uCalifornia Car Donation Charities Misrepresented Charitable Programs, Misdirected Donationsr

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• From time to time you may hear of a charity that accepts the donation of older, used vehicles that owners simply no longer have use for, promising to donate the profit of the future sale to a charitable program. While it might seem like a fairly straightforward operation, the state of California claims two such groups weren’t keeping their promises, instead using the funds to pay for their own expenses. 

  California Attorney General Kamala Harris, along with the District Attorneys for Los Angeles County and Venture County, filed civil lawsuits against People’s Choice Charities (PCC) and Cars 4 Causes (C4C) accusing the organizations of violating state law by misrepresenting their charitable programs and improperly profiting from charitable activities.

  “These charities exploited the goodwill of generous donors by misrepresenting their charitable programs, misappropriating donations and accruing excessive administrative costs,” Harris said in a statement. “These lawsuits hold People’s Choice Charities and Cars 4 Causes accountable for breaking the law and give California consumers greater confidence that their donations go toward the intended charitable cause.”

  Car donation organizations like PCC and C4C work by soliciting car donations, selling the vehicles, deducting all their costs, and then using what is left to fund a charitable program — which they choose or allow the donor to choose.

  Investigations by Harris and the District Attorneys’ offices found this was not happening with PCC and C4C.

  According to the lawsuit [PDF] against PCC, filed along with the Los Angeles District Attorney’s office, audits found that from 2007 to 2012, the organization reported that it had donated over $700,000 to other nonprofits, while it actually only donated $174,000.

  The discrepancy is a result of the company failing to properly disclose how it spent the net proceeds from sales, the complaint alleges.

  While Los Angeles-based PCC claimed to donate 100% of net proceeds from the sale of donated cars toward donors’ chosen charities, the AG’s office found that 97% of those funds were spent on administrative costs, such as towing and car repairs, and advertising.

  PCC claimed that towing was free and that it employs experienced staff to repair and sell the cars at minimal cost. However, in reality, the complaint claims, PCC charged the charities for towing expenses and has no repair staff; instead they pay outside vendors hundreds of thousands of dollars to do this work.

  In some cases, a “cash back” program offered by the organization provided donors with up to 50% of the vehicle’s value, essentially turning the company into a used car dealership, and further depleting funds meant for charitable donation, the complaint alleges.

  Once PCC deducted its numerous and undisclosed expenses, only a small fraction of the vehicle’s sale price is forwarded to a nonprofit.

  Similarly, the complaint [PDF] against Cars 4 Causes, filed in conjunction with the Venture County DA, claims the organization used 87% of its donations to pay for things such as advertising and administrative costs, including staff salaries. Only 13% of the funds meant for donation were directed to actual charities.

  According to an audit by the AG’s office, from 2009 to 2014, C4C reported that $15.9 million was donated to charity, but in reality, only $5.4 million made it to nonprofits.

  Additionally, the complaint accuses C4C of taking money from the charities it promised donors it would support.

  C4C’s records show it misappropriated about $2 million from thousands of charities including $600,000 that should have been given to charities serving the sick and providing medical research, $250,000 to children’s and education charities, $100,000 to veterans’ organizations, $230,000 to religious organizations, and $200,000 to charities serving the poor.

  The California AG’s office warned consumers on Tuesday to donate directly to the organization they want to benefit.

  “If a car donation organization is used, call the beneficiary organization you designated to confirm that they received your donation,” Harris said in a statement. “If they did not, call the car donation organization and demand that they forward your donation.”

  Earlier this fall, Minnesota Attorney General Lori Swanson accused one of the country’s largest car donation groups — known as “Wheels for Wishes” — of raking in tens of millions of dollars by allegedly misleading donors about its connections to the Make-A-Wish Foundation, and about how much money that legitimate organization was going to receive from the donated vehicles.

  
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by Ashlee Kieler via Consumerist

uGoogle Accused Of Snooping On Students’ Internet Activityr

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• Google is one of more than 200 companies that have signed on to the “Student Privacy Pledge,” in which it promises to, among other things, “Not collect, maintain, use or share student personal information beyond that needed for authorized educational/school purposes.” But a new complaint accuses the Internet biggie of breaking its oath and spying on kids’ online activity.

  In a complaint [PDF] filed with the Federal Trade Commission today, the Electronic Frontier Foundation accuses Google of “collecting, maintaining, using, and sharing student personal information” in violation of that Privacy Pledge.

  As part of its research into the potential privacy risks of computers and software provided to schools, the EFF looked at Google Apps for Education (GAFE) suite of educational cloud-based software programs.

  According to the complaint, when students are logged in to their Google for Education accounts, Google collects and uses for its own benefit data about the students’ use of non-educational Google services.

  “This includes recording students’ browsing behavior on every single Google-operated site students visit regardless of its relation to schoolwork… records of what students have searched for on the Internet and the results they click on, the videos they search for and watch on YouTube, the browser extensions they have installed, and their saved passwords,” reads the complaint. “Such data reveals highly personal information about students and is not necessary to deliver educational services.”

  What’s more, alleges the EFF, while there is no advertising within the Google educational apps, the data collected about the students is then used to target them with advertising elsewhere online.

  While Google does use aggregate and anonymous data for its targeting, the EFF cites research showing that you really own need a few points of data to figure lift the veil off that anonymity.

  And even if this aggregating and anonymizing worked perfectly, argues EFF, “Google’s use of students’ browsing history for its own benefit and without authorization from the student or parent, runs contrary to the letter and spirit of the Student Privacy Pledge. Aggregating and anonymizing students’ browsing history does not change the intensely private nature of the data – nor the fact that at the time of collection, it was tied to identifiable student accounts – such that Google should be free to use it, despite having promised not to do so without authorization from the student or parent.”

  The EFF contends that violating the very public Privacy Pledge — an oath that Google uses in its marketing of its educational products — is in itself a violation of the FTC Act’s prohibition against “deceptive acts or practices in or affecting commerce.”

  “Despite publicly promising not to, Google mines students’ browsing data and other information, and uses it for the company’s own purposes. Making such promises and failing to live up to them is a violation of FTC rules against unfair and deceptive business practices,” said EFF Staff Attorney Nate Cardozo. “Minors shouldn’t be tracked or used as guinea pigs, with their data treated as a profit center. If Google wants to use students’ data to ‘improve Google products,’ then it needs to get express consent from parents.”

  
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by Chris Morran via Consumerist

uMan Finds Himself In Jail After Drinking A Beer While In Traffic Next To A Marked Patrol Carr

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  There are many things you could do that will land you behind bars, but a Florida driver found himself in the fast lane to that jail cell when police say he sat in traffic sipping a nice, cold beer. Which is bad enough, but it just so happens, his car was next to a marked “Orlando Police Department.”

  Shortly before noon on Saturday, police charged the man with driving with an open container, carrying a concealed firearm and armed possession of pot with intend to sell, reports the Orlando Sentinel.

  “As I passed the vehicle… I observed the driver drink from a bottle that appeared to resemble that of an alcoholic beverage,” the arresting officer wrote in his report. “The bottle’s content appeared to be dark yellow in color, reasonably appearing to me to be the color of beer.”

  And indeed, it was a bottle of Corona Extra, police said. The officer noted that the driver didn’t want to the police vehicle at first, lagging behind to avoid a traffic stop.

  “I knew he was doing this because he reduced his speed to almost a complete stop in the roadway.”

  That tactic didn’t work out so well, as eventually the alleged beer drinker had to pass the police car, at which point the officer pulled him over. The driver eventually handed over a small bag of pot and admitted that there was an open beer behind the seat. He was arrested, and later released after posting bail.

  Idling next to a cop? Bad idea to be sipping a cold beer [Orlando Sentinel]

  
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by Mary Beth Quirk via Consumerist

uExpress Scripts To Offer $1 Version Of Drug That Skyrocketed To $750/Pill Overnightr

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• Earlier this year, a company called Turing Pharmaceuticals purchased the rights to Daraprim (pyrimethamine), an anti-parasitic used to treat malaria and toxoplasmosis, that had sold for as little as $1/tablet until not too long ago. Overnight, the price of Daraprim skyrocketed to around $750/pill, resulting in angry doctors, and a Senate investigation. Today, pharmacy benefits giant Express Scripts announced a partnership that will introduce a version of pyrimethamine at the pre-Turing price.

  St. Louis-based Express Scripts said today that it has partnered with San Diego drug compounder Imprimis Pharmaceuticals to release a compounded oral formulation of pyrimethamine and leucovorin (a form of folic acid) for $1 per capsule for Express Scripts customers.

  Patients with weakened immune systems, including those with HIV, who need Daraprim may not need to wait too long for this alternate, cheaper option. The companies say they hope to start processing the drug within the coming weeks.

  The announcement was applauded by the same groups of physicians that publicly criticized Turing for gouging patients in need.

  “We urge other private and public health insurers and pharmacy benefits managers to also make this option available to their beneficiaries,” reads a joint statement from the Infectious Diseases Society of America, the HIV Medicine Association, and the Pediatric Infectious Diseases Society. “Since the price increase taken by Turing Pharmaceuticals in August, our infectious diseases and HIV medical provider members have reported significant challenges obtaining pyrimethamine for their patients.”

  Last week, in spite of pressure from Walgreens — the only pharmacy offering Daraprim — to reduce the drug’s price, Turing announced that it intended to keep the price where it is.

  “We are optimistic that this arrangement will help address the serious cost and access barriers that have prevented or delayed pregnant women, infants, and patients with HIV infection or following transplantation from accessing this lifesaving treatment,” say the physicians’ groups.

  [via Chicago Tribune]

  
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by Chris Morran via Consumerist

uNice Person In Maine Taping Coats To Light Poles In Campaign To Help Keep Needy People Warmr

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• 
  Quite often at Consumerist, we hear stories that involve negative situations or feature consumers doing bad things. So when we read about people out there doing nice things for each other, we like to take note. To wit: a woman in Maine has started a campaign to help make sure all residents are dressed warmly against the cold this winter, by taping coats to light poles around town.

  Lest people think these jackets are missing their owners, attached to each one is a note from the Portland woman, reading: “I am not lost! Please take me if you need me,” reports WCSH-6’s Grady Trimble, who spotted two of the jackets downtown.

  She told the news station that she’s been asking others to do the same, after buying two jackets for $1. 00 each at Goodwill and taping them up in the downtown area. As soon as she was back inside her car, she said she saw someone without a lot of layers on taking a jacket.

  “People are homeless, people are cold,” she wrote on Facebook. “$5 to make five people less freezing, $5 to make someone sleep a little better tonight, $5 may be very little to me but very important to another. I encourage everyone to give this a try this season.”

  Good Samaritan leaves jackets in Portland for those in need [WCSH-6]

  
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by Mary Beth Quirk via Consumerist

uLending Startups Use Borrowers’ Smartphone Behavior To Decide If They Are Creditworthyr

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• 

  The wallet-sized – or larger – smartphone constantly tethered to your hand may often be seen as your connection to the outside world. Each time you surf the web, connect with friends, make purchases and check your bank account, it’s collecting mountains of data about you. And that data could soon be analyzed to determine if you’re creditworthy. 

  Or at least that’s the idea behind a number of lending startups trying to revamp the way consumers in developing countries obtain needed lines of credit, despite having no actual credit history, the Wall Street Journal reports.

  The companies say that by glancing at a person’s cellphone they can access data generated by apps and uncover behavior that correlates with the likelihood that a borrower will repay or default on a loan.

  To access a potential borrower’s phone, the companies have created a slew of apps, which analyze information stored on the device, including the content of their text messages, emails and duration or frequency of calls.

  That means the decision on whether or not someone qualifies for credit could hinge on how often they charge their phone or whether or not they add a last name to stored contacts.

  Branch.co already has such a program up and running in Kenya, where an Android app lets users apply for small loans, get approved and obtain access to the funds in minutes.

  The loans, which average just $30, come with a 6% to 12% interest rate depending on a borrower’s creditworthiness as determined by their smartphone behavior and are expected to be repaid within three to six months.

  “These are people that don’t have a credit score,” Branch founder Matt Flannery said. “Your digital trail can establish your financial track record.”

  Each startup, and its corresponding app, has a different method for culling and analyzing the smartphone data.

  For example, a company called InVenture, which also operates in Kenya, found that users who wait until after 10 p.m. to make calls are often lower-risk borrowers.

  “You’re able to get in and really understand the daily life of these customers,” InVenture CEO Shivani Siroya tells the WSJ, noting that the company’s algorithm analyzes 10,000 so-called signals per customer in order to determine creditworthiness.

  In another example of data analysis, Branch found users who are known gamblers – a detail found by scanning messages or payment logs – are more likely to repay a loan than non-gamblers.

  Customers of the apps in Kenya tell the WSJ they chose to borrow through the startups to pay for running or improving their small businesses because banks were too far away or imposed higher interest rates.

  The owner of a health and beauty store used the funds for items like skin cleansers when her account was running low, while a chef used the credit line to purchase plates, cutlery and pots.

  The WSJ estimates that lending startups like Branch and InVenture could bring needed lines of credit to up to 580 million people living in emerging economies.

  Of course, with the amount of sometimes sensitive data being collected by these startups and other companies, privacy is a big concern for both consumers and privacy advocates, who warn that some data could be misconstrued by the algorithms.

  For example, advocates shared concerns with the WSJ that someone may be denied a loan because they simply Tweeted “my car has broken down.”

  Still, a survey of dozens of people in developing countries found that most had no problem sharing personal information in exchange for lines of credit.

  While these companies are focused on emerging markets markets outside of the U.S., other so-called smartphone lenders like LendUp and ZestFinance use similar algorithms and process to provide credit to American consumers.

  Making the decision to lend based on non-traditional data sources isn’t just contained to startups: the WSJ reports that companies like Visa have built mobile payment apps.

  In August, social media behemoth Facebook received a patent that would allow lenders to determine a borrower’s creditworthiness by looking at their “friends.” It’s unclear if that project will ever come to fruition.

  Lending Startups Look at Borrowers’ Phone Usage to Assess Creditworthiness [The Wall Street Journal]

  
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by Ashlee Kieler via Consumerist

uStudy Claims Adult Happy Meals Could Lead People To Eat Smaller Portionsr

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• 
  McDonald’s has long been criticized for using toys and other incentives in Happy Meals to get young kids craving fast food. But could the same “prize included” approach be used to encourage adults to eat smaller portions?

  New research from the University of Arizona’s Eller College of Management suggests that the “Happy Meal Effect” could be used to incentivize adult consumers to purchase more health-friendly food options.

  Eller’s Martin Reimann, along with Antoine Bechara and Deborah MacInnis of the University of Southern California, performed a number of experiments to find out if offering a non-food bonus with a menu item was enough to steer both kids and adults toward an option that was not as filling as an offering without the bonus.

  When a group of sixth-grade students were presented with the option of a full sandwich and no prize or a half-sandwich and a pair of cheap bud-style earphones, 78% of them went for the smaller sandwich.

  Kids were even more likely to go with the prize-included half portion when the food in question was something youngster-friendly like chicken nuggets or cookies.

  The researchers found that you only need to present the opportunity for a prize to get people to select the smaller portion. They presented university staff and students with a choice between full lunches without any sort of incentive, and half portions that included only the chance of winning a $100 gift card or 10,000 frequent flier miles. Even just that hope of winning a prize was enough to steer a significant number of adults to the smaller portion.

  The likelihood of people to pick a half portion with a non-guaranteed prize was affected by several things. Researchers say that when test subjects knew the odds of winning a prize (even if the odds were good), the Happy Meal Effect wasn’t as strong as it was when subjects merely knew that a prize could be won.

  The dollar amount of the potential prize was also a factor that could sway results. Researchers say that the likelihood of choosing the smaller portion grew exponentially as the value increased from $10 to $50. However, there was little difference between the results for a possible $50 reward and a possible $100 prize.

  Perhaps most importantly, the research found that test subjects who opted for smaller portions were not later eating more to account for the fact that they didn’t each the larger portion at lunch.

  Reimann suggests this sort of incentivizing might be a way for restaurants to encourage smaller portion consumption while avoiding regulatory and legislative efforts to rein in consumption of high-calorie foods.

  “If non-food rewards, even small and uncertain ones, can be just as engaging at a neurochemical level, then restaurants can potentially motivate healthier choices without jeopardizing sales, and consumers have more paths to avoid overeating,” he explains.

  
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by Chris Morran via Consumerist