uRegulators Sue To Shut Down Illegal Offshore Payday Loan Networkr

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  (scurzuzu)

  While most of us think of payday lenders as small-time storefront operations, there is also a complicated web of interconnected payday businesses operating outside the U.S. borders, but illegally issuing costly short-term loans to American borrowers. A newly filed lawsuit hopes to put an end to one such network.

  The Consumer Financial Protection Bureau filed a lawsuit [PDF] in federal court against NDG Enterprises – an operation consisting of 11 companies – for purportedly issuing illegal payday loans and then using aggressive means to collect those debts.

  The companies named in the complaint include Canadian corporations NDG Financial Corp., Ltd., E-Care Contact Centers, Ltd., Blizzard Interactive Corp., Sagewood Holdings, Ltd., New World Consolidated Lending Corp., New World Lenders Corp., Payroll Loans First Lenders Corp., and New World RRSP Lenders Corp. Two other companies, Northway Financial Corp., and Northway Broker, Ltd., are incorporated in Malta.

  According to the CFPB complaint, since at least July 2011, the companies in the syndicate have issued short-term loans in all 50 states, including those where laws impose interest rate caps and licensing requirements that essentially outlaw such costly financial products.

  Each of the companies under the Enterprise umbrella served a specific purpose in the overall operation.

  For example, Blizzard identifies customers for Northway’s loans by purchasing leads from lead generators, some of which are websites operated by Northway Broker.

  One of the criteria that Blizzard uses to identify customers is the consumer’s state of residency. According to the complaint, in June 2013, the company focused on consumers residing in the United States, with the exception of Georgia, Pennsylvania, Puerto Rico, West Virginia, American Samoa, Guam, Mariana Islands, and North Dakota.

  States targeted by the company included New York which has laws prohibiting high interest short-term loans.

  Once the leads were purchased, consumers were directed to Northway-managed websites where they were required to create a user account that included their checking account number, social security number, date of birth, and home address.

  The companies then used this information to disburse loans and collect on owed debts.

  Loans offered by the operation were generally short-term (14 days), ranging from $100-$1500 with finance charges between $19.98 and $26.98 per $100 borrowed.

  

  The complaint includes examples of the enterprise’s payday loan costs. In this case from the CashTaxi.com website managed by Northway.

  Once loans have been issued to the consumer, collection activities are taken over by E-Care on behalf of the Enterprise.

  The CFPB alleges that E-Care used a host of deceptive and illegal debt collection tactics to obtain payments from consumers.

  In many cases, the company initiated contact by phone, e-mail, and letter with a restatement of the consumer’s obligation to repay the principal and interest in full, along with a $39 non-sufficient funds fee, and a $20 late payment fee.

  According to the complaint, many of the loan agreements made between the issuer and the consumer included a wage assignment clause, that states if a consumer defaults on the loan for more than seven days from the date that payment is due, the consumer authorizes NDG Enterprise to instruct the consumer’s employer to pay the outstanding amount directly to NDG Enterprise from consumer’s wages.

  When a wage-assignment agreement wasn’t available, the CFPB alleges E-Care falsely told consumers that non-payment of debt would result in lawsuit, arrest, imprisonment, or wage garnishment, despite lacking the intention or legal authority to take such actions.

  In addition to using threatening tactics to recoup loan costs, between July 21, 2011 and 2014, the Enterprise furnished information to credit reporting agencies on trade lines belonging to consumers residing in all fifty states, including approximately at least 15,000 trade lines belonging to New York residents.

  According to the CFPB, loans issues to residents of several states, which have usury laws in place, are void because of their illegal nature. These states include Alabama, Arizona, Arkansas, Illinois, Indiana, Kentucky, Massachusetts, Minnesota, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, and Utah.

  Despite this, the companies often claimed to consumers that because they were incorporated outside of the U.S. they did not have to abide by such state laws.

  For example, the companies – in most cases Northway and Northway Broker – would send a letter to consumers stating:

  If you take a moment to review the attached loan agreement, you will see that Northway Financial Corporation Ltd. is a Financial Institution licensed and regulated in accordance with the European Union (EU) Directives. As such, the laws of the Republic of Malta (member State of the European Union), not the state of [consumer’s state of residence] applies to its terms. We provided you with this notice so that you would understand the terms of your loan.

  In response to hundreds of complaints against Northway, several states issued cease and desist orders, directing the company to stop issuing loans that don’t comply with lending law protections. However, the companies continued to originate, service and collect loans in those states, the CFPB complaint alleges.

  In all, the CFPB alleges that the Enterprise violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition on unfair, deceptive, and abusive acts and practices.

  Specifically, the companies made false threats to consumers, deceived borrowers about their debts and used illegal means such as wage-assignment clauses to collect on void debts.

  With its lawsuit, the CFPB seeks to refund the money the companies took from consumers where the loan amounts were void or the consumer otherwise was not obligated to repay the loan.

  Additionally, the Bureau seeks to prohibit the companies from any further violations of federal consumer laws related to unfair, deceptive, and abusive acts and practices.

  
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by Ashlee Kieler via Consumerist

uAppeals Court Breathes New Life Into ATM Fee Price-Fixing Suitr

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  (Scott Lynch)

  More than two years after a federal court dismissed price-fixing lawsuits against Visa, MasterCard, Bank of America, JPMorgan Chase, and Wells Fargo, a federal appeals court has revived the cases that involve allegations that these banks and payment networks illegally and anticompetitively established fee levels for out-of-network ATM use.

  Non-bank ATM operators make money in two ways. The first we’re all familiar with: fees charged directly to the user. You want you’re money? That’ll be a few bucks on top of whatever you withdraw (and whatever your bank charges). That averages more than $2/transaction nationwide.

  The other revenue stream for independent ATM operators is the fee charged to the banks for each transaction. This can run upwards of $.60 each, but a good chunk of that doesn’t go to the ATM operator. Instead, it goes to whichever network connected the ATM to the particular bank.

  Visa and MasterCard run some of the most widely used networks, like Plus, Interlink, Cirrus, and Maestro. They also charge ATM operators the highest fees — up to $.50/transaction, according to court documents. That’s significantly more than the $.06-$.29/transaction fees charged by many smaller networks.

  Thus, ATM operators would have an incentive to push customers to use other payment networks, like Star, NYCE, or Credit Union 24. They could, for example, tell customers that if their card accesses one of those networks (which is usually indicated with a little logo on the front or back), that their ATM fee would be lower, say $1.75 instead of $2.00.

  But if ATM operators want to include access to any of the Visa or MasterCard networks, they have to agree to the condition that they won’t favor any other network in this way.

  The plaintiffs in the lawsuits contend that this requirement illegally restrains the efficient pricing of ATM services.

  The sort of anticompetitive practice alleged here is what’s known as “anti-steering,” in that it prevents merchants from directing consumers to an option that could save everyone money.

  Merchants recently won a court victory over similar requirements in the American Express merchant agreement, though the credit card company is appealing that decision.

  The appeal to the D.C. Circuit Court of Appeals consolidates three different complaints, all involving the Visa and MasterCard fees.

  Two of the complaints involved consumers who said they were forced to pay high ATM fees because of the anti-steering policies of these companies. The third lawsuit was filed by a trade group, the National ATM Council, and several individual ATM operators.

  In Feb. 2013, a U.S. District Court concluded that these complaints had failed to allege facts sufficient to establish standing or lacked adequate facts to establish violations of the Sherman Antitrust Act.

  The case seemed dead in the water after Dec. 2013, when the court ruled that the plaintiffs’ amended complaints still lacked sufficient facts to establish standing or a conspiracy.

  In dismissing the cases, the District Court had concluded that the plaintiffs had failed to show any real injury because of the current fee agreements.

  The plaintiffs theorized that the removal of the anti-steering requirement would result in lower-cost options for non-bank ATM users, but the court ruled that this was merely an “attenuated, speculative chain of events that relies on numerous independent actors,” and not evidence of measurable damage.

  But the appeals panel disagreed [PDF], and accused the lower court of “demanding proof of an economic theory that was not required in a complaint.”

  In overturning the dismissals, the appeals court notes that the two plaintiff theories complement each other — that the consumer plaintiffs believe they could pay lower fees if there were more choices, while the ATM operator plaintiffs say they would direct consumers to lower-cost options if they were allowed to.

  The panel isn’t saying that the plaintiffs were right or that their theories are proof of damage, but that the court erred by putting too heavy a burden on the plaintiffs at too early a stage in the legal process, and that the worth of these theories are a matter that should be decided through a trial.

  “Plaintiffs’ theories here are susceptible to proof at trial,” writes the appeals court. “The Plaintiffs allege a system in which Visa and MasterCard insulate their networks from price competition from other networks. This insulation yields higher profits for Visa and MasterCard (and higher returns for their shareholders), at the cost of consumers and independent ATM operators. The economic injury alleged is present and ongoing.”

  The appeals court also note that the theories aren’t pure speculation or ivory tower economic musings, but that the “complaints contain factual details, including details about the Plaintiffs’ own conduct, that support the alleged causal link between the Access Fee Rules and the economic harm.”

  And even when the plaintiffs “rely on certain economic assumptions about supply and demand,” the appeals court holds that “these sorts of assumptions are provable at trial.”

  The appeals court also found some merit in the plaintiffs’ antitrust allegations.

  Section 1 of the Sherman Antitrust Act outlaws “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.”

  Visa and MasterCard were each previously owned as joint ventures by groups of retail banks. The access fee rules in their ATM agreements date back to those days.

  According to the appeals court, these rules “protected Visa and MasterCard from competition with lower-cost ATM networks, thereby permitting Visa and MasterCard to charge supra-competitive fees. The rules also benefited the banks, who were equity shareholders of the associations (and therefore financial beneficiaries of the deal). And the rules protected banks from competition with each other over the types of bugs offered on bank cards.”

  The appeals panel also said that it doesn’t matter that Visa and MasterCard each adopted these rules independently and operate as separate businesses, noting that “The Supreme Court has ‘long held that concerted action under [Section] 1 does not turn simply on whether the parties involved are legally distinct entities,’ but rather depends upon ‘a functional consideration of how the parties involved in the alleged anticompetitive conduct actually operate.'”

  Per today’s ruling, the allegation that a group of retail banks “fixed an element of access fee pricing through bankcard association rules” describes the “sort of concerted action necessary to make out a Section 1 claim.”

  And so the case has been remanded and given new life.

  “This is a big win for consumers, who now can seek not only damages caused by the Defendants but can now also pursue an injunction that will spark competition in the ATM market,” said attorney Steve Berman, who argued the appeal, in a statement. “The decision today affirms that our claims should be heard on their merits.”

  
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by Chris Morran via Consumerist

uProposed Hypersonic Plane From Airbus: Paris To Tokyo In 3 Hours (Instead Of 12)r

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  ‘FIG. 15 represents a perspective view of an ultra-rapid air vehicle according to the invention’ (USPTO.gov)

  Because we can not yet bend time and space to our will, time is valuable. Which is why travelers might like to save that important resource and spend much less time on the plane than they do now. Airbus may make that a reality with its idea for a hypersonic plane.

  Airbus recently won approval for a patent of a hydrogen-powered hypersonic aircraft that could make the trip between Paris and Tokyo in a mere three hours, compared to the 12 it does now. London to New York? One hour, not seven or eight.

  The Ultra-Rapid Air Vehicle and Related Method For Aerial Locomotion would use a system of motors and turbojets to take off almost vertically from a regular runway using normal jets. It would then basically hop around above the atmosphere using ramjet engines, a type of engine currently used in missiles.

  The system would take the plane as high as almost 19 miles at cruise speeds of Mach 4.5, or 4.5 times the speed of sound.

  And in a nod to the Concorde, the supersonic jet that was taken out of service in 2003 due to high operating costs, this ultra-rapid air vehicle would feature a “gothic delta wing… fitted with moving fins… at both outer ends of the trailing edge of the delta wing.”

  Don’t get your hopes up just yet, however: Airbus says the hypersonic plane isn’t going to be a reality anytime soon.

  “Airbus Group and its divisions apply for hundreds of patents every year in order to protect intellectual property,” a spokesman told Reuters. “These patents are often based on R&D concepts and ideas in a very nascent stage of conceptualization, and not every patent progresses to becoming a fully realized technology or product.”

  Paris-Tokyo in 3 hours: Airbus wins patent for hypersonic plane [Reuters]

  
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by Mary Beth Quirk via Consumerist

uYahoo Removes Malware From Its Advertising Network That Exploited Weakness In Adobe Flashr

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  (Morton Fox)

  For six days last week, malware known as “malvertising” was reportedly lurking in Yahoo’s advertising network, with the potential for attackers to infect internet users’ computers and hold them for ransom. Security researchers say they notified Yahoo of the malware upon discovering it on Sunday, and the company removed the malicious code immediately.

  Researchers at Malwarebytes said they found the malicious ads embedded in Yahoo’s ads.yahoo.com network on Sunday and alerted Yahoo. The attack had been lurking undetected since last Tuesday, wrote Jerome Segura, a senior security researcher at Malwarebytes Labs.

  The malvertising method tricks online publishers into running malicious ads, that may look like any other ads and don’t require a user to interact with them to infect their machines.

  Here’s how it worked: A group of hackers bought ads across Yahoo’s network — finance, games, news, etc., as well as Yahoo.com. When a computer visited one of those sites, it would download malware code. At that point, the malware searched around for an out-of-date version of Adobe Flash, which could be used to commandeer the computer and hold it for ransom, or redirect the browser to websites that pay hackers for traffic (something we just saw with the recent Windows 10 email upgrade scam).

  Flash has come under fire recently after reports of multiple security holes.

  “Right now, the bad guys are really enjoying this,” Segura told the New York Times. “Flash for them was a godsend.”

  Yahoo said on Monday that it immediately removed the malware.

  “Yahoo is committed to ensuring that both our advertisers and users have a safe and reliable experience. As soon as we learned of this issue, our team took action and will continue to investigate this issue,” the company said in a statement, adding that disruptive ad behavior is a scourge on the tech industry as a whole.

  “Yahoo has a long history of engagement on this issue and is committed to working with our peers to create a secure advertising experience,” the statement continues, without adding how many users may have been affected. “We’ll continue to ensure the quality and safety of our ads through our automated testing and through the SafeFrame working group, which seeks to protect consumers and publishers from the potential security risks inherent in the online ad ecosystem.”

  Adobe is now asking users to update their Flash in wake of the attack to eliminate that particular vulnerability.

  “The majority of attacks we are seeing are exploiting software installations that are not up-to-date on the latest security updates,” a spokeswoman for Adobe said.

  It’s also good idea to keep your operating systems, browsers and browser plug-ins up to date to combat possible malvertising attacks. You can also run a scan on Yahoo sites with antivirus or anti-malware software, Malwarebytes noted.

  Large Malvertising Campaign Takes on Yahoo! [Malwarebytes]

  
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by Mary Beth Quirk via Consumerist

uOperators Of Credit Repair Business Masquerading As The FTC Must Return $2.4M To Consumersr

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  (Alan Bruce)

  Three months after regulators shut down a credit repair company catering mainly to Spanish-speaking consumers for falsely claiming to have a close relationship with the federal government – calling itself “FTC Credit Solutions” – and bilking thousands of dollars from individual consumers with empty promises of boosting their credit scores, the real Federal Trade Commission announced it has reached a settlement that will result in the return of $2.4 million to victims of the scam.

  The FTC announced today that it had settled an earlier complaint against FTC Credit Solutions and its operators – including Guillermo Leyes, Jimena Perez, Fermin Campos and Maria Bernal – banning the individuals from selling or advertising credit repair services to consumers and from deceiving consumers about any good or service they are selling.

  According to the original complaint [PDF], the operation deceived consumers in advertisements and phone calls by claiming to be affiliated with or licensed by the FTC, falsely promising that they could remove negative information from consumers’ credit reports, and guaranteeing consumers a credit score of 700 or above within six months or less.

  In some instances, Leyes, the marketing director for the company, promoted the services on the radio and in videos posted on the internet.

  The pitches, which were presented in Spanish, feature Leyes boasting about his experience in credit solutions.

  “Fourteen years working in banking tells you that I can help you. I was the first to come here on the radio, bringing you what is called credit restructuring. And what many ask, how are we going to remove a bankruptcy? This is impossible. How are you going to remove it? They have had to hold their tongues and say, well, we don’t know how he does it. And I am not going to tell them either. Because to do it I have not rested my brain, to do it I studied and to do it I have a license direct[ly] from the FTC, the Federal Trade Commission.”

  Subsequent calls placed to the company by FTC investigators posing as consumers uncovered instances in which employees of the company routinely said the operation “works under the Federal Trade Commission, which is a law that was signed by the President in 2010.”

  Employees also falsely promised that the company could “delete” and “get [the investigator] a pardon” for $19,000 in debt.

  In addition to making false statements about an affiliation with the Commission, the FTC alleges that the company unlawfully charged consumers fees in advance of providing the promised credit repair service. The company was also found to have sent false information to major credit bureaus.

  Under the proposed settlements [PDF] [PDF], all four defendants are subject to a monetary judgment of $2.4 million. While Leyes is responsible for the full amount, those belonging to Perez, Campos and Bernal are partially suspended due to their inability to pay, the FTC states.

  The operators are also barred from selling or advertising credit repair services to consumers and from deceiving consumers about any good or service they are selling, and from selling or otherwise benefitting from customers’ personal information.

  
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by Ashlee Kieler via Consumerist

uEpson’s New Printer Line Doesn’t Require Ink Cartridges Every 5 Minutesr

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  Here’s the $380 printer that’s the cheapest EcoTank model.

  The manufacturers of home inkjet printers have to make a profit somehow, and most companies choose the classic model of selling printers for a low price that gobble ink cartridges, which happen to also be sold by the manufacturer. Now Epson is introducing a new line of printers in the United States that costs more, but comes with refillable cartridges and enough ink to last for three years. Will American consumers be interested?

  Bloomberg News (warning: auto-play video at that link) speculates that the refillable printers were introduced first in markets where people buy the most off-brand ink cartridges, or are more likely to refill their own. Our colleagues down the hall at Consumer Reports checked with their counterparts in other countries where the printers have been available for a while, and learned that they haven’t taken over the market: the higher purchase price may be driving buyers away and back to the business model they’re comfortable with, shelling out for new cartridges every few months instead.

  That’s understandable: the cheapest EcoTank model costs $380, while a savvy shopper can usually find an inkjet printer available somewhere for free or cheap with a mail-in rebate. Epson’s own calculations show that the printer comes with enough ink to print 4,000 black pages and 6,500 color pages, which would use up about $800 worth of Epson-branded ink cartridges. Epson will find out whether that kind of front-end math makes sense to American consumers.

  Can Epson EcoTank printers deliver cheap ink? [Consumer Reports]
  Epson Is About to Solve the Most Annoying Problem With Inkjet Printers [Bloomberg] (Warning: auto-play video)

  
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by Laura Northrup via Consumerist

uComcast Makes Slight Improvements To Its Broadband Program For Low-Income Householdsr

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  (YayAdrian)

  Comcast’s Internet Essentials program, which offers affordable broadband access to some low-income households, has long been considered window dressing for regulators and lawmakers whenever the company has to show that it does something not-horrible for the community. Today, Comcast announced a pair of significant improvements to Essentials, while launching a pilot program that could result in expanded eligibility.

  The first big change to Essentials is a boost in speed. Users of the service had been limited to 5Mbps downstream, only 1/5 of the FCC’s current definition of what it considers “broadband.” While Essentials won’t get the full boost to 25Mbps to meet that standard, Comcast is doubling the speed to 10Mbps, which should allow an entire family to enjoy most of what the Internet has to offer without interruption.

  Existing customers will just need to restart their modems in order to access the improved speeds, says Comcast.

  The second improvement for Essentials users is that they will be given access to free wireless routers. That could help customers overcome a minor cost hurdle and improve a household’s access to broadband.

  We have confirmed with Comcast that the routers included in the Essentials offer are not the company’s WiFi routers that also create public WiFi hotspots for Comcast customers. These routers will only provide access for the account holders, according to a company rep.

  These two changes don’t address perhaps the biggest criticism of Essentials — its strict eligibility requirements. The program currently limits eligibility to households with at least one child who can participate in the national school lunch program. Thus, households with pre-school age children, grown children, or no children at all have been omitted. This includes the elderly, many of whom — especially in urban areas — live at or near the poverty line and often have little to no Internet access.

  Regulators in California wanted Comcast to restructure its eligibility requirements in order to gain local approval for its attempted acquisition of Time Warner Cable, but Comcast resisted. And now that the TWC merger has failed, it looked like Comcast had little incentive to alter its eligibility standards.

  However, Comcast is going to test an Essentials program for elderly customers in Palm Beach County, Florida. The company says more pilot programs are coming, but has not provided additional details.

  
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by Chris Morran via Consumerist