feb. 14, but the group felt compelled to preview the findings after the Labor Department’s jobs report was released today.

The NFIB survey found on a seasonally adjusted basis that 11 percent of business owners added an average of 3.0 workers over the past few months and 11 percent reduced their workforce an average of 2.9 workers per firm.

Forty-one percent of small-business owners hired or tried to hire, but 31 percent of them reported few or no qualified applicants for positions, Dunkelberg said.

“The percent of firms reducing employment was the lowest since October of 2006 when it was nine percent, but the percent of those increasing employment was also one of the lowest readings in that period,” Dunkelberg said.

The percent of owners reporting “hard-to-fill job openings” rose 3 points to 18 percent, the highest level since June 2008 when it was at 21 percent, Dunkelberg said.