uPayPal Must Pay $25M In Refunds, Penalties For Illegally Signing Customers Up For Online Credit Productr

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  (Liz Wise)

  The Consumer Financial Protection Bureau alleges that online payment platform PayPal signed up customers for PayPal credit accounts without authorization, forced customers to use this credit line instead of their preferred payment methods, and failed to address disputes. As a result, PayPal will pay a total of $25 million in refunds and penalties.

  The CFPB announced today that it filed a complaint and proposed consent order against California-based PayPal for illegally signing customers up for PayPal Credit without their permission and deceptively advertising the benefits of the credit service.

  According to the complaint [PDF], since 2008 PayPal has offered PayPal Credit – formerly Bill Me Later – to consumers making purchases from online merchants using the service or eBay.

  While the product was advertised as optional, the CFPB claims in some instances people who were attempting to enroll in a regular PayPal account, or simply make an online purchase, were signed up for the credit service without realizing it.

  In some cases, the company allegedly enrolled other individuals while they tried canceling or closing out of the application process.

  After customers were enrolled in the service, PayPal would automatically set or reselect the credit as the default payment method for all purchases made through the system.

  “This meant consumers used PayPal Credit even when they intended to use another method of payment such as a linked credit card or checking account,” the CFPB says in a statement.

  When customers tried to select a different payment method, they tell the CFPB the purchase was still completed with the unwanted PayPal Credit. As a result, many PayPal users incurred late fees and interest because they didn’t know they had made a purchase through PayPal Credit.

  The CFPB claims that most customers discovered their accounts only after finding a credit report inquiry or receiving welcome emails, billing statements, or debt-collection calls for amounts past due, including late fees and interest.

  In addition to illegally enrolling customers in the PayPal Credit service, the CFPB alleges that the payment services company deceptively advertised benefits of the program and unfairly charged customers interest after promising a deferred interest promotion.

  According to the CFPB, PayPal advertised promotions such as a $5 to $10 credit toward purchases if customers used the service. However, the company failed to honor the credit.

  Additionally, the company regularly advertised a limited-time, deferred interest promotion. Under the deal, PayPal purported to let users pick how payments would be applied to these promotional balances.

  However, when consumers attempted to contact the company to get more information or request to apply their payments to promotional balances often could not get through to the company’s customer service line or were given inaccurate information.

  As a result, many individuals tell the CFPB that they incurred deferred interest fees that they could not avoid.

  Unfortunately for customers, PayPal’s billing issues didn’t end there. The company allegedly failed to post payments or failed to remove late fees and interest charges from users’ bills even when payments were unable to be made because of website failures. enable to make payments because of website failures.

  When customer brought the billing issues related to fees and interest to PayPal’s attention, the company allegedly mishandled the disputes and made additional billing errors.

  Under the CFPB’s proposed consent order [PDF], PayPal must provide $15 million in redress to those who were mistakenly enrolled in PayPal Credit, who mistakenly paid for a purchase with PayPal Credit, or who incurred fees or deferred interest as a result of the company’s inadequate disclosures and flawed customer-service practices.

  The company must also pay a $10 million civil penalty to the CFPB’s Civil Penalty Fund.

  Additionally, PayPal is required to take steps to improve its consumer disclosures related to enrollment in PayPal Credit to ensure customers know they are enrolling or using the product for a purchase.

  “Online shopping has become a way of life for many Americans and it’s important that they are treated fairly,” CFPB director Richard Cordray said in a statement. “The CFPB’s action should send a signal that consumers are protected whether they are opening their wallets or clicking online to make a purchase.”

  Consumer Financial Protection Bureau Takes Action Against PayPal for Illegally Signing Up Consumers For Unwanted Online Credit [Consumer Financial Protection Bureau]

  
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by Ashlee Kieler via Consumerist

uSuspicious Buzzing Noise Leads To Discovery Of 40,000 Bees Under Floorboards Of NYC Homer

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  (Theodore Scott)

  No one likes unwanted houseguests squatting in their home, even if said residents are busy making something tasty. So when officials in New York City found a hive of roughly 40,000 bees living under the floorboards of a Queen apartment, experts felt it was best to evict.

  The owner of the home called in a retired New York Police Department detective whose known for his skill with bees to diagnose the source of a loud, buzzing noise coming from somewhere inside the house, reports the New York Daily News.

  His investigation using an infrared camera on a pole led to the discovery of the rogue swarm that had moved in under a bedroom in the house, at a spot where that room overhangs a backyard deck. It took more than two hours to remove the bees, with honey dripping off a massive honeycomb as it was carefully pulled out from under layers of siding and plywood.

  Luckily enough for the hive, the queen was found, so the colony will be moved to a new home upstate by another beekeeper.

  Buzz off! Massive hive of 40,000 bees found under bedroom floor of Queens home [New York Daily News]

  
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by Mary Beth Quirk via Consumerist

u4 Cancer Charities Accused Of Swindling Donors Out Of $187 Millionr

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  Children’s Cancer Fund of America Inc. is one of four cancer charities charged with allegedly perpetrating a scheme to bilk consumers out of millions of dollars.

  Federal regulators, state officials and prosecutors and law enforcement officers from all 50 states and the District of Columbia partnered up to charge four cancer charities and their operators for running a scheme to swindle consumers out of $187 million in charitable donations.

  According to the Federal Trade Commission, Cancer Fund of America, Inc. (CFA), Cancer Support Services Inc. (CSS), Children’s Cancer Fund of America Inc. (CCFOA) and The Breast Cancer Society Inc. (BCS), along with their operators, told donors their funds would go toward helping cancer patients.

  However, the agencies allege that the donations were actually spent on cars, trips, luxury cruises, college tuition, gym memberships, jet ski outings, sporting event and concert tickets, and dating site memberships for the company operators, their family members and friends.

  Stay tuned for more information on this enforcement action.

  
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by Ashlee Kieler via Consumerist

uAT&T CEO: We Can Invest In Our Company Despite Net Neutrality Because It’ll Lose In Court Anywayr

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  (Mike Mozart)

  All of the big ISPs hate the FCCs new net neutrality rule. They’ve been protesting the agency’s decision since before it was even made. And yet the top executives at the cable ISPs have all by now explained why net neutrality is not actually a threat to their businesses, and this week was AT&T CEO Randall Stephenson’s turn.

  AT&T spent the duration of the net neutrality fight trying their hardest to make “regulation stifles innovation” a self-fulfilling prophecy. On the heels of the White House’s call for the FCC to use Title II for net neutrality, last year, AT&T promptly issued a threat basically to take their ball and go home. Just a few months after announcing they might do a huge expansion of their gigabit fiber offerings, AT&T did an about-face, claiming that the plans were on hold due to the potential of strong net neutrality regulation.

  At the time, AT&T CEO Randall Stephenson told investors, “We can’t go out and invest that kind of money deploying fiber to 100 cities not knowing under what rules those investments will be governed.”

  Of course, the ISPs did not get their way, back in February, and the FCC vote to adopt the new rule. And in passing their regulation, the commission called everyone’s “this will stop us from investing” bluff.

  So how is AT&T’s Stephenson now justifying his company’s continued well-being and failure to collapse into a pile of bankrupt ashes?

  “The exact comment I made,” he said in an interview with CNBC this week, “was, we’re going to put a pause on our new broadband deployment plans until we see how these rules came out. We have seen how the rules came out.”

  And yes, there is a truth to that: we have all now seen the new rule. But AT&T hates that new rule. They expressed disappointment in the FCC for actually regulating. They have been warming up their legal challenges since before the rule was even adopted. And they are now among the many parties filing the giant slate of lawsuits against the FCC to halt that rule.

  So why is supposedly disastrous new regulatory environment suddenly not so bad for AT&T? Because they don’t expect it to last.

  “As we read those rules, we do believe they’re subject to modification by the courts and remand by the courts to the FCC,” said Stephenson, which translated from the legalese to the English means they expect the courts to toss the rule back to the FCC for major edits, or to invalidate it entirely.

  “Based on our reading of the Title II order that came out, we’re operating and we’re investing under the scenario that these rules will probably be changed,” Stephenson said. “We don’t think this rulemaking is sustainable from a legal standpoint, but the courts will decide that.”

  And if the lawsuits fail, well, there’s always Capitol Hill. “Irrespective,” continued Stephenson, “the Congress seems inclined to make a change here so we really think these rules will be modified to a format that will be conducive to investment in the long haul.”

  However, should Congress not fall into line, Stephenson has a plan C: the White House changing hands in the 2016 election, and the FCC’s current 3-2 party split swapping majorities. “Title II was put in place with a 3-2 vote of this commission. Title II could be changed by a 3-2 vote from another commission,” said Stephenson. “There’s just a lot of moving parts here. We think it’s unlikely the rules will stay in place like they are in the long term.”

  Of Stephenson’s A, B, and C plans, the courts are probably the most likely. A Congressional solution has supporters but not enough of them, and also faces strong opposition. And as for the FCC changing its tune later? As we’ve described before, it’s possible that they could, but it’s deeply unlikely without an external force prompting it, and it would go through the same lengthy rulemaking process as before.

  And so, the courts. But the FCC has been prepared for the inevitable lawsuits for many months, and crafted the entire new rule with the court’s tossing-out of the 2010 rule in mind. FCC chairman Tom Wheeler is confident that the FCC can win on this round.

  And yet, in terms of AT&T and others continuing to invest in their own companies and company infrastructure, net neutrality pretty much doesn’t matter. Companies are going to do whatever makes them money, and the internet is — and will not stop being — big business.

  Why net rules no longer an investment barrier: AT&T [CNBC via Ars Technica]

  
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by Kate Cox via Consumerist

uTic Tac Introduces New Flavors That Change As They Dissolve, Because Millennials Can’t Stand Being Boredr

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  Tic Tac’s current flavors (via Facebook)

  In yet another example of how badly brands want to cater to — and get the business of — younger consumers, Tic Tac is introducing its first major product innovation in seven years: Flavors that change as they dissolve in your mouth, because millennials just cannot stand being bored, nope, not for one second.

  Tic Tac Mixers were designed for young consumers who hate being bored, Todd Midura, marketing director for Tic Tac in the U.S. told Bloomberg, and will come in either cherry cola or peach lemonade.

  “It was really born from looking at consumer needs and trying to make sure we’re appealing to those younger consumers,” Midura said. “It’s all about people wanting the product to entertain them. Younger people are really looking for a product to do that.”

  The company says there are three reasons why someone might want a Tic Tac — to freshen breath, have a “sweet, fruity” moment or “emotional rescue.” Okay, then.

  Since Tic Tacs first came on the scene in 1969, the product has remained pretty much the same, besides a tweak to packaging in 2010 to allow the clear containers to hold more mints than before. That’s because people haven’t wanted a change, Midura says.

  “There’s an element of nostalgia,” he said. “People love being able to see what’s inside.”

  Unless you’re bored and you can’t find entertainment anywhere else than a flavor-changing candy.

  Tic Tac Adds New Flavor-Changing Varieties to Draw Millennials [Bloomberg]

  
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by Mary Beth Quirk via Consumerist

uJury Hits Debt Collector With $83 Million Verdict Over Bogus $1,130 Debtr

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  (Luke Hornick)

  A jury in Missouri recently awarded $251,000 in damages to a local woman who was wrongfully sued by a debt collector — more than 222 times the amount she’d been sued over — but that’s nothing compared to the additional $82.99 million in punitive damages assessed against the collection company.

  It all started several years back, when Portfolio Recovery Associates claimed a Kansas City, MO, resident owed $1,130.14 in credit card debt.

  But she didn’t owe this debt — in fact, it belonged to a man who lived in the other Kansas City (the one in Kansas). Like many debt collectors, Portfolio lacked the proper documentation for the debt it purchased but pursued it anyway.

  “The lawsuit terrified me,” she told KCUR FM in a written statement. “I feared they would take my house and I feared they would arrest me.”

  A legal aid lawyer spent months trying to convince Portfolio Recovery of its error, but the company continued to attempt to collect the bogus debt.

  And so when the debt collector sued the woman, she filed a counterclaim, alleging malicious prosecution and violation of the Fair Debt Collection Practices Act.

  A judge sided with the woman last October, ruling that the debt collector had “acted in bad faith, abused the discovery process and repeatedly violated this court’s discovery orders.”

  “I was very shocked that they sued me for one year and three months even though I never had the credit card,” says the woman. “And after they dismissed the case, they said they might sue me again.”

  A jury was subsequently asked to make a decision on damages, and last week they came down hard on Portfolio Recovery. The $252,000 was awarded to the woman for the company’s violations of the FDCPA, while the $82.9 million was for malicious prosecution. That figure represents around half of the company’s net income for 2014.

  If that verdict is upheld, the woman (and her attorneys) would receive half while the other half would go to the Missouri attorney general’s office to set up a victims’ compensation fund. The state’s AG’s office has reportedly received dozens of similar complaints about Portfolio Recovery in the last decade.

  The woman’s lawyer says the jury hit Portfolio Recovery with a “verdict that it thought would get this company’s attention.”

  “This company has gained a reputation for take no prisoners, ‘If you mess with us we’re going to take you all the way, you’re going to have to spend a lot of money on this litigation, you’re going to have to go all the way to trial,’” said her attorney. “And so, among consumer lawyers, they are known to be very aggressive in litigation and to not stop; even when they’re wrong, they’re just not going to stop.”

  Portfolio Recovery says it will appeal the “outlandish” verdict.

  “We hope and expect the judge will set aside this inappropriate award, and we plan to file motions to make the request formally in the very near term,” says the company. “Any fair reading of the facts of this case makes plain that a verdict of this size is not justice by any means and cannot stand.”

  Jury Awards KC Woman $83 Million In Debt Collection Case [KCUR]

  Jackson County jury assesses $82 million verdict against debt collection firm [Kansas City Star]

  [via Credit.com]

  
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by Chris Morran via Consumerist

uNHTSA Investigating Nissan Vehicle Issue That Can Result In Blown Tires, Brake Failurer

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  (Russ Swift)

  Suffering a tire blowout while driving down the highway is never a welcome experience, but imagine if you found out that the tire blew, not because of debris on the roadway, but as a result of a manufacturing defect with your vehicle? It’s for that reason more than 130,000 Nissan Versa vehicles are now under investigation by federal regulators.

  The National Highway Traffic Safety Administration’s Office of Defects Investigation opened a probe into model year 2008 to 2010 Versa vehicles after receiving 93 complaints about fractured front suspension coil springs.

  According to a notice [PDF] posted by NHTSA, the fractured spring can lead to tire punctures or brake line damage while driving, which increase the risk of an accident.

  “Preliminary analysis of the complaints indicates that the coil spring failures occur without warning and can happen at any speed,” the agency says in the notice.

  While no injuries or fatalities have been reported related to the issue, one complaint did involved a crash

  The driver in that instance was entering a highway on-ramp when they heard the crunching sound of metal on metal coming from the front passenger side of their car.

  “I attempted to straighten out my car after the slight right turn and my right tire was not reacting to my turning of the steering wheel. I hit the brake a bit and tried to slow the car when my car started to fishtail,” the complaint states. “I was already in a spin that caused me to completely lose control… the car speed past 360 degrees, I went over an island and came to an abrupt stop once I took out the stop sign on this island.”

  Another complaint involved the coil spring fracturing while the vehicle was traveling at 65 miles-per-hour, causing a sudden tire failure by cutting the inner sidewall.

  Several other complaints include instances where the vehicle experience a passenger-side coil spring fracture while driving at speed in excess of 40 miles-per-hour. At least one of those cases resulted in a tire puncture and brake line failure.

  NHTSA says ODI has received field report information related to the failures for the affected vehicles.

  A preliminary investigation has been opened by the agency to access the scope, frequency and safety-related consequences of the alleged defect. The investigation is NHTSA’s first step in a process that could result in a recall of the vehicles.

  
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by Ashlee Kieler via Consumerist