ReportWire

Tag: Consumer affairs

  • Trump nominates new CFPB director, but White House says agency is still closing

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    NEW YORK (AP) — President Trump nominated Stuart Levenbach as the next director of the Consumer Financial Protection Bureau on Wednesday, using a legal maneuver to keep his budget director Russell Vought as acting director of the bureau while the Trump administration continues on its plan to shut down the consumer financial protection agency.

    Levenbach is currently an associate director inside the Office of Management and Budget, handling issues related to natural resources, energy, science and water issues. Levenbach’s resume shows significant experience dealing with science and natural resources issues, acting as chief of staff of the National Oceanic and Atmospheric Administration during Trump’s first term.

    Levenbach’s nomination is not meant to go through to confirmation, an administration official said, speaking on condition of anonymity to discuss personnel matters. Under the Vacancies Act, Vought can only act as acting director for 210 days, but now that Trump has nominated someone to the position, that clock has been suspended until the Senate approves or denies Levenbach’s confirmation as director. Vought is Levenbach’s boss.

    The CFPB has been nonfunctional much of the year. Many of its employees have been ordered not to work, and the only major work the bureau is doing is unwinding the regulations and rules it put into place during Trump’s first term and during the Biden administration.

    While in the acting director role, Vought has signaled that he wishes to dismantle, or vastly diminish, the bureau.

    The latest blow to the bureau’s future came earlier this month, when the White House said it does not plan to withdraw any funds from the Federal Reserve, which is where the bureau gets its funding, to fund the bureau past Dec. 31.

    The White House and the Justice Department are using a legal interpretation of the law that created the bureau, the Dodd-Frank Act, that the Fed must be profitable in order to fund the CFPB’s operations. Since roughly 2022, the Fed has been cash-flow negative since it owns bonds from the COVID-19 pandemic that pay very low interest but must pay out higher interest to the banks that deposit reserves with it. This means, on paper, the Fed is not earning a profit at the moment and therefore has no money to allot to the CFPB.

    Several judges have rejected this argument when it was brought up by companies, but it’s never been the position of the government until this year that the CFPB requires the Fed to be profitable to provided the CFPB with operating funds.

    “Donald Trump’s sending the Senate a new nominee to lead the CFPB looks like nothing more than a front for Russ Vought to stay on as Acting Director indefinitely as he tries to illegally close down the agency,” said Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, in a statement.

    The bureau was created after the 2008 financial crisis as part of the Dodd-Frank Act, a law passed to overhaul the financial system and require banks to hold more capital to avoid another financial crisis. The CFPB was created to be a independent advocate for consumers to help them avoid bad actors in the financial system.

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  • New analysis shows more US consumers are falling behind on their utility bills

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    WASHINGTON — More people are falling behind on paying their bills to keep on the lights and heat their homes, according to a new analysis of consumer data — a warning sign for the U.S. economy and another political headache for President Donald Trump.

    Past due balances to utility companies jumped 9.7% annually to $789 between the April-June periods of 2024 and 2025, said The Century Foundation, a liberal think tank. The increase has overlapped with a 12% jump in monthly energy bills during the same period.

    Consumers usually prioritize their utility bills along with their mortgages and auto debt, said Julie Margetta Morgan, the foundation’s president. The increase in both energy costs and delinquencies may suggest that consumers are falling behind on other bills, too.

    “There’s a lot of information out there about rising utility costs, but here we can actually look at what that impact has been on families in terms of how they’re falling behind,” Margetta Morgan said.

    Troubles paying electricity and natural gas bills reflect something of an economic quandary for Trump, who is promoting the buildout of the artificial intelligence industry as a key part of an economic boom he has promised for America. But AI data centers are known for their massive use of electricity, and threaten to further increase utility bills for everyday Americans.

    These troubles also come as Trump faces political pressure from voters fed up with the high cost of living.

    Ever since Republicans saw their fortunes sag in off-year elections this month and affordability was identified as the top issue, Trump has been trying to convince the public that prices are falling. Fast-rising electricity bills could be an issue in some congressional battlegrounds in next year’s midterm elections.

    Trump has put a particular emphasis on prices at the pump. Gasoline accounts for about 3% of the consumer price index, slightly less than the share belonging to electricity and natural gas bills — meaning that possible savings on gasoline could be more than offset by higher utility bills.

    The president maintains that any troubling data on inflation is false and that Democrats are simply trying to hurt his administration’s reputation.

    “In fact, costs under the TRUMP ADMINISTRATION are tumbling down, helped greatly by gasoline and ENERGY,” Trump posted on social media Friday. “Affordability is a lie when used by the Dems,”

    Nearly 6 million households have utility debt “so severe” that it will soon be reported to collection agencies, according to the foundation’s analysis, drawn from the University of California Consumer Credit Panel.

    During Trump’s first six months in office, there was a 3.8% increase in households with severely overdue utility bills.

    “Voters are frustrated and families are hurting because these tech giants are cutting backroom deals with politicians, and it’s causing their power bills to go up,” said Mike Pierce, executive director of the advocacy group Protect Borrowers, which contributed to the analysis. “If the Trump administration doesn’t want to do its job and protect families and make life more affordable, I guess that’s its choice.”

    Both Margetta Morgan and Pierce previously worked at the Consumer Financial Protection Bureau, a government agency formed in part to track trends in household borrowing to prevent potential abuses. The Trump administration has essentially shut down the bureau.

    The administration has so far said it has no responsibility for any increases in electricity prices, since those are often regulated by state utility boards. The White House maintains that utility costs are higher in Democratic states that rely on renewable forms of energy.

    “Electricity prices are a state problem,” Treasury Secretary Scott Bessent told ABC News this month. “There are things that the federal government can control. Local electricity prices are not one of them.”

    The Century Foundation analysis counters that the Trump administration is contributing to higher utility costs “by impeding renewable energy generation” including solar and wind power.

    While the new analysis is a warning sign, other economic analyses on consumers suggest their finances are stable despite some emerging pressures.

    The New York Federal Reserve has said delinquency rates of 90 days or more for mortgages, auto loans and student debt have each increased over the past 12 months, though it said mortgage delinquencies are “relatively low.” An analysis of debit and credit card spending by the Bank of America Institute showed that consumers’ “overall financial health looks sound.”

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  • Walmart CEO Doug McMillon announces his surprise retirement at age 59

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    NEW YORK — Walmart CEO Doug McMillon, who turned America’s largest retailer into a tech-powered giant and spearheaded a period of robust sales growth since becoming chief executive in 2014, plans to retire early next year, the company said Friday in a surprise announcement.

    John Furner, 51, the head of Walmart’s U.S. operations, will take over on Feb. 1, the day after McMillon’s retirement becomes effective, the company said. Although McMillon is set to spend a year advising his successor, Walmart shares fell 3% immediately in premarket trading after the news of the unexpected leadership change.

    Unlike Amazon’s Jeff Bezos or Tesla’s Elon Musk, McMillon isn’t a household name, but he played a key role in the U.S. economy. Walmart’s performance serves as a barometer of consumer spending given its size and vast customer base. The company maintains that 90% of U.S. households rely on Walmart for a range of products, and more than 150 million customers shop on its website or in its stores every week.

    Walmart also is the nation’s largest private employer, with 1.6 million workers.

    The pending CEO switch comes at a challenging time for retail companies and other employers that have spent almost 11 months navigating an uncertain economic environment as President Donald Trump’s administration adopted volatile policies on tariffs and initiated an immigration crackdown that threatened to shrink the supply of workers.

    McMillon started with Walmart in 1984 and became chief executive three decades later. During his tenure as CEO, he invested heavily in employees by increasing wages, expanding parental leave and launching a program for employees seeking advancement and education opportunities to earn certificates and degrees.

    Under his leadership, Walmart has been laser-focused on maintaining low prices while embracing new technology like artificial intelligence and robotics.

    “Over more than a decade as CEO, Doug led a comprehensive transformation by investing in our associates, advancing our digital and e-commerce capabilities, and modernizing our supply chain,” Walmart Chairman Greg Penner, the son-in-law of the late Walmart founder Sam Walton, said. “He leaves Walmart stronger, more innovative, and better aligned with our purpose to help people save money and live better.”

    Furner started at Walmart in 1993, working as an hourly store associate in Bentonville, Arkansas, where the company is based. He served as president and CEO of the U.S. division of Sam’s Club, the membership warehouse-store chain that Walmart owns, before taking the same roles at Walmart U.S.

    Under McMillon, Walmart’s annual revenue has grown from $485.7 billion to $681 billion in its latest fiscal year. Its stock was hovering around $25 per share when he came to the helm; now, it is over $102.

    When he became CEO, stores were messy and worker morale was low. McMillon thought the company needed to increase pay and create pathways for hourly workers to advance in their careers. In 2015, Walmart announced a three-year, $2.7 billion investment to increase wages and create new education and training opportunities.

    But when McMillon briefed investors that year and cut the annual sales forecast, investors weren’t happy, sending Walmart shares down and destroying $21.5 billion in market value in hours. The company gradually regained investors’ confidence with higher sales, new customers and greatly improved employee retention rates.

    Walmart also invested heavily in e-commerce and faster deliveries. The company said in August that roughly one-third of recent deliveries from its U.S. stores involved orders asking for goods to arrive in three hours or less, and 20% of those orders made it to customers in a half-hour or under.

    Walmart has also looked for new sources of revenue like advertising and launched a membership program called Walmart + to compete with Amazon Prime, its rival’s free shipping program.

    During the coronavirus pandemic, Walmart powered through worldwide supply chain kinks and saw a sales surge as homebound consumers stocked up. Walmart used its clout with suppliers again to maintain low prices and attract more customers during the period of inflation that followed the pandemic.

    The company has said it is absorbing some of the extra import costs from Trump’s tariffs on foreign goods but that customers would see some price increases.

    “We’re doing what we said we would do,” McMillon told stock analysts in August. “We’re keeping our prices as low as we can for as long as we can. Our merchants have been creative and acted with urgency to avoid what would have been additional pressure for our customers and members.”

    ___

    AP Business Writer Michelle Chapman in New York contributed to this report.

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  • AT&T reached a $177M data breach settlement. What consumers should know about claiming their money

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    NEW YORK (AP) — AT&T has reached a combined $177 million settlement over two data breaches. And impacted consumers have a little over a month left to file a claim for their chunk of the money.

    Several lawsuits emerged across the U.S. — and were later consolidated — after AT&T notified millions of customers that information ranging from Social Security numbers to call records were compromised in these breaches last year. Plaintiffs alleged that the telecommunications giant “repeatedly failed” to protect consumer data. While AT&T has continued to deny wrongdoing, it opted to settle earlier this year.

    “We have agreed to this settlement to avoid the expense and uncertainty of protracted litigation,” AT&T said in a Thursday statement, adding that the company remains “committed to protecting our customers’ data and ensuring their continued trust in us.”

    Eligible consumers have until Dec. 18 to file for a settlement payment — which will still need a judge’s final stamp of approval early next year. Here’s what you should know.

    What data breaches does the AT&T settlement cover?

    The settlement covers two different breaches. Both were disclosed in 2024 — but involve data belonging to millions of current and former AT&T customers dating as far back as 2019 or earlier.

    AT&T disclosed the first of these breaches in March 2024, after the company said it found that customer information from 2019 or earlier had been released on the “dark web” weeks earlier. At the time, AT&T said the breach impacted roughly 7.6 million current and 65.4 million former account holders — with leaked data including some sensitive info like Social Security numbers and passcodes.

    The other breach involved call and text records of nearly all AT&T customers from May through October of 2022, as well as a small subset from Jan. 2, 2023. AT&T said it learned that data was “illegally downloaded from our workspace on a third-party cloud platform” in April of last year — and began notifying customers in July 2024, after launching an investigation. The company maintained that the leaked records included information like phone numbers, but not content of the calls or texts, or other personally identifiable information.

    Several lawsuits emerged over both of these data breaches — which were later consolidated. The settlement was reached earlier this year in U.S. District Court in Texas.

    How much money could impacted customers get?

    The settlement’s cash funds total $177 million to pay those impacted by both of these breaches — which divvies up to $149 million for the first “settlement class” and another $28 million for the second, per a preliminary approval order filed in June.

    According to the settlement administrator’s website, consumers impacted by the first breach may be eligible to up to $5,000. And those affected by the second breach may be eligible for up to $2,500. It’s also possible to be an “overlap settlement class member,” which would mean you may be eligible for payments from both of these funds.

    Final payment amounts will vary depending on losses documented from each person — as well as the total number of claims received and added costs like attorney fees. And the court still has to give the settlement its final stamp of approval, in a hearing currently scheduled for Jan. 15, 2026.

    When is the deadline to file a claim?

    In the meantime, consumers have a little over a month left to file a claim online or by mail. The deadline is Dec. 18.

    To learn more, you can visit the website of the settlement administrator, Kroll Settlement Administration. Class members can also opt-out or make an objection before Nov. 17.

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  • AT&T reached a $177M data breach settlement. What consumers should know about claiming their money

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    NEW YORK — AT&T has reached a combined $177 million settlement over two data breaches. And impacted consumers have a little over a month left to file a claim for their chunk of the money.

    Several lawsuits emerged across the U.S. — and were later consolidated — after AT&T notified millions of customers that information ranging from Social Security numbers to call records were compromised in these breaches last year. Plaintiffs alleged that the telecommunications giant “repeatedly failed” to protect consumer data. While AT&T has continued to deny wrongdoing, it opted to settle earlier this year.

    “We have agreed to this settlement to avoid the expense and uncertainty of protracted litigation,” AT&T said in a Thursday statement, adding that the company remains “committed to protecting our customers’ data and ensuring their continued trust in us.”

    Eligible consumers have until Dec. 18 to file for a settlement payment — which will still need a judge’s final stamp of approval early next year. Here’s what you should know.

    The settlement covers two different breaches. Both were disclosed in 2024 — but involve data belonging to millions of current and former AT&T customers dating as far back as 2019 or earlier.

    AT&T disclosed the first of these breaches in March 2024, after the company said it found that customer information from 2019 or earlier had been released on the “dark web” weeks earlier. At the time, AT&T said the breach impacted roughly 7.6 million current and 65.4 million former account holders — with leaked data including some sensitive info like Social Security numbers and passcodes.

    The other breach involved call and text records of nearly all AT&T customers from May through October of 2022, as well as a small subset from Jan. 2, 2023. AT&T said it learned that data was “illegally downloaded from our workspace on a third-party cloud platform” in April of last year — and began notifying customers in July 2024, after launching an investigation. The company maintained that the leaked records included information like phone numbers, but not content of the calls or texts, or other personally identifiable information.

    Several lawsuits emerged over both of these data breaches — which were later consolidated. The settlement was reached earlier this year in U.S. District Court in Texas.

    The settlement’s cash funds total $177 million to pay those impacted by both of these breaches — which divvies up to $149 million for the first “settlement class” and another $28 million for the second, per a preliminary approval order filed in June.

    According to the settlement administrator’s website, consumers impacted by the first breach may be eligible to up to $5,000. And those affected by the second breach may be eligible for up to $2,500. It’s also possible to be an “overlap settlement class member,” which would mean you may be eligible for payments from both of these funds.

    Final payment amounts will vary depending on losses documented from each person — as well as the total number of claims received and added costs like attorney fees. And the court still has to give the settlement its final stamp of approval, in a hearing currently scheduled for Jan. 15, 2026.

    In the meantime, consumers have a little over a month left to file a claim online or by mail. The deadline is Dec. 18.

    To learn more, you can visit the website of the settlement administrator, Kroll Settlement Administration. Class members can also opt-out or make an objection before Nov. 17.

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  • National Retail Federation predicts first $1 trillion holiday shopping season

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    NEW YORK — American shoppers are expected to spend more during this holiday shopping season than last year despite economic uncertainty and rising prices.

    The 2025 forecast from the National Retail Federation on Thursday estimates that shoppers will collectively spend between $1.01 trillion and $1.02 trillion in November and December, an increase of 3.7% to 4.2% compared with last year.

    Retailers rung up $976 billion in holiday sales last year, the group said.

    “We’re seeing really positive behavior and engagement from consumers, ” NRF President and CEO Matthew Shay told reporters on a call Thursday. “In fairness, that’s been somewhat of a surprise.”

    But Shay said more Americans are growing selective and they’re focused on discounts. And while spending is expected to be up again, the growth of that spending may be in decline.

    That is still greater than the average increase of 3.6% between 2010 to 2019. Americans ramped up spending after that during the coronavirus pandemic. Holiday season sales rose 8.9% in 2020 and soared 12.5% in 2021, according to the NRF.

    The group’s holiday forecast is based on economic modeling using various key economic indicators including consumer spending, disposable personal income, employment, wages, inflation and previous monthly retail sales releases. NRF’s calculation excludes automobile dealers, gasoline stations and restaurants to focus on core retail.

    Holiday spending accounts for 19% of annual sales for the retail industry, though for some retailers the number is a lot higher, according to the NRF. And consumer spending in the U.S. is monitored closely because it drives about 70% of the nation’s gross domestic product.

    The forecast this year, however, arrives during the longest government shutdown in U.S. history. There has been no government data released on the jobs market or retail sales since the shutdown began 37 days ago.

    “Forecasting is increasingly challenging in this environment,” Shay acknowledged.

    The NRF forecast is in line with other estimates, however, which point to slowing growth.

    Mastercard SpendingPulse, which tracks spending across all payment methods including cash, predicts that holiday sales will be up 3.6% from Nov. 1 through Dec. 24. That compares with a 4.1% increase last year.

    Deloitte Services LP forecasts holiday retail sales to be up between 2.9% to 3.4% from Nov. 1 through Jan. 31, compared with last year’s 4.2%.

    Adobe expects U.S. online sales to hit $253.4 billion this holiday season, representing 5.3% growth. That’s smaller than last year’s 8.7% growth.

    Consumer spending in the U.S. has remained resilient even as consumer confidence has eroded.

    Mark Matthews, NRF’s chief economist and executive director of research, said consumer behavior is changing with a sharper focus on finding deals. And the frequency of family nights out at a restaurant is on the decline, NRF executives said.

    The timing of the government shutdown is “absolutely problematic,” Matthews said, noting that it’s led to a loss in private sector income, which erodes consumer demand.

    Spending should recover once the shutdown ends, Matthews said, yet there are broader issues of concern that will not be solved when the government shutdown ends.

    The gap between wealthy and lower-income households is widening, according to analysts.

    Based on spending from its credit card and bank customers, Bank of America found that spending growth among lower income households rose 0.6% in September compared with the same period last year. Among higher income brackets, spending rose at more than four times that speed, or 2.6%, in September. And wages are growing faster for higher income households.

    That is making it more difficult for lower income households to keep up when tariffs and other economic factors are pushing prices higher.

    In a separate report this week, Bank of America estimated that U.S. consumers are bearing 50% to 70% of the U.S. tariff costs, and it expects that load to grow.

    “We think there is overwhelming evidence that tariffs have pushed inflation higher for consumers,’’ Bank of America economists Stephen Juneau and Aditya Bhave wrote.

    At the same time, U.S. companies have announced tens of thousands of job cuts. Some companies have cited rising operational costs from new tariffs under the Trump administration, as well as shifting consumer spending, corporate restructuring, or increased spending on artificial intelligence.

    That has led retailers to pull back on the hiring of seasonal workers.

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  • Trump administration moves to overrule state laws protecting credit reports from medical debt

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    NEW YORK (AP) — The Trump administration is moving to overrule any state laws that may protect consumers’ credit reports from medical debt and other debt issues.

    The Consumer Financial Protection Bureau has drafted what’s known as an interpretative rule related to the Fair Credit Reporting Act, interpreting the law in a way that says the FCRA should preempt any state laws or regulations when it comes to how debt should be reported to the credit bureaus like Experian, Equifax and Trans Union.

    This repeals previous Biden-era rules and regulations that allowed states to implement their own credit reporting bans. More than a dozen states like New York and Delaware prohibit the reporting of medical debt on a consumers’ credit report.

    Medical debt is often the most disputed part of a consumer’s credit report, because insurance payments can take time, and oftentimes patients do not have the means to fully pay a medical bill if insurance is not covering a procedure that has already taken place.

    The three credit bureaus jointly announced in 2023 they would no longer track any medical debts below $500, which at the time the bureaus said would eliminate 70% of all medical debts reported on consumers’ credit files. But some states have gone further than that. New York, Delaware and others passed laws where medical debts can no longer be reported to the credit bureaus.

    The CFPB, which is largely not operating at the moment with the exception of actively repealing previous rules written under President Biden or earlier, says in its rule that Congress intended to “create national standards for the credit reporting system” under the FCRA and state laws run afoul of that intention.

    The Kaiser Family Foundation estimates that Americans owe roughly $220 billion in medical debt. In Republican-controlled states like South Dakota, Mississippi, West Virginia and Georgia, roughly one in six Americans have outstanding medical debt, according to the KFF.

    Having outstanding, delinquent medical debt can impact the ability for an individual to apply for a mortgage, a credit card or an auto loan.

    A spokesperson for the Bureau did not immediately respond to a request for comment.

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  • Japan’s central bank holds steady on key interest rate

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    Japan’s central bank has kept its key interest rate unchanged at 0.5%, in a decision that was widely expected, given recent inflation trends that have stayed above target

    TOKYO — Japan’s central bank kept its key interest rate unchanged at 0.5% Friday, in a decision that was widely expected, given recent inflation trends that have stayed above target.

    The Bank of Japan issued its decision on the overnight call rate after a two-day meeting by its policy board.

    “Japan’s economy has recovered moderately, although some weakness has been seen in part. Overseas economies have grown moderately on the whole,” it said in a statement.

    The U.S. Federal Reserve cut its policy rate by 0.25 percentage points earlier this week, the Fed’s first cut since December, and lowered its short-term rate to about 4.1%, down from 4.3%.

    Japan had been ailing from deflationary trends in recent years, but prices are gradually rising. Recent government data show consumer prices rising above the central bank’s target of 2%, at between 2.5% and 3%.

    The Bank of Japan noted exports will be hit by higher tariffs, which have come about because of U.S. President Donald Trump’s policies. There was an increase in trade in anticipation of the tariffs, but those rises are now tapering off, it said.

    Also mentioned as a risk factor was the uncertainty in domestic politics. Prime Minister Shigeru Ishiba is stepping down, and the ruling party is holding an election to choose a new leader.

    Five candidates are expected to enter the race, with a party vote coming early next month. The grip on power by the Liberal Democratic Party, which has ruled postwar Japan almost incessantly, appears to be unraveling lately.

    The Japanese stock market has been booming recently, with the benchmark Nikkei 225 hitting another record Thursday, cheered by the Fed’s rate cut. Shares were falling slightly in Friday morning trading.

    ___

    Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama

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  • Japan’s economy grew at faster rate in fiscal Q1 than initially thought

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    Japan’s economy expanded at a stronger rate in the fiscal first quarter than previously estimated, despite worries about U.S. tariffs and domestic political uncertainty, according to government data

    TOKYO — Japan’s economy expanded at a stronger rate in the fiscal first quarter than previously estimated, despite worries about U.S. tariffs and domestic political uncertainty, according to government data released Monday.

    The Cabinet Office said Japan’s real gross domestic product, the sum value of a nation’s goods and services, grew at a seasonally adjusted 2.2% annualized rate in the April-June quarter from the previous quarter.

    That was better than the preliminary estimate for 1.0% growth, which came out last month, as solid consumer spending and inventories lifted growth more than previously thought.

    Quarter-on-quarter, Japan’s GDP grew 0.5%, up from the initial estimate for a 0.3% rise, which was also what analysts projected, according to RaboResearch.

    That marked the fifth straight quarter of growth. The annualized number shows what the growth, or contraction, would have been if the quarterly rate continued for a year.

    U.S. President Donald Trump’s move to raise tariffs on Japanese imports is a major worry for the export-dependent economy, especially auto exports, which now face a 15% tariff, up from 2.5%.

    Another concern is the looming political uncertainty after Prime Minister Shigeru Ishiba announced Sunday he is stepping down as head of the ruling party. A party election will follow over the next weeks.

    Private consumption rose 0.4%, according to the latest government data, better than the initial estimate for 0.2% growth, raising domestic demand growth into positive territory at 0.2% growth, instead of contracting 0.1%, as in the earlier data.

    Japan’s benchmark Nikkei rose in morning trading, despite Ishiba’s announcement on resigning, as the move was somewhat expected, and the market appeared to welcome the action as a step forward.

    But analysts say uncertainty remains because it’s still unclear what parties might be brought in to form a coalition with the ruling party.

    ___

    Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama

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  • The US government wants to make it easier for you to click the ‘unsubscribe’ button

    The US government wants to make it easier for you to click the ‘unsubscribe’ button

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    WASHINGTON — In the name of consumer protection, a slew of U.S. federal agencies are working to make it easier for Americans to click the unsubscribe button for unwanted memberships and recurring payment services.

    A broad new government initiative, dubbed “Time Is Money,” includes a rollout of new regulations and the promise of more for industries spanning from healthcare and fitness memberships to media subscriptions.

    “The administration is cracking down on all the ways that companies, through paperwork, hold times and general aggravation waste people’s money and waste people’s time and really hold onto their money,” Neera Tanden, White House domestic policy adviser, told reporters Friday in advance of the announcement.

    “Essentially in all of these practices, companies are delaying services to you or really trying to make it so difficult for you to cancel the service that they get to hold onto your money for longer and longer,” Tanden said. “These seemingly small inconveniences don’t happen by accident — they have huge financial consequences.”

    Efforts being rolled out Monday include a new Federal Communications Commission inquiry into whether to impose requirements on communications companies that would make it as easy to cancel a subscription or service as it was to sign up for one.

    The Federal Trade Commission in March 2023 initiated “click to cancel” rulemaking requiring companies to let customers end subscriptions as easily as they started them.

    Also Monday, the heads of the departments of Labor and of Health and Human Services are asking health insurance companies and group health plans to make improvements to customer interactions with their health coverage, and “in the coming months will identify additional opportunities to improve consumers’ interactions with the health care system,” according to a White House summary.

    The government already has launched several initiatives aimed at improving the consumer experience.

    In October, the FTC announced a proposed rule to ban hidden and bogus junk fees, which can mask the total cost of concert tickets, hotel rooms and utility bills.

    In April, the Transportation Department finalized rules that would require airlines to automatically issue cash refunds for things like delayed flights and to better disclose fees for baggage or reservation cancellations.

    The department also has taken actions against individual companies accused of misleading customers.

    In June, the Justice Department, referred by the FTC, filed a lawsuit against software maker Adobe and two of its executives, Maninder Sawhney and David Wadhwani, for allegedly pushing consumers toward the firm’s “annual paid monthly” subscription without properly disclosing that canceling the plan in the first year could cost hundreds of dollars.

    Dana Rao, Adobe’s general counsel, said in an emailed statement that Adobe disagrees with the lawsuit’s characterization of its business and “we will refute the FTC’s claims in court.”

    “The early termination fees equate to minimal impact to our revenue, accounting for less than half a percent of our total revenue globally, but is an important part of our ability to offer customers a choice in plans that balance cost and commitment,” Rao said.

    Some business advocates are not a fan of the government’s overall efforts to crack down on junk fees.

    Sean Heather, senior vice president of international regulatory affairs and antitrust at the U.S. Chamber of Commerce, said the initiative is “nothing more than an attempt to micromanage businesses’ pricing structures, often undermining businesses’ ability to give consumers options at different price points.”

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  • The US government wants to make it easier for you to click the ‘unsubscribe’ button

    The US government wants to make it easier for you to click the ‘unsubscribe’ button

    [ad_1]

    WASHINGTON — In the name of consumer protection, a slew of U.S. federal agencies are working to make it easier for Americans to click the unsubscribe button for unwanted memberships and recurring payment services.

    A broad new government initiative, dubbed “Time Is Money,” includes a rollout of new regulations and the promise of more for industries spanning from healthcare and fitness memberships to media subscriptions.

    “The administration is cracking down on all the ways that companies, through paperwork, hold times and general aggravation waste people’s money and waste people’s time and really hold onto their money,” Neera Tanden, White House domestic policy adviser, told reporters Friday in advance of the announcement.

    “Essentially in all of these practices, companies are delaying services to you or really trying to make it so difficult for you to cancel the service that they get to hold onto your money for longer and longer,” Tanden said. “These seemingly small inconveniences don’t happen by accident — they have huge financial consequences.”

    Efforts being rolled out Monday include a new Federal Communications Commission inquiry into whether to impose requirements on communications companies that would make it as easy to cancel a subscription or service as it was to sign up for one.

    The Federal Trade Commission in March 2023 initiated “click to cancel” rulemaking requiring companies to let customers end subscriptions as easily as they started them.

    Also Monday, the heads of the departments of Labor and of Health and Human Services are asking health insurance companies and group health plans to make improvements to customer interactions with their health coverage, and “in the coming months will identify additional opportunities to improve consumers’ interactions with the health care system,” according to a White House summary.

    The government already has launched several initiatives aimed at improving the consumer experience.

    In October, the FTC announced a proposed rule to ban hidden and bogus junk fees, which can mask the total cost of concert tickets, hotel rooms and utility bills.

    In April, the Transportation Department finalized rules that would require airlines to automatically issue cash refunds for things like delayed flights and to better disclose fees for baggage or reservation cancellations.

    The department also has taken actions against individual companies accused of misleading customers.

    In June, the Justice Department, referred by the FTC, filed a lawsuit against software maker Adobe and two of its executives, Maninder Sawhney and David Wadhwani, for allegedly pushing consumers toward the firm’s “annual paid monthly” subscription without properly disclosing that canceling the plan in the first year could cost hundreds of dollars.

    Dana Rao, Adobe’s general counsel, said in an emailed statement that Adobe disagrees with the lawsuit’s characterization of its business and “we will refute the FTC’s claims in court.”

    “The early termination fees equate to minimal impact to our revenue, accounting for less than half a percent of our total revenue globally, but is an important part of our ability to offer customers a choice in plans that balance cost and commitment,” Rao said.

    Some business advocates are not a fan of the government’s overall efforts to crack down on junk fees.

    Sean Heather, senior vice president of international regulatory affairs and antitrust at the U.S. Chamber of Commerce, said the initiative is “nothing more than an attempt to micromanage businesses’ pricing structures, often undermining businesses’ ability to give consumers options at different price points.”

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  • Air travel is getting worse. That’s what passengers are telling the US government

    Air travel is getting worse. That’s what passengers are telling the US government

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    WASHINGTON (AP) — Air travel got more miserable last year, if the number of consumer complaints filed with the U.S. government is any measure.

    The Transportation Department said Friday that it received nearly 97,000 complaints in 2023, up from about 86,000 the year before. The department said there were so many complaints that it took until July to sort through the filings and compile the figures.

    That’s the highest number of consumer complaints about airlines since 2020, when airlines were slow to give customers refunds after the coronavirus pandemic shut down air travel.

    The increase in complaints came even as airlines canceled far fewer U.S. flights — 116,700, or 1.2% of the total, last year, compared with about 210,500, or 2.3%, in 2022, according to FlightAware data. However, delays remained stubbornly high last year, at around 21% of all flights.

    So far this year, cancellations remain relatively low — about 1.3% of all flights — but delays are still running around 21%.

    More than two-thirds of all complaints last year dealt with U.S. airlines, but a quarter covered foreign airlines. Most of the rest were about travel agents and tour operators.

    Complaints about treating passengers with disabilities rose by more than one-fourth compared with 2022. Complaints of discrimination, while small in number, also rose sharply. Most were about race or national origin.

    The Transportation Department said the increase in complaints was partly the result of more consumers knowing about their rights and the ability to file a complaint. The department said it helped Southwest Airlines customers get more than $600 million in refunds and reimbursements after the carrier canceled nearly 17,000 flights during December 2022. Southwest also paid a $35 million fine.

    Airlines receive many more complaints from travelers who don’t know how or don’t bother to complain to the government, but the carriers don’t release those numbers.

    The Transportation Department is modernizing its complaint-taking system, which the agency says will help it do a better job overseeing the airline industry. However, the department now releases complaint numbers many months late. It did not issue figures for the second half of 2023 until Friday.

    ___

    The Transportation Department’s online complaint form is at https://secure.dot.gov/air-travel-complaint

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  • Vermont Legislature overrides governor, passing overdose prevention, renewable energy, tax measures

    Vermont Legislature overrides governor, passing overdose prevention, renewable energy, tax measures

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    The Democratic-controlled Vermont Legislature on Monday overturned a number of the Republican governor’s vetoes, passing measures to prevent drug overdoses, restrict a pesticide that’s toxic to bees and to require state utilities to source all renewable energy by 2035.

    But the Legislature failed to override Gov. Phil Scott’s veto of a data privacy bill that was considered to be among the strongest in the country. It would have allowed consumers to file civil lawsuits against companies that break certain privacy rules. Scott vetoed the legislation last week, saying it would make Vermont “a national outlier and more hostile than any other state to many businesses and non-profits.”

    The Vermont House voted to override his veto but the Senate sustained his decision.

    The vote came after the Legislature reconvened Monday to try to override Scott’s vetoes of seven bills. Each chamber needed two-thirds of those present to vote to override to be successful in passing the bills.

    Senate President Pro Tem Philip Baruth, a Democrat, thanked colleagues at the end of the day, calling it “an incredibly productive day, a long day and an exhausting day in many ways but with brilliant results.”

    Gov. Scott, on the other hand, called it a sad day for Vermonters “who simply cannot afford further tax burdens and cost increases. Many will talk about these votes as a major loss for me, but it’s really a major loss for Vermont taxpayers, workers and families.”

    Scott said last month that the Legislature is out of balance and at times “focuses so much on their goals they don’t consider the unintended consequences.” While he said his vetoes aren’t popular in Montpelier, “I’ll take that heat when I believe I’m making the right choice for the everyday Vermonter,” Scott said.

    The drug overdose prevention law enacted by the Legislature allows for a safe injection site in Vermont’s largest city of Burlington where people can use narcotics under the supervision of trained staff and be revived if they take too much.

    The center will provide referrals to addiction treatment as well as medical and social services. It also will offer education about overdose prevention and distribute overdose reversal medications.

    “The data is clear. Overdose prevention centers save lives, connect people to treatment, reduce pressures on emergency rooms and Emergency Medical Services, and reduce public drug consumption and discarded supplies in our communities,” Baruth said in a statement.

    The new law allocates $1.1 million in fiscal year 2025 to the Vermont Department of Health to award grants to the city of Burlington to establish such a center. The money will come from the Opioid Abatement Special Fund made up of Vermont’s share of a national settlement with drug manufacturers and distribution companies. Before then, the Health Department is required to contract with a researcher or consultant to study the impact of the overdose prevention center pilot program.

    Two years ago, the first sanctioned overdose prevention centers in New York City opened, according to the Drug Policy Alliance. Rhode Island is expected to open one in Providence this summer.

    By Monday afternoon, the state House and Senate had overturned the governor’s veto of a bill that requires state utilities to source all renewable energy by 2035, making Vermont the second state with such an ambitious timeline. Scott had said the renewable energy bill would be too costly for ratepayers. Under the legislation, the biggest utilities will need to meet the goal by 2030.

    “The renewable energy standard will put Vermont on track to achieve 100% renewable electricity by 2035, dramatically reducing planet-warming carbon pollution and saving Vermonters money over time,” Baruth said in a separate statement. He called the governor’s veto an attempt to continue rejecting “critical progress on climate action” at a time when Vermonters still are facing “the impacts of recent climate disasters.”

    The Legislature also enacted a property tax bill to pay for education that will increase property taxes by an average of nearly 14% and create a committee to recommend changes to make Vermont’s education system more affordable. Scott has said Vermonters cannot afford double-digit tax increases.

    In addition, the Legislature overrode Scott’s veto of a measure that restricts a type of pesticide that’s toxic to bees. The Legislature passed the bill after New York Gov. Kathy Hochul signed off on what she described as the nation’s first law last year to severely limit the use of neonics in her state. In vetoing the bill, Scott said it was “more anti-farmer than it is pro-pollinator.”

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  • High profile for-profit Bay Area coding school BloomTech hit by feds for allegedly tricking students

    High profile for-profit Bay Area coding school BloomTech hit by feds for allegedly tricking students

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    High-profile Bay Area coding school BloomTech, which touts “dream” technology jobs at companies such as Google and Amazon, has been sanctioned by federal authorities for allegedly deceiving students about loan costs and making false claims about graduates’ hiring rates.

    The Consumer Financial Protection Bureau in an order banned the school’s co-founder and CEO Austen Allred from student-loan activities for 10 years, and permanently banned the for-profit vocational institute, formerly called the Lambda School and also known as Bloom Institute of Technology, from all consumer lending.

    The CFPB targeted the income-based repayment scheme used by nearly all BloomTech students that required payment of a percentage of income once graduates started earning at least $50,000 a year.

    “BloomTech falsely claimed its ‘income share’ agreements were not loans, did not create debt, did not carry a finance charge, and were ‘risk free,’” the CFPB said in a news release Wednesday. “In fact, the agreements are loans with an average finance charge of $4,000. The loans carry substantial risk, as a single missed payment triggers a default and the remainder of the $30,000 ‘cap’ becomes due immediately.”

    The school issued thousands of the income-share loans, but stopped offering them this year, according to the bureau’s order against the school.

    BloomTech’s six- to nine-month training programs in subjects including web development, data science, and computer engineering typically cost $20,000 to $30,000 in tuition.

    BloomTech, and Allred, enticed prospective students with job-placement rates as high as 86%, when internal metrics showed placement rates closer to 50% and sometimes as low as 30%, the news release said. “Allred tweeted that the school achieved a 100% job-placement rate in one of its cohorts, and later acknowledged in a private message that the sample size was just one student,” the news release said.

    BloomTech, backed by Silicon Valley venture capital firms, advertised that top tech companies and Fortune 100 firms employed many of its graduates. But the school knew as early as 2018 that large corporations “rarely hired its graduates into high-paying, program-related jobs,” the CFPB’s order said.

    Allred and the school violated the federal Consumer Financial Protection Act and Truth in Lending Act, the CFPB alleged.

    Allred and the school agreed to sanctions without accepting wrongdoing, according to the order. The CEO and the school did not immediately respond to requests for comment.

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  • Key lawmakers float new rules for personal data protection; bill would make privacy a consumer right

    Key lawmakers float new rules for personal data protection; bill would make privacy a consumer right

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    WASHINGTON — Two influential lawmakers from opposing parties have crafted a deal on legislation designed to strengthen privacy protections for Americans’ personal data.

    The sweeping proposal announced Sunday evening would define privacy as a consumer right and create new rules for companies that collect and use personal information. It comes from the offices of Democratic Sen. Maria Cantwell and Republican Rep. Cathy McMorris Rodgers, both of Washington state.

    Cantwell chairs the Senate Commerce Committee while McMorris Rodgers leads the House Energy and Commerce Committee. While the proposal has not been formally introduced and remains in draft form, the bipartisan support suggests the bill could get serious consideration.

    Congress has long discussed ways to protect the personal data regularly submitted by Americans to a wide range of businesses and services. But partisan disputes over the details have doomed previous proposals.

    According to a one-page outline released Sunday, the bill worked out by McMorris Rodgers and Cantwell would strengthen rules requiring consumer consent before a company can collect or transfer certain kinds of information. Companies would have to notify consumers about the details of data collection and retention policies and seek consumer permission for significant changes.

    In addition, companies would have to ensure that any algorithms used to analyze personal data aren’t biased, and companies that buy and sell personal data would have to register with the Federal Trade Commission.

    Consumers would also have greater control over how their data is used under the measure. One provision of the proposal would allow consumers to opt out of targeted ads — i.e., advertisements sent to them based on their personal data.

    A new bureau focused on data privacy would be created within the FTC, which would have the authority to enact new rules as technology changes. Enforcement of the law would fall to the FTC as well as state attorneys general.

    If passed, the new standard would preempt most state privacy laws — though it wouldn’t impact certain states’ laws already on the books that protect financial, health or employee data.

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  • Federal officials want to know how airlines handle — and share — passengers’ personal information

    Federal officials want to know how airlines handle — and share — passengers’ personal information

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    WASHINGTON — Federal officials said Thursday they will review how airlines protect personal information about their passengers and whether they are making money by sharing that information with other parties.

    The U.S. Department of Transportation said its review will focus on the 10 biggest U.S. airlines and cover their collection, handling and use of information about customers.

    “Airline passengers should have confidence that their personal information is not being shared improperly with third parties or mishandled by employees,” Transportation Secretary Pete Buttigieg said.

    A spokeswoman for the trade group Airlines for America said, “U.S. airlines take customers’ personal information security very seriously, which is why they have robust policies, programs and cybersecurity infrastructure to protect consumers’ privacy.”

    In announcing the review, the Transportation Department did not make allegations against any of the carriers or cite any events that might have prompted the move. A spokesman said it is being done “proactively” to help the department determine how to protect passengers’ information.

    The department said it sent letters to each of the airlines — Delta, United, American, Southwest, Alaska, JetBlue, Spirit, Frontier, Hawaiian and Allegiant — about their procedures for collecting and using passenger information, including “monetization of passenger data, targeted advertising, and prevention of data breaches.”

    The agency also asked airlines if they have received complaints about employees or contractors mishandling personal information.

    Delta, United, American, Southwest and Alaska referred questioners to the Airlines for America statement. Allegiant, which is not part of the trade group, said protecting customer data is a priority, and it welcomes the government review.

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  • Trump says Powell is being ‘political’ with interest rates

    Trump says Powell is being ‘political’ with interest rates

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    Former President Donald Trump on Friday criticized Federal Reserve Chair Jerome Powell and said he’s playing politics with interest-rate policy.

    “It looks to me like he’s trying to lower interest rates for the sake of maybe getting people elected,” Trump said, in an interview on the Fox Business Network.

    “I think he’s political,” added Trump, the likely 2024 Republican nominee for president.

    Asked if he would reappoint Powell to a third four-year term, Trump replied “no.”

    Trump said he has a couple of choices in mind to replace Powell, but wouldn’t say who.

    Trump said he thinks lowering interest rates would lead to massive inflation. The conflict in the Middle East is likely to lead to “big inflation” from a spike in oil prices, he added.

    “Trump said he thinks lowering interest rates would lead to massive inflation. The conflict in the Middle East is likely to lead to “big inflation” from a spike in oil prices, he added.”

    Powell “is not going to be able to do anything,” Trump said.

    On Wednesday, Powell said he wasn’t giving a potential third term any thought. Powell’s current term expires in early 2026.

    Speculation on a third term “is not something I’m focused on,” Powell said.

    “We’re focused on doing our jobs. This year is going to be a highly consequential year for the Fed and monetary policy. We’re, all of us, very buckled down, focused on doing our jobs,” Powell said.

    Analysts say that the Fed will be criticized by both parties in the election year.

    On Sunday, Powell will appear on the CBS News program “60 Minutes” and will likely face more questions about the election.

    Earlier this week, top Democrats on the Senate Banking Committee urged the Fed to cut rates quickly, saying they were too high and hurting the housing market.

    “Keeping interest rates high will be detrimental to American workers and their families and do little to bring down prices or promote moderate economic growth,” said Sen. Sherrod Brown, a Democrat from Ohio, and the chairman of the Banking Committee, in a letter to Powell prior to Wednesday’s Fed meeting.

    At the meeting on Wednesday, the Fed kept its benchmark interest rate unchanged in a range of 5.25%-5.5%.

    Asked about the letter from the Democrats on Wednesday, Powell said Congress has given the Fed the job of stable prices. High inflation hurts people at the lower end of the income spectrum, he added.

    “It’s what society has asked us to do is to get inflation down. The tools we use to do it are interest rates,” he said.

    The Fed has penciled in three rate cuts for 2024. Powell said that a cut at the Fed’s next meeting in March was unlikely. He said the Fed wants to see more good inflation reports so it can have greater confidence that inflation is coming down to the 2% target.

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  • NFL has ‘decided to rip off fans’ with playoff game on Peacock, congressman says

    NFL has ‘decided to rip off fans’ with playoff game on Peacock, congressman says

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    “‘You’ve decided to rip off fans by exclusively broadcasting tomorrow’s Chiefs vs. Dolphins wild-card game on Peacock. For the first time ever, fans will be forced to choose between signing up for yet another expensive streaming service or missing out on a major playoff game.’”

    That was part of a letter that Rep. Pat Ryan penned to leaders of the NFL and NBC Sports lamenting that an NFL playoff game this weekend will be available via steaming only for the first time.

    “How much more profit do [NFL commissioner Roger] Goodell and NBC need to make at the expense of hard working Americans?” the New York Democrat’s letter went on to ask.

    He wrote: “Congress granted the NFL an antitrust exemption in its broadcast deals with the expectation that you wouldn’t use it to screw over fans. That was clearly a mistake.” 

    Peacock, a streaming service operated by Comcast’s
    CMCSA,
    -0.65%
    NBCUniversal, is one of several streaming platforms that now broadcast NFL games. Some of those services, like Amazon’s
    AMZN,
    -0.36%
    Prime Video, have exclusive rights to certain games, meaning there is no other option to watch on network or cable television, or through a cord-cutting live TV subscription. But while there have been NFL games available only on a streaming platform before, never before has it been a playoff game.

    Part of the reason that Ryan, along with many NFL fans, are upset that the Chiefs-Dolphins game is available exclusively on Peacock is that it’s been getting more expensive to watch the NFL in recent years — because, increasingly, games are not broadcast on network TV. In fact, the price to watch every NFL game this season for cord cutters was $1,603, not including the cost of internet service. 

    That commitment includes the cost of six streaming services and five username and password combinations. Those digital streaming services include Google’s
    GOOG,
    +0.40%

    GOOGL,
    +0.40%
    YouTube TV, NFL Sunday Ticket, Amazon Prime Video, Peacock, NFL+ and ESPN+
    DIS,
    +1.01%    .

    And the NFL is reaping the rewards. A decade ago, the league made about $3 billion from its TV deals. But, through all of its broadcast deals today with both networks and streaming companies, it makes roughly $10 billion a year.

    Peacock has two plans: a $5.99-per-month subscription with ads, and another option for $11.99 a month that’s ad-free. While fans who live in the local broadcast areas of where the teams play (the media markets around Kansas City and Miami, in this case) will have the ability to watch the game on local TV, the rest of the country will have to pay for Peacock.

    According to the Wall Street Journal, NBC paid $110 million for Peacock’s exclusive NFL broadcast rights. 

    Many fans took to social media to vent their frustrations about having to buy another streaming service to watch an NFL game this weekend.

    Responding to the backlash, an NFL spokesperson said in a statement: “The NFL’s media strategy has been to make our games available in as many ways as possible to meet our fans where they spend their time. As streaming video becomes commonplace, we are increasingly expanding the digital distribution of NFL content while continuing a longstanding policy that all NFL games be shown on free, over-the-air television in the markets of the participating teams.”

    NBCUniversal did not respond to MarketWatch’s request for comment.

    Clermont, Fla., resident Calicia Landry, 53, has been a Dolphins fan for decades. Her family had season tickets during the historic 1972 season when the Dolphins went undefeated — the first and only time that has happened in NFL history.

    When asked if she will pay for Peacock to watch the game, Landry, whose town is in the Orlando, Fla., market, told MarketWatch that, despite Peacock’s cost of just $5, “it’s the principle now.”

    “I bought NFL Sunday Ticket already. I already pay for television service with DirecTV
    T,
    +1.54%    .
    I had to have Prime to watch the Black Friday game,” she said. “It’s too much.”

    Read on: Here’s how much the major streaming services are set to cost are all the price increases

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  • Southwest Airlines reaches $140 million settlement for December 2022 flight-canceling meltdown

    Southwest Airlines reaches $140 million settlement for December 2022 flight-canceling meltdown

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    DALLAS — Southwest Airlines will pay a $35 million fine as part of a $140 million agreement to settle a federal investigation into a debacle in December 2022 when the airline canceled thousands of flights and stranded more than 2 million travelers over the holidays.

    Most of the settlement will go toward compensating future passengers, which the U.S. Department of Transportation considers an incentive for Southwest to avoid repeating last winter’s mess.

    The government said the assessment was the largest it has ever imposed on an airline for violating consumer protection laws.

    Transportation Secretary Pete Buttigieg said the settlement demonstrates his agency’s resolve to make airlines take care of their passengers.

    “This penalty should put all airlines on notice to take every step possible to ensure that a meltdown like this never happens again,” he said.

    Southwest said it was “grateful to have reached a consumer-friendly settlement” giving the airline credit for compensation it already provided to customers. The airline said it has “learned from the event, and now can shift its entire focus to the future.”

    The assessment stems from nearly 17,000 canceled flights a year ago, starting as a winter storm paralyzed Southwest operations in Denver and Chicago and then snowballing when a crew rescheduling system couldn’t keep up with the chaos.

    Even before the settlement, the nation’s fourth-biggest airline by revenue said the meltdown cost it more than $1.1 billion in refunds and reimbursements, extra costs and lost ticket sales over several months.

    The government said in a consent decree dated Friday that Southwest “violated the law on numerous occasions,” including by failing to help customers who were stranded in airports and hotels, leaving many of them to scramble for other flights.

    Many who called the airline’s overwhelmed customer service center got a busy signal or were stuck on hold for hours.

    Southwest also did not keep customers updated about canceled and delayed flights, failing to fulfill a requirement that airlines notify the public within 30 minutes of a change. Some said they never got an email or text notice and couldn’t access Southwest’s website.

    The government also charged Southwest did not provide refunds quickly enough. People whose refund requests to a special Southwest website contained errors were not told to fix the mistakes, they simply didn’t get the money. Others didn’t receive immediate refunds for things like pet fees and boarding upgrades that went unused because of canceled flights, according to the department.

    In the consent order, Dallas-based Southwest disputed many of the Transportation Department’s findings and said only a small percentage of refunds were issued late, but the company said it entered the agreement just to settle the matter.

    Southwest said the 2022 storm that produced record cold temperatures, blizzards and power outages a few days before Christmas created “unanticipated operational challenges.” The airline said it quickly began reimbursing travelers for meals, hotels and alternative transportation and also distributed frequent flyer points.

    Southwest has added de-icing equipment and will increase staff during extreme cold temperatures at key airports, CEO Robert Jordan said.

    Southwest had previously agreed to make more than $600 million in refunds and reimbursements. Still, the carrier disclosed in October that federal officials found its efforts fell short and the carrier could face a civil penalty over its service to customers.

    The settlement provides that in addition to the $35 million fine, Southwest will get $33 million in credit for compensation already handed out, mostly for giving 25,000 frequent flyer points each, worth about $300, to affected customers. The company promised to give out $90 million in vouchers to future travelers.

    The government values vouchers at 80% of their face value, so Southwest received credit for $72 million for the future vouchers, not the full $90 million to be distributed $30 million a year between April 2024 and April 2027. If Southwest pays out less than promised, it will owe the government a penalty of 80% of any shortfall.

    In exchange for Southwest agreeing to the fine and other measures, the government stopped short of deciding whether the airline advertised a flight schedule that it knew could not be kept. Buttigieg had raised that charge publicly.

    The Transportation Department said it reviewed thousands of consumer complaints, visited Southwest facilities and met with senior company officials during the investigation.

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  • Southwest Airlines reaches $140 million settlement for December 2022 flight-canceling meltdown

    Southwest Airlines reaches $140 million settlement for December 2022 flight-canceling meltdown

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    DALLAS — Southwest Airlines will pay a $35 million fine as part of a $140 million agreement to settle a federal investigation into a debacle in December 2022 when the airline canceled thousands of flights and stranded more than 2 million travelers over the holidays.

    Most of the settlement will go toward compensating future passengers, which the U.S. Department of Transportation considers an incentive for Southwest to avoid repeating last winter’s mess.

    The government said the assessment was the largest it has ever imposed on an airline for violating consumer protection laws.

    Transportation Secretary Pete Buttigieg said the settlement demonstrates his agency’s resolve to make airlines take care of their passengers.

    “This penalty should put all airlines on notice to take every step possible to ensure that a meltdown like this never happens again,” he said.

    Southwest said it was “grateful to have reached a consumer-friendly settlement” giving the airline credit for compensation it already provided to customers. The airline said it has “learned from the event, and now can shift its entire focus to the future.”

    The assessment stems from nearly 17,000 canceled flights a year ago, starting as a winter storm paralyzed Southwest operations in Denver and Chicago and then snowballing when a crew rescheduling system couldn’t keep up with the chaos.

    Even before the settlement, the nation’s fourth-biggest airline by revenue said the meltdown cost it more than $1.1 billion in refunds and reimbursements, extra costs and lost ticket sales over several months.

    The government said in a consent decree dated Friday that Southwest “violated the law on numerous occasions,” including by failing to help customers who were stranded in airports and hotels, leaving many of them to scramble for other flights.

    Many who called the airline’s overwhelmed customer service center got a busy signal or were stuck on hold for hours.

    Southwest also did not keep customers updated about canceled and delayed flights, failing to fulfill a requirement that airlines notify the public within 30 minutes of a change. Some said they never got an email or text notice and couldn’t access Southwest’s website.

    The government also charged Southwest did not provide refunds quickly enough. People whose refund requests to a special Southwest website contained errors were not told to fix the mistakes, they simply didn’t get the money. Others didn’t receive immediate refunds for things like pet fees and boarding upgrades that went unused because of canceled flights, according to the department.

    In the consent order, Dallas-based Southwest disputed many of the Transportation Department’s findings and said only a small percentage of refunds were issued late, but the company said it entered the agreement just to settle the matter.

    Southwest said the 2022 storm that produced record cold temperatures, blizzards and power outages a few days before Christmas created “unanticipated operational challenges.” The airline said it quickly began reimbursing travelers for meals, hotels and alternative transportation and also distributed frequent flyer points.

    Southwest has added de-icing equipment and will increase staff during extreme cold temperatures at key airports, CEO Robert Jordan said.

    Southwest had previously agreed to make more than $600 million in refunds and reimbursements. Still, the carrier disclosed in October that federal officials found its efforts fell short and the carrier could face a civil penalty over its service to customers.

    The settlement provides that in addition to the $35 million fine, Southwest will get $33 million in credit for compensation already handed out, mostly for giving 25,000 frequent flyer points each, worth about $300, to affected customers. The company promised to give out $90 million in vouchers to future travelers.

    The government values vouchers at 80% of their face value, so Southwest received credit for $72 million for the future vouchers, not the full $90 million to be distributed $30 million a year between April 2024 and April 2027. If Southwest pays out less than promised, it will owe the government a penalty of 80% of any shortfall.

    In exchange for Southwest agreeing to the fine and other measures, the government stopped short of deciding whether the airline advertised a flight schedule that it knew could not be kept. Buttigieg had raised that charge publicly.

    The Transportation Department said it reviewed thousands of consumer complaints, visited Southwest facilities and met with senior company officials during the investigation.

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