uDiscover Financial Ditching Home-Lending Businessr

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• Just three years after getting into the mortgage origination business, Discover Financial Services plans to shutter its home lending operations.

  The Los Angeles Times reports that Discover, which began offering home loans after it acquired Tree.com in 2012, will dissolve the service in order to shift focus to consumer banking services.

  Discover says the move to consumer banking offers “greater opportunities for growth.”

  The company has already stopped accepting applications at its Irvine, CA, location, but will continue processing and funding loans already underway, the L.A. Times reports.

  Discover Home Loans Inc. will also wind down business at its Louisville, KY, offices later this summer. AmeriSave Mortgage Corp. is expected to finish processing applications from that unit, establishing its own office in the city.

  The mortgage origination closure will result in the loss of about 460 jobs. Discover says it will offer severance packaged to the affected employees.

  Discover Financial closes mortgage unit, lays off hundreds in Irvine [The Los Angeles Times]

  
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by Ashlee Kieler via Consumerist

uStarbucks Closing All Standalone La Boulange Bakery Cafés By Fallr

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  (Gary Stevens)

  Back in 2012, Starbucks bought a San Francisco-based bakery chain, La Boulange, to help class up its offerings in the pastry case. While Starbucks will keep the brand for the pastries served in Starbucks cafés, the company has decided to close the 23 standalone La Boulange locactions that have stayed in business since the acquisition.

  While Starbucks has expanded its selection of food and increased their profits from sales of pastries, sandwiches, and other breakfast items, the company no longer wants to run the 23 stores that just exist as bakery-cafés. Production facilities that supply those stores will close as well.

  “Starbucks has determined La Boulange stores are not sustainable for the company’s long-term growth,” the company explained in a statement. “The La Boulange brand will continue to play a significant role in the future of Starbucks food in stores.” Starbucks calls the addition of the company’s pastries in the U.S. and Canada an “up-leveled food experience,” which sounds like something out of a croissant-themed video game.

  There was an adjustment period after Starbucks and La Boulange got hitched: originally, Starbucks switched out their classic pastry case items in favor of a fussier selection from La Boulange, and customers really weren’t into it. Coffee and lemon cakes returned to the pastry case, and the two companies achieved pastry and sandwich harmony.

  Starbucks Food Strategy and La Boulange Update [Starbucks](via Bloomberg)

  
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by Laura Northrup via Consumerist

uUber Still Working Out Logistics Of Delivering Food And Merchandiser

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• New business ventures sometimes have unexpected problems. As ride-hailing service Uber tries to expand its business into hauling lunch orders and same-day online orders around, the company has hit some unanticipated problems. For example, some people order lunch when they think they’re ordering a ride, since both are part of the same mobile app. Some high-end retailers couldn’t use Uber driver since their insurance only covers merchandise up to $1,000.

  It’s not entirely clear how someone could confuse a cross-town ride with a sandwich, as one Uber driver who also delivers for UberEATS in Chicago claimed in an interview with the Wall Street Journal. The service carries two different items during typical lunch hours, and the Chicago driver says that drivers are told to just throw out whatever food they have left at the end of the day.

  Combining rides with lunch delivery seems like a good match at first glance: business typically slows down during the middle of the day for drivers who work during business hours, so Uber began experimenting with food delivery, offering drivers a bonus to try it out.

  Delivering pricey items like electronics and jewelry can get even more complicated. Sources told the WSJ that negotiations fell apart between Uber and companies that sell jewelry and clothing because of insurance issues and ordering methods: a $1,000 insurance limit and limited selections may not matter so much for sandwiches or even iPhones, but did matter for one jewelry company and for luxury vendor Gilt Group.

  Delivering food involves challenges that don’t necessarily come up while driving for an app-based taxi service: drivers need to get out of their cars and find a parking space, which can be a challenge in the dense urban areas where these services operate now.

  Meet The Drivers Behind Uber’s Food Delivery Service [Wall Street Journal]

  
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by Laura Northrup via Consumerist

uEtsy Launches Pilot Crowdfunding Program To Help Sellers Grow Their Businessesr

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  While Etsy has long been a marketplace where sellers could launch small businesses, the site has not had a Kickstarter-like crowdfunding platform for sellers to raise money to grow their businesses. Today, Etsy announced it is finally giving crowd-sourced funding a shot with the launch of a new pilot program.

  “Fund on Etsy” aims to allow sellers to raise money directly on Etsy’s website to improve their businesses in various ways, from studio expansions to purchasing new tools to hiring a helping hand, the company said in an announcement of the two-month long pilot program on Tuesday.

  “Fund on Etsy is a way to expand the Etsy Economy, where creative entrepreneurs find meaningful work and thoughtful consumers discover and buy unique goods while building relationships with the people who sell to them,” Joe Lallouz, product lead for Etsy’s Maker Innovation team said in a blog post.

  Much like Kickstarter, individuals who support a Fund on Etsy project won’t be charged until the funding goal is met. The crowdfunded products are expected to ship within six to nine months.

  A limited group of the company’s one million sellers have been chosen to participate in the U.S.-only pilot program, which will run from June 16 to August 16.

  CNBC reports that the Brooklyn-based company will take a 3.5% cut of each transaction plus a 20-cent posting fee.

  Etsy says about 100 vendors have been working for the past two months to create funding campaigns – ranging from a few hundred dollars to $10,000 – to further their businesses’ success.

  “Growth means different things to different people, and we believe Fund on Etsy will allow sellers to continue to grow on their own terms,” Lallouz said.

  One example given by the company includes a seller who began selling modern housewares on the site after she was laid off as a designer. She plans to use the platform to raise $4,500 to develop and produce a new line of hand-marbled wooden plates.

  In addition to helping sellers improve their operations, Etsy says the crowdfunding aspect of the site will allow buyers to feel more connected to their purchases.

  “We believe that crowdfunding on Etsy is a natural way for sellers to forge even more resonant connections with their existing communities and customer bases and to grow in ways that may not have been possible before,” the company says. “By funding a campaign, buyers can participate in a new product’s journey from initial concept to their front door, while forging even more meaningful relationships with Etsy sellers they care about.”

  Etsy says that following the pilot program it will look at buyer and seller feedback to determine whether or not crowdfunding should become a permanent platform for the company.

  Etsy Launches Fund on Etsy Pilot Program to Crowdfund New Products [Etsy]
  Etsy launches crowdfunding pilot program [CNBC]

  
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by Ashlee Kieler via Consumerist

uConsumers Love Designer Brands, Hate Products Splattered With Logosr

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  Cats are not subtle about their designer brand preferences. (Christine)

  The luxury goods industry has a problem: its customers now prefer subtlety. That means that bags that serve as walking billboards yet cost thousands of dollars just don’t sell like they used to. The global rich are now more interested in subtlety and craftsmanship, or they’re tired of feeling like they’re showing off. Maybe both.

  Showing off is kind of rude when economic inequality is a popular political issue, and there’s a chance that you might have to walk with a $3,000 handbag right in front of an actual poor person. It sounds strange, but experts who study consumer spending told the Washington Post that this is an actual trend, and fashion companies are struggling to keep up.

  How do you create a handbag or a pair of shoes that signals its price only to people who can afford the same brand of accessories? How can you convince fashion fans to buy new pieces every season when what they want are classic looks and high craftsmanship that makes pieces durable?

  It’s not just in the United States that this is a problem. In the last few years, luxury brands like Prada and Louis Vuitton have increased sales in China, and customers there have developed a distaste for flashy logos, too. Customers’ interest in high-end accessories hasn’t gone down, but pieces that now look tacky to the discerning shopper have lost their appeal.

  Why Louis Vuitton, Gucci and Prada are in trouble [Washington Post] (via Racked)

  
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by Laura Northrup via Consumerist

uToyota Adds Another 1.37M Vehicles To The Massive Takata Airbag Recallr

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  (Mike Mozart)

  Auto manufacturers continue to whittling down the number of unidentified vehicles equipped with potential shrapnel-shooting airbags a month after Japanese parts maker Takata deemed the safety devices defective. The latest round of expanded recalls goes to Toyota, which added another 1.37 million to its recall list.

  Reuters reports that Toyota’s recall involves 1.37 million vehicles using front passenger-side airbags with inflators that can rupture with enough force to injure or kill occupants upon deployment.

  Newly identified vehicles include model year 2003 to 2007 Corolla and Corolla Matrix, model year 2005 to 2006 Tundra, model year 2005 to 2007 Sequoia and model year 2003 to 2007 Lexus SC430.

  The company says the expansion brings the total number of Toyota and Lexus vehicles recalled in the U.S. to 2.9 million.

  A spokesperson for Toyota says that the company is unaware of any injuries or fatalities related to airbag deployments in the models recalled on Tuesday.

  Reuters reports that the automaker has identified 24 incidents of improper deployments – including eight reports of injuries – of Takata airbags in its vehicles worldwide.

  Manufacturers have scrambled in recent weeks to identify millions of vehicles that include Takata safety devices linked to at least seven deaths and more than 100 injuries.

  While about 17 million of the 33.8 million vehicles with the airbags had already been part of recalls by major automakers, millions of others had yet to be identified, leaving consumers wondering if they’re driving around with what some people have likened to an explosive device in their steering wheel.

  Toyota’s recall comes just hours after Honda announced it had recalled an additional 1.39 million Accord and Civic sedans also for defective passenger-side airbags.

  Consumers looking to see if their vehicles are part of the largest auto recall in history can check by entering their 17 digit VIN on SaferCar.gov, which will return a list of all recalls associated with a particular vehicle.

  Regulators with the National Highway Traffic Safety Administration have said that identifying affected vehicles will likely be just one hurdle consumers will face when it comes to the Takata recall. The parts manufacturer has struggled in recent months to meet the demand for replacement airbags. The company recently announced it would increase its output of new parts to one million per month later this year.

  But even if those consumers do receive new airbags promptly, there’s still no guarantee those new safety devices are safe, as Takata, regulators and manufacturers have yet to identify what has caused the defect.

  In fact late last month, Takata confirmed that more than 400,000 vehicles that have been fixed through previous airbag recalls will have to undergo a second replacement.

  Toyota expands Takata U.S. air bag recalls by 1.37 million vehicles [Reuters]

  
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by Ashlee Kieler via Consumerist

uWalmart Accused Of Using Its Charitable Foundation To Build More Walmartsr

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  Chicago is one of the markets where Walmart allegedly used its charitable Walmart Foundation to aid its urban expansion plans. (Photo: Eric Allix Rogers)

  There are more than 4,500 Walmart stores in the U.S., but the nation’s largest retailer continues to expand. The company, once associated with rural communities, has recently made pushes into urban markets. And a new complaint to the IRS accuses Walmart of wrongfully using its tax-exempt Walmart Foundation charity to get a foothold in those cities.

  In a lengthy and detailed complaint [PDF] to IRS Commissioner John Koskinen about the Walmart Foundation, more than a dozen community groups from around the country raise concerns about the retail giant’s potential use of a tax-exempt charity to further its corporate ends.

  They claim that an analysis of Walmart Foundation giving between 2008 and 2013 shows that donations from the foundation “skyrocketed” in cities like New York, Boston, Washington, D.C., and Los Angeles whenever the retailer attempted to enter those cities.

  Here are the relevant charts from the complaint for NYC and Boston:
  

  

  Additionally, the groups say that the Walmart Foundation used localized pages on WalmartCommunity.com to both dangle the potential for increased charitable donations if Walmart stores were allowed to open in the city and the threat of those donations not materializing if the stores weren’t allowed.

  For example, the page pushing for a Walmart in Salt Lake City lists $10 million in “Donations to charitable organizations” under the headline of “What’s at Stake.”

  A What’s at Stake page for Chicago doesn’t name the Walmart Foundation, but lists millions in charitable donations to local groups, all of which came from the Foundation, according to the complaint.

  The groups also contend that the Walmart Foundation has questionable expectations of grant recipients.

  It cites a Foundation Memo [PDF], dubbed “Recognizing The Walmart Foundation For Its Good Works,” as encouraging recipients to promote the Walmart store brand.

  “Incorporating ‘Walmart’ into the name of programs being supported by the Walmart Foundation helps ensure that those being served and others recognize Walmart whenever the program is referred to by name,” reads the document, which the groups note carries the Walmart logo and not the Walmart Foundation logo.

  The complaint also takes issue with the foundation’s stated position to not donate to groups that may position Walmart or the Foundation in a negative light.

  This means that if a group wants to continue receiving Foundation funds, it can’t do anything that might highlight a non-positive aspect of the retailer, not just the Foundation. Or a group that may have been ready to join in criticism of Walmart may now back off that choice in order to receive grant money.

  The complaint notes that the Walmart Foundation, has no independent directors and is governed entirely by senior Walmart executives and Foundation staff members, implying that the goals of Walmart are ultimately the foundation’s goals.

  Thus, contend the groups filing the complaint, the Walmart Foundation is in violation of several rules governing tax-exempt charities.

  The senior Walmart executives involved with the Foundation benefit financially in their for-profit jobs from the work they do through the Foundation, alleges the complaint, which says this is a violation of the prohibition against “private inurement” and “private benefit” at tax-exempt charities.

  The groups have asked to IRS to review their complaint and open an investigation into the Foundation, and to sanction the charity if it is found to be non-compliant.

  [via Washington Post]

  
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by Chris Morran via Consumerist