Apple CEO Tim Cook introduces the Apple Card during a launch event at the Apple headquarters in Cupertino, California, on March 25, 2019.
Noah Berger | AFP | Getty Images
The Consumer Financial Protection Bureau ordered Apple and Goldman Sachs on Wednesday to pay more than $89 million for mishandling consumer disputes related to Apple Card transactions.
The bureau said Apple failed to send tens of thousands of consumer disputes to Goldman Sachs. Even when Goldman Sachs did receive disputes, the CFPB said the bank did not follow federal requirements when investigating the cases.
Goldman Sachs was ordered to pay a $45 million civil penalty and $19.8 million in redress, while Apple was fined $25 million. The bureau also banned Goldman Sachs from launching new credit cards unless it can provide an adequate plan to comply with the law.
“Apple and Goldman Sachs illegally sidestepped their legal obligations for Apple Card borrowers. Big Tech companies and big Wall Street firms should not behave as if they are exempt from federal law,” said CFPB Director Rohit Chopra.
Apple Card was first launched in 2019 as a credit card alternative, hinged on Apple Pay, the company’s mobile payment and digital wallet service. The company partnered with Goldman Sachs as its issuing bank, and advertised the card as more simple and transparent than other credit cards.
That December, the companies launched a new feature that allowed users to finance certain Apple devices with the card through interest-free monthly installments.
But the CFPB found that Apple and Goldman Sachs misled consumers about the interest-free payment plans for Apple devices. While many customers thought they would get automatic interest-free monthly payments when they bought Apple devices with an Apple Card, they were still charged interest. Goldman Sachs did not adequately communicate to consumers about how the refunds would work, which meant some people ended up paying additional interest charges, according to the CFPB.
It also meant some consumers had incorrect credit reports, the agency said.
“Apple Card is one of the most consumer-friendly credit cards that has ever been offered. We worked diligently to address certain technological and operational challenges that we experienced after launch and have already handled them with impacted customers,” Nick Carcaterra, vice president of Goldman Sachs corporate communications, told CNBC. “We are pleased to have reached a resolution with the CFPB and are proud to have developed such an innovative and award-winning product alongside Apple.”
Representatives from Apple did not immediately respond to CNBC’s request for comment.
Revolut CEO, Nikolay Storonsky (L) and Meta CEO, Mark Zuckerberg.
Reuters
British financial technology firm Revolut on Thursday criticized Facebook parent company Meta over its approach to tackling fraud, saying the U.S. tech giant should directly compensate people who fall victim to scams via its social media platforms.
A day after Meta announced a partnership with U.K. banks NatWest and Metro Bank on a data-sharing framework designed to help prevent customers from falling prey to fraud schemes, Revolut said the pact “falls woefully short of what’s required to tackle fraud globally.”
In a statement, Woody Malouf, Revolut’s head of financial crime, said that Meta’s plans to tackle financial fraud on its platforms amount to “baby steps, when what the industry really needs is giant leaps forward.”
“These platforms share no responsibility in reimbursing victims, and so they have no incentive to do anything about it. A commitment to data sharing, albeit needed, simply isn’t good enough,” Malouf added.
CNBC has contacted Meta for comment.
New payment industry reforms will come into force in the U.K. on Oct. 7 that require banks and payment firms to issue victims of so-called authorized push payment (APP) fraud a maximum compensation of £85,000 ($111,000).
Britain’s Payments System Regulator had previously recommended a £415,000 maximum compensation amount for fraud victims, but backed down following backlash from banks and payment firms.
Revolut’s Malouf said that, while his company is on board with steps the U.K. government is taking to combat fraud, Meta and other social media platforms should do their part to financially compensate those who fall victim to fraud as a result of scams originating on their sites.
The fintech firm published a report Thursday alleging that 62% of user-reported fraud on its online banking platform originated from Meta, down from 64% last year.
Facebook was the most common source of all scams reported by Revolut users, accounting for 39% of fraud, while WhatsApp was the second-highest source of such events with an 18% share, the bank said in its “Consumer Security and Financial Crime Report.“
JPMorgan Chase CEO and Chairman Jamie Dimon gestures as he speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, D.C., on Dec. 6, 2023.
Evelyn Hockstein | Reuters
Buried in a roughly 200-page quarterly filing from JPMorgan Chase last month were eight words that underscore how contentious the bank’s relationship with the government has become.
The lender disclosed that the Consumer Financial Protection Bureau could punish JPMorgan for its role in Zelle, the giant peer-to-peer digital payments network. The bank is accused of failing to kick criminal accounts off its platform and failing to compensate some scam victims, according to people who declined to be identified speaking about an ongoing investigation.
In response, JPMorgan issued a thinly veiled threat: “The firm is evaluating next steps, including litigation.”
The prospect of a bank suing its regulator would’ve been unheard of in an earlier era, according to policy experts, mostly because corporations used to fear provoking their overseers. That was especially the case for the American banking industry, which needed hundreds of billions of dollars in taxpayer bailouts to survive after irresponsible lending and trading activities caused the 2008 financial crisis, those experts say.
But a combination of factors in the intervening years has created an environment where banks and their regulators have never been farther apart.
Trade groups say that in the aftermath of the financial crisis, banks became easy targets for populist attacks from Democrat-led regulatory agencies. Those on the side of regulators point out that banks and their lobbyists increasingly lean on courts in Republican-dominated districts to fend off reform and protect billions of dollars in fees at the expense of consumers.
“If you go back 15 or 20 years, the view was it’s not particularly smart to antagonize your regulator, that litigating all this stuff is just kicking the hornet’s nest,” said Tobin Marcus, head of U.S. policy at Wolfe Research.
“The disparity between how ambitious [President Joe] Biden’s regulators have been and how conservative the courts are, at least a subset of the courts, is historically wide,” Marcus said. “That’s created so many opportunities for successful industry litigation against regulatory proposals.”
Those forces collided this year, which started out as one of the most consequential for bank regulation since the post-2008 reforms that curbed Wall Street risk-taking, introduced annual stress tests and created the industry’s lead antagonist, the CFPB.
In the final months of the Biden administration, efforts from a half-dozen government agencies were meant to slash fees on credit card late payments, debit transactions and overdrafts, among other proposals. The industry’s biggest threat was the Basel Endgame, a sweeping plan to force big banks to hold tens of billions of dollars more in capital for activities like trading and lending.
“The industry is facing an onslaught of regulatory and potential legislative change,” Marianne Lake, head of JPMorgan’s consumer bank, warned investors in May.
JPMorgan’s disclosure about the CFPB probe into Zelle comes after years of grilling by Democrat lawmakers over financial crimes on the platform. Zelle was launched in 2017 by a bank-owned firm called Early Warning Services in response to the threat from peer-to-peer networks including PayPal.
The vast majority of Zelle activity is uneventful; of the $806 billion that flowed across the network last year, only $166 million in transactions was disputed as fraud by customers of JPMorgan, Bank of America and Wells Fargo, the three biggest players on the platform.
But the three banks collectively reimbursed just 38% of those claims, according to a July Senate report that looked at disputed unauthorized transactions.
Banks are typically on the hook to reimburse fraudulent Zelle payments that the customer didn’t give permission for, but usually don’t refund losses if the customer is duped into authorizing the payment by a scammer, according to the Electronic Fund Transfer Act.
A JPMorgan payments executive told lawmakers in July that the bank actually reimburses 100% of unauthorized transactions; the discrepancy in the Senate report’s findings is because bank personnel often determine that customers have authorized the transactions.
Amid the scrutiny, the bank began warning Zelle users on the Chase app to “Stay safe from scams” and added disclosures that customers won’t likely be refunded for bogus transactions.
The company, which has grown to become the largest and most profitable American bank in history under CEO Jamie Dimon, is at the fore of several other skirmishes with regulators.
Thanks to his reputation guiding JPMorgan through the 2008 crisis and last year’s regional banking upheaval, Dimon may be one of few CEOs with the standing to openly criticize regulators. That was highlighted this year when Dimon led a campaign, both public and behind closed doors, to weaken the Basel proposal.
In May, at JPMorgan’s investor day, Dimon’s deputies made the case that Basel and other regulations would end up harming consumers instead of protecting them.
The cumulative effect of pending regulation would boost the cost of mortgages by at least $500 a year and credit card rates by 2%; it would also force banks to charge two-thirds of consumers for checking accounts, according to JPMorgan.
The message: banks won’t just eat the extra costs from regulation, but instead pass them on to consumers.
While all of these battles are ongoing, the financial industry has racked up several victories so far.
Some contend the threat of litigation helped convince the Federal Reserve to offer a new Basel Endgame proposal this month that roughly cuts in half the extra capital that the largest institutions would be forced to hold, among other industry-friendly changes.
It’s not even clear if the watered-down version of the proposal, a long-in-the-making response to the 2008 crisis, will ever be implemented because it won’t be finalized until well after U.S. elections.
If Republican candidate Donald Trump wins, the rules might be further weakened or killed outright, and even under a Kamala Harris administration, the industry could fight the regulation in court.
That’s been banks’ approach to the CFPB credit card rule, which aimed to cap late fees at $8 per incident and was set to go into effect in May.
A last-ditch effort from the U.S. Chamber of Commerce and bank trade groups successfully delayed its implementation when Judge Mark Pittman of the Northern District of Texas sided with the industry, granting a freeze of the rule.
A key playbook for banks has been to file cases in conservative jurisdictions where they are likely to prevail, according to Lori Yue, a Columbia Business School associate professor who has studied the interplay between corporations and the judicial system.
The Northern District of Texas feeds into the 5th Circuit Court of Appeals, which is “well-known for its friendliness to industry lawsuits against regulators,” Yue said.
“Venue-shopping like this has become well-established corporate strategy,” Yue said. “The financial industry has been particularly active this year in suing regulators.”
Since 2017, nearly two-thirds of the lawsuits filed by the U.S. Chamber of Commerce challenging federal regulations have been in courts under the 5th Circuit, according to an analysis by Accountable US.
Industries dominated by a few large players — from banks to airlines, pharmaceutical companies and energy firms — tend to have well-funded trade organizations that are more likely to resist regulators, Yue added.
The polarized environment, where weakened federal agencies are undermined by conservative courts, ultimately preserves the advantages of the largest corporations, according to Brian Graham, co-founder of bank consulting firm Klaros.
“It’s really bad in the long run, because it locks in place whatever the regulations have been, while the reality is that the world is changing,” Graham said. “It’s what happens when you can’t adopt new regulations because you’re terrified that you’ll get sued.”
— With data visualizations by CNBC’s Gabriel Cortes.
Rohit Chopra, director of the CFPB, testifies during a House Financial Services Committee hearing on June 14, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
The Consumer Financial Protection Bureau declared on Wednesday that customers of the burgeoning buy now, pay later industry have the same federal protections as users of credit cards.
The agency unveiled what it called an “interpretive rule” that deemed BNPL lenders essentially the same as traditional credit card providers under the decades-old Truth in Lending Act.
That means the industry — currently dominated by fintech firms like Affirm, Klarna and PayPal — must make refunds for returned products or canceled services, must investigate merchant disputes and pause payments during those probes, and must provide bills with fee disclosures.
“Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under long-standing laws and regulations already on the books,” CFPB Director Rohit Chopra said in a release.
The CFPB, which last week was handed a crucial victory by the Supreme Court, has pushed hard against the U.S. financial industry, issuing rules that slashed credit card late fees and overdraft penalties. The agency, formed in the aftermath of the 2008 financial crisis, began investigating the BNPL industry in late 2021.
The use of digital installment loan-type services has ballooned in recent years, with volumes surging tenfold from 2019 to 2021, Chopra said during a media briefing. Among CFPB concerns are that some users are given more debt than they can handle, he said.
“Buy now, pay later is now a major part of our consumer credit market as these loans provide a meaningful alternative to other options for consumers,” Chopra told reporters. “The CFPB wants to make sure that these new competitive offerings are not gaining an advantage by sidestepping longstanding rights and responsibilities enshrined under the law.”
It’s unclear how many BNPL providers don’t comply with refund and dispute requirements; on the website for Affirm, for instance, there are pages for both activities.
While the CFPB acknowledged that many BNPL players offer those services, the new rule will ensure that they are applied consistently across the industry, a senior agency official told reporters.
The new rule will go into effect in 60 days, and the agency is now accepting public commentary on it, the official said.
Shares of Affirm were off 5.2% Wednesday, while PayPal slipped 3%.
For some time, BNPL providers have anticipated greater regulation, including efforts to apply existing card rules onto the industry. In March, Klarna published a post arguing that its no-interest product was less risky for customers than credit cards — which can often come with steep interest rates — thus requiring less oversight.
“Instead of trying to jam BNPL into an outdated credit card framework that does little to actually protect consumers, leaders in Washington should draft and implement a framework for BNPL that is proportionate to the risk it poses,” Klarna said at the time.
In a statement provided Wednesday, Klarna called the CFPB move a “significant step forward” in BNPL regulation, adding that it already adhered to standards for refunds, disputes and billing information.
“But it is baffling that the CFPB has overlooked the fundamental differences between interest-free BNPL and credit cards, whose whole business model is based on trapping customers into a cycle of paying sky-high interest rates month after month,” said a Klarna spokesperson.
An Affirm spokesman said the company was “encouraged” that the CFPB was promoting industry standards, “many of which already reflect how Affirm operates,” and that it was engaged with the regulator on improving how it operates.
“Affirm’s success is aligned with responsibly extending access to credit as we do not charge late or hidden fees,” the spokesman said. “We urge other companies that offer buy now, pay later products to live up to the industry’s promise to provide consumers with a more flexible and transparent alternative to other payment options.”
The industry’s stance raises the possibility that, like other financial players including payday lenders, BNPL companies could push back against the CFPB rule by suing the agency.
The CFPB rule capping credit card late fees at $8 per incident, which was set to go into effect this month, was challenged and paused by a federal judge recently.
Led by the U.S. Chamber of Commerce, the card industry in March sued the CFPB in federal court to prevent the new rule from taking effect.
That effort, which bounced between venues in Texas and Washington, D.C., for weeks, is now about to reach a milestone: a judge in the Northern District of Texas is expected to announce by Friday evening whether the court will grant the industry’s request for a freeze.
That could hold up the regulation, which would slash what most banks can charge in late fees to $8 per incident, just days before it was to take effect on Tuesday.
“We should get some clarity soon about whether the rule is going to be allowed to go into effect,” said Tobin Marcus, lead policy analyst at Wolfe Research.
The credit card regulation is part of President Joe Biden’s broader election-year war against what he deems junk fees.
Big card issuers have steadily raised the cost of late fees since 2010, profiting off users with low credit scores who rack up $138 in fees annually per card on average, according to CFPB Director Rohit Chopra.
As expected, the industry has mounted a campaign to derail the regulations, deeming them a misguided effort that redistributes costs to those who pay their bills on time, and ultimately harms those it purports to benefit by making it more likely for users to fall behind.
Up for grabs is the $10 billion in fees per year that the CFPB estimates the rule would save American families by pushing down late penalties to $8 from a typical $32 per incident.
Card issuers including Capital One and Synchrony have already talked about efforts to offset the revenue hit they would face if the rule takes effect. They could do so by raising interest rates, adding new fees for things like paper statements, or changing who they choose to lend to.
Capital One CEO Richard Fairbank said last month that, if implemented, the CFPB rule would impact his bank’s revenue for a “couple of years” as the company takes “mitigating actions” to raise revenue elsewhere.
“Some of these mitigating actions have already been implemented and are underway,” Fairbank told analysts during the company’s first-quarter earnings call. “We are planning on additional actions once we learn more about where the litigation settles out.”
Like some other observers, Wolfe Research’s Marcus believes the Chamber of Commerce is likely to prevail in its efforts to hold off the rule, either via the Northern District of Texas or through the 5th Circuit Court of Appeals. If granted, a preliminary injunction could hold up the rule until the dispute is settled, possibly through a lengthy trial.
The industry group, which includes Washington, D.C.-based trade associations like the American Bankers Association and the Consumer Bankers Association, filed its lawsuit in Texas because it is widely viewed as a friendlier venue for corporations, Marcus said.
“I would be very surprised if [Texas Judge Mark T.] Pittman denies that injunction on the merits,” he said. “One way or another, I think implementation is going to be blocked before the rule is supposed to go into effect.”
The CFPB declined to comment, and the Chamber of Commerce didn’t immediately respond to a request for comment.
The National Association of Realtors agreed to a $418 million settlement last week in an antitrust lawsuit where a federal jury found the organization and several large real-estate brokerages had conspired to artificially inflate agent commissions on the sale and purchase of real estate.
The NAR’s multiple listing service, or MLS, used at a local level across areas in the U.S., facilitated the compensation rates for both a buyer’s and seller’s agents.
At the time of listing a property, the home seller negotiated with the listing agent what the compensation would be for a buyer’s agent, which appeared on the MLS. However, if a seller was unaware they could negotiate, they were typically locked into paying the listed brokerage fee.
The proposed settlement would have the commission offer completely removed from the NAR’s system and home sellers will no longer be responsible for paying or offering commission for both the buyer and seller agents, said real estate attorney Claudia Cobreiro, the founder of Cobreiro Law in Coral Gables, Florida.
“The rule that has been the subject of litigation requires only that listing brokers communicate an offer of compensation,” the NAR wrote in a press release.
“Commissions remain negotiable, as they have been,” the organization wrote.
However, some of these changes may take time to materialize, experts say.
If a settlement agreement is accepted within a lawsuit between two people, the court generally won’t look at the settlement. Yet, in a federal class-action lawsuit, one that affects a large number of people, there will be a period for the court and interested parties to review the settlement and offer commentary and feedback on the agreement, Cobreiro said.
“That’s the process that we’re about to enter, and that process can take some time,” she said.
As proposed, the settlement would have the NAR completely remove commissions from its MLS system by July. That may be optimistic, Cobriero said.
“It would be more realistic to see this being implemented later this year,” she said.
In the meantime, it’s “business as usual” for buyers and sellers, Cobreiro said. “There is nothing that agents should be doing differently currently in their ongoing transactions.”
A buyer or seller already in the market is probably not going to be affected by the settlement unless their property happens to be on the market a little longer than what’s customary, she said.
“The big gray area here is how will buyer [agent] commissions be handled moving forward,” said Cobreiro, as there is no finalized agreement yet that clearly indicates how that will be handled.
The settlement agreement doesn’t say that the buyer’s agent will not be paid nor that the buyer’s agentcannot charge fees.
“The big question here is who is going to pay for those services moving forward. Will it ultimately be a buyer that will have to get the buyer’s agent’s commission together, on top of closing costs and on top of down payment?” Cobreiro said.
While commission fees are negotiable between involved parties, knowing what cards you have on the table as a homebuyer will be more important now than before. Using an agent will still be a smart way to achieve that, experts say.
“A great local agent can give you a competitive advantage,” said Amanda Pendleton, a home trends expert at Zillow Group. That’s especially true as low-priced starter homes are expected to remain in demand, she said.
Here are two things to know about how the settlement could change the process of buying a home:
1. Buyers could be responsible for their agent fees: Historically, real estate commissions typically come out of the seller’s pocket, and are split between the buyer’s and seller’s agents.
As a result of the settlement, the seller will no longer be responsible for commission fees for a buyer’s agent. So this is a new potential charge buyers need to consider in their budget. Historically, if a buyer’s agent got half of a 5% or 6% commission, that equaled thousands of dollars.
For example: The median home sale price by the end of 2023 was $417,700, according to the Federal Reserve. That would mean commissions at a 5.37% rate — the 2023 average rate, according to Lending Tree —amount to roughly $22,430, about $11,215 of which might go to the buyer’s agent.
But bypassing an agent’s services may not lead to direct savings, especially for first-time buyers, experts say. You could put yourself at risk by leaving the homebuying process entirely to the seller and their agent, said Cobreiro.
Sometimes things show up in your home inspection report that merit a credit from the seller, but if you don’t have an agent, the seller’s agent may not volunteer that, said Cobreiro.
Doing so would be a breach of their fiduciary duty to the seller, and it affects their commission if the price of the property declines, she said.
“Signing the contract is the least of it; there’s so many things that happen throughout the transaction that really require the expertise and the navigation by someone who understands the process,” she said.
2. Buyers may be required to sign a contract early on: If buyers become responsible for their agent’s commission, you’re likely to see more agents asking buyers to sign a buyer-broker agreement upfront, before the agent starts helping them find a property.
Most brokerages have a buyer agency agreement, but it’s common for real estate agents to wait to present the contract.
“They want to win the person’s business, they don’t want to scare them with having to sign any contracts,” said Steven Nicastro, a former real estate agent who writes for Clever Real Estate.
Moving the contract talks to earlier in the process is a precaution to protect buyer’s agents in the market.
“That could lead to negotiations actually taking place at the first meeting between a buyer and the buyer’s agent,” Nicastro said.
Know you can negotiate the commission rate as well as the duration of the contract, which can span from three months to a year, Cobreiro said.
Rohit Chopra, director of the CFPB, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress,” in the Dirksen Building on Nov. 30, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
The Consumer Financial Protection Bureau unveiled a new rule on Tuesday that it said would cap the typical late fee that banks charge customers at $8 per incident.
By cutting late fees to $8 from an average of around $32, more than 45 million card users would save an average of $220 annually, the CFPB said in a release.
The new rule, long expected after an initial proposal was floated early last year, comes after the agency said it reviewed market data related to the 2009 Card Act. Regulations tied to that law granted card issuers the ability to charge ever-increasing amounts of late fees.
“For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,” CFPB Director Rohit Chopra said in the release. “Today’s rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines.”
The announcement is the latest salvo in President Joe Biden‘s war against so-called junk fees.
The big banks that issue credit cards have been raising the cost of late penalties since 2010, and the fees exceeded $14 billion in 2022, according to the CFPB. The industry profits from customers with low credit scores, who rack up an average of $138 annually in late fees per card, said Chopra.
The rule, which applies to card issuers with at least one million open accounts, also ends automatic inflation adjustments on late fees.
Instead, the agency said it would adjust the fee if needed to cover collection costs, and that card issuers can charge higher fees if they prove they are necessary. The rule doesn’t directly affect interest rates, the CFPB said.
An industry group criticized the CFPB rule on Tuesday, saying that many card users will see higher interest rates and reduced credit availability. The group also questioned the process by which the rule was issued. The CFPB says Congress granted it the authority to administer the Card Act.
“The rule’s policy goals are, at best, consumer redistribution, not consumer protection,” Consumer Bankers Association head Lindsey Johnson said in a statement. “Equally concerning is that this rule continues the CFPB’s deeply problematic practice of rushing to prioritize headlines at the expense of legal process.”
Another industry group, the American Bankers Association, said it is considering options to push back against the CFPB’s rules.
In a release, Republican Senator Tim Scott of South Carolina said he would lean on the Congressional Review Act to fight implementation of the late fee cap.
The rule goes into effect 60 days after its publication in the Federal Register, the CFPB said.
When you buy or sell a home, your real estate agent’s commissions can trim thousands of dollars off the sale price — but many consumers don’t realize you can negotiate those terms.
Nearly a third, 31%, of homebuyers and sellers negotiated commissions with their agents, according to a new report by LendingTree. A majority of those, 64%, successfully reduced the fees. LendingTree polled 2,034 U.S. adults in mid-January.
About 36% of homebuyers and sellers say they didn’t know they could negotiate a real estate agent’s commission.
That’s understandable: When buyers are budgeting costs for a new property, they often focus on the bigger things, like the down payment and the mortgage, said Jacob Channel, a senior economist at LendingTree.
“Real estate commission fees are one of the sort of less glamorous or less talked out parts of the homebuying process,” said Channel.
“Thoughts like how much a real estate agent’s going to get paid or who pays the real estate agent probably aren’t at the forefront of your mind,” he said.
In 2023, the average commission was 5.37%, LendingTree found. Rates typically range from 5% to 6%, translating to thousands of dollars and the earnings are usually split evenly between the buyer and seller agents involved with the transaction. The seller typically pays those commissions at closing.
The median home sale price by the end of 2023 was $417,700, according to the Federal Reserve. That would mean commissions at a 5.37% rate amount to $22,430.49.
Yet 48% of homebuyers and sellers didn’t know how much their agent received in commission for their latest home transaction, according to LendingTree.
“The homebuying and selling experience can be so overwhelming,” said Channel. “Unless you’re paying close attention, it’s kind of hard to come up with an itemized list of what exactly you spent and where exactly you spent it.”
Some home sellers avoid these fees entirely by selling the home on their own. So-called for sale by owner homes represented 10% of home sales in 2021, according to the National Association of Realtors.
Technology has made it easier for Americans to buy and sell properties on their own through online marketplaces. But they may end up putting in more time and energy than they initially anticipate or make the process even more complicated, Channel said.
“[Real estate agents] are doing a lot of work behind the scenes that isn’t necessarily [or] immediately apparent to sellers and buyers,” he said.
Agents are often familiar with local housing market trends, know how to sell a property for a higher price and are familiar with the necessary paperwork involved in the transaction, said Channel.
“All housing markets have their own individual quirks,” he said. “If you’re a seller and you try to do it on your own, you might miss something or … not position yourself in a particularly strong way to get a good deal to sell your house for as much as you could.”
While real estate agents must be upfront with their fees, buyers and sellers should make sure to ask questions about what they are charging and why. An agent’s rate often depends on factors like the property type and how easily they think it will sell.
Keep in mind that agents’ “livelihoods depend on the commission fees that they make,” said Channel.
If you find an agent you like but worry about the cost, see if you can come to an agreement or reach a discount. You may have more leverage to negotiate if your home is desirable, has a high value or if your local market is hot.
Look into different agents in your area and compare their fees. So-called low-commission agents may offer fewer services, but charge commissions as low as 1% to 1.5%. Others work on a flat-fee basis.
If you’re working with a dual agent, or a real estate agent who’s representing both the buyer and seller, you might point out to them that they don’t have to split the commission with anyone. Even with a slightly lower rate, they’re more likely to take home more money if they had split 5% with a second agent, said Channel.
As of now, the home seller is responsible for paying both their agent and the buyer’s. But that could change if a lawsuit stands.
In an antitrust lawsuit last fall, a federal jury found the NAR and several large real estate brokerages had conspired to artificially inflate agent commissions. As a result, the NAR, Keller Williams and HomeServices of America are liable for nearly $1.8 billion in damages. Re/Max and Anywhere Real Estate settled before the trial, each paying damages.
“Last month, NAR filed motions asking the Court to set aside the trial verdict and enter judgment as a matter of law in favor of NAR or, at the very least, order a new trial. These motions are part of the post-trial process, and we expect rulings on them in due course,” a spokesperson from NAR told CNBC in a statement.
A spokesperson on behalf of HomeServices of America declined to comment.
Keller Williams settled for $70 million in early February.
If the verdict stands, it could mean that a home seller won’t be required to pay the buyer’s agent, experts say. More buyers may bypass agents, or try to negotiate fees.
“Hopefully, this will give us even more transparency,” said Channel. “This goes to show … why it’s so important to pay attention to all the costs when you go to buy or sell a home.”
Younger adults are less worried about financialfraud than are older generations, a recent study found.
Only 15% of Gen Z and 20% of millennials are concerned about falling victim to stolen money or assets through deceptive tactics, according to a Bank of America Better Money Habits survey of 1,000 respondents. By comparison, about 27% of Gen X and 27% of baby boomers feel at risk of fraud.
“Younger generations are still navigating financial literacy and [are] still understanding the pitfalls” of fraud, said Jennifer Ehresman, head of client protection for consumer and small business at Bank of America.
Younger cohorts also tend to believe they are less exposed to fraud thanks to the immediacy of online banking apps; the accessibility allows them to check account transactions in real time, Ehresman said.
“They feel more connected in the flow of financials,” she added.
However, believing they can spot and report fraud quickly may offer a false sense of security.
It’s true that older adults tend to have bigger account balances on the line. But that doesn’t mean younger generations can’t experience severe consequences, said Matt Schulz, chief credit analyst at LendingTree.
“Their credit may not be as strong … they don’t have that much wiggle room in their budget. Financial fraud is a really big deal and can be really impactful,” Schulz said.
Fraudsters are using younger adults’ online presence to their advantage. Consumers lost about $2.7 billion to scams on social media, far higher than any other method of contact, the Federal Trade Commission reported in October.
Those losses are more common for younger generations. During the first six months of 2023, social media was the criminals’ point of contact in 38% of fraud losses for people ages 20 to 29. For those 18 or 19 years of age, the figure was 47%, according to the FTC.
The amount of time it takes to recover from a scam will depend on the information compromised.
“In some cases, it’s fixed in an afternoon; other cases, there can be more involved,” Schulz said.
For example, if a scammer obtained your credit card number and racked up charges, fixing the problem may take just a phone call where you report the issue, as credit cards have rigorous fraud protections.
However, if someone stole your Social Security number, that can have bigger ramifications that are harder to recover from.
A criminal could use that information to open new credit cards or take out new loans in your name.
They could also use your personal information to file a tax return in your name and claim your refund. The IRS’ Identity Theft Victim Assistance program had 294,138 individual case receipts during fiscal year 2023, a hike from 92,631 cases in 2019, according to a recent report from National Taxpayer Advocate.
“One of the best things to do is building [a] basic financial fraud check,” Schulz said.
That means routinely checking your bills and credit card statements. A fraudster who gets your credit card information will test if you notice small charges.
“It’s a matter of a bad guy [who] gets ahold of your credit card and they buy a candy bar at a gas station,” Schulz said.
If you don’t recognize a charge, take action and report it.
“The first time you look through the list of transactions will take a while. But … it builds that positive habit,” he said.
Be skeptical any time you’re thinking of signing up for a service, especially if it requires your financial information. Before you fill in any forms with sensitive data, understand the fine print and what the impact could be if that information were stolen.
“If something feels too good to be true, it’s okay to say no,” said Schulz.
While rent payments do not traditionally affect your credit, a growing number of so-called rent-reporting services are trying to change that.
These services track users’ rent-paying habits and report them to one or more of the big credit bureaus — Equifax, Experian and TransUnion — with the aim of helping renters build credit and potentially boost their credit score.
But these services don’t all operate the same way, and some may have less value for renters. There’s one major detail you should consider before signing up, said Matt Schulz, chief credit analyst at LendingTree: Is your payment record going to all three bureaus?
“It’s important for people to understand that you don’t just have one credit score,” he said. “You just don’t know which bureau your lender is going to use to get your information.”
This week, real estate site Zillow Group launched a new rent payment reporting feature. Renters who pay through the site can now opt in to have their on-time rent payments reported to Experian, one of the three major credit bureaus, at no charge to the renter or landlord.
In order for a renter to use the Zillow feature, their landlord must be a user of Zillow Rental Manager and have agreed to receive payments through the firm.
“It aligns with our goal of providing accessibility to building credit in the rental space. It’s a really positive step in that direction,” said Michael Sherman, the vice president of rentals at Zillow Group.
While Zillow is the first real estate marketplace to report rental payment data to a credit bureau, it joins a host of different rent-reporting services already available for consumers.
There are many services renters can look into, including some that are free, such as Piñata, and others that come with service or processing transaction fees, such as Rental Kharma, which charges $8.95 a month after an initial set-up fee of $75.
There are also services geared to landlords that offer rent reporting for tenants, including ClearNow, Esusu and PayYourRent. Landlords usually shoulder the cost of these programs, but there may be processing fees depending on how you make your rent payments.
Nearly 50 million Americans have no usable credit scores, according to a 2022 fact sheet from the Office of the Comptroller of the Currency’s Project REACh, or Roundtable for Economic Access and Change.
Being “credit invisible” can affect your ability to qualify for loans and affect the interest rates and terms you are given when you apply for credit.
When rent payments are included in credit reports, consumers see an average increase of nearly 60 points to their credit score, according to a 2021 TransUnion report.
Other payment reporting programs such as Experian Boost, StellarFi and UltraFICO have aims similar to those of rent-reporting services, but with different kinds of payments. They allow users to build credit based on alternative metrics such as banking activity and payments for streaming services, electric bills and mobile phone plans.
Talk to your landlord before you sign up for a rent-reporting service on your own. They may be open to signing up as a benefit to their tenants.
While “people are creatures of habit and don’t always embrace change,” a credit building feature can help a landlord stand out in a competitive rental market, said Schulz.
“It would be significant added value; building credit is a big deal and if you are somebody who can help people build credit, you may be a little more interesting to them,” he added.
Before you sign up to a rent-reporting service, it’s important to understand which bureau or bureaus the company sends reports to. It may not be worth using a service that sends rent payment reports only to a single bureau.
“If a rent-reporting service only gives your information to one of [the three big bureaus], and the lender that you are getting your auto loan from uses a different credit bureau, the benefits that could and should come with that tool may not end up panning out,” said Schulz.
The ideal is that the rent-reporting company gives the data to Equifax, Experian and TransUnion.
“People hear about three credit bureaus, but they don’t understand that your three credit reports are different reports, and different companies report to different bureaus,” said Schulz.
Pawan Passi, former equities executive at Morgan Stanley, arrives at court in New York, US, on Friday, Jan. 12, 2024.
Alex Kent | Bloomberg | Getty Images
Morgan Stanley has agreed to pay a total of $249 million to settle a criminal investigation and a related Securities and Exchange Commission probe of the unauthorized disclosure of block trades to investors by the bank‘s supervisor for such trades and another employee, authorities said Friday.
As part of the settlement, Morgan Stanley entered into a non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of New York for making false statements related to certain block trades executed from 2018 through August 2021, the office said.
Morgan Stanley, which admitted responsibility for its employees’ actions, is obligated under the deal to cooperate with and provide information to U.S. authorities for at least three years.
The SEC charged Morgan Stanley with “failing to enforce its policies concerning the misuse of material non-public information related to block trades,” that agency said.
Block trades typically involve large numbers of shares of a company’s stock in privately arranged transactions executed outside public markets.
The SEC said the bank generated more than $100 million in illicit profits as a result of misconduct by Pawan Passi, the former head of the bank’s U.S equity syndicate desk.
Passi, 40, has entered into a deferred prosecution agreement with federal prosecutors, subject to approval by a judge. If Passi complies with the terms of that deal and demonstrates good behavior, he will not be prosecuted, prosecutors said.
Passi was ordered to pay a $250,000 civil penalty by the SEC.
Passi admitted that “from 2018 through August 2021, he promised sellers of certain equity blocks that Morgan Stanley would keep information concerning their potential sales confidential, knowing that he would disclose that information to buy-side investors and that those investors would use the information to trade in advance of the block sales,” according to prosecutors.
Passi appeared at a hearing Friday in Manhattan federal court. His deal does not include a monetary penalty in the criminal case because he had already forfeited about $7.4 million in compensation from Morgan Stanley.
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The SEC’s order in the probe says that a former senior member of the syndicate desk participated with Passi in disclosing to certain buy-side investors “non-public, potentially market-moving information” about block trades that Morgan Stanley had been invited to bid on or was negotiating with sellers.
“Those buy-side investors used such information to ‘pre-position’ — or take a short position in — the stock that was the subject of the upcoming block trade,” the SEC order says.
The order said the bank “failed to enforce written policies and procedures” designed to prevent material nonpublic information from being misused, and also failed to enforce information barriers to prevent such information involving block trades from being discussed by the syndicate desk with the institutional equity division. The syndicate desk is on the bank’s private side, while the equity division conducts trading in public markets.
“Sellers entrusted Morgan Stanley and Passi with material non-public information concerning upcoming block trades with the full expectation and understanding that they would keep it confidential,” said SEC Chairman Gary Gensler.
“Instead, Morgan Stanley and Passi abused that trust by leaking that same information and using it to position themselves ahead of those trades. While their conduct may have earned them tens of millions of dollars on low-risk trades, it violated the federal securities laws,” Gensler said.
Prosecutors said that the non-prosecution deal with Morgan Stanley “recognizes serious misconduct to which Morgan Stanley has admitted and was uncovered by the Government and was no voluntarily self-disclosed.”
But prosecutors also said the agreement recognizes that the bank “provided extraordinary cooperation” with the investigation and that the probe did not find evidence of “corporate management’s complicity in or knowledge of the wrongdoing.”
“Morgan Stanley’s controls, while ultimately unsuccessful in uncovering the misconduct, were designed in part to detect misconduct in the block trades business and were applied in good faith,” the U.S. Attorney’s Office said.
In a statement, Morgan Stanley said, “We are pleased to resolve these investigations and are confident in the enhancements we have made to our controls around block trading, including strengthening our policies, procedures, training and surveillance.”
“The core of this matter is the misconduct of two employees who violated the Firm’s policies, procedures and our core values, as outlined in the settlement documents,” the bank said.
Passi’s lawyer George Canellos said, “We are pleased that the U.S. Attorney’s Office agreed not to pursue a criminal conviction of Mr. Passi in this complex matter. Mr. Passi served clients with skill and delivered great execution quality and prices.”
“The settlements allow Mr. Passi and his family to move past two very difficult years of intense government scrutiny of the block trading practices on Wall Street,” Canellos said.
Tesla is recalling more than 120,000 vehicles over doors that fail to comply with U.S. government regulations.
In a letter posted on the National Highway Traffic Safety Administration’s website Thursday, Tesla acknowledged the affected doors can be unlocked during a crash, which could cause the door to unlatch and open, increasing the risk of injury.
Affected vehicles include Tesla Models S and X manufactured for model years 2021 through 2023. Tesla said it was not aware of any injuries as a result of the issue as of Dec. 14.
As a remedy, Tesla is releasing an over-the-air (OTA) software update free of charge. Owner notification letters are expected to be sent out Feb. 17, 2024.
Last week, Tesla announced a recall for nearly all its U.S. vehicles — some 2 million — due to concerns about the safety of its autopilot driver-assistance feature. A federal investigation found that its autosteer function may have led some drivers to abandon responsibility for the operation of their vehicles.
That recall came after one in February affecting more than 360,000 vehicles related to Tesla’s “full self-driving” software.
Tesla did not respond to multiple requests for comment.
In a post last week on X, formerly known as Twitter, Tesla issued a statement accusing some news outlets of misconstruing “the nature of our safety systems,” adding that “incontrovertible data” shows Tesla’s features are “saving lives and preventing injury.”
Elon Musk owns X and Tesla.
A NHTSA spokesperson told NBC News last week that its investigation into Tesla’s autopilot features “remains open as we monitor the efficacy of Tesla’s remedies and continue to work with the automaker to ensure the highest level of safety.”
Tesla Model Y, equipped with FSD system. Three front facing cameras under windshield near rear view mirror.
Mark Leong | The Washington Post | Getty Images
Tesla drivers in the U.S. were involved in accidents at a higher rate than drivers of any other brand of vehicle over the past year, according to a new study of 30 automotive brands by LendingTree.
The researchers analyzed quotes from people looking to insure their own vehicles, and did not include accident or incident data involving drivers of rental cars, a spokesperson for LendingTree told CNBC by email on Tuesday.
The study said, “It’s hard to nail down why certain brands may have higher accident rates than others. However, there are indications that certain types of vehicles attract riskier drivers than others.”
With 24 accidents per 1,000 drivers during the period from mid-November 2022 to mid-November 2023, Tesla drivers clocked in with the worst accident rate in the U.S., followed by Ram drivers who were involved in about 23 accidents, and Subaru drivers who were involved in about 21 accidents per 1,000 drivers during the year.
By contrast, drivers of Pontiac, Mercury and Saturn vehicles were all involved in fewer than 10 accidents per 1,000 drivers during the period of the study.
BMW drivers were the most likely to engage in driving under the influence, the researchers found. They were involved in about 3 DUIs per 1,000 drivers in a year, about twice the rate of DUIs among Ram drivers, who were the second worst drivers in this regard.
For driving incidents overall, which included not only accidents but also DUIs, speeding, and other citations, Ram drivers had the highest incident rate, while Tesla drivers had the second-highest incident rate in the U.S.
Accidents, DUIs, speeding and other citations can all lead to higher insurance rates for drivers. Lending Tree found that one speeding ticket can bump up the price of vehicle insurance by 10% to 20%, accidents can increase rates by around 40%, while DUIs can lead to a rate increase of 60% or more.
The Lending Tree findings about drivers with the highest rates of accidents and incidents by vehicle brand followed an Autopilot software recall by Tesla in the U.S. that impacts some 2 million of the company’s electric vehicles.
Tesla EVs come standard with an advanced driver assistance system (ADAS) marketed as Autopilot. The company sells more extensive driver assistance packages called Enhanced Autopilot and Full Self-Driving (or FSD) options in the U.S. as well. Those who pay for FSD can also test software features that are not fully debugged yet on public roads.
Tesla’s ADAS technology is meant to help drivers with steering, acceleration and braking. CEO Elon Musk claimed in 2021 that a Tesla driver using Autopilot was about 10 times less likely to crash than a driver of the average car. While Tesla publishes its own safety reports, the company has not allowed third-party researchers to evaluate their data to confirm or debunk such claims.
Musk has also touted Tesla’s systems as if they are already, or will soon be, safe to use hands-free — yet Autopilot and Full Self-Driving systems still require Tesla drivers to remain attentive to the road and ready to steer or brake in response at all times.
A two-year investigation by the National Highway Traffic Safety Administration (or NHTSA) found that Tesla’s Autosteer feature, which is part of Autopilot and FSD, had safety defects that may cause an “increased risk of a collision.” NHTSA said it found that Tesla drivers can too easily misuse the cars’ Autosteer feature and may not even know whether it is engaged or switched off.
According to filings with the federal vehicle safety regulator, Tesla did not concur with NHTSA’s findings but agreed to conduct a voluntary software recall, and promised to make safety improvements to Autosteer with “over-the-air” updates. The updated software will nag drivers to pay attention to the road more often, and lock drivers out of using Autopilot if Tesla’s systems detect irresponsible use.
Tesla did not respond to a request for comment about the Lending Tree study and why the accident and incident rates may have been so high among Tesla drivers in the U.S. over the past year.
Read the full Lending Tree study of the best and worst drivers in the U.S. by auto brand, here.
A recall on your vehicle can derail your travel plans, depending on the issue at hand.
It’s an issue plenty of drivers have to consider this fall. Subaru, Volkswagen, General Motors, Mercedes-Benz, Toyota and Honda Motor are among the vehicle manufacturers that have issued recall notices with the National Highway Traffic Safety Administration in November — collectively affecting more than 2.3 million vehicles.
Among those, Toyota recalled nearly 1.9 million RAV4s to fix a battery issue that could potentially cause a fire. Honda Motor issued a recall last week on nearly 250,000 Honda and Acura vehicles due to a manufacturing error that may cause engine damage.
Luckily, “recalls are covered repairs by the automaker at no cost to the consumer,” said Tom McParland, contributing writer for automotive website Jalopnik and operator of vehicle-buying service Automatch Consulting. If a driver’s vehicle was recalled, they should make an appointment at their local dealer for the repair.
Yet, as many Americans prepare to drive long distances to see family and loved ones for the holiday weekend, travel plans may need to change depending on the severity of a recall affecting your vehicle, experts say.
Sometimes the government can compel automakers to recall their vehicles, but these notices usually occur after multiple people report the same problem or the automaker finds a flaw in the manufacturing process after an investigation, said Brian Moody, executive editor for Kelley Blue Book.
“It’s common for there to be a recall when there haven’t been any incidents yet,” said Moody.
Once the recall notice is issued, the manufacturer will send out mailed notifications to drivers, but those can arrive weeks or months later.
For example, the NHTSA notices say owner notification letters for Honda’s Nov. 2 steering control recall are expected to be mailed Dec. 18. For the Nov. 16 recall on damaged engines, drivers should expect to receive a notification on Jan. 2, 2024.
If you hear about a recall in the news, it can help to call the dealer or the automaker’s customer service line to determine if your car is affected, experts say.
“It’s not always that a recall applies equally to every single version of a model that you have. There may be limitations,” Moody said.
As to whether or not travel plans should be altered, the decision will depend on the nature of the recall, said McParland.
“If the recall says possible transmission failure, that’s a lot more risky for long-distance travel versus a glitchy navigation system,” McParland said.
If you decide to rent a car instead of driving your own due to a recall notice, it’s unlikely to be reimbursed by the automaker.
“Usually rentals are not covered” as part of the recall repair, McParland said.
While some insurance policies may have a breakdown coverage and may provide rentals if the vehicle is in the shop for a major recall service, it is not the norm.
“It’s worth calling your carrier to ask,” added McParland.
It is more common for luxury automakers to provide their customers with loaner cars. Otherwise, it is up to the individual dealership or the manufacturer’s terms of sale, Moody said.
Here are three tips to help drivers navigate recalls:
1. Figure out if your car is affected
“There is a government database where folks can look up if their car is impacted by the recall,” McParland said. Drivers can put in their VIN into the NHTSA site. It will pull up all the recalls your car model has had, said Moody.
To see if the recall was already addressed, you can either check the government website or look through the manufacturer site, said Moody.
Drivers can also look into different online resources in addition to the government data, Moody said. Other website services can help you locate nearby repair shops and typical car issues your model may have.
If you receive a mailed notification from the manufacturer, follow the instructions and call your dealership as soon as you can.
2. Book an appointment ‘as soon as possible’
If your car is affected by a recall, “you want to make an appointment as soon as possible,” Moody said.
While the repair will be completed at no cost to the consumer, some dealers may have a backlog of appointments for a certain issue, said McParland. “An immediate repair may not be available,” he said.
3. Check if a mechanic is covered under the warranty
If you are facing a backlog of recall appointments at your local dealer and would opt to take the vehicle elsewhere for a faster service, ask the manufacturer first, said Moody. Contact customer service and explain your situation. The company may be able to cover the recall repair done by outside official channels, he said.
Otherwise, the rule of thumb for a recall is to take your vehicle to your local dealership of that automaker. There is a system in place where the manufacturer reimburses the local dealer and the service is free for the customer, Moody said.
Altogether, if you don’t know what the recall is for or don’t understand what the affected car part does, call your local dealer or manufacturer to ask, especially before you head out on a long trip.
“If you see something like ‘may lose control’, or ‘vehicle fire’ … maybe don’t drive until you find out for sure if the car is covered,” Moody said.
Morgan Stanley agreed to pay a fine of $6.5 million to a coalition of six states for compromising the personal data of millions of customers while decommissioning computers at the financial services giant, New York’s attorney general said Thursday.
Morgan Stanley as part of the settlement agreed to adopt provisions “that better protects the personal information of its consumers going forward,” New York AG Letitia James‘ office said.
The settlement comes more than three years after Morgan Stanley notified the states’ attorneys general of two incidents involving data security.
In the first incident, involving the closure of two company data centers in 2016, Morgan Stanley contracted with a vendor to remove data from the computers that were set to be decommissioned, but later learned that the vendor subcontracted certain services to an unauthorized provider, according to the agreement.
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Some computers then ended up being auctioned off “while still containing consumers’ personal information, including data belonging to 1.1 million New Yorkers,” according to James’ office.
“In a second incident, Morgan Stanley discovered during a decommissioning process that 42 servers, all potentially containing unencrypted customer information, were missing,” James’ office said in a statement. “During this process, the company learned that the local devices being decommissioned may have contained unencrypted data due to a manufacturer flaw in the encryption software.”
An investigation found that Morgan Stanley failed to maintain proper controls for vendors and hardware inventory.
“Had these controls been in place, both data security events could have been prevented,” James’ office said.
James, in a statement, said, “No one should have their personal information auctioned off without their knowledge because a company failed to take basic steps to erase it before selling their old computers.”
New York will receive $1.66 million in the settlement, and the rest of the fine will be split between the other states: Connecticut, Florida, Indiana, New Jersey and Vermont.
A Morgan Stanley spokesperson, in a statement to CNBC, said, “We have previously notified all potentially impacted clients regarding these matters, which occurred several years ago, and are pleased to have resolved this related investigation.”
Since the incidents were discovered, the company has not detected unauthorized access or misuse of client information, and it has made significant changes to how it handles data destruction and vendors.
Chair of the House Republican Conference Rep. Elise Stefanik (R-NY) speaks during a news conference after a caucus meeting with House Republicans on Capitol Hill May 10, 2023 in Washington, DC.
Drew Angerer | Getty Images
House Republican Conference Chair Rep. Elise Stefanik on Friday filed an ethics complaint calling for the removal of a judge presiding over the $250 million business fraud trial of former President Donald Trump.
The No. 3 House Republican and one of Trump’s most loyal allies in the chamber, Stefanik claimed in her complaint that Manhattan Supreme Court Judge Arthur Engoron had shown “clear judicial bias” against the former president and displayed “bizarre behavior” during his high-profile civil trial.
Stefanik, whose congressional district covers northeast New York, urged the state’s Commission on Judicial Conduct to “take corrective action to restore a just process and protect our constitutional rights.”
Stefanik also wrote that Engoron “must recuse from this case,” although the commission does not have the authority to remove specific judges.
The complaint is a remarkable step by Trump’s political allies in Washington to join his aggressive efforts to undermine Engoron, whose rulings in the case could strike a major blow to the ex-president and his business empire.
The letter from Stefanik, who is not a lawyer and has no relation to the case, could also be meant to support Trump’s argument if he appeals any of Engoron’s eventual rulings.
It comes after a week of testimony in the trial by members of the Trump family that some legal experts say did little to help their case.
The case will settle claims brought by New York Attorney General Letitia James, who accuses Trump, his two adult sons, his company and some of its top executives of fraudulently inflating the values of Trump’s assets to boost his net worth and rake in financial benefits.
Engoron will deliver verdicts in the no-jury trial, because neither side requested one.
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Engoron has already found the defendants liable for fraud. The trial itself will determine how much the defendants will be ordered to pay in damages or other penalties. The judge will also evaluate six other claims in James’ lawsuit that have yet to be resolved.
In addition to seeking around $250 million in damages, James wants to permanently bar Trump Sr., Donald Trump Jr. and Eric Trump from running a New York business.
Stefanik’s letter Friday echoed many of Trump’s own criticisms of Engoron and James’ case as she urged the commission to sanction the judge.
She railed against the judge for striking a pose at cameras in the courtroom on the first day of the trial, for granting James’ request for partial summary judgement in a pretrial ruling, and for imposing a gag order on Trump and his attorneys. She also repeated Trump’s claim that the value of his Palm Beach, Florida, resort home Mar-a-Lago is much higher than the estimates provided during the trial.
Engoron had barred Trump from making public statements after Trump repeatedly targeted the judge’s principal law clerk on the second day of the trial. The judge later extended that gag order to Trump’s lawyers after their “repeated, inappropriate remarks” about the clerk.
Trump has been found to have violated that narrow gag order twice since it was imposed, leading to $15,000 in fines. Stefanik called the gag order “un-American.”
Her letter also targets the clerk, claiming that she has given more in political donations to Democratic candidates than she is allowed to as a court official.
“Judge Engoron’s bizarre and biased behavior is making New York’s judicial system a laughingstock,” Stefanik wrote. “The Commission’s sanctions against Judge Engoron are necessary to bring back credibility to our great state’s legal system.”
Asked for comment on Stefanik’s letter, Commission Administrator Robert Tembeckjian said in a statement to CNBC, “All matters before the Commission on Judicial Conduct are confidential according to law, unless and until a judge is found to have committed ethical misconduct, and a decision to that effect is issued.”
The Federal Reserve is expected to further hike interest rates before the end of the year, and the average credit card interest rate is already at an all-time high. The average rate for existing accounts is at 22.77%, the highest it has been in 30 years, according to WalletHub.
Automated payment options can help credit card holders bypass late payment fees. While cardholders who use automated payment features typically set them for more than the minimum due, they also tend to pay off less of their monthly balance than customers making manual payments, according to a 2022 study.
Such cardholders will end up paying more in interest in the long run if they don’t pay their statement balance in full each month, experts say.
“You can set it up for a lower payment,” said Sara Rathner, credit cards expert and writer at NerdWallet, referring to a monthly automated card payment. “If you still have a balance, [that] will roll over as long as it’s unpaid.” But that unpaid balance will be subject to interest charges.
Avoid paying more in interest and fees by setting up your credit card automated payments to cover the entire statement balance, experts say. If you check your account online, you may also see a “current” balance that includes newer charges, but you only have to pay the statement balance in full each month to avoid interest charges.
If you can’t pay your statement balance in full, be sure to make smaller payments on a regular basis to keep current and chip away at your overall balance, said Nick Ewen, director of content at The Points Guy. Not doing so can mean hefty late fees in addition to accrued interest.
You usually can pay off your statement or current balance whenever you like. “There’s no penalty charge on your card if you pay your statement balance before the due date,” Ewen added.
Here are some of the best practices cardholders should consider:
Ask your lender if you can change your card payment due date to a few days after your paycheck is deposited, said Rathner. This way, you’re aware of how much money is available in your checking account before a scheduled automatic card payment goes through and you won’t overdraft your account, she added.
Log into your credit card account online or call a customer service agent to find out what features you have available to facilitate this.
Zero percent annual percentage rate offers are usually good for 12 to 18 months. However, if a cardholder does not make a minimum payment, the card issuer can revoke the 0% APR offer and push the customer into an APR of 29% or higher, said Ewen.
Make sure to read the fine print and make all the payments to keep the offer rate. Additionally, pay off the full balance before the promotion expires. Otherwise, you will be hit with interest charges at that point, he added.
If you’re carrying credit card debt, consider doing a balance transfer, said Ewen. Some credit cards offer a 0% APR for balance transfers for, as an example, a one-time fee of 3% to 5% or $5, he said. If you transfer a balance from one card to another for a 12-month 0% APR, you have a year to pay off the balance as long as you pay it off by the time the introductory special is over.
Additionally, if the terms change with one of your existing credit cards, most larger credit card companies will offer you a product change, said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners in Irvine, California.
Instead of closing the affected card, move to another card from the issuer that has no annual fee, she added. This is helpful if you have a high-fee credit card and want to keep the overlying credit line high.
“It doesn’t require credit pool and reduces credit card expenses,” said Sun, a member of CNBC’s Advisor Council. Call the provider and see if a product change is available.
Some lawmakers and regulators are calling for interest rate caps and lower fees on credit cards as debt levels march higher.
Total credit card debt topped $1 trillion in the second quarter of 2023 for the first time ever.
The average interest rate for all cardholders jumped to more than 21% in August, the highest on record, according to Federal Reserve data. Some cards — retail store cards, in particular — charge more than 30%, said Ted Rossman, industry analyst for CreditCards.com.
Sen. Josh Hawley, R-Mo., introduced a bill in September to cap credit card rates (also known as the “annual percentage rate,” or APR) at 18%, citing “higher financial burdens” shouldered by working people.
The legislation — the Capping Credit Card Interest Rates Act — would also aim to prevent card companies from raising other fees to evade a cap.
Meanwhile, the Consumer Financial Protection Bureau proposed a rule earlier this year to slash fees for late credit-card payments. One prong of the rule would lower fees for a missed payment to $8 from as much as $41.
In June, four senators — Sens. Richard Durbin, D-Ill.; Roger Marshall, R-Kan.; J.D. Vance, R-Ohio; and Peter Welch, D-Vt. — introduced the Credit Card Competition Act. That act aims to reduce merchant card transaction fees that may get passed on to consumers.
“I think some of the [political] lines are starting to blur a little bit, at least on credit card issues,” Rossman said.
However, it’s unclear if these measures will succeed.
For example, Democrats are “likely to embrace” Hawley’s bill, since progressives have long favored a federal interest-rate cap, Jaret Seiberg, analyst at Cowen Washington Research Group, wrote in a recent research note. But it likely doesn’t have enough support to overcome a filibuster in the Senate and is almost a non-starter in the Republican-controlled House, he said.
“We do not see a path forward for legislation to cap credit card interest rates,” Seiberg said.
The CFPB is also embroiled in a legal fight before the Supreme Court that, depending on the outcome, has the potential to erase all agency rulemakings from the books.
Americans have leaned more on credit cards to pay their bills as pandemic-era inflation raised prices on food, housing and other consumer items at the fastest pace in four decades.
Credit cards are the “most prevalent form of household debt” — and their use continues to spread, according to the Federal Reserve Bank of New York. There are 70 million more credit card accounts open now than in 2019, it said.
Rates have moved upward as the Federal Reserve has raised its benchmark interest rate to reduce inflation.
Credit card interest rates have predominantly remained below 36% due to “self-restraint” by banks, though that’s still “extremely high” for a credit card, said Lauren Saunders, associate director at the National Consumer Law Center.
However, current federal law generally doesn’t impose a ceiling on rates, she said.
I think some of the [political] lines are starting to blur a little bit, at least on credit card issues.
Ted Rossman
industry analyst for CreditCards.com
There are some exceptions: The Military Lending Act caps interest for active duty servicemembers and dependents at 36% for consumer credit. Federally chartered credit unions have an 18% limit.
Past legislative proposals have also sought to slash interest rates. For example, Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y,. introduced a measure in 2019 that would have capped rates at 15%.
Reps. Jesús “Chuy” García, D-IL, and Glenn Grothman, R-WI, proposed a 36% cap on consumer loans in 2021. Grothman plans to reintroduce the legislation next year, his office said.
“The 36% interest rate cap for active-duty servicemembers and their families has proven to be a highly effective measure in providing protection against predatory lending practices,” Grothman said in an e-mail. “Why should we not extend these same protections to veterans and all Americans?”
The financial services industry remains largely opposed to imposing a ceiling.
Eight trade groups representing lenders like banks and credit unions wrote a letter to Sen. Hawley in September, stating that his proposed cap would have adverse effects like restricting the availability of credit and eliminating or reducing popular card features like cash back rewards.
Interest income accounts for 80% of company profits on credit cards, according to a 2022 study published by the Federal Reserve.
Rossman’s general advice to consumers: Make your personal credit card rate 0%.
That means paying your bill in full and on time each month. Such customers don’t get charged interest, while those who carry a balance from month to month generally accrue interest charges.
That advice wouldn’t change, even if the rate were capped at 15% or 18%, for example, he said.
“[Such rates] would be better, but no picnic in my estimation,” Rossman said.
The average credit card balance is almost $6,000, according to TransUnion.
At 18% interest, cardholders with an average balance who make only the minimum monthly payment would be in debt for 206 months and make $7,575 in total interest expenses, according to Rossman. (The latter figure doesn’t include payments toward principal.)
“Minimum-payment math is brutal,” he said. “Your debt can drag on for decades.”
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United Auto Workers members strike the General Motors Lansing Delta Assembly Plant on September 29, 2023 in Lansing, Michigan.
Bill Pugliano | Getty Images
DETROIT – General Motors’ stock price fell below $30 a share Thursday for the first time in more than three years amid ongoing strikes by the United Auto Workers union and a report of a potentially costly airbag recall for the automaker.
Since the UAW union’s targeted strikes began Sept. 15, shares of the Detroit automaker have fallen by more than 10%. The stock closed at $33.66 a share a day before the work stoppages began.
The most recent share decline occurred midday Thursday following The Wall Street Journal reporting GM has at least 20 million vehicles built with a potentially dangerous air-bag part that the government says should be recalled before more people are hurt or killed.
The potential recall of roughly 52 million air-bag inflators from Tennessee-based auto supplier ARC Automotive had been reported about previously, but the number of affected GM vehicles had not.
The National Highway Traffic Safety Administration held a public meeting Thursday on its determination that the air-bag parts are defective and should be recalled, according to the report. Automakers, including GM, have until later this year to file responses on the matter.
GM’s stock since Oct. 1, 2020
GM has recalled about 1 million vehicles due to the problem. The company reiterated Thursday that it “believes the evidence and data presented by NHTSA at this time does not provide a basis for any recall” beyond the ones the company has already done.
“Neither the affected automakers nor NHTSA, despite eight years of study and investigation, have identified a systemic design or manufacturing defect in ARC frontal airbag inflators,” the company said in an emailed statement. “If GM concludes at any time that any unrecalled ARC inflators are unsafe, the company will take appropriate action in cooperation with NHTSA.”
GM said it “will continue to work collaboratively with NHTSA, other manufacturers, and ARC to monitor and investigate the long-term performance and safety of ARC airbag inflators.”
While many Wall Street analysts have said a strike by the UAW was already priced into GM shares, the automaker’s stock has only experienced five positive trading days out of 14 sessions.
GM confirmed Thursday it had made a counteroffer to the union, marking its sixth since the start of negotiations. It comes a day after the automaker said the strike cost it $200 million in lost production during the third quarter.
“We believe we have a compelling offer that would reward our team members and allow GM to succeed and thrive into the future. We continue to stand ready and willing to negotiate in good faith 24/7 to reach an agreement,” the company said Thursday in an emailed statement.
The last time shares of GM dropped below $30 a share during intraday trading was on Oct. 2, 2020, according to FactSet.
Jonathan Kanter, Assistant Attorney General for the Antitrust Division at the Department of Justice, arrives at federal court on September 12, 2023 in Washington, DC.
Kevin Dietsch | Getty Images
Google pays billions of dollars to make sure its search engine runs by default on internet browsers and phones, feeding a cycle that pumps its own monopoly profits while making it harder for rivals to gain significant market share in search, the government alleged in opening arguments Tuesday at the biggest tech antitrust trial in decades.
Lawyers for the Department of Justice and a coalition of state attorneys general led by Colorado faced Google on Tuesday, as the 10-week trial kicked off in Washington, D.C. District Court. Day one of the trial set the stage for how the government and Google would argue their opposing views of how the company has maintained a large slice of the search market for years.
The government’s case is that Google has kept its share of the general search market by creating strong barriers to entry and a feedback loop that sustained its dominance.
Google says it’s simply been the preferred choice of consumers. That popularity, the company says, is why browser and phone makers have chosen Google as their default search engine through revenue sharing agreements.
The opening statements also previewed who each side will lean on to help make their arguments. In addition to economic experts that will speak to Google’s level of dominance and behavior, Google said the court would hear from several of its own executives and those from other businesses.
The court will hear from the company’s CEO Sundar Pichai, who the DOJ’s lawyer said Google intends to call. It will also hear from Apple’s Senior Vice President of Services Eddy Cue and Mozilla CEO Mitchell Baker, Google’s lawyer said. Several other Google executives, including those who oversee advertising services and search products, are also expected to be witnesses, the lawyer added.
Additionally, the court will hear from Sridhar Ramaswamy, a former senior advertising executive for Google who later co-founded a competitor search engine, Neeva, the DOJ said. The privacy-focused search engine founded in 2019 announced in May that it would shut down the consumer product and instead focus on artificial intelligence use cases. Neeva agreed that month to be acquired by Snowflake.
Following opening statements, the DOJ lawyer questioned its first witness, as it begins what’s known as its “case-in-chief.” The judge has allotted about four weeks for the DOJ to present its case, after which the coalition of state AGs led by Colorado will do so, followed by Google.
Hal Varian, chief economist at Google Inc., arrives to federal court in Washington, DC, US, on Tuesday, Sept. 12, 2023.
Ting Shen | Bloomberg | Getty Images
The DOJ’s lawyer walked Google’s Chief Economist Hal Varian through a series of documents, beginning with a 2003 memo he wrote called “Thoughts on Google v Microsoft.” At the time he wrote the memo, Varian said he was reporting to a boss who reported directly to the CEO.
In the memo, Varian had raised antitrust concerns with Google leaders, urging them to “be careful about what we say in both public and private” on the subject. Varian wrote, “we should also consider entry barriers, switching costs and intellectual property when prioritizing products.” During his testimony, Varian said the best entry barrier is a superior product.
“This case is about the future of the internet and whether Google’s search engine will ever face meaningful competition,” the DOJ’s lawyer, Kenneth Dintzer, told the court in his opening statements.
Dintzer alleged Google has more than 89% of the market for general search, citing an economic expert witness. General search is used by consumers as an “onramp to the internet,” Ditzner said, making it distinct from more specialized search engines. Unlike with a specialized search service, users seek out a general search engine when they don’t know the best website for an answer to their question.
“There are no substitutes for general search,” Ditzner said.
Google maintains its monopoly through a feedback loop that serves to strengthen its hold on the market while making it harder for rivals to enter. Google pays for defaults, which allow it to get more search queries. More queries means more data, which can be used to improve search quality, helping Google make more money. That gives Google more resources to pay for default status.
Since the Federal Trade Commission declined to bring an antitrust case against Google nearly 10 years ago, Patterson Belknap Webb & Tyler’s William Cavanaugh, who represents the states, said “Google has doubled down on its efforts to use defaults in its distribution agreements.”
Google itself recognizes the immense value of defaults. The company pays more than $10 billion per year to maintain default status across browsers and devices, the DOJ alleged. And the company once called the idea of losing its default placement with Apple “a code red situation,” Ditzner said.
At the same time, Google sought to “limit Apple’s ability to design products that compete with Google,” given it has the resources and foundation to build a powerful rival, Ditzner said.
In 2013, Ditzner told the court, Apple adopted its own suggestions in its browser when users begin a search. The feature “concerned” Google, Joan Braddi vice president of product partnerships at Google, later said in an email Ditzner referenced.
In turn, Google added to the revenue sharing agreement with Apple a stipulation that it could not “expand farther than what they were doing in Sept 2016 (as we did not wish for them to bleed off traffic),” Braddi wrote. “Also, they can only offer a ‘Siri’ suggestion exclusively for quality and not because they want to drive traffic to Siri.”
While Google argued browser and device makers freely enter agreements to make its search engine the default, the DOJ said Google has the upper hand in getting device manufacturers to sign its agreements. For example, manufacturers consider the Play Store a “must-have app” for Android phones, Ditzner said, but the only way to get it is by signing the exclusivity agreements.
The evidence will show device manufacturers and carriers accepted the exclusivity and revenuesharing agreements “because that was the only option,” Ditzner said.
In 2020, Samsung and AT&T were interested in partnering with Branch Metrics, which had a search engine that could answer questions by searching apps on a phone, the DOJ said. But Google told AT&T and Branch they couldn’t do the deal. Google’s lawyer later said there’s no evidence the company told carriers they couldn’t use Branch. Google’s lawyer added that Branch’s CEO would testify that it doesnn’t compete with Google.
The states also touched on their claims that Google used what was supposed to be a neutral ad buying tool to thwart rival Microsoft. Google will say it had no duty to deal with Microsoft, Cavanaugh said, but that doesn’t apply here because “they have chosen to deal.”
Finally, the government said the court would hear more about Google’s alleged document destruction, saying that it taught employees to hide evidence through its “Communicate With Care” program. Google told employees to include legal on “any written communication” about revenue share agreements, the government alleged. The DOJ also shared a 2021 message from Pichai in which he asked if he and a colleague could “change the setting of this group to history off,” before deleting the request.
Kent Walker, President of Global Affairs and Chief legal officer of Alphabet Inc., arrives at federal court on September 12, 2023 in Washington, DC.
Kevin Dietsch | Getty Images
Google said it faces fierce competition and that the popularity of its search engine is due to its continued innovation, rather than efforts to thwart rivals.
In a world where search queries are increasingly entered across many different apps and websites, Google’s lawyer, Williams & Connolly’s John Schmidtlein said, “that competition has never been more real.”
Comparing the case to the DOJ’s 1990s allegations against Microsoft is misguided, Schmidtlein said. While the government accused Microsoft in that case of forcing PC manufacturers to preload its own browser over one that was preferred by consumers, here Google competed for default status, Schmidtlein said.
To the government, Microsoft is the supposed “victim” in this case, Schmidtlein said. But Microsoft failed to advance its position in search because it did not invest or innovate in it for a long time, Schmidtlein argued, focusing instead on its Windows desktop product.
Google also had no duty to deal with Microsoft, a rival, on its preferred terms with its search ad tool. Schmidtlein said Google had fulfilled four out of five of Microsoft’s feature requests for the tool. The one outstanding feature, real-time bidding for ads, took years for Google to build for its own product, and a version compatible with Microsoft’s tools is now being tested, he said.
Google also contended that advertisers are motivated by return on their investment and are very willing to switch platforms if they think they’ll get a better deal elsewhere.
Browser and device makers actually like having default features for many reasons, Google’s lawyer argued. For browsers, search engines are a reason for consumers to use their interface, and accepting a revenue sharing agreement for a default search provider is a good way for browsers to make money, given they are usually free to consumers.
But it’s important browsers pick the right search default, Schmidtlein said, as Mozilla learned when it switched its default from Google to Yahoo in 2014. By 2017, Mozilla terminated what was supposed to be a five-year deal, with its Chief Business and Legal Officer Denelle Dixon saying in a statement that the company “exercised our contractual right to terminate our agreement with Yahoo! based on a number of factors including doing what’s best for our brand, our effort to provide quality web search, and the broader content experience for our users,” TechCrunch reported at the time.
Similarly, Apple has touted that Google is the default search engine on its browser.
“Apple repeatedly chose Google as the default because Apple believed it was the best experience for its users,” Schmidtlein said.
On the phone manufacturing side, Google argued that its revenue sharing agreements have the effect of “enhancing competition between Apple and Android, causing those two mobile platforms to invest, to develop better devices.”
