TIME Regulation

Obama Calls for Tighter Rules on Retirement Account Brokers

President Obama addresses the General Session of the 2015 Democratic National Committee Winter Meeting in Washington, DC, on Feb. 20, 2015.
Nicholas Kamm—AFP/Getty Images President Obama addresses the General Session of the 2015 Democratic National Committee Winter Meeting in Washington, DC, on Feb. 20, 2015.

Many people provide investment advice, but not all of them are required to disclose potential conflicts of interest

(WASHINGTON) — The Obama administration is proposing tougher restrictions on brokers who manage Americans’ retirement accounts, reigniting a confrontation with the financial services industry over rules affecting trillions of dollars in 401k and other savings accounts.

The change would put brokers — who sell stocks, bonds, annuities and other investments — under the stricter requirements for registered financial advisers when they handle clients’ retirement accounts.

In a long-anticipated move, the Labor Department is making the proposal Monday to the White House Budget Office. After an internal review, it likely will be put out for public comment for several months.

The rule has been the subject of intense behind-the-scenes lobbying, pitting major Wall Street firms and financial industry groups against a coalition of labor, consumer groups and retiree advocates such as the AARP.

The administration first proposed a regulation in 2010, but pulled it back following an industry outcry that the proposal would hurt rather than help investors by limiting choices.

To buttress the new effort, the White House on Monday is releasing a report from its Council of Economic Advisers that concludes investors lose billions of dollars because of brokers’ conflicts of interests. Obama was scheduled to address the AARP later Monday to draw attention to the plan.

“When you go to a doctor or a lawyer, you expect the advice you get to be in your best interests. But the same doesn’t always hold true in the world of retirement savings,” Labor Secretary Tom Perez said in a conference call with reporters. “Many financial advisers have taken an oath to serve your best interests, but there are other financial advisers and brokers who provide critical financial advice every day and are not obligated to look out for your best interests.”

Americans increasingly are seeking financial advice to help them navigate an array of options for retirement, college savings and more. Many people provide investment advice, but not all of them are required to disclose potential conflicts of interest.

Under current rules, brokers are required to recommend only “suitable” investments based on the client’s finances, age and how much risk is appropriate for him or her. The rules would make brokers handling retirement accounts obligated to put their clients’ interests first.

The chairman of Obama’s Council of Economic Advisers, Jason Furman, pointed to academic studies that conclude investors who receive such recommendations sustain a 1 percentage point lower return on their retirement savings, totaling losses of $17 billion every year to middle-class families.

Industry officials dispute those studies and say the industry is well governed by financial regulators like the Securities and Exchange Commission. They say the Department of Labor is ill suited to write rules best left to agencies more familiar with the financial industry.

“You have the Department of Labor, which really doesn’t know this area,” said Ira Hammerman, general counsel for the Securities Industry and Financial Markets Association, the brokerage industry’s big lobbying group. “Our concern is they are not going to get it right, just like they did not get it right in 2010.”

Meanwhile, the SEC is studying the broader investment advice industry to determine whether it should come under further regulations. Critics of the Labor Department effort say the Obama administration should leave the regulations to the SEC or it will risk limiting the advice available to investors with relatively small retirement savings.

“Investors benefit from choice; choice of products, and choice in advice providers,” SEC Commissioner Daniel Gallagher, a critic of the Labor Department proposal, said in a speech Friday. “This is something the nanny state has a hard time comprehending.”

Perez and Jeff Zients, director of the White House National Economic Council, said administration officials have been consulting with SEC Chairman Mary Jo White, financial industry officials and consumer groups.

Zients said the proposed rule would be “very different” from the restrictions the administration proposed in 2010.

“Much has been learned since then,” he said.

TIME Regulation

Why Wal-Mart and Texas Are Headed for an Epic Showdown

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Alamy

Two icons of "real" America are at loggerheads over a surprising issue

No state is more “real America” than Texas. No retailer is more “real America” than Wal-Mart. And no political opinion is more “real America” than “regulation bad.”

So it might come as something of a shock to learn that Wal-Mart stores in Texas are forbidden by law from selling booze—anything other than beer and wine. Wal-Mart is paying trial lawyers to sue the Texas Alcoholic Beverage Commission in the U.S. District Court in Austin, challenging the law that forbids all publicly held corporations, hotels excepted, from selling hooch. The law violates the U.S. Constitution, Wal-Mart argues.

“One class of retailers—public corporations—[is] denied an opportunity to compete in the distilled spirits market, while another class of retailers—private corporations and publicly traded hotel corporations—are allowed to compete without similar restriction,” Wal-Mart argues in the lawsuit. “No other state in the nation allows private corporations to engage in the retail sale of spirits but prohibits some but not all publicly traded companies from doing so.”

And indeed, the distinction does seem odd—”irrational,” as Wal-Mart puts it. But as it turns out, it’s just another instance of one business interest versus another. In the lawsuit, Wal-Mart singles out the Texas Package Stores Association as the lobbying group that has fought hard to keep the law in place. It represents about half of the state’s approximately 2,500 liquor stores.

No retailer in Texas is allowed more than five package-store permits, so any chain that’s any bigger is barred from selling any booze other than beer and wine from its sixth store on up. Except that there’s a loophole. Wal-Mart notes in the lawsuit that families are allowed to “pool their package store permits into a single entity and collectively obtain an unlimited number of package store permits.”

A Wal-Mart spokesperson pointed out to the Dallas Morning News what for many people would be the most obvious argument against the law: “This is counter to Texas’ belief in free enterprise and fair competition, limits our customers’ choice[s] and keeps the price of spirits artificially high, all of which harm Texas consumers.”

TIME Regulation

FCC Chair Reveals Details of Net Neutrality Proposal

Federal Communications Commission (FCC) Chairman Tom Wheeler speaks during new conference in Washington on Oct. 8, 2014.
Jose Luis Magana—AP Federal Communications Commission (FCC) Chairman Tom Wheeler speaks during new conference in Washington on Oct. 8, 2014.

In an op-ed, FCC chair Tom Wheeler promised 'the strongest open internet protections ever proposed'

The push for net neutrality took another step forward Wednesday when FCC Chairman Tom Wheeler confirmed his plans to put forth “the strongest open internet protections ever proposed” by the independent agency.

“After more than a decade of debate and a record-setting proceeding that attracted nearly 4 million public comments, the time to settle the Net Neutrality question has arrived,” the FCC chair wrote in an op-ed published online by Wired. Wheeler promised he will submit a proposal this week for new FCC rules that would ban paid prioritization on both wired and mobile networks. The rules would ensure Internet service providers (ISPs) are prohibited from blocking any lawful Internet content or creating so-called Internet fast-lanes that allow certain companies and websites to pay for faster delivery of their content.

“The internet must be fast, fair and open,” Wheeler wrote.

Earlier this week, reports surfaced that Wheeler planned to propose that the FCC reclassify high-speed Internet service as a telecommunications service, rather than an information service, under Title II of the Communications Act. Those reports noted that the FCC would likely vote on the proposed rules later this month. Last year, a federal appeals court ruled that such a step would be necessary if the FCC wanted to treat ISPs more like public utilities, subjecting them to stricter regulation.

Wheeler’s op-ed did not specifically refer to reclassification of ISPs, but the chairman did write that his proposal would ask the FCC to “use its Title II authority to implement and enforce open Internet protections.”

Last year, the FCC chair also proposed a plan to side-step the reclassification issue by allowing cable companies and telecoms to negotiate contracts with content providers such as Netflix that would provide faster streaming speeds so long as the deals were “commercially reasonable.” Netflix did begrudgingly (it claimed) enter into several such pacts with providers such as Comcast and Verizon, but the arrangements drew heavy criticism from proponents of an open Internet.

Millions of people used a public comments period last year to bash Wheeler’s initial proposal and President Barack Obama even weighed in last fall to publicly urge the FCC to adopt the “strongest possible rules” to enforce net neutrality by regulating broadband providers more like public utilities.

Wheeler wrote on Wednesday that his new proposal takes into account “public input received over the last several months” as well as his own understanding of FCC regulations and the industry. And, while net neutrality opponents have argued that stricter regulation of broadband providers could impair growth and innovation, Wheeler wrote in his op-ed that it is possible to maintain an open Internet while also allowing for the growth of broadband networks. Wheeler wrote that his proposal would “modernize Title II” and would not include strict oversight of pricing as well as “no tariffs, no last-mile unbundling.”

Even as Wheeler’s op-ed made the Internet rounds Wednesday afternoon, stocks of cable and satellite Internet providers remained strong. Shares of cable companies Comcast, Time Warner Cable and Verizon were all up in recent trading, as were shares of satellite providers Dish Network and DirecTV.

This article originally appeared on Fortune.com.

TIME Regulation

U.S. Eyes Ban of Controversial Internet ‘Fast Lanes’

US-POLITICS-FCC
Brendan Smialowski—AFP/Getty Images Federal Communication Commission Chairman Tom Wheeler waits for a hearing at the FCC on Dec. 11, 2014 in Washington, DC.

Issues have been at the heart of an intense debate over so-called net neutrality

A new Federal Communications Commission proposal expected this week has the potential to be a game-changer in the debate over net neutrality.

FCC Chairman Tom Wheeler is expected to propose that high-speed Internet service be reclassified as a telecommunications service, rather than an information service, under Title II of the Communications Act, according to The New York Times, which cites various anonymous sources from the telecommunications industry.

The step would allow the FCC to regulate Internet service providers (ISPs) like public utilities, including ensuring that ISPs cannot block any Internet content. They would also be prohibited from creating so-called Internet fast-lanes for companies and websites willing to pay for faster delivery of their content.

These issues have been at the heart of an intense debate over so-called net neutrality, the idea that all Internet traffic be treated equally. The outcome could have profound implications for consumers and telecommunications companies.

In November, President Barack Obama publicly urged the FCC to adopt the “strongest possible rules” to enforce net neutrality by regulating broadband providers more like public utilities. He argued that “the Internet has become an essential part of everyday communication and everyday life” and therefore requires strict regulation. Opponents of net neutrality have claimed that stricter regulation of ISPs could impair growth and innovation.

The Times does note that the proposal from Wheeler — a former cable and wireless industry lobbyist appointed as FCC chairman by Obama in 2013 — is likely to stop short of some of the strictest forms of regulation reserved for public utilities, including oversight of pricing.

Last year, Wheeler offered a proposal that would have avoided reclassifying ISPs while allowing cable companies and telecoms to negotiate contracts that would let content providers like Netflix pay for faster streaming speeds, as long as the deals are “commercially reasonable.” Wheeler’s initial proposal sparked intense criticism from opponents who said it would give a huge advantage to wealthy companies that could afford to pay for faster Internet service while leaving everyone else in the slow lane.

Wheeler’s latest proposal, which should have the support of Obama and other proponents of an open Internet, is expected to be submitted to FCC commissioners on Thursday. A vote would likely come later this month, the Times reported.

This article originally appeared on Fortune.com

TIME Regulation

FCC Spectrum Auction Raises Over $30 Billion in Battle for Airwaves

FCC’s first spectrum auction in six years raised three times more than expected

Companies have bid more than $30 billion to get a slice of the mid-range frequency spectrum auctioned off by the Federal Communications Commission last week.

The FCC offered what is called AWS-3 frequencies, which are a mid-range spectrum similar to those controlled by Dish Networks. Auction 97, as it’s called, kicked off Nov. 13. It’s one of the first to offer that type of frequency and one of the biggest sales of new frequencies since 2008.

Pre-sale estimates put the value of the airwaves at $10.1 billion, but interest from companies pushed the bidding well over that value. The final and winners won’t be revealed until the auction ends and the FCC awards certain frequencies.

Certain airwaves are more valuable than others. A New York City block of frequencies sold for a reported $1.19 billion.

The spectrum is a valuable commodity because it allows wireless companies to add more capacity for cellular data and other wireless services. New frequencies, which may only be bought through an FCC auction, have been in short supply until now and companies are battling to get a slice to be able to increase their services and speed.

Dish, America Movil, T-Mobile US and AT&T are all said to be participating in the bidding.

This article originally appeared on Fortune.com

TIME privacy

What Is Uber Really Doing With Your Data?

The Hamptons Lure Uber Top Drivers Amid NYC Slow Summer Weekends
Bloomberg—Bloomberg via Getty Images Th Uber Technologies Inc. car service application (app) is demonstrated for a photograph on an Apple Inc. iPhone in New York, U.S., on Wednesday, Aug. 6, 2014.

"I was tracking you"

Uber has had a rocky few days. On Monday, it was revealed that the ride-sharing app’s senior vice president, Emil Michael proposed the idea of investigating critical journalists’ personal lives in order to dig up dirt on them. On Tuesday, the company published a blog post clarifying its privacy policy. And Uber is investigating its top New York executive for tracking a reporter without her permission, TIME learned Wednesday.

What is Uber really up to, and what are its employees allowed to do?

What Uber does with your data

Uber has a company tool called “God View” that reveals the location of Uber vehicles and customers who request a car, two former Uber employees told Buzzfeed. Corporate employees have access to the tool, though drivers do not. But a wide number of Uber employees can apparently view customers’ locations. (Uber did not confirm or deny the tool’s existence to TIME, but it’s worth noting that “God View” is a widely used term in the gaming world.)

Still, several previous incidents appear to confirm the existence of Uber’s so-called God View.

Venture capitalist Peter Sims said in a September blog post that Uber had once projected his private location data on a screen at a well-attended Chicago launch party:

One night, a couple of years ago, I was in an Uber SUV in NYC, headed to Penn Station to catch the train to Washington DC when I got a text message from a tech socialite of sorts (I’ll spare her name because Gawker has already parodied her enough), but she’s someone I hardly know, asking me if I was in an Uber car at 33th and 5th (or, something like that). I replied that I was indeed, thinking that she must be in an adjacent car. Looking around, she continued to text with updates of my car’s whereabouts, so much so that I asked the driver if others could see my Uber location profile? “No,” he replied, “that’s not possible.”

At that point, it all just started to feel weird, until finally she revealed that she was in Chicago at the launch of Uber Chicago, and that the party featured a screen that showed where in NYC certain “known people” (whatever that means) were currently riding in Uber cabs. After learning this, I expressed my outrage to her that the company would use my information and identity to promote its services without my permission. She told me to calm down, and that it was all a “cool” event and as if I should be honored to have been one of the chosen.

And this month, a Buzzfeed reporter arrived for an interview at Uber’s New York headquarters only to find the company’s top manager in the city, Josh Mohrer, was waiting for her. According to Buzzfeed, Mohrer said, “There you are,” while gesturing at his iPhone. “I was tracking you.” Mohrer didn’t ask for permission to track Johana, Buzzfeed reports.

Of course, Uber also uses customer data for the humdrum daily task of connecting riders with drivers as well as resolving disputes and reaching out to customers.

What Uber says it can do with your data

Uber says it only uses your data for “legitimate business purposes” and that its team audits who has access to its data on an ongoing basis. “Our data privacy policy applies to all employees: access to and use of data is permitted only for legitimate business purposes,” a spokesperson told TIME. “Data security specialists monitor and audit that access on an ongoing basis. Violations of this policy do result in disciplinary action, including the possibility of termination and legal action.”

And in its privacy policy, Uber says that it can use your personal information or usage information—that includes your location, email, credit card, name or IP address—”for internal business purposes” as well as to facilitate its service for pickups and communicating with customers.

Uber clarified in a blog post Tuesday that “legitimate business purposes” include facilitating payments for drivers, monitoring for fraudulent activity and troubleshooting user bugs.

Another important point: Uber says it can hold on to your data even if you delete your account. The company claims it keeps your credit card information, geo-location and trip history “to comply with our legal and regulatory obligations” and “resolve disputes.” Users have to provide a written request in order to completely delete an Uber profile along with all their data.

MORE: A Historical Argument Against Uber: Taxi Regulations Are There for a Reason

So did Uber do anything wrong?

Strictly by its own standards, it appears that Uber may not have violated its own rules when Josh Mohrer tracked Buzzfeed’s reporter. There’s no indication Mohrer shared the information outside Uber—which would disqualify it from being “internal”—but it’s hard argue that he tracked the reporter for a “business purpose.” (Maybe it saved Mohrer time? Or he was showing off the feature? It’s hard to say.)

At the Uber Chicago launch party where Peter Sims’ location was reportedly tracked, the data was shared with people outside the company, as non-employees were at the event. That’s hard to justify by Uber’s rules. However, Uber’s privacy policy was updated in 2013, and the Chicago launch party occurred “a couple of years ago,” by Sims’ telling. So it’s unclear whether the move violated Uber’s privacy rules at that time.

Should you delete your Uber account?

If you’ve lost all trust in Uber and think that other ride-share apps like Lyft (or plain old taxis) are better, than yes, perhaps. But there isn’t any evidence that Uber is inappropriately using customer data on a widespread scale. And if you do delete your account, remember: unless you write in, Uber will still have your data.

TIME Google

Google Barge Project Scrapped Over Fire Safety Concerns

Google Mystery Barge
Jeff Chiu—AP In this Tuesday, Oct. 29, 2013, file photo, two men fish in the water in front of a Google barge on Treasure Island in San Francisco. The barge portion of the Google barge mystery is only half the story.

The Coast Guard expressed concern over lack of oversight in the secretive project

Concerns over fire-safety led Google Inc. to halt construction of its “Google barges,” a secretive project that had attracted significant public curiosity.

“These vessels will have over 5,000 gallons of fuel on the main deck and a substantial amount of combustible material on board,” wrote Robert Gauvin, the Coast Guard’s acting chief of commercial vessel compliance, in a March 2013 email to Google’s contractor on the project, Foss Maritime Co. The Wall Street Journal broke the story using documents obtained through the Freedom of Information Act.

Google had previously said the barges, located of the Maine coast and in San Francisco Bay, were to be “an interactive space where people can learn about technology.” The West Coast barge was eventually moved out to storage 80 miles away, while the Maine barge was dismantled and scrapped.

Read more at The Wall Street Journal

TIME Regulation

Feds Sue AT&T for Allegedly Slowing Unlimited Data Plans

AT&T Asks U.S. Judge to Throw Out Sprint's Antitrust Lawsuit
Bloomberg/Getty Images The AT&T Inc. logo is displayed at the company's new store in Chicago, Illinois, U.S., on Friday, Sept. 30, 2011.

"The issue here is simple: 'unlimited' means unlimited."

The Federal Trade Commission is suing AT&T for allegedly misleading customers by slowing data speeds for wireless customers who had unlimited data plans but went over a certain usage point, the agency announced Tuesday.

According to the FTC, AT&T did not properly inform customers who had unlimited plans that their speeds would still be lowered after they exceeded certain data thresholds in a given month. Speeds were reduced by as much as 90 percent in some cases, making basic phone functions such as web browsing and watching video almost impossible, the FTC said.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” FTC Chairwoman Edith Ramirez said in a statement. “The issue here is simple: ‘unlimited’ means unlimited.”

AT&T throttled speeds for 3.5 million customers at least 25 million times, the FTC alleges, while it also said that customers who canceled their contracts due to the lowered speeds still had to pay expensive termination fees, the FTC alleges.

In an emailed statement, AT&T senior executive vice president and general counsel Wayne Watts called the FTC’s suit “baffling.”

“The FTC’s allegations are baseless and have nothing to do with the substance of our network management program,” Watts said. “We have been completely transparent with customers since the very beginning. We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented. In addition, this program has affected only about 3% of our customers, and before any customer is affected, they are also notified by text message.”

AT&T no longer sells unlimited data plans to new customers and has been trying to phase out the service for years, along with many other major carriers. The company announced in 2011 that it would begin throttling the data speeds of its heaviest users on a regular basis.

Wireless carriers’ practice of slowing speeds for their heaviest unlimited users has also caught the attention of the Federal Communications Commission. “Wireless customers across the country are complaining that their supposedly ‘unlimited’ data plans are not truly unlimited, because they are being throttled and they have not received appropriate notice,” said an FCC spokesperson Tuesday. “We continue to work on this important issue, including with our partners at the FTC, and we encourage customers to contact the FCC if they are being throttled by AT&T or other cellular providers.”

TIME Regulation

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

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

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.

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