TIME Regulation

More Than 350,000 Customers Have Asked AT&T for a Refund After Bogus Charges

New York City Exteriors And Landmarks
A general view of the exterior of the AT&T store in Times Sqaure on February 21, 2013 in New York City. Ben Hider—Getty Images

Here's how to request yours

Hundreds of thousands of AT&T customers have requested refunds for bogus cell phone charges since the telco reached a settlement with the Federal Trade Commission last week to reimburse consumers, an FTC official told TIME Wednesday. In total, 359,000 individuals have sent in claims to the FTC seeking refunds for unauthorized charges that appeared on their cell phone bills in a practice known as “cramming.” Through cramming, third parties are able to issue unwanted, recurring charges for things like love tips and horoscopes to cell phone users.

Jessica Rich, the director of the FTC’s bureau of consumer protection, said the response from consumers was one of the largest the agency has ever seen. The only case with a larger number of claims that she could recall was a 2012 settlement with Skechers over deceptive marketing for one of its shoe lines, which garnered close to half a million consumer complaints. “We expect this to be a lot higher,” Rich said.

In total, AT&T has agreed to pay $80 million in refunds to customers for cramming charges. The telco giant will also pay $20 million in penalties and fees to the 50 states and Washington, D.C., and a $5 million penalty to the FTC. At the time of the settlement, an AT&T spokesman noted that the company was the first in the telco industry to stop charging customers for premium SMS messages in late 2013. The FTC is currently suing T-Mobile over the same issue.

It’s not guaranteed that all the people who have issued claims will actually receive refunds. An independent claims administrator will review the refund requests to determine if they are valid. “I’m expecting that most of the claims are going to be valid, but if they’re not valid, there will be a way to determine that,” Rich said.

Customers who think they were a victim of cramming can file to claim a refund until May 1, 2015.

TIME Regulation

AT&T to Pay $105 Million Settlement Over Extra Charges on Customers’ Bills

Settlement follows allegations that T-Mobile also engaged in hiding bogus charges in customers' bills

AT&T will pay $105 million to settle allegations brought by the Federal Trade Commission that the wireless carrier unlawfully billed customers for extra charges on their cellphone plans. The practice, known as “cramming,” involves charging customers $9.99 per month for unwanted features from third parties like ringtones, text message horoscopes and love tips.

According to the FTC, AT&T received 1.3 million customer complaints about the bogus charges in 2011 alone. That same year AT&T changed its refund policy so customers could only be reimbursed for two months’ worth of faulty charges, the FTC claims. The charges were listed under a line item called “AT&T Monthly Subscriptions” on customers’ bills, so many did not know they were coming from third parties.

AT&T will offer refunds totaling $80 million to customers who paid cramming charges over the years. The company will also pay $20 million in penalties and fees to all 50 states and Washington, D.C., as well as a $5 million penalty to the FTC.

“This case underscores the important fact that basic consumer protections – including that consumers should not be billed for charges they did not authorize — are fully applicable in the mobile environment,” FTC Chairwoman Edith Ramirez said in a press release.

AT&T stopped billing people for premium SMS content in December 2013. The company says it was the first in the industry to end the practice. “While we had rigorous protections in place to guard consumers against unauthorized billing from these companies, last year we discontinued third-party billing for PSMS services,” AT&T spokesman Marty Richter said in an email.

The FTC has been especially focused on bringing penalties against telecom and Internet companies over the last year. T-Mobile was accused of similar cramming practices in July, but the wireless carrier is disputing the claims in court. Apple and Amazon have also faced FTC allegations that their app store policies allowed children to easily rack up massive charges of in-app purchases on their parents’ devices.

TIME Regulation

FCC Ends Rule That Led to NFL ‘Blackouts’

Tom Brady
New England Patriots quarterback Tom Brady throws a pass during pre-game warm-ups before playing the Kansas City Chiefs on September 29, 2014. Matthew J. Lee—The Boston Globe/Getty Images

The FCC brushed aside the NFL's objections that blackouts were needed to drum up attendance at undersold games

The Federal Communications Commission unanimously voted Tuesday to revoke its support for “sports blackouts,” in which a sports team can suppress local broadcasts of its games until it has sold a certain percentage of stadium seating. But the FCC said blackouts could continue as part of separate agreements between teams and local broadcasters, raising questions about whether the rule change will really lead to fewer blackouts.

The little-known rule, which was first put into effect in 1975, disproportionately affected NFL games, which were blacked out if the team hadn’t sold 85 to 100 percent of its tickets 72 hours before kickoff.

The FCC called the rule an “unnecessary and outdated” means of drumming up ticket sales. “Television revenues have replaced tickets sales as the NFL’s main source of revenue, and blackouts of NFL games are increasingly rare,” the FCC said in a statement announcing the decision.

TIME Regulation

Obama Administration Unveils New Rules to Fight Tax Inversions

U.S. Treasury Secretary Jack Lew
U.S. Treasury Secretary Jack Lew Mark Wilson—Getty Images

The U.S. Treasury Department said Monday it will take steps to curb the practice of companies moving their headquarters overseas by trimming the tax benefits of those transactions — known as corporate tax inversions — and, in some cases, stopping them entirely.

“Inversion transactions erode our corporate tax base, unfairly placing a larger burden on all other taxpayers, including small businesses and hard-working Americans,” Treasury Secretary Jacob Lew said. “It’s critical that this unfair loophole be closed.”

Lew told reporters on a conference call that he believes the best way to curb a practice that is increasingly popular with corporations, which can generate millions of dollars in tax savings, is through comprehensive tax reform with anti-inversion provisions and he also urged Congress to pass new legislation to tackle the issue.

“Now that it’s clear that Congress won’t act before the lame-duck session, we’re taking initial steps that we believe will make companies think twice before undertaking an inversion to try to avoid U.S. taxes,” Lew said.

Lew announced a new set of measures meant to make inversions less appealing to U.S. companies, including by eliminating some of the ways those companies gain access to deferred earnings of foreign subsidiaries without incurring associated taxes. The Treasury will also require that owners of U.S. companies own less than 80% of a newly combined entity, thus making it more difficult for them to invert in the first place.

“These first, targeted steps make substantial progress in constraining the creative techniques used to avoid U.S. taxes, both in terms of meaningfully reducing the economic benefits of inversions after the fact, and when possible, stopping them altogether,” Lew said in a statement before adding that the “Treasury will continue to review a broad range of authorities for further anti-inversion measures as part of our continued work to close loopholes that allow some taxpayers to avoid paying their fair share.”

The Treasury’s new regulations will go into effect immediately, but will not be retroactive, meaning that they will affect any transactions that are completed after Monday, according to a senior Treasury official. “For some companies considering deals, today’s actions may mean that those transactions no longer make economic sense,” Lew said.

President Obama issued a statement applauding the actions taken Monday by Lew and the Treasury Department “to help reverse this trend.” Obama said that he has personally asked Congress “to lower our corporate tax rate, close wasteful loopholes, and simplify the tax code for everyone.”

Fortune magazine ran a cover story this summer detailing the practice of corporate inversions and the possibility of pending legislation to combat the transactions. A potential high-profile deal between Burger King and Canadian doughnuts and coffee chain Tim Horton’s, which would see the U.S. fast food company move its headquarters to the tax haven north of the border, is part of the wave of similar transactions invigorating the debate over the best way to keep U.S. companies’ tax dollars from going overseas.

This article originally appeared on Fortune.com

TIME Regulation

The Fed Is Staying the Course, and That’s Great

Janet Yellen, chair of the U.S. Federal Reserve, listens to a question during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington on Sept. 17, 2014.
Janet Yellen, chair of the U.S. Federal Reserve, listens to a question during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington on Sept. 17, 2014. Bloomberg/Getty Images

Why boring monetary policy is good

The Federal Reserve’s monthly statement Wednesday was typically dull. Basically, the Fed is staying the course, because the economy is continuing a path of gradual improvement.

The Fed continued its “taper,” reducing the monetary stimulus it’s pumping into the economy by $10 billion for the 10th consecutive month, while announcing that this stimulus—known as “QE3”—should end on schedule next month. The Fed also continued to signal it won’t raise interest rates above zero “for a considerable time,” despite speculation it might soften that language. Fed Chair Janet Yellen then devoted most of her news conference to a mind-numbing discussion of procedural arcana involving “policy normalization principles” and “overnight RRP facilities.”

This is not exciting stuff. But boring monetary policy is an excellent thing to have, especially just six years after a spectacular financial crisis. At the time, the Fed took all kinds of unprecedented actions to save an economy that was contracting at an 8% annual rate and shedding 800,000 jobs a month. Some critics thought those actions would fail to prevent a depression. Others thought they would lead to hyperinflation, a devastating run on the dollar, or a double-dip recession. Instead, we’ve had 54 straight months of job growth. The jobless rate is down from 10% to just over 6% percent. The stock market is booming. Last year, the U.S. had its largest one-year drop in child poverty since 1966, and this year is looking even better. Two of the Fed’s inflation hawks actually dissented from the latest statement, arguing it “does not reflect the considerable economic progress that has been made.”

In other words, things are OK.

Things are not great; as Yellen pointed out, many American families are still dealing with aftershocks of the crisis, including tight credit, lingering debt, depressed wages and a shortage of jobs. Incomes for the non-rich have grown modestly since 2010 and not at all since before the crisis, although tax cuts for the middle class and the poor, tax increases for the rich, and expanded government benefits for the vulnerable have helped offset those trends. It’s true that our recovery from the Great Recession has been slower than previous recoveries from ordinary recessions. But it has been much stronger than previous recoveries in nations that endured major financial crises—and much stronger than Europe’s current recovery. The euro zone’s output has not yet reached pre-crisis levels; it’s still struggling with 12% unemployment and a risk of deflation.

We’re doing a lot better than that. We had more effective bank bailouts, more generous fiscal stimulus—until Republicans took over the House after the 2010 midterms and began demanding austerity—and much more accommodative monetary policy. It’s all worked remarkably well. We’ve faced some headwinds—the contagion from the near-collapse of Greece in 2010, the turmoil after we nearly defaulted on our debt in 2011—but the economy has continued its path of slow but steady growth. That’s why Yellen was able to discuss those mind-numbing “policy normalization principles,” the guidelines the Fed will follow as it starts raising rates and reining in its bloated balance sheet in 2015. We’re approaching normal. And the Fed’s forecast for the next few years also looks pretty decent.

It doesn’t look fantastic. But in 2008, the U.S. suffered a horrific financial shock, with a loss of household wealth five times worse than the shock that preceded the Depression. We’re still dealing with the aftershocks. Many Americans still don’t feel like the economy is working for them, an understandable reaction to persistent long-term unemployment, stagnant wages, and continuing foreclosures.

But as dull as it sounds, it’s working better every year. The lesson of our current plight is not that the system doesn’t work. It’s that financial crises really suck.

TIME Regulation

Regulators Promise to Be Tough on Big Banks

Senate Banking Committee Holds Hearing On Wall Street Reform
Federal Reserve Board of Governors member Daniel Tarullo testifies during a hearing before Senate Banking, Housing and Urban Affairs Committeeon Sept. 9, 2014 on Capitol Hill in Washington, DC. Alex Wong—Getty Images

As implementation of financial reform law continues

A top Federal Reserve official said Tuesday that regulators would spend the next year holding the biggest banks’ proverbial feet to the fire, while working to exempt small, community banks from regulatory requirements designed for the goliaths of Wall Street.

At a Senate Banking Committee hearing, Fed Governor Daniel Tarullo said regulators will require the nation’s biggest, riskiest financial institutions—those deemed Too Big To Fail—to maintain generous “crash pads” to protect against potential losses in the case of the next financial crisis.

Meanwhile, he said, small, community banks would not be subject to those same requirements and, in fact, should also be exempt of other, paperwork-heavy regulations under the Dodd-Frank financial reform law, like the so-called Volcker Rule. Community banks’ “balance sheets are pretty easily investigated by us and their lending falls into discreet categories,” which makes many of the most burdensome regulations unnecessary, Tarullo said.

The biggest banks’ crash pads, known as “capital surcharges,” will exceed the minimal standards required by international regulators and may be as high as 3.5%, Tarullo said. Shares of the biggest banks, like Goldman Sachs and Morgan Stanley, which may find themselves subject to stricter requirements this year, dipped temporarily during Tarullo’s testimony, before climbing again and leveling off in the afternoon.

Sen. Heidi Heitkamp (D-N.D.) and Sen. Mike Crapo (R-Idaho), the committee’s top Republican, both returned repeatedly to the need to scale back the regulatory burden on small, community banks. “Too big to fail has become too small to succeed,” Heitkamp said.

Tarullo’s tough talk on big banks comes just a month after 11 of the biggest banks in the country failed to produce workable plans, known as “living wills,” designed to help regulators shut them down should they find themselves at the brink of collapse, as they did in 2008 and 2009. Living wills are necessary, the regulators said, so that the burden of bailing them out does not fall on taxpayers. In August, the Federal Reserve and the Federal Deposit Insurance Corp. dismissed the 11 biggest banks’ living wills as “unrealistic” and grossly inadequate.

Tarullo was joined by Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation; Tom Curry, the Comptroller of the Currency; Richard Cordray, director of the Consumer Financial Protection Bureau; Mary Jo White, chair of the Securities and Exchange Commission; and Tim Massad, chairman of the Commodity Futures Trading Commission. Those six top regulators are in charge of writing, implementing and enforcing the bulk of the 400 some-odd rules mandated by the 2010 Dodd-Frank financial reform law.

Sen. Elizabeth Warren (D-Mass.) applauded the assembled regulators for requiring the biggest banks to take seriously their living wills, but worried that, unless regulators are willing to “use the tools they have at their disposal”—like limiting banks’ growth—the biggest financial institutions will simply continue to drag their feet throughout the process. She wanted to make sure, she said, that “we’re not going to be back here a year from now having the same conversation.” Both Tarullo and Gruenberg insisted they would use their agencies’ “tools” to force banks to come up with workable living wills by next August.

What was perhaps the dramatic highlight of a rather staid three-hour hearing came in the last 20 minutes, when Warren, joined by Sen. Richard Shelby (R-Ala.), demanded to know why regulators had failed to refer bank executives to the Department of Justice for prosecution for crimes committed in the lead-up to the financial crisis. During Savings and Loan Crisis in the 1980s, 800 executives were convicted and the FBI investigated 5,500, all on referrals from banking regulators, Warren said—whereas this time around, JP Morgan chief Jamie Dimon actually received a $8.5 million raise after negotiating a successful settlement with the government.

“Banks have admitted to breaking the law and have settled with the U.S. for $35 billion dollars, but despite the misconduct at these banks, not a single senior executive… has been criminally prosecuted,” Warren said. “The message to every Wall Street banker is loud and clear: if you break the law, you will not go to jail, but you might end up with a much bigger pay check.”

Shelby, who had clearly been enjoying watching Warren berate the regulators, piped up. “People… whoever they are, shouldn’t be able to buy their way out of culpability, especially when it’s so strong it defies rationality,” he said, gesturing at Warren. “I agree with her on that.”

TIME Regulation

Google Refunding Parents At Least $19 Million for Kids’ Unwanted Purchases

Holiday Shoppers Visit A Google Winter Wonderlab
A shopper plays the Riptide 2 GP video game on a Google Inc. Nexus 7 tablet computer at the Winter Wonderlab inside the Roseville Galleria mall in Roseville, California, U.S., on Saturday, Dec. 14, 2013. Bloomberg—Bloomberg via Getty Images

Apple made a similar settlement and Amazon may do so as well

Google is the latest tech company to be dinged by federal regulators for making it too easy for kids to rack up unwanted in-app charges on their parents’ phones. The tech giant has agreed to a settlement of at least $19 million with the Federal Trade Commission to refund parents for their children’s unauthorized charges.

According to the FTC complaint, Google in 2011 did not require any password authorization to confirm in-app charges in its Google Play Store, then called the Android Market. The feature was added later, but inputting a password opened up a 30-minute window in which purchases could be made without a password confirmation. These issues led some parents to complain that their kids managed to rack up hundreds of dollars in charges buying virtual goods in games and other apps, according to the FTC. Seemingly harmless children’s mobile games can sometimes have individual items or features priced at as much as $200.

In addition to the refunds, Google will be required to get express consent from consumers when charging for in-app purchases in the future.

The Google settlement is the latest action in an ongoing campaign by the FTC to force tech companies to make their mobile payment systems more transparent. The Commission reached a $32.5 million settlement with Apple over the same issue in January, and is currently suing Amazon to seek similar refunds for customers whose kids placed unwanted charges.

MONEY Financial Planning

Why Financial Planners Should Be More Like Hairdressers

Valentine—Getty Images

If cosmetologists have to be licensed, why not financial planners?

In Massachusetts, where I work, if you want to be a cosmetologist, you need a license. To get that license, you need two years of supervised work experience, and you need to take a practical exam.

No special license exists, however, for financial planning as a separate profession.

Recently, I and some of my colleagues from the Financial Planning Association visited Capitol Hill in Washington, D.C. and the State House in Massachusetts to advocate for better recognition of holistic financial planning as a profession.

In meetings with legislators and aides, we talked about how the financial planning profession as a separate discipline isn’t well defined. We spoke about how individuals who perform such services are overseen by a number of regulatory bodies. We explained that the public often doesn’t understand that planners aren’t specifically licensed as such.

The legislators were surprised to hear this. And when I’ve raised the subject with some of my clients, they’ve been just as surprised.

People assume that financial planning — in its most comprehensive form, helping clients manage all elements of their financial lives, from budgeting to retirement and estate planning —is governed by formal professional standards in the same way that CPAs and attorneys are.

To be clear, many elements of the financial planning process have notable regulatory oversight. Activities such as providing investment advice or selling insurance or investment products are all regulated.

And on the surface, having a Certified Financial Planner credential would seem to signify that a financial professional is practicing a specific profession, “financial planning.” Most of us in the financial industry, however, know that holding the CFP mark doesn’t necessarily mean that an individual is providing truly comprehensive financial planning for a client. That would require inclusion of all elements of the financial planning process, from goal-setting to implementation to tracking a plan’s progress.

Providing only one or two elements of the financial planning process — say, just recommending investments — doesn’t qualify as full-scale financial planning, even if you have the CFP credential.

I happen to be a financial planner who also is licensed to sell certain kinds of financial products. These are two separate parts of my job. When I’m working with clients, I make clear what “hat” I’m wearing at any given time, whether it is as their financial planner or as their broker. These are not the same thing.

I can imagine this isn’t always easy for my clients to follow what this really means to them. Most people think their financial professional is acting in their best interests. And really, when you are trusting what is sometimes your life savings to another person, why wouldn’t you expect that level of care? I know most of my clients have a high level of trust in me to do the right thing for them.

But being trusted may not be enough; what may be more necessary is to be trustworthy. It means trusting that I will take their best interests first, over my own. I would prefer to be specifically licensed as a financial planner, so when I’m providing comprehensive financial planning my clients understand the differences even better.

So the conversations are getting out there about what can be done to bring better recognition and perhaps regulation of the profession of holistic financial planning. The end goal is to help the public better understand distinctions among financial professionals and empower them to make the choices that best suit their needs.

This is all a work in progress, and I suspect will never get 100% agreement on what’s best for the public. But we have to keep trying so that our clients are well served by a profession they understand to be one.


Stuart Armstrong, CFP, is a member of the Financial Planning Association Board of Directors.


TIME Regulation

Verizon Settles for $7.4 Million After Failing to Notify Customers of Privacy Rights

The FCC said about 2 million new customers weren't given a notice about opting out of disclosing their personal info for marketing purposes

Verizon will pay $7.4 million to settle charges the company failed to give about 2 million new customers the choice to opt out of allowing their personal information to be used in marketing campaigns, government regulators announced Wednesday.

Federal regulators found Verizon failed to send privacy opt-out notices to some new customers as early as 2006. Verizon officials failed to discover the error until Sept. 2012, then waited 126 days before notifying the Federal Communications Commission about the lapse, federal regulators wrote in the statement.

Verizon’s settlement with the FCC marks the largest ever by a phone company over a privacy matter, according to the Washington Post.

“In today’s increasingly connected world, it is critical that every phone company honor its duty to inform customers of their privacy choices and then to respect those choices,” said Travis LeBlanc, Acting Chief of the FCC’s Enforcement Bureau. “It is plainly unacceptable for any phone company to use its customers’ personal information for thousands of marketing campaigns without even giving them the choice to opt out.”

Verizon, which was scrutinized by the FCC last month for its “throttling policy,” said that the lack of opt-out notices issue has been resolved.

“The issue here was that a notice required by FCC rules inadvertently was not provided to certain of Verizon’s wireline customers before they received marketing materials from Verizon for other Verizon services that might be of interest to them,” the company said in a statement. “It did not involve a data breach or an unauthorized disclosure of customer information to third parties.”

Under the settlement’s terms, Verizon will be required to include opt-out notices on every bill—not just the first bill—and to be monitored to ensure that customers are receiving proper notices of their privacy rights, the FCC said.

TIME Companies

Apple Fails Again to Ban Sales of Samsung Phones

Apple Samsung Patent
A Samsung and Apple smartphone are displayed in London on Aug. 6, 2014 Peter Macdiarmid—Getty Images

The latest in the Apple-Samsung patent war

A U.S. judge on Wednesday rejected Apple’s bid to permanently ban sales of some Samsung phones that had recently been found to infringe Apple patents.

What Apple pitched as a “narrowly tailed ban” on some older Samsung models was denied by U.S. District Judge Lucy Koh in San Jose, Calif., who had rejected Apple’s previous request to ban some U.S. Samsung sales in August of 2012, according to Bloomberg.

In its bid, Apple specifically identified certain features on nine of Samsung’s patent-infringing smartphones in order to give the South Korean firm a “sunset period” to alter those features, according to court documents.

But Apple’s latest court denial is perhaps its last as both parties have toned down their multiyear patent war. In late July, Apple dropped its appeal of the 2012 case while also announcing that its quarterly profits and smartphone sales had jumped up from the previous year’s, a suggestion that its iPhone sales went largely unaffected by any Samsung patent infringements. Most recently, both Apple and Samsung agreed earlier this month to drop patent disputes against each other outside the U.S.

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser