Copyright © 2015 Bert N. Langford (Images may be subject to copyright. Please send feedback)
Welcome to Our Generation USA!
Consumers
includes all of us who buy the products and services of the retail market, along with their regulation by the government and other consumer affairs organizations, e.g. the Better Business Bureau, to ensure fair trade business policies.
Consumers including the laws protecting them
YouTube Video: What To Do If You're A Victim of Identity Theft (The Federal Trade Commission)
Pictured: Consumer's Bill of Rights
Economics and marketing:
The consumer is the one who pays to consume goods and services produced. As such, consumers play a vital role in the economic system of a nation. Without consumer demand, producers would lack one of the key motivations to produce: to sell to consumers.
The consumer also forms part of the chain of distribution.
Recently in marketing instead of marketers generating broad demographic profiles and Fisio-graphic profiles of market segments, marketers have started to engage in personalized marketing, permission marketing, and mass customization.
Largely due the rise of the Internet, consumers are shifting more and more towards becoming "prosumers" – consumers that are also producers (often of information and media on the social web) or influence the products created (e.g. by customization, crowdfunding or publishing their preferences) or actively participate in the production process or use interactive products.
Law and politics:
The law primarily uses the notion of the consumer in relation to consumer protection laws, and the definition of consumer is often restricted to living persons (i.e. not corporations or businesses) and excludes commercial users.
A typical legal rationale for protecting the consumer is based on the notion of policing market failures and inefficiencies, such as inequalities of bargaining power between a consumer and a business. As of all potential voters are also consumers, consumer protection takes on a clear political significance.
Concern over the interests of consumers has also spawned activism, as well as incorporation of consumer education into school curricula. There are also various non-profit publications, such as Which?, Consumer Reports and Choice Magazine, dedicated to assist in consumer education and decision making.
Public reaction:
While use of the term consumer is widespread among governmental, business and media organisations, many individuals and groups find the label objectionable because it assigns a limited and passive role to their activities.
See also:
The consumer is the one who pays to consume goods and services produced. As such, consumers play a vital role in the economic system of a nation. Without consumer demand, producers would lack one of the key motivations to produce: to sell to consumers.
The consumer also forms part of the chain of distribution.
Recently in marketing instead of marketers generating broad demographic profiles and Fisio-graphic profiles of market segments, marketers have started to engage in personalized marketing, permission marketing, and mass customization.
Largely due the rise of the Internet, consumers are shifting more and more towards becoming "prosumers" – consumers that are also producers (often of information and media on the social web) or influence the products created (e.g. by customization, crowdfunding or publishing their preferences) or actively participate in the production process or use interactive products.
Law and politics:
The law primarily uses the notion of the consumer in relation to consumer protection laws, and the definition of consumer is often restricted to living persons (i.e. not corporations or businesses) and excludes commercial users.
A typical legal rationale for protecting the consumer is based on the notion of policing market failures and inefficiencies, such as inequalities of bargaining power between a consumer and a business. As of all potential voters are also consumers, consumer protection takes on a clear political significance.
Concern over the interests of consumers has also spawned activism, as well as incorporation of consumer education into school curricula. There are also various non-profit publications, such as Which?, Consumer Reports and Choice Magazine, dedicated to assist in consumer education and decision making.
Public reaction:
While use of the term consumer is widespread among governmental, business and media organisations, many individuals and groups find the label objectionable because it assigns a limited and passive role to their activities.
See also:
- Alpha consumer
- Consumer debt
- Consumer leverage ratio
- Consumer theory
- Consumerism
- Consumers' cooperative
- Consumption
- Coolhunting
- Mass customization
- Media consumption
- Mental health consumer
- Consumer reporting agency
- Consumer protection
- Consumer organization
- Consumer Direct
- National Consumer Agency (NCA)
- Informed consumer
- Perplexity consumer
Consumer Financial Protection Bureau of the United States, formed as a result of the Dodd-Frank Act of 2010
YouTube Video: Barney Frank explains Dodd-Frank Act on Charlie Rose
Pictured: Organizational Structure of the Consumer Financial Protection Bureau created July, 2010 through the Dodd-Frank Act of 2010
The Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111–203, H.R. 4173; commonly referred to as Dodd–Frank) was signed into federal law by President Barack Obama on July 21, 2010. Passed as a response to the Great Recession, it brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression.
The act made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry.
The law was initially proposed by the Obama administration in June 2009, when the White House sent a series of proposed bills to Congress. A version of the legislation was introduced in the House in July 2009. On December 2, 2009, revised versions were introduced in the House of Representatives by the then Financial Services Committee Chairman Barney Frank, and in the Senate Banking Committee by former Chairman Chris Dodd. Due to Dodd and Frank's involvement with the bill, the conference committee that reported on June 25, 2010 voted to name the bill after them.
As with other major financial reforms, a variety of critics have attacked the law, with some arguing it was insufficient to prevent another financial crisis (or more bailouts) and others contending it went too far and unduly restricted financial institutions. President-Elect Donald Trump's transition team has vowed to dismantle the Dodd–Frank act.
Click here for further amplification on the Dodd-Frank Act.
Consumer Financial Protection Bureau:
The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB jurisdiction includes
The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the financial crisis of 2007–08 and the subsequent Great Recession.
The CFPB was initially established as an independent agency but it effectively became an executive agency after a federal appeals court found that the President of the United States' power to remove the CFPB Director had been unconstitutionally limited.
Click on any of the following blue hyperlinks for further amplification:
The act made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry.
The law was initially proposed by the Obama administration in June 2009, when the White House sent a series of proposed bills to Congress. A version of the legislation was introduced in the House in July 2009. On December 2, 2009, revised versions were introduced in the House of Representatives by the then Financial Services Committee Chairman Barney Frank, and in the Senate Banking Committee by former Chairman Chris Dodd. Due to Dodd and Frank's involvement with the bill, the conference committee that reported on June 25, 2010 voted to name the bill after them.
As with other major financial reforms, a variety of critics have attacked the law, with some arguing it was insufficient to prevent another financial crisis (or more bailouts) and others contending it went too far and unduly restricted financial institutions. President-Elect Donald Trump's transition team has vowed to dismantle the Dodd–Frank act.
Click here for further amplification on the Dodd-Frank Act.
Consumer Financial Protection Bureau:
The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB jurisdiction includes
- banks,
- credit unions,
- securities firms,
- payday lenders,
- mortgage-servicing operations,
- foreclosure relief services,
- debt collectors
- and other financial companies operating in the United States.
The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the financial crisis of 2007–08 and the subsequent Great Recession.
The CFPB was initially established as an independent agency but it effectively became an executive agency after a federal appeals court found that the President of the United States' power to remove the CFPB Director had been unconstitutionally limited.
Click on any of the following blue hyperlinks for further amplification:
Online Ad Tracking: why you see ads online from businesses you just visited
YouTube Video: TED Presents "Tracking the Tracker" by Gary Kovacs
Pictured: Facebook’s new ads will track which stores you visit
Courtesy of Federal Trade Commission (June, 2016)
Have you ever wondered why some online ads you see are targeted to your tastes and interests? Or how websites remember your preferences from visit-to-visit or device-to-device? The answer may be in the “cookies” – or in other online tracking methods like device fingerprinting and cross-device tracking.
Here are answers to some commonly asked questions about online tracking — how it works and how you can control it.
Understanding Cookies
What is a cookie?A cookie is information saved by your web browser, the software program you use to visit the web. When you visit a website, the site might store a cookie so it can recognize your device in the future. Later if you return to that site, it can read that cookie to remember you from your last visit. By keeping track of you over time, cookies can be used to customize your browsing experience, or to deliver ads targeted to you.
Who places cookies on the web?
First-party cookies are placed by the site that you visit. They can make your experience on the web more efficient. For example, they help sites remember:
Third-party cookies are placed by someone other than the site you are on. For example, the website may partner with an advertising network to deliver some of the ads you see. Or they may partner with an analytics company to help understand how people use their site. These “third party” companies also may place cookies in your browser to monitor your behavior over time.
Over time, these companies may develop a detailed history of the types of sites you frequent, and they may use this information to deliver ads tailored to your interests. For example, if an advertising company notices that you read a lot of articles about running, it may show you ads about running shoes – even on an unrelated site you’re visiting for the first time.
Understanding Other Online Tracking: What are Flash cookies?
A Flash cookie is a small file stored on your computer by a website that uses Adobe’s Flash player technology. Flash cookies use Adobe’s Flash player to store information about your online browsing activities. Flash cookies can be used to replace cookies used for tracking and advertising, because they also can store your settings and preferences. Similarly, companies can place unique HTML5 cookies within a browser’s local storage to identify a user over time. When you delete or clear cookies from your browser, you will not necessarily delete the Flash cookies stored on your computer.
What is device fingerprinting?
Device fingerprinting can track devices over time, based on your browser’s configurations and settings. Because each browser is unique, device fingerprinting can identify your device, without using cookies. Since device fingerprinting uses the characteristics of your browser configuration to track you, deleting cookies won’t help.
Device fingerprinting technologies are evolving and can be used to track you on all kinds of internet-connected devices that have browsers, such as smart phones, tablets, laptop and desktop computers.
How does tracking in mobile apps occur?
When you access mobile applications, companies don’t have access to traditional browser cookies to track you over time. Instead, third party advertising and analytics companies use device identifiers — such as Apple iOS’s Identifiers for Advertisers (“IDFA”) and Google Android’s Advertising ID — to monitor the different applications used on a particular device.
Does tracking of other “smart devices” occur?
Yes. More and more, consumer devices, in addition to phones, are capable of being connected online. For example, smart entertainment systems often provide new ways for you to watch TV shows and movies, and also may use technology to monitor what you watch. Look to the settings on your devices to investigate whether you can reset identifiers on the devices or use web interfaces on another device to limit ad tracking.
Controlling Online Tracking: How can I control cookies?
Various browsers have different ways to let you delete cookies or limit the kinds of cookies that can be placed on your computer. When you choose a browser, consider which suits your privacy preferences best.
To check out the settings in a browser, use the ‘Help’ tab or look under ‘Tools’ for settings like ‘Options’ or ‘Privacy.’ From there, you may be able to delete cookies, or control when they can be placed. Some browsers allow add-on software tools to block, delete, or control cookies. And security software often includes options to make cookie control easier. If you delete cookies, companies may not be able to associate you with your past browsing activity. However, they may be able to track you in the future with a new cookie.
If you block cookies entirely, you may limit your browsing experience. For example, you may need to enter information repeatedly, or you might not get personalized content that is meaningful to you. Most browsers’ settings will allow you to block third-party cookies without also disabling first-party cookies.
How can I control Flash cookies and device fingerprinting?
The latest versions of Google Chrome, Mozilla Firefox, and Microsoft Internet Explorer let you control or delete Flash cookies through the browser’s settings. If you use an older version of one of these browsers, upgrade to the most recent version, and set it to update automatically.
If you use a browser that doesn’t let you delete Flash cookies, look at Adobe’s Website Storage Settings panel. There, you can view and delete Flash cookies, and control whether you’ll allow them on your computer.
Like regular cookies, deleting Flash cookies gets rid of the ones on your computer at that moment. Flash cookies can be placed on your computer the next time you visit a website or view an ad unless you block Flash cookies altogether.
How can I control tracking in or across mobile apps?
You can reset the identifiers on your device in the device settings. iOS users can do this by following Settings > Privacy > Advertising > Reset Advertising Identifier. For Android, the path is Google settings > Ads > Reset advertising ID. This control works much like deleting cookies in a browser — the device is harder to associate with past activity, but tracking can start anew using the new advertising identifier.
You also can limit the use of identifiers for ad targeting on your devices. If you turn on this setting, apps are not permitted to use the advertising identifier to serve consumers targeted ads.
For iOS, the controls are available through Settings > Privacy > Advertising > Limit Ad Tracking.
For Android, Google Settings > Ads > Opt Out of Interest-Based Ads.
Although this tool will limit the use of tracking data for targeting ads, companies may still be able to monitor your app usage for other purposes, such as research, measurement, and fraud prevention.
Mobile browsers work much like traditional web browsers, and the tracking technologies and user controls are much the same as for ordinary web browsers, described above.
Mobile applications also may collect your geolocation to share with advertising companies. The latest versions of iOS and Android allow you to limit which particular applications can access your location information.
What is “private browsing”?
Many browsers offer private browsing settings that are meant to let you keep your web activities hidden from other people who use the same computer. With private browsing turned on, your browser won’t retain cookies, your browsing history, search records, or the files you downloaded. Privacy modes aren’t uniform, though; it’s a good idea to check your browser to see what types of data it stores.
But note that cookies used during the private browsing session still can communicate information about your browsing behavior to third parties. So, private browsing may not be effective in stopping third parties from using techniques such as fingerprinting to track your web activity.
What are “opt-out” cookies?
Some websites and advertising networks allow you to set cookies that tell them not to use information about what sites you visit to target ads to you.
For example, the Network Advertising Initiative (NAI) and the Digital Advertising Alliance (DAA) offer tools for opting out of targeted advertising — often by placing opt-out cookies. If you delete all cookies, you’ll also delete the cookies that indicate your preference to opt out of targeted ads.
Cookies are used for many purposes — for example, to limit the number of times you’re shown a particular ad. So even if you opt out of targeted advertising, a company may still use cookies for other purposes.
What is “Do Not Track”?
Do Not Track is a setting in most internet browsers that allows you to express your preference not to be tracked across the web. Turning on Do Not Track through your web browser sends a signal to every website you visit that you don’t want to be tracked from site to site. Companies then know your preference.
If they have committed to respect your Do Not Track preference, they are legally required to do so. However, most tracking companies today have not committed to honoring users’ Do Not Track preferences.
Can I block online tracking?
Consumers can learn about tracker-blocking browser plugins which block the flow of information from a computer to tracking companies and allow consumers to block ads. They prevent companies from using cookies or fingerprinting to track your internet behavior.
To find tracker-blocking plugins, type “tracker blocker” in your search engine. Then, compare features to decide which tracker blocker is best for you. For example, some of them block tracking by default, while others require you to customize when you’ll block tracking.
Remember that websites that rely on third party tracking companies for measurement or advertising revenue may prevent you from using their site if you have blocking software installed. However, you can still open those sites in a separate browser that doesn’t have blocking enabled, or you can disable blocking on those sites.
Tagged with: computer security, cookies, Do Not Track, personal information, privacy
You Might Also Like
Have you ever wondered why some online ads you see are targeted to your tastes and interests? Or how websites remember your preferences from visit-to-visit or device-to-device? The answer may be in the “cookies” – or in other online tracking methods like device fingerprinting and cross-device tracking.
Here are answers to some commonly asked questions about online tracking — how it works and how you can control it.
Understanding Cookies
What is a cookie?A cookie is information saved by your web browser, the software program you use to visit the web. When you visit a website, the site might store a cookie so it can recognize your device in the future. Later if you return to that site, it can read that cookie to remember you from your last visit. By keeping track of you over time, cookies can be used to customize your browsing experience, or to deliver ads targeted to you.
Who places cookies on the web?
First-party cookies are placed by the site that you visit. They can make your experience on the web more efficient. For example, they help sites remember:
- items in your shopping cart
- your log-in name
- your preferences, like always showing the weather in your home town
- your high game scores.
Third-party cookies are placed by someone other than the site you are on. For example, the website may partner with an advertising network to deliver some of the ads you see. Or they may partner with an analytics company to help understand how people use their site. These “third party” companies also may place cookies in your browser to monitor your behavior over time.
Over time, these companies may develop a detailed history of the types of sites you frequent, and they may use this information to deliver ads tailored to your interests. For example, if an advertising company notices that you read a lot of articles about running, it may show you ads about running shoes – even on an unrelated site you’re visiting for the first time.
Understanding Other Online Tracking: What are Flash cookies?
A Flash cookie is a small file stored on your computer by a website that uses Adobe’s Flash player technology. Flash cookies use Adobe’s Flash player to store information about your online browsing activities. Flash cookies can be used to replace cookies used for tracking and advertising, because they also can store your settings and preferences. Similarly, companies can place unique HTML5 cookies within a browser’s local storage to identify a user over time. When you delete or clear cookies from your browser, you will not necessarily delete the Flash cookies stored on your computer.
What is device fingerprinting?
Device fingerprinting can track devices over time, based on your browser’s configurations and settings. Because each browser is unique, device fingerprinting can identify your device, without using cookies. Since device fingerprinting uses the characteristics of your browser configuration to track you, deleting cookies won’t help.
Device fingerprinting technologies are evolving and can be used to track you on all kinds of internet-connected devices that have browsers, such as smart phones, tablets, laptop and desktop computers.
How does tracking in mobile apps occur?
When you access mobile applications, companies don’t have access to traditional browser cookies to track you over time. Instead, third party advertising and analytics companies use device identifiers — such as Apple iOS’s Identifiers for Advertisers (“IDFA”) and Google Android’s Advertising ID — to monitor the different applications used on a particular device.
Does tracking of other “smart devices” occur?
Yes. More and more, consumer devices, in addition to phones, are capable of being connected online. For example, smart entertainment systems often provide new ways for you to watch TV shows and movies, and also may use technology to monitor what you watch. Look to the settings on your devices to investigate whether you can reset identifiers on the devices or use web interfaces on another device to limit ad tracking.
Controlling Online Tracking: How can I control cookies?
Various browsers have different ways to let you delete cookies or limit the kinds of cookies that can be placed on your computer. When you choose a browser, consider which suits your privacy preferences best.
To check out the settings in a browser, use the ‘Help’ tab or look under ‘Tools’ for settings like ‘Options’ or ‘Privacy.’ From there, you may be able to delete cookies, or control when they can be placed. Some browsers allow add-on software tools to block, delete, or control cookies. And security software often includes options to make cookie control easier. If you delete cookies, companies may not be able to associate you with your past browsing activity. However, they may be able to track you in the future with a new cookie.
If you block cookies entirely, you may limit your browsing experience. For example, you may need to enter information repeatedly, or you might not get personalized content that is meaningful to you. Most browsers’ settings will allow you to block third-party cookies without also disabling first-party cookies.
How can I control Flash cookies and device fingerprinting?
The latest versions of Google Chrome, Mozilla Firefox, and Microsoft Internet Explorer let you control or delete Flash cookies through the browser’s settings. If you use an older version of one of these browsers, upgrade to the most recent version, and set it to update automatically.
If you use a browser that doesn’t let you delete Flash cookies, look at Adobe’s Website Storage Settings panel. There, you can view and delete Flash cookies, and control whether you’ll allow them on your computer.
Like regular cookies, deleting Flash cookies gets rid of the ones on your computer at that moment. Flash cookies can be placed on your computer the next time you visit a website or view an ad unless you block Flash cookies altogether.
How can I control tracking in or across mobile apps?
You can reset the identifiers on your device in the device settings. iOS users can do this by following Settings > Privacy > Advertising > Reset Advertising Identifier. For Android, the path is Google settings > Ads > Reset advertising ID. This control works much like deleting cookies in a browser — the device is harder to associate with past activity, but tracking can start anew using the new advertising identifier.
You also can limit the use of identifiers for ad targeting on your devices. If you turn on this setting, apps are not permitted to use the advertising identifier to serve consumers targeted ads.
For iOS, the controls are available through Settings > Privacy > Advertising > Limit Ad Tracking.
For Android, Google Settings > Ads > Opt Out of Interest-Based Ads.
Although this tool will limit the use of tracking data for targeting ads, companies may still be able to monitor your app usage for other purposes, such as research, measurement, and fraud prevention.
Mobile browsers work much like traditional web browsers, and the tracking technologies and user controls are much the same as for ordinary web browsers, described above.
Mobile applications also may collect your geolocation to share with advertising companies. The latest versions of iOS and Android allow you to limit which particular applications can access your location information.
What is “private browsing”?
Many browsers offer private browsing settings that are meant to let you keep your web activities hidden from other people who use the same computer. With private browsing turned on, your browser won’t retain cookies, your browsing history, search records, or the files you downloaded. Privacy modes aren’t uniform, though; it’s a good idea to check your browser to see what types of data it stores.
But note that cookies used during the private browsing session still can communicate information about your browsing behavior to third parties. So, private browsing may not be effective in stopping third parties from using techniques such as fingerprinting to track your web activity.
What are “opt-out” cookies?
Some websites and advertising networks allow you to set cookies that tell them not to use information about what sites you visit to target ads to you.
For example, the Network Advertising Initiative (NAI) and the Digital Advertising Alliance (DAA) offer tools for opting out of targeted advertising — often by placing opt-out cookies. If you delete all cookies, you’ll also delete the cookies that indicate your preference to opt out of targeted ads.
Cookies are used for many purposes — for example, to limit the number of times you’re shown a particular ad. So even if you opt out of targeted advertising, a company may still use cookies for other purposes.
What is “Do Not Track”?
Do Not Track is a setting in most internet browsers that allows you to express your preference not to be tracked across the web. Turning on Do Not Track through your web browser sends a signal to every website you visit that you don’t want to be tracked from site to site. Companies then know your preference.
If they have committed to respect your Do Not Track preference, they are legally required to do so. However, most tracking companies today have not committed to honoring users’ Do Not Track preferences.
Can I block online tracking?
Consumers can learn about tracker-blocking browser plugins which block the flow of information from a computer to tracking companies and allow consumers to block ads. They prevent companies from using cookies or fingerprinting to track your internet behavior.
To find tracker-blocking plugins, type “tracker blocker” in your search engine. Then, compare features to decide which tracker blocker is best for you. For example, some of them block tracking by default, while others require you to customize when you’ll block tracking.
Remember that websites that rely on third party tracking companies for measurement or advertising revenue may prevent you from using their site if you have blocking software installed. However, you can still open those sites in a separate browser that doesn’t have blocking enabled, or you can disable blocking on those sites.
Tagged with: computer security, cookies, Do Not Track, personal information, privacy
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Data Mining vs. Right to Privacy*
* Article in Time Magazine, July 31, 2012 issue
YouTube Video: What is Data Mining?
Pictured: The process of data mining: for additional information, click here
Excerpt from Time Magazine, July 31, 2012 about the risks caused by data mining:
“Big Brother is watching you.” That’s a line from the dystopian classic 1984, but it’s also far closer to reality than most Americans realize. No, there’s not some totalitarian government spy in a trench coat following you, but you are being watched — not by a dictator, but by a handful of companies that make big bucks aggregating tiny scraps of information about you and putting the puzzle pieces together to build your digital profile. Eight lawmakers are demanding that these companies crack open their vaults so Congress can see what they’re compiling about us and what they’re doing with it.
Right now, this multibillion-dollar industry is largely unregulated. A New York Times article earlier this year about a data-mining company prompted the two co-chairs of the Bipartisan Congressional Privacy Caucus and six other Congress members to send a letter to nine companies that collect personal data.
They’ve asked these corporations where they get their data, how they slice and dice it, and to whom they sell and share it.
“By combining data from numerous offline and online sources, data brokers have developed hidden dossiers on almost every U.S. consumer,” the letter says. “This large scale aggregation of the personal information of hundreds of millions of American citizens raises a number of serious privacy concerns.”...."
Data mining is the computational process of discovering patterns in large data sets involving methods at the intersection of artificial intelligence, machine learning, statistics, and database systems.
It is an interdisciplinary subfield of computer science. The overall goal of the data mining process is to extract information from a data set and transform it into an understandable structure for further use.
Aside from the raw analysis step, it involves database and data management aspects, data pre-processing, model and inference considerations, interest metrics, complexity considerations, post-processing of discovered structures, visualization, and online updating. Data mining is the analysis step of the "knowledge discovery in databases" process, or KDD.
The term is a misnomer, because the goal is the extraction of patterns and knowledge from large amounts of data, not the extraction (mining) of data itself. It also is a buzzword and is frequently applied to any form of large-scale data or information processing (collection, extraction, warehousing, analysis, and statistics) as well as any application of computer decision support system, including artificial intelligence, machine learning, and business intelligence.
The book Data mining: Practical machine learning tools and techniques with Java (which covers mostly machine learning material) was originally to be named just Practical machine learning, and the term data mining was only added for marketing reasons.
Often the more general terms (large scale) data analysis and analytics – or, when referring to actual methods, artificial intelligence and machine learning – are more appropriate.
The actual data mining task is the automatic or semi-automatic analysis of large quantities of data to extract previously unknown, interesting patterns such as groups of data records (cluster analysis), unusual records (anomaly detection), and dependencies (association rule mining, sequential pattern mining).
This usually involves using database techniques such as spatial indices. These patterns can then be seen as a kind of summary of the input data, and may be used in further analysis or, for example, in machine learning and predictive analytics.
For example, the data mining step might identify multiple groups in the data, which can then be used to obtain more accurate prediction results by a decision support system. Neither the data collection, data preparation, nor result interpretation and reporting is part of the data mining step, but do belong to the overall KDD process as additional steps.
The related terms data dredging, data fishing, and data snooping refer to the use of data mining methods to sample parts of a larger population data set that are (or may be) too small for reliable statistical inferences to be made about the validity of any patterns discovered. These methods can, however, be used in creating new hypotheses to test against the larger data populations.
Click on any of the following blue hyperlinks for more about Data Mining:
“Big Brother is watching you.” That’s a line from the dystopian classic 1984, but it’s also far closer to reality than most Americans realize. No, there’s not some totalitarian government spy in a trench coat following you, but you are being watched — not by a dictator, but by a handful of companies that make big bucks aggregating tiny scraps of information about you and putting the puzzle pieces together to build your digital profile. Eight lawmakers are demanding that these companies crack open their vaults so Congress can see what they’re compiling about us and what they’re doing with it.
Right now, this multibillion-dollar industry is largely unregulated. A New York Times article earlier this year about a data-mining company prompted the two co-chairs of the Bipartisan Congressional Privacy Caucus and six other Congress members to send a letter to nine companies that collect personal data.
They’ve asked these corporations where they get their data, how they slice and dice it, and to whom they sell and share it.
“By combining data from numerous offline and online sources, data brokers have developed hidden dossiers on almost every U.S. consumer,” the letter says. “This large scale aggregation of the personal information of hundreds of millions of American citizens raises a number of serious privacy concerns.”...."
Data mining is the computational process of discovering patterns in large data sets involving methods at the intersection of artificial intelligence, machine learning, statistics, and database systems.
It is an interdisciplinary subfield of computer science. The overall goal of the data mining process is to extract information from a data set and transform it into an understandable structure for further use.
Aside from the raw analysis step, it involves database and data management aspects, data pre-processing, model and inference considerations, interest metrics, complexity considerations, post-processing of discovered structures, visualization, and online updating. Data mining is the analysis step of the "knowledge discovery in databases" process, or KDD.
The term is a misnomer, because the goal is the extraction of patterns and knowledge from large amounts of data, not the extraction (mining) of data itself. It also is a buzzword and is frequently applied to any form of large-scale data or information processing (collection, extraction, warehousing, analysis, and statistics) as well as any application of computer decision support system, including artificial intelligence, machine learning, and business intelligence.
The book Data mining: Practical machine learning tools and techniques with Java (which covers mostly machine learning material) was originally to be named just Practical machine learning, and the term data mining was only added for marketing reasons.
Often the more general terms (large scale) data analysis and analytics – or, when referring to actual methods, artificial intelligence and machine learning – are more appropriate.
The actual data mining task is the automatic or semi-automatic analysis of large quantities of data to extract previously unknown, interesting patterns such as groups of data records (cluster analysis), unusual records (anomaly detection), and dependencies (association rule mining, sequential pattern mining).
This usually involves using database techniques such as spatial indices. These patterns can then be seen as a kind of summary of the input data, and may be used in further analysis or, for example, in machine learning and predictive analytics.
For example, the data mining step might identify multiple groups in the data, which can then be used to obtain more accurate prediction results by a decision support system. Neither the data collection, data preparation, nor result interpretation and reporting is part of the data mining step, but do belong to the overall KDD process as additional steps.
The related terms data dredging, data fishing, and data snooping refer to the use of data mining methods to sample parts of a larger population data set that are (or may be) too small for reliable statistical inferences to be made about the validity of any patterns discovered. These methods can, however, be used in creating new hypotheses to test against the larger data populations.
Click on any of the following blue hyperlinks for more about Data Mining:
- Etymology
- Background
- Process
- Research
- Standards
- Notable uses
- Privacy concerns and ethics
- Copyright Law
- Software
- See also:
- Methods:
- Agent mining
- Anomaly/outlier/change detection
- Association rule learning
- Bayesian networks
- Classification
- Cluster analysis
- Decision trees
- Ensemble learning
- Factor analysis
- Genetic algorithms
- Intention mining
- Learning classifier system
- Multilinear subspace learning
- Neural networks
- Regression analysis
- Sequence mining
- Structured data analysis
- Support vector machines
- Text mining
- Time series analysis
- Application domains
- Application examples (Main article: Examples of data mining)
- Related topics: Data mining is about analyzing data; for information about extracting information out of data, see:
- Methods:
Examples of Data Mining
YouTube Video: Microsoft Data Mining Demo -- Fill from Example
Pictured: Microsoft Data Mining Demo -- Fill from Example with SQL Server 2008 and Excel 2007
Data mining has been used in many applications. Click on any of the following blue hyperlinks for notable examples of usage:
- Games
- Business
- Science and engineering
- Human rights
- Medical data mining
- Spatial data mining
- Temporal data mining
- Sensor data mining
- Visual data mining
- Music data mining
- Surveillance
- Pattern mining
- Subject-based data mining
- Knowledge grid
[Your Web Host: Certainly, we are learning that the Internet is not a blessing for all. Below we take on the topic of what the Internet giants like Amazon.com are doing to your neighborhood malls and retailer "brick and mortar" chains and franchises, INCLUDING JOB LOSSES! It is not pretty!]
'Retail Apocalypse’ Is Really Just Beginning by Bloomberg News and What is "Retail Apocalypse"? (by Wikipedia)
YouTube Video: Top 10 Businesses Killed by the Internet by WatchMojo
YouTube Video: Macy's, Sears and Kmart Closing Stores - Online Sales Killing Brick-and-Mortars?
YouTube Video: "Click on PLAY ALL" to view Dead Mall Series
Pictured below: Impact of Internet on Retailers: Graphic of Announced store cumulative openings and closings (Excluding grocery stores and restaurants) (courtesy of Bloomberg News)
By Bloomberg News: The so-called retail apocalypse has become so ingrained in the U.S. that it now has the distinction of its own Wikipedia entry. (see below for "Retail Apocalypse")
The industry’s response to that kind of doomsday description has included blaming the media for hyping the troubles of a few well-known chains as proof of a systemic meltdown. There is some truth to that. In the U.S., retailers announced more than 3,000 store openings in the first three quarters of this year.
But chains also said 6,800 would close. And this comes when there’s sky-high consumer confidence, unemployment is historically low and the U.S. economy keeps growing. Those are normally all ingredients for a retail boom, yet more chains are filing for bankruptcy and rated distressed than during the financial crisis. That’s caused an increase in the number of delinquent loan payments by malls and shopping centers.
Pictured Below: Late payers as percent of retail real estate loans that are delinquent by metro area, as of September 2017
The industry’s response to that kind of doomsday description has included blaming the media for hyping the troubles of a few well-known chains as proof of a systemic meltdown. There is some truth to that. In the U.S., retailers announced more than 3,000 store openings in the first three quarters of this year.
But chains also said 6,800 would close. And this comes when there’s sky-high consumer confidence, unemployment is historically low and the U.S. economy keeps growing. Those are normally all ingredients for a retail boom, yet more chains are filing for bankruptcy and rated distressed than during the financial crisis. That’s caused an increase in the number of delinquent loan payments by malls and shopping centers.
Pictured Below: Late payers as percent of retail real estate loans that are delinquent by metro area, as of September 2017
The reason isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder—even for healthy chains.
The debt coming due, along with America’s over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster. The spillover will likely flow far and wide across the U.S. economy. There will be displaced low-income workers, shrinking local tax bases and investor losses on stocks, bonds and real estate. If today is considered a retail apocalypse, then what’s coming next could truly be scary.
Until this year, struggling retailers have largely been able to avoid bankruptcy by refinancing to buy more time. But the market has shifted, with the negative view on retail pushing investors to reconsider lending to them.
Toys “R” Us Inc. served as an early sign of what might lie ahead. It surprised investors in September by filing for bankruptcy—the third-largest retail bankruptcy in U.S. history—after struggling to refinance just $400 million of its $5 billion in debt. And its results were mostly stable, with profitability increasing amid a small drop in sales.
Pictured below: (Consumer Confidence) vs. Stores going about of Business
The debt coming due, along with America’s over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster. The spillover will likely flow far and wide across the U.S. economy. There will be displaced low-income workers, shrinking local tax bases and investor losses on stocks, bonds and real estate. If today is considered a retail apocalypse, then what’s coming next could truly be scary.
Until this year, struggling retailers have largely been able to avoid bankruptcy by refinancing to buy more time. But the market has shifted, with the negative view on retail pushing investors to reconsider lending to them.
Toys “R” Us Inc. served as an early sign of what might lie ahead. It surprised investors in September by filing for bankruptcy—the third-largest retail bankruptcy in U.S. history—after struggling to refinance just $400 million of its $5 billion in debt. And its results were mostly stable, with profitability increasing amid a small drop in sales.
Pictured below: (Consumer Confidence) vs. Stores going about of Business
Making matters more difficult is the explosive amount of risky debt owed by retail coming due over the next five years. Several companies are like teen-jewelry chain Claire’s Stores Inc., a 2007 leveraged buyout owned by private-equity firm Apollo Global Management LLC, which has $2 billion in borrowings starting to mature in 2019 and still has 1,600 stores in North America.
Just $100 million of high-yield retail borrowings were set to mature in 2017, but that will increase to $1.9 billion in 2018, according to Fitch Ratings Inc. And from 2019 to 2025, it will balloon to an annual average of almost $5 billion. The amount of retail debt considered risky is also rising. Over the past year, high-yield bonds outstanding gained 20 percent, to $35 billion, and the industry’s leveraged loans are up 15 percent, to $152 billion, according to Bloomberg data.
Even worse, this will hit as a record $1 trillion in high-yield debt for all industries comes due over the next five years, according to Moody’s. The surge in demand for refinancing is also likely to come just as credit markets tighten and become much less accommodating to distressed borrowers.
Just $100 million of high-yield retail borrowings were set to mature in 2017, but that will increase to $1.9 billion in 2018, according to Fitch Ratings Inc. And from 2019 to 2025, it will balloon to an annual average of almost $5 billion. The amount of retail debt considered risky is also rising. Over the past year, high-yield bonds outstanding gained 20 percent, to $35 billion, and the industry’s leveraged loans are up 15 percent, to $152 billion, according to Bloomberg data.
Even worse, this will hit as a record $1 trillion in high-yield debt for all industries comes due over the next five years, according to Moody’s. The surge in demand for refinancing is also likely to come just as credit markets tighten and become much less accommodating to distressed borrowers.
Retailers have pushed off a reckoning because interest rates have been historically low from all the money the Federal Reserve has pumped into the economy since the financial crisis.
That’s made investing in riskier debt—and the higher return it brings—more attractive. But with the Fed now raising rates, that demand will soften. That may leave many chains struggling to refinance, especially with the bearishness on retail only increasing.
One testament to that negativity on retail came earlier this year, when Nordstrom Inc.’s founding family tried to take the department-store chain private. They eventually gave up because lenders were asking for 13 percent interest, about twice the typical rate for retailers.
That’s made investing in riskier debt—and the higher return it brings—more attractive. But with the Fed now raising rates, that demand will soften. That may leave many chains struggling to refinance, especially with the bearishness on retail only increasing.
One testament to that negativity on retail came earlier this year, when Nordstrom Inc.’s founding family tried to take the department-store chain private. They eventually gave up because lenders were asking for 13 percent interest, about twice the typical rate for retailers.
Store credit cards pose additional worries. Synchrony Financial, the largest private-label card issuer, has already had to increase reserves to help cover loan losses this year. And Citigroup Inc., the world’s largest card issuer, said collection rates on its retail portfolio are declining. One reason that’s been cited is that shoppers are more willing to stop paying back a card from a chain if the store they went to has closed.
The ripple effect could also be a direct hit to the industry that is the largest employer of Americans at the low end of the income scale. The most recent government statistics show that salespeople and cashiers in the industry total 8 million.
During the height of the financial crisis, store workers felt the brunt of the pain when 1.2 million jobs disappeared, or one in seven of all the positions lost from 2008 to 2009, according to the Department of Labor. Since the crisis, employment has been increasing, including in the retail industry, but that correlation ended as jobs at stores sank by 101,000 this year.
Pictured below: Retail Jobs Lag: compared to all private jobs, positions at physical stores have grown less over the last 10 years, both in numbers and wages.
The ripple effect could also be a direct hit to the industry that is the largest employer of Americans at the low end of the income scale. The most recent government statistics show that salespeople and cashiers in the industry total 8 million.
During the height of the financial crisis, store workers felt the brunt of the pain when 1.2 million jobs disappeared, or one in seven of all the positions lost from 2008 to 2009, according to the Department of Labor. Since the crisis, employment has been increasing, including in the retail industry, but that correlation ended as jobs at stores sank by 101,000 this year.
Pictured below: Retail Jobs Lag: compared to all private jobs, positions at physical stores have grown less over the last 10 years, both in numbers and wages.
The drop coincides with a rapid acceleration in store closings as bankruptcies surge and many of the nation’s largest retailers, including WalMart Stores Inc. and Target Corp., have decided that they have too much space. Even before the e-commerce boom, the U.S. was considered over-stored—the result of investors pouring money into commercial real estate decades earlier as the suburbs boomed.
All those buildings needed to be filled with stores, and that demand got the attention of venture capital. The result was the birth of the big-box era of massive stores in nearly every category—from office suppliers like Staples Inc. to pet retailers such as PetSmart Inc. and Petco Animal Supplies, Inc.
Now that boom is finally going bust. Through the third quarter of this year, 6,752 locations were scheduled to shutter in the U.S., excluding grocery stores and restaurants, according to the International Council of Shopping Centers. That's more than double the 2016 total and is close to surpassing the all-time high of 6,900 in 2008, during the depths of the financial crisis. Apparel chains have by far taken the biggest hit, with 2,500 locations closing.
Department stores were hammered, too, with Macy’s Inc., Sears Holdings Corp. and J.C. Penney Co. downsizing. In all, about 550 department stores closed, equating to 43 million square feet, or about half the total.
All those buildings needed to be filled with stores, and that demand got the attention of venture capital. The result was the birth of the big-box era of massive stores in nearly every category—from office suppliers like Staples Inc. to pet retailers such as PetSmart Inc. and Petco Animal Supplies, Inc.
Now that boom is finally going bust. Through the third quarter of this year, 6,752 locations were scheduled to shutter in the U.S., excluding grocery stores and restaurants, according to the International Council of Shopping Centers. That's more than double the 2016 total and is close to surpassing the all-time high of 6,900 in 2008, during the depths of the financial crisis. Apparel chains have by far taken the biggest hit, with 2,500 locations closing.
Department stores were hammered, too, with Macy’s Inc., Sears Holdings Corp. and J.C. Penney Co. downsizing. In all, about 550 department stores closed, equating to 43 million square feet, or about half the total.
States like Ohio, West Virginia, Michigan and Illinois have been among the hardest hit, with retail employment declining over the past decade, and now those woes are likely to spread.
Many states, such as Nevada, Florida and Arkansas, have overly relied on retail for job growth, so they could feel more pain as the fallout deepens. In Washington since 2007, retail jobs have grown 3 percentage points faster than overall job growth.
New England and rust-belt states in particular have struggled, January 2007 to September 2017
Many states, such as Nevada, Florida and Arkansas, have overly relied on retail for job growth, so they could feel more pain as the fallout deepens. In Washington since 2007, retail jobs have grown 3 percentage points faster than overall job growth.
New England and rust-belt states in particular have struggled, January 2007 to September 2017
Exposure to low-end retail jobs varies by state. Alabama, Louisiana, New Hampshire, Mississippi and South Carolina have the highest concentration of cashiers, who have an average wage of $21,500 a year. And on a regional basis, Washington Parish north of New Orleans has a higher percentage than anywhere in the country, at twice the national average. Florida relies on retail salespeople more than any other state. In Sumter County, west of Orlando, retail jobs nearly doubled over the past decade.
The path to the middle class in retail is often to become a supervisor. There are 1.2 million of them, and their average annual salary is more than twice that of a cashier at $44,000. In that category, many of the same states have the most on the line, with Alabama, West Virginia, South Carolina and Montana containing the highest ratio of these workers.
One response to the loss of store-based retail jobs is to note that the industry is adding positions at distribution centers to bolster its online operations. While that is true, many displaced retail workers don’t live near a shipping facility. The hiring also skews more toward men, as they make up two-thirds of the workforce, and retail store employees are 60 percent women.
The coming wave of risky retail debt maturities doesn’t take into account that companies currently considered stable by ratings agencies also have loads of borrowings. Just among the eight publicly-traded department stores, there is about $24 billion in debt, and only two of those—Sears Holdings Corp. and Bon-Ton Stores Inc.—are rated distressed by Moody’s.
The path to the middle class in retail is often to become a supervisor. There are 1.2 million of them, and their average annual salary is more than twice that of a cashier at $44,000. In that category, many of the same states have the most on the line, with Alabama, West Virginia, South Carolina and Montana containing the highest ratio of these workers.
One response to the loss of store-based retail jobs is to note that the industry is adding positions at distribution centers to bolster its online operations. While that is true, many displaced retail workers don’t live near a shipping facility. The hiring also skews more toward men, as they make up two-thirds of the workforce, and retail store employees are 60 percent women.
The coming wave of risky retail debt maturities doesn’t take into account that companies currently considered stable by ratings agencies also have loads of borrowings. Just among the eight publicly-traded department stores, there is about $24 billion in debt, and only two of those—Sears Holdings Corp. and Bon-Ton Stores Inc.—are rated distressed by Moody’s.
“A pall has been cast on retail,” said Charlie O’Shea, a retail analyst for Moody’s. “A day of reckoning is coming.”
[End of Article]
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Retail Apocalypse by Wikipedia
The retail apocalypse refers to the closing of a large number of American retail stores in 2015 and expected to peak in 2018. Over 4,000 physical stores are affected as American consumers shift their purchasing habits due to various factors, including the rise of e-commerce.
Major department stores such as J.C. Penney and Macy’s have announced hundreds of store closures, and well-known apparel brands such as J. Crew and Ralph Lauren are unprofitable.
Of the 1,200 shopping malls across the US, 50% are expected to close by 2023. More than 12,000 stores are expected to close in 2018. The retail apocalypse phenomenon is related to the middle-class squeeze, in which consumers experience a decrease in income while costs increase for education, healthcare, and housing.
Bloomberg stated that the cause of the retail apocalypse “isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms.”
Forbes has said the media coverage is exaggerated, and the sector is simply evolving. The most productive retailers in the US during the retail apocalypse are the low-cost, “fast-fashion” brands (e.g. Zara and H&M) and dollar stores (e.g. Dollar General and Family Dollar).
Since at least 2010, various economic factors have resulted in the closing of a large number of American retailers, particularly in the department store industry. Sears Holdings, which had 3,555 Kmart and Sears stores in 2010, was down to 1,503 as of 2016, with more closures scheduled.
Kmart, which operated 2,171 stores at its peak in 2000, a number that has since dwindled to less than 750 with further closures planned.
The term "retail apocalypse" began gaining widespread usage in 2017 following multiple announcements from many major retailers of plans to either discontinue or greatly scale back a retail presence, including companies such as H.H. Gregg, Family Christian Stores and The Limited all going out of business entirely.
The Atlantic describes the phenomenon as "The Great Retail Apocalypse of 2017," reporting nine retail bankruptcies and several apparel companies having their stock hit new lows, including that of Lululemon, Urban Outfitters, American Eagle. Credit Suisse, a major global financial services company, predicted that 25% of U.S. malls remaining in 2017 could close by 2022.
Factors:
The main factor cited in the closing of retail stores in the retail apocalypse is the shift in consumer habits towards online commerce.
Holiday sales for e-commerce were reported as increasing by 11% for 2016 compared with 2015 by Adobe Digital Insights, with Slice Intelligence reporting an even more generous 20% increase.
Comparatively, brick-and-mortar stores saw an overall increase of only 1.6%, with physical department stores experiencing a 4.8% decline.
Another factor is an over-supply of malls, as the growth rate of malls between 1970 and 2015 was over twice the growth rate of the population. In 2004, Malcolm Gladwell wrote that investment in malls was artificially accelerated when the U.S. Congress introduced accelerated depreciation into the tax code in 1954.
Despite the construction of new malls, mall visits declined by 50% between 2010-2013 with further declines reported in each successive year.
A third major reported factor is the "restaurant renaissance," a shift in consumer spending habits for their disposable cash from material purchases such as clothing towards dining out and travel.
Another cited factor is the "death of the American middle class," resulting in large-scale closures of retailers such as Macy's and Sears, which traditionally relied on spending from this market segment.
The final factor in poor brick-and-mortar sales performance is a combination of poor retail management coupled with an overcritical eye towards quarterly dividends: a lack of accurate inventory control creates both under-performing and out-of-stock merchandise, causing a poor shopping experience for customers in order to optimize short-term balance sheets, the latter of which also influences the desire to under-staff retail stores in order to keep claimed profits high.
Click on any of the following blue hyperlinks for more about Retail Apocalypse:
See also:
[End of Article]
___________________________________________________________________________
Retail Apocalypse by Wikipedia
The retail apocalypse refers to the closing of a large number of American retail stores in 2015 and expected to peak in 2018. Over 4,000 physical stores are affected as American consumers shift their purchasing habits due to various factors, including the rise of e-commerce.
Major department stores such as J.C. Penney and Macy’s have announced hundreds of store closures, and well-known apparel brands such as J. Crew and Ralph Lauren are unprofitable.
Of the 1,200 shopping malls across the US, 50% are expected to close by 2023. More than 12,000 stores are expected to close in 2018. The retail apocalypse phenomenon is related to the middle-class squeeze, in which consumers experience a decrease in income while costs increase for education, healthcare, and housing.
Bloomberg stated that the cause of the retail apocalypse “isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms.”
Forbes has said the media coverage is exaggerated, and the sector is simply evolving. The most productive retailers in the US during the retail apocalypse are the low-cost, “fast-fashion” brands (e.g. Zara and H&M) and dollar stores (e.g. Dollar General and Family Dollar).
Since at least 2010, various economic factors have resulted in the closing of a large number of American retailers, particularly in the department store industry. Sears Holdings, which had 3,555 Kmart and Sears stores in 2010, was down to 1,503 as of 2016, with more closures scheduled.
Kmart, which operated 2,171 stores at its peak in 2000, a number that has since dwindled to less than 750 with further closures planned.
The term "retail apocalypse" began gaining widespread usage in 2017 following multiple announcements from many major retailers of plans to either discontinue or greatly scale back a retail presence, including companies such as H.H. Gregg, Family Christian Stores and The Limited all going out of business entirely.
The Atlantic describes the phenomenon as "The Great Retail Apocalypse of 2017," reporting nine retail bankruptcies and several apparel companies having their stock hit new lows, including that of Lululemon, Urban Outfitters, American Eagle. Credit Suisse, a major global financial services company, predicted that 25% of U.S. malls remaining in 2017 could close by 2022.
Factors:
The main factor cited in the closing of retail stores in the retail apocalypse is the shift in consumer habits towards online commerce.
Holiday sales for e-commerce were reported as increasing by 11% for 2016 compared with 2015 by Adobe Digital Insights, with Slice Intelligence reporting an even more generous 20% increase.
Comparatively, brick-and-mortar stores saw an overall increase of only 1.6%, with physical department stores experiencing a 4.8% decline.
Another factor is an over-supply of malls, as the growth rate of malls between 1970 and 2015 was over twice the growth rate of the population. In 2004, Malcolm Gladwell wrote that investment in malls was artificially accelerated when the U.S. Congress introduced accelerated depreciation into the tax code in 1954.
Despite the construction of new malls, mall visits declined by 50% between 2010-2013 with further declines reported in each successive year.
A third major reported factor is the "restaurant renaissance," a shift in consumer spending habits for their disposable cash from material purchases such as clothing towards dining out and travel.
Another cited factor is the "death of the American middle class," resulting in large-scale closures of retailers such as Macy's and Sears, which traditionally relied on spending from this market segment.
The final factor in poor brick-and-mortar sales performance is a combination of poor retail management coupled with an overcritical eye towards quarterly dividends: a lack of accurate inventory control creates both under-performing and out-of-stock merchandise, causing a poor shopping experience for customers in order to optimize short-term balance sheets, the latter of which also influences the desire to under-staff retail stores in order to keep claimed profits high.
Click on any of the following blue hyperlinks for more about Retail Apocalypse:
- Affected retailers, beginning with:
See also:
- Dead mall
- Amazon.com
- Experience economy
- Generation Z
- Economic history of the United States
- Brian Sozzi, Coach CEO Perfectly Explains What Must Be Done to Survive Retail Apocalypse thestreet.com September 8, 2017
- The Death Knell for the Bricks-and-Mortar Store? Not Yet MATTHEW SCHNEIER, New York Times, November 13, 2017
- What It's Like to Work in the Last Big Store in a Dying Mall Washington Post/Newser, Kate Seamons, January 2, 2018
Consumer Protection Laws in the United States including Anti-trust Laws and the Federal Trade Commission as well as the Breakup of the AT&T Bell companies in 1982
YouTube Video: What is the U.S. Federal Trade Commission Act?
Pictured below: Graphic of the forced breakup of AT&T in 1982, into"Baby Bells"
In regulatory jurisdictions that provide for it (comprising most or all developed countries with free market economies), consumer protection is a group of laws and organizations designed to ensure the rights of consumers as well as fair trade, competition and accurate information in the marketplace.
The laws are designed to prevent the businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors. They may also provide additional protection for those most vulnerable in society.
Consumer protection laws are a form of government regulation that aim to protect the rights of consumers. For example, a government may require businesses to disclose detailed information about products—particularly in areas where safety or public health is an issue, such as food.
Consumer protection is linked to the idea of consumer rights and to the formation of consumer organizations, which help consumers make better choices in the marketplace and get help with consumer complaints. Other organizations that promote consumer protection include government organizations and self-regulating business organizations such as consumer protection agencies and organizations, ombudsmen, the Federal Trade Commission in America and Better Business Bureaus in America and Canada, etc.
A consumer is defined as someone who acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing.
Consumer interests can also be protected by promoting competition in the markets which directly and indirectly serve consumers, consistent with economic efficiency, but this topic is treated in competition law. Consumer protection can also be asserted via non-government organizations and individuals as consumer activism.
Consumer Protection in the United States:
In the United States a variety of laws at both the federal and state levels regulate consumer affairs. Among them are the following Federal agencies:
Federal consumer protection laws are mainly enforced by the Federal Trade Commission, the Consumer Financial Protection Bureau, the Food and Drug Administration, and the U.S. Department of Justice.
At the state level, many states have adopted the Uniform Deceptive Trade Practices Act including, but not limited to, Delaware, Illinois, Maine, and Nebraska. The deceptive trade practices prohibited by the Uniform Act can be roughly subdivided into conduct involving either a) unfair or fraudulent business practice and b) untrue or misleading advertising.
The Uniform Act contains a private remedy with attorneys fees for prevailing parties where the losing party "willfully engaged in the trade practice knowing it to be deceptive". Uniform Act §3(b).
Missouri has a similar statute called the Merchandising Practices Act. This statute allows local prosecutors or the Attorney General to press charges against people who knowingly use deceptive business practices in a consumer transaction and authorizes consumers to hire a private attorney to bring an action seeking their actual damages, punitive damages, and attorney's fees.
Also, the majority of states have a Department of Consumer Affairs devoted to regulating certain industries and protecting consumers who use goods and services from those industries.
For example, in California, the California Department of Consumer Affairs regulates about 2.3 million professionals in over 230 different professions, through its forty regulatory entities. In addition, California encourages its consumers to act as private attorneys general through the liberal provisions of its Consumers Legal Remedies Act.
California has the strongest consumer protection laws of any US state, partly because of rigorous advocacy and lobbying by groups such as Utility Consumers' Action Network, Consumer Federation of California, and Privacy Rights Clearinghouse. For example, California provides for "cooling off" periods giving consumers the right to cancel contracts within a certain time period for several specified types of transactions, such as home secured transactions, and warranty and repair services contracts.
Other states have been the leaders in specific aspects of consumer protection. For example, Florida, Delaware, and Minnesota have legislated requirements that contracts be written at reasonable readability levels as a large proportion of contracts cannot be understood by most consumers who sign them.
Consumer Protection Laws in the United States:
Click on any of the following blue hyperlinks for more about Consumer Protection:
United States antitrust law:
United States antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. (The concept is called competition law in other English-speaking countries.)
The main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. These Acts, first, restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade.
Second, they restrict the mergers and acquisitions of organizations that could substantially lessen competition. Third, they prohibit the creation of a monopoly and the abuse of monopoly power.
The Federal Trade Commission, the U.S. Department of Justice, state governments and private parties who are sufficiently affected may all bring actions in the courts to enforce the antitrust laws. The scope of antitrust laws, and the degree to which they should interfere in an enterprise's freedom to conduct business, or to protect smaller businesses, communities and consumers, are strongly debated.
One view, mostly closely associated with the "Chicago School of economics" suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest.
Click on any of the following blue hyperlinks for more about United States Antitrust Laws:
United States Federal Trade Commission (FTC):
The Federal Trade Commission (FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anti-competitive business practices, such as coercive monopoly.
The Federal Trade Commission Act was one of President Woodrow Wilson's major acts against trusts. Trusts and trust-busting were significant political concerns during the Progressive Era.
Since its inception, the FTC has enforced the provisions of the Clayton Act, a key antitrust statute, as well as the provisions of the FTC Act, 15 U.S.C. § 41 et seq.
Over time, the FTC has been delegated with the enforcement of additional business regulation statutes and has promulgated a number of regulations (codified in Title 16 of the Code of Federal Regulations).
For more about the Federal Trade Commission, click here.
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Breakup of the Bell System.
The breakup of the Bell System was mandated on January 8, 1982, by an agreed consent decree providing that AT&T Corporation would, as had been initially proposed by AT&T, relinquish control of the Bell Operating Companies that had provided local telephone service in the United States and Canada up until that point.
This effectively took the monopoly that was the Bell System and split it into entirely separate companies that would continue to provide telephone service. AT&T would continue to be a provider of long distance service, while the now-independent Regional Bell Operating Companies (RBOCs) would provide local service, and would no longer be directly supplied with equipment from AT&T subsidiary Western Electric.
This divestiture was initiated by the filing in 1974 by the United States Department of Justice of an antitrust lawsuit against AT&T. AT&T was, at the time, the sole provider of telephone service throughout most of the United States.
Furthermore, most telephonic equipment in the United States was produced by its subsidiary, Western Electric. This vertical integration led AT&T to have almost total control over communication technology in the country, which led to the antitrust case, United States v. AT&T. The plaintiff in the court complaint asked the court to order AT&T to divest ownership of Western Electric.
Feeling that it was about to lose the suit, AT&T proposed an alternative — the breakup of the biggest corporation in American history. It proposed that it retain control of Western Electric, Yellow Pages, the Bell trademark, Bell Labs, and AT&T Long Distance.
It also proposed that it be freed from a 1956 antitrust consent decree, then administered by Judge Vincent Pasquale Biunno in the United States District Court for the District of New Jersey, that barred it from participating in the general sale of computers
In return, it proposed to give up ownership of the local operating companies. This last concession, it argued, would achieve the Government's goal of creating competition in supplying telephone equipment and supplies to the operative companies.
The settlement was finalized on January 8, 1982, with some changes ordered by the decree court: the regional holding companies got the Bell trademark, Yellow Pages, and about half of Bell Labs.
Effective January 1, 1984, the Bell System’s many member companies were variously merged into seven independent "Regional Holding Companies", also known as Regional Bell Operating Companies (RBOCs), or "Baby Bells". This divestiture reduced the book value of AT&T by approximately 70%
Click here for more about the Breakup of the Bell System.
The laws are designed to prevent the businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors. They may also provide additional protection for those most vulnerable in society.
Consumer protection laws are a form of government regulation that aim to protect the rights of consumers. For example, a government may require businesses to disclose detailed information about products—particularly in areas where safety or public health is an issue, such as food.
Consumer protection is linked to the idea of consumer rights and to the formation of consumer organizations, which help consumers make better choices in the marketplace and get help with consumer complaints. Other organizations that promote consumer protection include government organizations and self-regulating business organizations such as consumer protection agencies and organizations, ombudsmen, the Federal Trade Commission in America and Better Business Bureaus in America and Canada, etc.
A consumer is defined as someone who acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing.
Consumer interests can also be protected by promoting competition in the markets which directly and indirectly serve consumers, consistent with economic efficiency, but this topic is treated in competition law. Consumer protection can also be asserted via non-government organizations and individuals as consumer activism.
Consumer Protection in the United States:
In the United States a variety of laws at both the federal and state levels regulate consumer affairs. Among them are the following Federal agencies:
- Federal Food, Drug, and Cosmetic Act,
- Fair Debt Collection Practices Act,
- the Fair Credit Reporting Act,
- Truth in Lending Act,
- Fair Credit Billing Act,
- and the Gramm–Leach–Bliley Act.
Federal consumer protection laws are mainly enforced by the Federal Trade Commission, the Consumer Financial Protection Bureau, the Food and Drug Administration, and the U.S. Department of Justice.
At the state level, many states have adopted the Uniform Deceptive Trade Practices Act including, but not limited to, Delaware, Illinois, Maine, and Nebraska. The deceptive trade practices prohibited by the Uniform Act can be roughly subdivided into conduct involving either a) unfair or fraudulent business practice and b) untrue or misleading advertising.
The Uniform Act contains a private remedy with attorneys fees for prevailing parties where the losing party "willfully engaged in the trade practice knowing it to be deceptive". Uniform Act §3(b).
Missouri has a similar statute called the Merchandising Practices Act. This statute allows local prosecutors or the Attorney General to press charges against people who knowingly use deceptive business practices in a consumer transaction and authorizes consumers to hire a private attorney to bring an action seeking their actual damages, punitive damages, and attorney's fees.
Also, the majority of states have a Department of Consumer Affairs devoted to regulating certain industries and protecting consumers who use goods and services from those industries.
For example, in California, the California Department of Consumer Affairs regulates about 2.3 million professionals in over 230 different professions, through its forty regulatory entities. In addition, California encourages its consumers to act as private attorneys general through the liberal provisions of its Consumers Legal Remedies Act.
California has the strongest consumer protection laws of any US state, partly because of rigorous advocacy and lobbying by groups such as Utility Consumers' Action Network, Consumer Federation of California, and Privacy Rights Clearinghouse. For example, California provides for "cooling off" periods giving consumers the right to cancel contracts within a certain time period for several specified types of transactions, such as home secured transactions, and warranty and repair services contracts.
Other states have been the leaders in specific aspects of consumer protection. For example, Florida, Delaware, and Minnesota have legislated requirements that contracts be written at reasonable readability levels as a large proportion of contracts cannot be understood by most consumers who sign them.
Consumer Protection Laws in the United States:
- Consumer Product Safety Act – gives the Consumer Product Safety Commission the power to develop safety standards and pursue recalls for products
- Federal Trade Commission Act – created the Federal Trade Commission (FTC) to prevent unfair competition, deceptive acts, regulate trade, etc.
- United States National Do Not Call Registry – allows US consumers to limit telemarketing calls they receive.
- Pure Food and Drug Act – led to the creation of the U.S. Food and Drug Administration (FDA) to regulate foods, drugs, and more.
- Communications Act of 1934 – created the Federal Communications Commission (FCC) to regulate all radio and interstate cable, phone, and satellite communications.
- Fair Credit Reporting Act (FRCA) – regulates the collection, dissemination, and use of consumer credit information
- Fair Debt Collection Practices Act (FDCPA) – eliminates abusive consumer practices, ensure fairness, etc.
- Truth in Lending Act (TILA) – requires clear disclosure of key terms of the lending arrangement and all costs.
- Real Estate Settlement Procedures Act (RESPA) – prohibits kickbacks and requires lenders to provide a good faith estimate of costs
- Health Insurance Portability and Accountability Act (HIPAA) – provides consumer protection for health information
- Digital Millennium Copyright Act – prohibits production or sale of devices or services intended to circumvent copyright measures.
- Digital Media Consumers' Rights Act (proposed) – would repeal the Digital Millennium Copyright Act
Click on any of the following blue hyperlinks for more about Consumer Protection:
- Constitutional laws
- See Also:
- Consumer issues:
- Airline complaints
- Antitrust
- Better Business Bureau
- Class action
- Competition policy
- Competition regulator
- Consumer complaint
- Consumer organization
- Cooling-off period
- Credit and debt
- Extended warranty
- Fairtrade labelling
- Federal Trade Commission
- Food safety
- List of food labeling regulations
- Mandatory labeling
- Ombudsman
- Online Complaint Management System
- Planned obsolescence
- Product recall
- Telephone Consumer Protection Act
- Transparency (market)
- Unfair competition
- People:
- Consumers International
- Consumer Protection Act 1986
- OECD Consumer Policy Toolkit Report
- About Econsumer.gov, a portal for consumers to report complaints concerning online and related transactions with foreign companies
- International Consumer Protection and Enforcement Network (ICPEN)
- Consumer issues:
United States antitrust law:
United States antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. (The concept is called competition law in other English-speaking countries.)
The main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. These Acts, first, restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade.
Second, they restrict the mergers and acquisitions of organizations that could substantially lessen competition. Third, they prohibit the creation of a monopoly and the abuse of monopoly power.
The Federal Trade Commission, the U.S. Department of Justice, state governments and private parties who are sufficiently affected may all bring actions in the courts to enforce the antitrust laws. The scope of antitrust laws, and the degree to which they should interfere in an enterprise's freedom to conduct business, or to protect smaller businesses, communities and consumers, are strongly debated.
One view, mostly closely associated with the "Chicago School of economics" suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest.
Click on any of the following blue hyperlinks for more about United States Antitrust Laws:
- History
- Cartels and collusion
- Mergers
- Monopoly and power
- Scope of antitrust law
- Remedies and enforcement
- Theory
- See also:
- Consumer issues:
- Barton–Rush Bill, a proposed franchise competition bill
- Commissioner Andrew L. Harris
- Contestable market
- DRAM price fixing
- Duopoly
- Economic regulator
- Government monopoly
- Limit price
- Market anomaly
- Monopsony
- Ordoliberalism
- Consumers International
- Consumer issues:
United States Federal Trade Commission (FTC):
The Federal Trade Commission (FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anti-competitive business practices, such as coercive monopoly.
The Federal Trade Commission Act was one of President Woodrow Wilson's major acts against trusts. Trusts and trust-busting were significant political concerns during the Progressive Era.
Since its inception, the FTC has enforced the provisions of the Clayton Act, a key antitrust statute, as well as the provisions of the FTC Act, 15 U.S.C. § 41 et seq.
Over time, the FTC has been delegated with the enforcement of additional business regulation statutes and has promulgated a number of regulations (codified in Title 16 of the Code of Federal Regulations).
For more about the Federal Trade Commission, click here.
___________________________________________________________________________
Breakup of the Bell System.
The breakup of the Bell System was mandated on January 8, 1982, by an agreed consent decree providing that AT&T Corporation would, as had been initially proposed by AT&T, relinquish control of the Bell Operating Companies that had provided local telephone service in the United States and Canada up until that point.
This effectively took the monopoly that was the Bell System and split it into entirely separate companies that would continue to provide telephone service. AT&T would continue to be a provider of long distance service, while the now-independent Regional Bell Operating Companies (RBOCs) would provide local service, and would no longer be directly supplied with equipment from AT&T subsidiary Western Electric.
This divestiture was initiated by the filing in 1974 by the United States Department of Justice of an antitrust lawsuit against AT&T. AT&T was, at the time, the sole provider of telephone service throughout most of the United States.
Furthermore, most telephonic equipment in the United States was produced by its subsidiary, Western Electric. This vertical integration led AT&T to have almost total control over communication technology in the country, which led to the antitrust case, United States v. AT&T. The plaintiff in the court complaint asked the court to order AT&T to divest ownership of Western Electric.
Feeling that it was about to lose the suit, AT&T proposed an alternative — the breakup of the biggest corporation in American history. It proposed that it retain control of Western Electric, Yellow Pages, the Bell trademark, Bell Labs, and AT&T Long Distance.
It also proposed that it be freed from a 1956 antitrust consent decree, then administered by Judge Vincent Pasquale Biunno in the United States District Court for the District of New Jersey, that barred it from participating in the general sale of computers
In return, it proposed to give up ownership of the local operating companies. This last concession, it argued, would achieve the Government's goal of creating competition in supplying telephone equipment and supplies to the operative companies.
The settlement was finalized on January 8, 1982, with some changes ordered by the decree court: the regional holding companies got the Bell trademark, Yellow Pages, and about half of Bell Labs.
Effective January 1, 1984, the Bell System’s many member companies were variously merged into seven independent "Regional Holding Companies", also known as Regional Bell Operating Companies (RBOCs), or "Baby Bells". This divestiture reduced the book value of AT&T by approximately 70%
Click here for more about the Breakup of the Bell System.
Anti-competitive Business Practices
YouTube Video about Monopolies and Anti-Competitive Markets
Pictured below: see description below image.
About the above Picture: Read the following article:
"Anti Competitive Conduct" by Bobby Maharaj, Fiji Commerce Commission May, 19 2018
"This week’s article focuses on anti competitive conduct. It highlights the importance of understandings, agreements on certain business practices that limits competition in market.
What are Anti-Competitive Conducts?
Anti-Competitive Conducts are certain business practices that limit or prevent competition in market and are deemed illegal under Competition Law. It refers to a wide range of business practices in which a firm or group of firms may engage in an understanding, agreements or covenants in order to restrict inter-firm competition to maintain or increase their relative market position and profits without necessarily providing goods and services at a lower cost or of higher quality.
These understandings, agreements or covenants do not necessarily have to be in writing. Nothing need, even be expressed—a ‘nod and wink’ is sufficient.
Such conducts includes but is not limited to:
Anti Competitive Conduct under CCD 2010:
Anti Competitive Conduct is covered in Section 67 of the Commerce Commission Decree 2010 (“CCD2010”) and is per se a Restrictive Trade Practice. Section 67 of the CCD 2010 restricts a person or a trader from engaging in an anti-competitive conduct.
A person engages in an anti-competitive conduct if the person has substantial degree of power in a market and takes advantage of that power with the effect or likely effect of substantially lessening competition in that or another market.
Common Forms of Anti-Competitive Conduct:
Anti-competitive practices are sometimes known as restrictive practices. They are methods used by firms in a market to restrict competition.
This prohibited conduct includes, but not limited to Refusal to Supply.
Incumbent firms often control access to facilities that are essential inputs in the supply of services at the retail level. Competing retailers depend on the incumbent for access to the essential facility. Incumbent firms may attempt to prevent competitors from entering the market by refusing to provide access to an essential facility, withhold information or imposition of excessive pricing regime.
To encourage competition, many jurisdictions require firms with control over essential facilities to provide access to competitors. Rules may also determine the way in which access prices will be agreed, and procedures for resolving any disputes.
Vertical Price Squeeze
A vertically integrated firm is one that controls the supply chain at various functional levels. For example, a manufacturer of timber also operates a hardware and timber yard and supplies the timber to its competitors as well.
A firm which is vertically integrated and controls an essential input to the retail service implements a price squeeze if:
It is a pricing strategy used by an established firm to eliminate competition from equally efficient firms, and secure a dominant position in a previously competitive market. A firm practicing predatory pricing lowers its price below cost and maintains it there until equally efficient competitors are forced to incur unsustainable losses and exit the market. The firm then raises its price to a monopoly level in order to recoup its lost profits.
Predatory pricing is a risky strategy. The firm involved incurs high up-front losses, with no guarantee of future gains from monopolization. The strategy will only be profitable if, once all competitors have been forced out of the market, the incumbent is able to raise its prices to a monopoly level and keep them there.
If the firm is subject to either direct price regulation or some other form of control, predatory pricing is unlikely to succeed. Predatory pricing requires high barriers to entry. If firms are able to enter the market easily, then each time the incumbent increases its price this will attract new entrants into the market, forcing the incumbent to drop its price again.
Tying and Bundling:
Tying of services occur where a service provider makes the purchase of one product or service over which it has market power (the “tying good”) conditional on the purchase of a second, competitively supplied, product or service (the “tied good”). By tying services, a service provider can try to use market power in one market to give itself an advantage in another competitive market. Customers who opt to buy the tied good from a competitor cannot find a feasible substitute for the service provider’s tying good.
Tying is primarily a strategy to maximize profits. It can be profitable:
Service Bundling occurs where a service provider offers two or more services separately, but gives a discount to customers who purchase the services as a combined bundle. Bundling is common especially in telecommunications and other multiproduct industries, reflecting both cost savings from producing services jointly, and consumer preferences for service bundles.
Cartels
A cartel exists when businesses agree to act together instead of competing with each other.
This agreement is designed to drive up the profits of cartel members while maintaining the illusion of competition.
There are certain forms of anti-competitive conduct that are known as cartel conduct. They include:
Cartels can be local, national or international. Established cartel members know that they are doing the wrong thing and will go to great lengths to avoid getting caught.
Minimum resale prices or Resale Price Maintenance
Suppliers must not put pressure on businesses to charge at a recommended retail price or any other set price and threaten to stop supplying re-sellers. Suppliers also cannot pressure re-sellers to stop advertising, displaying or selling goods supplied by the supplier below a specified price.
For example, a Supplier of Good A may decide to mark the Recommended Retail Price as $2.50 a unit. What the Supplier cannot do is to refuse to supply if a trader decides to sell at a price lower than $2.50.
Impact of Anti-Competitive Conduct:
Anti-Competitive Conduct by business affects the economy at large in the following ways:
___________________________________________________________________________
Anti-business competitive practices are business practices that prevent or reduce competition in a market (see restraint of trade). The debate about the morality of certain business practices termed as being anti-competitive has continued both in the study of the history of economics and in the popular culture.
Types of Anti-competitive Practices:
These can include:
Effects of Anti-competitive Practices:
It is usually difficult to practice anti-competitive practices unless the parties involved have significant market power or government backing. This debate about the morality of certain business practices termed as being anti-competitive has continued both in the study of the history of economics and in the popular culture, as in the performances in Europe in 2012 by Bruce Springsteen, who sang about bankers as "greedy thieves" and "robber barons".
During the Occupy Wall Street protests of 2011, the term was used by populist Vermont Senator Bernie Sanders in his attacks on Wall Street. He said "We believe in this country; we love this country; and we will be damned if we're going to see a handful of robber barons control the future of this country."
The business practices and political power of the billionaires of Silicon Valley has also led to their identification as robber barons.
Monopolies and oligopolies are often accused of, and sometimes found guilty of, anti-competitive practices. For this reason, company mergers are often examined closely by government regulators to avoid reducing competition in an industry.
Although anti-competitive practices often enrich those who practice them, they are generally believed to have a negative effect on the economy as a whole, and to disadvantage competing firms and consumers who are not able to avoid their effects, generating a significant social cost.
For these reasons, most countries have competition laws to prevent anti-competitive practices, and government regulators to aid the enforcement of these laws.
The argument that anti-competitive practices have a negative effect on the economy arises from the belief that a freely functioning efficient market economy, composed of many market participants each of which has limited market power, will not permit monopoly profits to be earned...and consequently prices to consumers will be lower, and if anything there will be a wider range of products supplied.
Opponents of robber barons believe that the realities of the marketplace are sometimes more complex than this or similar theories of competition would suggest. For example, oligopolistic firms may achieve economies of scale that would elude smaller firms.
Again, very large firms, whether quasi-monopolies or oligopolies, may achieve levels of sophistication e.g. in business process and/or planning (that benefit end consumers) and that smaller firms would not easily attain.
There are undoubtedly industries (e.g. airlines and pharmaceuticals) in which the levels of investment are so high that only extremely large firms that may be quasi-monopolies in some areas of their businesses can survive.
Many governments regard these market niches as natural monopolies, and believe that the inability to allow full competition is balanced by government regulation. However, the companies in these niches tend to believe that they should avoid regulation, as they are entitled to their monopoly position by fiat.
In some cases, anti-competitive behavior can be difficult to distinguish from competition. For instance, a distinction must be made between product bundling, which is a legal market strategy, and product tying, which violates anti-trust law.
Some advocates of laissez-faire capitalism (such as Monetarists, some Neoclassical economists, and the heterodox economists of the Austrian school) reject the term, seeing all "anti-competitive behavior" as forms of competition that benefit consumers.
See also:
"Anti Competitive Conduct" by Bobby Maharaj, Fiji Commerce Commission May, 19 2018
"This week’s article focuses on anti competitive conduct. It highlights the importance of understandings, agreements on certain business practices that limits competition in market.
What are Anti-Competitive Conducts?
Anti-Competitive Conducts are certain business practices that limit or prevent competition in market and are deemed illegal under Competition Law. It refers to a wide range of business practices in which a firm or group of firms may engage in an understanding, agreements or covenants in order to restrict inter-firm competition to maintain or increase their relative market position and profits without necessarily providing goods and services at a lower cost or of higher quality.
These understandings, agreements or covenants do not necessarily have to be in writing. Nothing need, even be expressed—a ‘nod and wink’ is sufficient.
Such conducts includes but is not limited to:
- directly or indirectly fix purchase or selling price or any other trading conditions
- limit or control production, markets, investment or development
- provide for the artificial dividing up of markets or sources of supply
- affect tenders to be submitted in response to bids
- apply different conditions to equivalent transactions with other parties engaged in the same trade (competitors) hence, putting them at a competitive disadvantage
- make the conclusion of contracts subject to parties other than the offering party accepting supplementary obligations which have no connection with the subject of such contracts.
Anti Competitive Conduct under CCD 2010:
Anti Competitive Conduct is covered in Section 67 of the Commerce Commission Decree 2010 (“CCD2010”) and is per se a Restrictive Trade Practice. Section 67 of the CCD 2010 restricts a person or a trader from engaging in an anti-competitive conduct.
A person engages in an anti-competitive conduct if the person has substantial degree of power in a market and takes advantage of that power with the effect or likely effect of substantially lessening competition in that or another market.
Common Forms of Anti-Competitive Conduct:
Anti-competitive practices are sometimes known as restrictive practices. They are methods used by firms in a market to restrict competition.
This prohibited conduct includes, but not limited to Refusal to Supply.
Incumbent firms often control access to facilities that are essential inputs in the supply of services at the retail level. Competing retailers depend on the incumbent for access to the essential facility. Incumbent firms may attempt to prevent competitors from entering the market by refusing to provide access to an essential facility, withhold information or imposition of excessive pricing regime.
To encourage competition, many jurisdictions require firms with control over essential facilities to provide access to competitors. Rules may also determine the way in which access prices will be agreed, and procedures for resolving any disputes.
Vertical Price Squeeze
A vertically integrated firm is one that controls the supply chain at various functional levels. For example, a manufacturer of timber also operates a hardware and timber yard and supplies the timber to its competitors as well.
A firm which is vertically integrated and controls an essential input to the retail service implements a price squeeze if:
- The price the firm demands makes it impossible for an equally-efficient retail-stage competitor to operate profitably or even survive, given the level of retail prices;
- The firm does not charge its own downstream operation this high price; or
- Engages in a discriminatory price practices between its own downstream operation and the competitors to the extent of lessening competition.
- Exclusionary or Predatory Pricing
It is a pricing strategy used by an established firm to eliminate competition from equally efficient firms, and secure a dominant position in a previously competitive market. A firm practicing predatory pricing lowers its price below cost and maintains it there until equally efficient competitors are forced to incur unsustainable losses and exit the market. The firm then raises its price to a monopoly level in order to recoup its lost profits.
Predatory pricing is a risky strategy. The firm involved incurs high up-front losses, with no guarantee of future gains from monopolization. The strategy will only be profitable if, once all competitors have been forced out of the market, the incumbent is able to raise its prices to a monopoly level and keep them there.
If the firm is subject to either direct price regulation or some other form of control, predatory pricing is unlikely to succeed. Predatory pricing requires high barriers to entry. If firms are able to enter the market easily, then each time the incumbent increases its price this will attract new entrants into the market, forcing the incumbent to drop its price again.
Tying and Bundling:
Tying of services occur where a service provider makes the purchase of one product or service over which it has market power (the “tying good”) conditional on the purchase of a second, competitively supplied, product or service (the “tied good”). By tying services, a service provider can try to use market power in one market to give itself an advantage in another competitive market. Customers who opt to buy the tied good from a competitor cannot find a feasible substitute for the service provider’s tying good.
Tying is primarily a strategy to maximize profits. It can be profitable:
- where the demands for the two products are complementary, such that end users consume both products together; or
- If the tying product is regulated and the regulated price is below the service provider’s profit maximizing level. In this case, a successful tying strategy would enable the service provider to increase its overall profitability by increasing the price of the tied good.
Service Bundling occurs where a service provider offers two or more services separately, but gives a discount to customers who purchase the services as a combined bundle. Bundling is common especially in telecommunications and other multiproduct industries, reflecting both cost savings from producing services jointly, and consumer preferences for service bundles.
Cartels
A cartel exists when businesses agree to act together instead of competing with each other.
This agreement is designed to drive up the profits of cartel members while maintaining the illusion of competition.
There are certain forms of anti-competitive conduct that are known as cartel conduct. They include:
- price fixing, when competitors agree on a pricing structure rather than competing against each other
- sharing markets, when competitors agree to divide a market so participants are sheltered from competition
- rigging bids, when suppliers communicate before lodging their bids and agree among themselves who will win and at what price
- Controlling the output or limiting the amount of goods and services available to buyers.
Cartels can be local, national or international. Established cartel members know that they are doing the wrong thing and will go to great lengths to avoid getting caught.
Minimum resale prices or Resale Price Maintenance
Suppliers must not put pressure on businesses to charge at a recommended retail price or any other set price and threaten to stop supplying re-sellers. Suppliers also cannot pressure re-sellers to stop advertising, displaying or selling goods supplied by the supplier below a specified price.
For example, a Supplier of Good A may decide to mark the Recommended Retail Price as $2.50 a unit. What the Supplier cannot do is to refuse to supply if a trader decides to sell at a price lower than $2.50.
Impact of Anti-Competitive Conduct:
Anti-Competitive Conduct by business affects the economy at large in the following ways:
- creates inefficiency and declined output due to artificial forces of the market
- decreasing investment by building barriers to entry and competition
- increasing unemployment by restricting competing firms from expanding
- weaken the incentive for cost control
- restrict consumer choice
- unduly limit product variety profit.
___________________________________________________________________________
Anti-business competitive practices are business practices that prevent or reduce competition in a market (see restraint of trade). The debate about the morality of certain business practices termed as being anti-competitive has continued both in the study of the history of economics and in the popular culture.
Types of Anti-competitive Practices:
These can include:
- Dumping, where a company sells a product in a competitive market at a loss. Though the company loses money for each sale, the company hopes to force other competitors out of the market, after which the company would be free to raise prices for a greater profit.
- Exclusive dealing, where a retailer or wholesaler is obliged by contract to only purchase from the contracted supplier.
- Price fixing, where companies collude to set prices, effectively dismantling the free market.
- Refusal to deal, e.g., two companies agree not to use a certain vendor
- Dividing territories, an agreement by two companies to stay out of each other's way and reduce competition in the agreed-upon territories.
- Limit pricing, where the price is set by a monopolist at a level intended to discourage entry into a market.
- Tying, where products that aren't naturally related must be purchased together.
- Resale price maintenance, where resellers are not allowed to set prices independently.
- Religious / minority group doctrine, where businesses must apply tribute to a significant (normally religious) part of the community in order to engage in trade with that community. (e.g., A business that does not comply will be 50% worse off than the competitor if they do not comply with the tribute demanded by just 20% of the community)
- Absorption of a competitor or competing technology, where the powerful firm effectively co-opts or swallows its competitor rather than see it either compete directly or be absorbed by another firm.
- Subsidies from government which allow a firm to function without being profitable, giving them an advantage over competition or effectively barring competition
- Regulations which place costly restrictions on firms that less wealthy firms cannot afford to implement
- Protectionism, tariffs and quotas which give firms insulation from competitive forces
- Patent misuse and copyright misuse, such as fraudulently obtaining a patent, copyright, or other form of intellectual property; or using such legal devices to gain advantage in an unrelated market.
- Digital rights management which prevents owners from selling used media, as would normally be allowed by the first sale doctrine.
Effects of Anti-competitive Practices:
It is usually difficult to practice anti-competitive practices unless the parties involved have significant market power or government backing. This debate about the morality of certain business practices termed as being anti-competitive has continued both in the study of the history of economics and in the popular culture, as in the performances in Europe in 2012 by Bruce Springsteen, who sang about bankers as "greedy thieves" and "robber barons".
During the Occupy Wall Street protests of 2011, the term was used by populist Vermont Senator Bernie Sanders in his attacks on Wall Street. He said "We believe in this country; we love this country; and we will be damned if we're going to see a handful of robber barons control the future of this country."
The business practices and political power of the billionaires of Silicon Valley has also led to their identification as robber barons.
Monopolies and oligopolies are often accused of, and sometimes found guilty of, anti-competitive practices. For this reason, company mergers are often examined closely by government regulators to avoid reducing competition in an industry.
Although anti-competitive practices often enrich those who practice them, they are generally believed to have a negative effect on the economy as a whole, and to disadvantage competing firms and consumers who are not able to avoid their effects, generating a significant social cost.
For these reasons, most countries have competition laws to prevent anti-competitive practices, and government regulators to aid the enforcement of these laws.
The argument that anti-competitive practices have a negative effect on the economy arises from the belief that a freely functioning efficient market economy, composed of many market participants each of which has limited market power, will not permit monopoly profits to be earned...and consequently prices to consumers will be lower, and if anything there will be a wider range of products supplied.
Opponents of robber barons believe that the realities of the marketplace are sometimes more complex than this or similar theories of competition would suggest. For example, oligopolistic firms may achieve economies of scale that would elude smaller firms.
Again, very large firms, whether quasi-monopolies or oligopolies, may achieve levels of sophistication e.g. in business process and/or planning (that benefit end consumers) and that smaller firms would not easily attain.
There are undoubtedly industries (e.g. airlines and pharmaceuticals) in which the levels of investment are so high that only extremely large firms that may be quasi-monopolies in some areas of their businesses can survive.
Many governments regard these market niches as natural monopolies, and believe that the inability to allow full competition is balanced by government regulation. However, the companies in these niches tend to believe that they should avoid regulation, as they are entitled to their monopoly position by fiat.
In some cases, anti-competitive behavior can be difficult to distinguish from competition. For instance, a distinction must be made between product bundling, which is a legal market strategy, and product tying, which violates anti-trust law.
Some advocates of laissez-faire capitalism (such as Monetarists, some Neoclassical economists, and the heterodox economists of the Austrian school) reject the term, seeing all "anti-competitive behavior" as forms of competition that benefit consumers.
See also:
- Amazon.com controversies § Anti-competitive practices
- Anti-competitive practices of Apple Inc.
- Antitrust law
- Loss leader
- Natural monopoly
- Parker immunity doctrine
- Predatory pricing
- Price discrimination
Better Business Bureau, including its Website
YouTube Video: What is the mission and vision of the Better Business Bureau?
YouTube Video: Understanding the Credit Rating System of the Better Business Bureau
The Better Business Bureau (BBB), founded in 1912, is a private, nonprofit organization whose self-described mission is to focus on advancing marketplace trust, consisting of 106 independently incorporated local BBB organizations in the United States and Canada, coordinated under the Council of Better Business Bureaus (CBBB) in Arlington, Virginia.
Nearly 400,000 local businesses in North America are accredited by the BBB. The BBB prospects successfully vetted businesses to become dues-paying 'accredited businesses' that pledge and continue to adhere to the BBB Code of Business Practices. In return, the BBB allows accredited businesses in good standing to use its trademarked logo in marketing materials.
The Better Business Bureau is not affiliated with any governmental agency. Businesses that affiliate with the BBB and adhere to its standards do so through industry self-regulation. To avoid bias, the BBB's policy is to refrain from recommending or endorsing any specific business, product or service.
The organization has been the subject of controversy, particularly related to its alleged practice of giving higher ratings to businesses that pay a membership fee. The BBB disputes the claim that payment from businesses is required for them to receive an "A" rating.
Business consultant and previous national Manager of Customer Service for Checker Auto Parts Eva Love observed, "Complaining about a business to the Better Business Bureau is like complaining to the mouse's mother after a mouse steals your cheese. It will help if the wind is blowing in your direction.
Structure and Funding:
The 112 BBBs are independently governed by their own boards of directors and must meet international BBB standards, which are monitored by the CBBB. The CBBB is governed by leaders of local BBBs, as well as by senior executives from major corporations, and community leaders such as academics and legal experts.
Each BBB is run separately and is chiefly funded by its accredited businesses, who often serve on its board. A study by a business school dean at Marquette University found that ninety percent of BBB board members are from business.
Businesses that move from one BBB jurisdiction to another may need to apply for BBB accreditation in the new BBB location unless they have a system-wide accreditation. CBBB receives membership dues from BBBs, which amounted to US $4,884,226 in 2009.
Dispute resolution procedures, including the National Advertising Division
The organization's dispute resolution procedures are established by the Council of the Better Business Bureaus, and implemented by local BBBs. Usually, disputes can be resolved through mediation; when appropriate, low- or no‑cost arbitration may also be offered and provided through the BBB. The BBB acts as a neutral party when providing dispute resolution services.
Complaints about the practice of professions like medicine and law are usually not handled by the BBB and are referred to associations regulating those professions. The BBB does not handle complaints that have gone to court or are in the process of going to court as the complaint is already being handled by an alternative entity.
If a BBB receives a consumer dispute, the BBB contacts the business in question and offers to mediate the dispute. A business does not need to be a member of the BBB to use its mediation services. BBB accreditation, or membership, is completely optional for a business to accept and participate in through the payment of dues. Past complaints allege that the BBB compiles scores based upon their ability to collect their money from businesses, and not entirely upon business performance.
The National Advertising Division of the Council of Better Business Bureaus in the United States and Canada reviews factual claims made in national advertisements. They offer alternative dispute resolution services for advertisers, typically reaching a conclusion within 90 days of a filing. Compliance with findings is voluntary.
Rating System and Accreditation:
Until 2008, the BBB rated companies "satisfactory" or "unsatisfactory." On January 1, 2009, the BBB moved to a new system based on a school-style A+ to F rating system. The 16 factors have been posted on each business review since the program's inception and the details on the points awarded as well.
Initially there was a 17th factor worth 4 points for businesses that were Accredited and paid a fee to BBB. That process was changed in November 2010 in response to criticism in the media and from the Connecticut attorney general who accused BBB of using "pay to play" tactics.
If a business chooses not to provide basic information, such as size and start date, the BBB may assign a not-rated (NR) rating. A low rating due solely to a company not providing information would read: "BBB does not have sufficient background information on this business."
A business is eligible for BBB accreditation if it meets, in the opinion of the BBB, the "BBB Standards for Trust". There are eight BBB Standards for Trust that the BBB expects its accredited businesses to adhere to build trust ("maintain a positive track record in the marketplace"), advertise honestly, tell the truth, be transparent, honor promises, be responsive (address marketplace disputes), safeguard privacy (protect consumer data) and embody integrity.
The Attorney General of Connecticut demanded that the BBB stop using its weighted letter grade system, calling it "potentially harmful and misleading" to consumers. Responding to the Attorney General of Connecticut and others, the BBB has since modified its letter grade system.
Click on any of the following for more about the Better Business Bureau:
Nearly 400,000 local businesses in North America are accredited by the BBB. The BBB prospects successfully vetted businesses to become dues-paying 'accredited businesses' that pledge and continue to adhere to the BBB Code of Business Practices. In return, the BBB allows accredited businesses in good standing to use its trademarked logo in marketing materials.
The Better Business Bureau is not affiliated with any governmental agency. Businesses that affiliate with the BBB and adhere to its standards do so through industry self-regulation. To avoid bias, the BBB's policy is to refrain from recommending or endorsing any specific business, product or service.
The organization has been the subject of controversy, particularly related to its alleged practice of giving higher ratings to businesses that pay a membership fee. The BBB disputes the claim that payment from businesses is required for them to receive an "A" rating.
Business consultant and previous national Manager of Customer Service for Checker Auto Parts Eva Love observed, "Complaining about a business to the Better Business Bureau is like complaining to the mouse's mother after a mouse steals your cheese. It will help if the wind is blowing in your direction.
Structure and Funding:
The 112 BBBs are independently governed by their own boards of directors and must meet international BBB standards, which are monitored by the CBBB. The CBBB is governed by leaders of local BBBs, as well as by senior executives from major corporations, and community leaders such as academics and legal experts.
Each BBB is run separately and is chiefly funded by its accredited businesses, who often serve on its board. A study by a business school dean at Marquette University found that ninety percent of BBB board members are from business.
Businesses that move from one BBB jurisdiction to another may need to apply for BBB accreditation in the new BBB location unless they have a system-wide accreditation. CBBB receives membership dues from BBBs, which amounted to US $4,884,226 in 2009.
Dispute resolution procedures, including the National Advertising Division
The organization's dispute resolution procedures are established by the Council of the Better Business Bureaus, and implemented by local BBBs. Usually, disputes can be resolved through mediation; when appropriate, low- or no‑cost arbitration may also be offered and provided through the BBB. The BBB acts as a neutral party when providing dispute resolution services.
Complaints about the practice of professions like medicine and law are usually not handled by the BBB and are referred to associations regulating those professions. The BBB does not handle complaints that have gone to court or are in the process of going to court as the complaint is already being handled by an alternative entity.
If a BBB receives a consumer dispute, the BBB contacts the business in question and offers to mediate the dispute. A business does not need to be a member of the BBB to use its mediation services. BBB accreditation, or membership, is completely optional for a business to accept and participate in through the payment of dues. Past complaints allege that the BBB compiles scores based upon their ability to collect their money from businesses, and not entirely upon business performance.
The National Advertising Division of the Council of Better Business Bureaus in the United States and Canada reviews factual claims made in national advertisements. They offer alternative dispute resolution services for advertisers, typically reaching a conclusion within 90 days of a filing. Compliance with findings is voluntary.
Rating System and Accreditation:
Until 2008, the BBB rated companies "satisfactory" or "unsatisfactory." On January 1, 2009, the BBB moved to a new system based on a school-style A+ to F rating system. The 16 factors have been posted on each business review since the program's inception and the details on the points awarded as well.
Initially there was a 17th factor worth 4 points for businesses that were Accredited and paid a fee to BBB. That process was changed in November 2010 in response to criticism in the media and from the Connecticut attorney general who accused BBB of using "pay to play" tactics.
If a business chooses not to provide basic information, such as size and start date, the BBB may assign a not-rated (NR) rating. A low rating due solely to a company not providing information would read: "BBB does not have sufficient background information on this business."
A business is eligible for BBB accreditation if it meets, in the opinion of the BBB, the "BBB Standards for Trust". There are eight BBB Standards for Trust that the BBB expects its accredited businesses to adhere to build trust ("maintain a positive track record in the marketplace"), advertise honestly, tell the truth, be transparent, honor promises, be responsive (address marketplace disputes), safeguard privacy (protect consumer data) and embody integrity.
The Attorney General of Connecticut demanded that the BBB stop using its weighted letter grade system, calling it "potentially harmful and misleading" to consumers. Responding to the Attorney General of Connecticut and others, the BBB has since modified its letter grade system.
Click on any of the following for more about the Better Business Bureau:
- History
- Criticism including Criticism on case resolutions
- Canada
- Los Angeles
- See also:
Consumers Union and its magazine Consumer Reports
YouTube Video: Advice from Advocates with Consumers Union's Safe Patient Project
YouTube Video: Consumers Union on the Consumer Financial Protection Bureau
Pictured below: Four Covers of Consumer Reports magazine
Consumers Union (CU) is a United States-based non-profit organization focusing on product testing, investigative journalism, and consumer advocacy.Consumers Union publishes a magazine and a website, both called Consumer Reports (see below).
Marta L. Tellado is the current CEO of Consumer Reports. She joined the organization in 2014, with the goal of expanding its engagement and advocacy efforts.
Founded in 1936, CU was created to serve as a source of information that consumers could use to help assess the safety and performance of products. Since that time, CU has continued its testing and analysis of products and services, and attempted to advocate for the consumer in legislative and rule-making areas.
Among the reforms in which CU played a role were the advent of seat belt laws, the exposure of the dangers of cigarettes, and more recently, the enhancement of consumer finance protection and the increase of consumer access to quality health care.
The organization has also expanded its reach to a suite of digital platforms.
The organization’s headquarters, including its 50 testing labs, are located in Yonkers, New York, while its automotive testing track is in East Haddam, Connecticut. CU is funded by subscriptions to its magazine and website, as well as through independent grants and donations.
Advocacy and Campaigns:
Consumers Union has hundreds of thousands of online advocates who take action and write letters to policymakers about the issues its advocates take on. This group continues to grow as Consumer Reports expands its reach, with 6 million paid members who have access to online tools like a car recall tracker and personalized content.
An additional base of online members join for free and received guidance on a range of products (i.e. gas grills, washing machines) at no charge. CU has also launched several advocacy websites, including HearUsNow.org, which helps consumers with telecommunications policy matters.
In March 2005, CU campaign PrescriptionforChange.org released "Drugs I Need", an animated short with a song from the Austin Lounge Lizards, that was featured by The New York Times, JibJab, BoingBoing, and hundreds of blogs.
On Earth Day 2005, CU launched GreenerChoices.org, a web-based initiative meant to "inform, engage, and empower consumers about environmentally friendly products and practices."
Consumers Union, the advocacy and policy arm of Consumer Reports Magazine, is a sponsor of the Safe Patient Project, with the goal to aid consumers in finding the best quality of health care by promoting the public disclosure of hospital-acquired infection rates and medical errors.
The US Centers for Disease Control states that about 2 million patients annually (about 1 in 20) will acquire an infection while being treated in a hospital for an unrelated health care problem, resulting in 99,000 deaths and as much as $45 billion in excess hospital costs.
The campaign has worked in every state calling for legislation requiring hospitals to disclose infection rates to the public. A list of state infection reports can be found here. The Safe Patient Project also works on medical devices, prescription drugs, and physician accountability.
GreenerChoices.org offers an "accessible, reliable, and practical source of information on buying 'greener' products that have minimal environmental impact and meet personal needs."
The site contains many articles about different products, rating them on how "green" they are. It also focuses on electronics and appliance recycling and reuse, as well as conservation and global warming prevention.
Funding for Consumers Union has recently been provided by USPIRG Education Fund, the Kentucky Equal Justice Center and the California Pan-Ethnic Health Network among other advocacy organizations.
In recent years, the organization has been vocal on key issues, including:
Click on any of the following blue hyperlinks for more about Consumers Union:
Consumer Reports is an American magazine published since 1936 by Consumers Union (above), a nonprofit organization dedicated to unbiased product testing, consumer-oriented research, public education, and advocacy. Consumer Reports publishes reviews and comparisons of consumer products and services based on reporting and results from its in-house testing laboratory and survey research center.
The magazine accepts no advertising, pays for all the products it tests, and as a nonprofit organization has no shareholders. It also publishes general and targeted product/service buying guides.
Editorial Independence:
Consumer Reports is well known for its policies on editorial independence, which it says are to "maintain our independence and impartiality... [so that] CU has no agenda other than the interests of consumers". CR has unusually strict requirements and sometimes has taken extraordinary steps; for example it declined to renew a car dealership's bulk subscription because of "the appearance of an impropriety".
Consumer Reports does not allow outside advertising in the magazine, but its website has retailers' advertisements. Consumer Reports states that PriceGrabber places the ads and pays a percentage of referral fees to CR, who has no direct relationship with the retailers.
Consumer Reports publishes reviews of its business partner and recommends it in at least one case. CR had a similar relationship with BizRate at one time and has had relationships with other companies including:
CR also accepts grants from other organizations, and at least one high-ranking Consumer Reports employee has gone on to work for a company he evaluated.
CR also forbids the use of its reviews for selling products; for example, it will not allow a manufacturer to advertise a positive review. CR has gone to court to enforce that rule.
Consumer Reports says its staff purchases all tested products at retail prices, anonymously in "most cases", and that they accept no free samples in order to prevent bias from bribery or from being given better than average samples.
However, in order to review some products before they are publicly available CR does accept "press samples" from manufacturers but says it pays for the samples and does not include them in ratings.
For most of CR's history, it minimized contact with government and industry experts "to avoid compromising the independence of its judgment".
In 2007, in response to errors in infant car seat testing, it began accepting advice from a wide range of experts on designing tests, but not on final assessments. Also, at times CR allows manufacturers to review and respond to criticism before publication.
Some objective and comparative tests published by Consumer Reports are carried out under the umbrella of the international consumer organization International Consumer Research & Testing. Consumer Reports also uses outside labs for testing, including for 11 percent of tests in 2006
Click on on any of the following blue hyperlinks for more about Consumer Reports magazine:
Marta L. Tellado is the current CEO of Consumer Reports. She joined the organization in 2014, with the goal of expanding its engagement and advocacy efforts.
Founded in 1936, CU was created to serve as a source of information that consumers could use to help assess the safety and performance of products. Since that time, CU has continued its testing and analysis of products and services, and attempted to advocate for the consumer in legislative and rule-making areas.
Among the reforms in which CU played a role were the advent of seat belt laws, the exposure of the dangers of cigarettes, and more recently, the enhancement of consumer finance protection and the increase of consumer access to quality health care.
The organization has also expanded its reach to a suite of digital platforms.
The organization’s headquarters, including its 50 testing labs, are located in Yonkers, New York, while its automotive testing track is in East Haddam, Connecticut. CU is funded by subscriptions to its magazine and website, as well as through independent grants and donations.
Advocacy and Campaigns:
Consumers Union has hundreds of thousands of online advocates who take action and write letters to policymakers about the issues its advocates take on. This group continues to grow as Consumer Reports expands its reach, with 6 million paid members who have access to online tools like a car recall tracker and personalized content.
An additional base of online members join for free and received guidance on a range of products (i.e. gas grills, washing machines) at no charge. CU has also launched several advocacy websites, including HearUsNow.org, which helps consumers with telecommunications policy matters.
In March 2005, CU campaign PrescriptionforChange.org released "Drugs I Need", an animated short with a song from the Austin Lounge Lizards, that was featured by The New York Times, JibJab, BoingBoing, and hundreds of blogs.
On Earth Day 2005, CU launched GreenerChoices.org, a web-based initiative meant to "inform, engage, and empower consumers about environmentally friendly products and practices."
Consumers Union, the advocacy and policy arm of Consumer Reports Magazine, is a sponsor of the Safe Patient Project, with the goal to aid consumers in finding the best quality of health care by promoting the public disclosure of hospital-acquired infection rates and medical errors.
The US Centers for Disease Control states that about 2 million patients annually (about 1 in 20) will acquire an infection while being treated in a hospital for an unrelated health care problem, resulting in 99,000 deaths and as much as $45 billion in excess hospital costs.
The campaign has worked in every state calling for legislation requiring hospitals to disclose infection rates to the public. A list of state infection reports can be found here. The Safe Patient Project also works on medical devices, prescription drugs, and physician accountability.
GreenerChoices.org offers an "accessible, reliable, and practical source of information on buying 'greener' products that have minimal environmental impact and meet personal needs."
The site contains many articles about different products, rating them on how "green" they are. It also focuses on electronics and appliance recycling and reuse, as well as conservation and global warming prevention.
Funding for Consumers Union has recently been provided by USPIRG Education Fund, the Kentucky Equal Justice Center and the California Pan-Ethnic Health Network among other advocacy organizations.
In recent years, the organization has been vocal on key issues, including:
- championing consumer choice and industry competition in the debate against the Sprint T-Mobile merger,
- advocating for consumer preference to leave net neutrality protections in place,
- exposing how data is used to engage in racial discrimination when determining consumer pricing offers,
- and advocating for stronger privacy laws in the wake of Cambridge Analytica.
Click on any of the following blue hyperlinks for more about Consumers Union:
- History
- See also:
- Official website
- Consumers International
- Australian Consumers' Association
- Consumers' Institute of New Zealand
- UFC Que Choisir, France's most important consumers' group.
Consumer Reports is an American magazine published since 1936 by Consumers Union (above), a nonprofit organization dedicated to unbiased product testing, consumer-oriented research, public education, and advocacy. Consumer Reports publishes reviews and comparisons of consumer products and services based on reporting and results from its in-house testing laboratory and survey research center.
The magazine accepts no advertising, pays for all the products it tests, and as a nonprofit organization has no shareholders. It also publishes general and targeted product/service buying guides.
Editorial Independence:
Consumer Reports is well known for its policies on editorial independence, which it says are to "maintain our independence and impartiality... [so that] CU has no agenda other than the interests of consumers". CR has unusually strict requirements and sometimes has taken extraordinary steps; for example it declined to renew a car dealership's bulk subscription because of "the appearance of an impropriety".
Consumer Reports does not allow outside advertising in the magazine, but its website has retailers' advertisements. Consumer Reports states that PriceGrabber places the ads and pays a percentage of referral fees to CR, who has no direct relationship with the retailers.
Consumer Reports publishes reviews of its business partner and recommends it in at least one case. CR had a similar relationship with BizRate at one time and has had relationships with other companies including:
- Amazon.com,
- Yahoo!,
- The Wall Street Journal,
- The Washington Post,
- BillShrink,
- and Decide.com.
CR also accepts grants from other organizations, and at least one high-ranking Consumer Reports employee has gone on to work for a company he evaluated.
CR also forbids the use of its reviews for selling products; for example, it will not allow a manufacturer to advertise a positive review. CR has gone to court to enforce that rule.
Consumer Reports says its staff purchases all tested products at retail prices, anonymously in "most cases", and that they accept no free samples in order to prevent bias from bribery or from being given better than average samples.
However, in order to review some products before they are publicly available CR does accept "press samples" from manufacturers but says it pays for the samples and does not include them in ratings.
For most of CR's history, it minimized contact with government and industry experts "to avoid compromising the independence of its judgment".
In 2007, in response to errors in infant car seat testing, it began accepting advice from a wide range of experts on designing tests, but not on final assessments. Also, at times CR allows manufacturers to review and respond to criticism before publication.
Some objective and comparative tests published by Consumer Reports are carried out under the umbrella of the international consumer organization International Consumer Research & Testing. Consumer Reports also uses outside labs for testing, including for 11 percent of tests in 2006
Click on on any of the following blue hyperlinks for more about Consumer Reports magazine:
- Editorial independence
- Publications
- History
- Product changes after Consumer Reports tests
- Lawsuits against Consumers Union
- Controversy over child safety seats
- Other errors or issues
- Graphs
- See also:
Consumer Price Index (CPI)
- YouTube Video: What is The Consumer Price Index - CPI ?
- YouTube Video: Calculating a Consumer Price Index (CPI)
- YouTube Video: Inflation and CPI Practice- Macro 2.8
The Consumer Price Index measures changes in the price level of market basket of consumer goods and services purchased by households.
The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.
Sub-indices and sub-sub-indices are computed for different categories and sub-categories of goods and services, being combined to produce the overall index with weights reflecting their shares in the total of the consumer expenditures covered by the index. It is one of several price indices calculated by most national statistical agencies.
The annual percentage change in a CPI is used as a measure of inflation. A CPI can be used to index (i.e. adjust for the effect of inflation) the real value of wages, salaries, and pensions; to regulate prices; and to deflate monetary magnitudes to show changes in real values. In most countries, the CPI, along with the population census, is one of the most closely watched national economic statistics.
The index is usually computed monthly, or quarterly in some countries, as a weighted average of sub-indices for different components of consumer expenditure, such as food, housing, shoes, clothing, each of which is in turn a weighted average of sub-sub-indices.
At the most detailed level, the elementary aggregate level, (for example, men's shirts sold in department stores in San Francisco), detailed weighting information is unavailable, so indices are computed using an unweighted arithmetic or geometric mean of the prices of the sampled product offers. (However, the growing use of scanner data is gradually making weighting information available even at the most detailed level.)
These indices compare prices each month with prices in the price-reference month. The weights used to combine them into the higher-level aggregates, and then into the overall index, relate to the estimated expenditures during a preceding whole year of the consumers covered by the index on the products within its scope in the area covered.
Thus the index is a fixed-weight index, but rarely a true Laspeyres index, since the weight-reference period of a year and the price-reference period, usually a more recent single month, do not coincide.
Ideally, the weights would relate to the composition of expenditure during the time between the price-reference month and the current month. There is a large technical economics literature on index formulas which would approximate this and which can be shown to approximate what economic theorists call a true cost-of-living index.
Such an index would show how consumer expenditure would have to move to compensate for price changes so as to allow consumers to maintain a constant standard of living. Approximations can only be computed retrospectively, whereas the index has to appear monthly and, preferably, quite soon.
Nevertheless, in some countries, notably in the United States and Sweden, the philosophy of the index is that it is inspired by and approximates the notion of a true cost of living (constant utility) index, whereas in most of Europe it is regarded more pragmatically.
The coverage of the index may be limited. Consumers' expenditure abroad is usually excluded; visitors' expenditure within the country may be excluded in principle if not in practice; the rural population may or may not be included; certain groups such as the very rich or the very poor may be excluded. Saving and investment are always excluded, though the prices paid for financial services provided by financial intermediaries may be included along with insurance.
The index reference period, usually called the base year, often differs both from the weight-reference period and the price-reference period. This is just a matter of rescaling the whole time-series to make the value for the index reference-period equal to 100. Annually revised weights are a desirable but expensive feature of an index, for the older the weights the greater is the divergence between the current expenditure pattern and that of the weight reference-period.
Click on any of the following blue hyperlinks for more about the Consumer Price Index:
The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.
Sub-indices and sub-sub-indices are computed for different categories and sub-categories of goods and services, being combined to produce the overall index with weights reflecting their shares in the total of the consumer expenditures covered by the index. It is one of several price indices calculated by most national statistical agencies.
The annual percentage change in a CPI is used as a measure of inflation. A CPI can be used to index (i.e. adjust for the effect of inflation) the real value of wages, salaries, and pensions; to regulate prices; and to deflate monetary magnitudes to show changes in real values. In most countries, the CPI, along with the population census, is one of the most closely watched national economic statistics.
The index is usually computed monthly, or quarterly in some countries, as a weighted average of sub-indices for different components of consumer expenditure, such as food, housing, shoes, clothing, each of which is in turn a weighted average of sub-sub-indices.
At the most detailed level, the elementary aggregate level, (for example, men's shirts sold in department stores in San Francisco), detailed weighting information is unavailable, so indices are computed using an unweighted arithmetic or geometric mean of the prices of the sampled product offers. (However, the growing use of scanner data is gradually making weighting information available even at the most detailed level.)
These indices compare prices each month with prices in the price-reference month. The weights used to combine them into the higher-level aggregates, and then into the overall index, relate to the estimated expenditures during a preceding whole year of the consumers covered by the index on the products within its scope in the area covered.
Thus the index is a fixed-weight index, but rarely a true Laspeyres index, since the weight-reference period of a year and the price-reference period, usually a more recent single month, do not coincide.
Ideally, the weights would relate to the composition of expenditure during the time between the price-reference month and the current month. There is a large technical economics literature on index formulas which would approximate this and which can be shown to approximate what economic theorists call a true cost-of-living index.
Such an index would show how consumer expenditure would have to move to compensate for price changes so as to allow consumers to maintain a constant standard of living. Approximations can only be computed retrospectively, whereas the index has to appear monthly and, preferably, quite soon.
Nevertheless, in some countries, notably in the United States and Sweden, the philosophy of the index is that it is inspired by and approximates the notion of a true cost of living (constant utility) index, whereas in most of Europe it is regarded more pragmatically.
The coverage of the index may be limited. Consumers' expenditure abroad is usually excluded; visitors' expenditure within the country may be excluded in principle if not in practice; the rural population may or may not be included; certain groups such as the very rich or the very poor may be excluded. Saving and investment are always excluded, though the prices paid for financial services provided by financial intermediaries may be included along with insurance.
The index reference period, usually called the base year, often differs both from the weight-reference period and the price-reference period. This is just a matter of rescaling the whole time-series to make the value for the index reference-period equal to 100. Annually revised weights are a desirable but expensive feature of an index, for the older the weights the greater is the divergence between the current expenditure pattern and that of the weight reference-period.
Click on any of the following blue hyperlinks for more about the Consumer Price Index:
- Calculating the CPI for a single item
- Calculating the CPI for multiple items
- Weighting
- Owner-occupiers and the price index
- Consumer price indices in the United States
- See also:
- Consumer price index by country
- Core inflation
- Cost of living index
- FRED (Federal Reserve Economic Data)
- Harmonized Index of Consumer Prices (HICP)
- Hedonic regression
- Higher Education Price Index
- Household final consumption expenditure (HFCE)
- GDP deflator
- Inflation adjustment
- Inflation rate
- Inflationism
- List of economics topics
- Market basket (basket of goods)
- MIT Billion Prices project
- Personal consumption expenditures price index (PCEPI)
- Producer price index (PPI)
- Quality bias
- RPIX
- World inflation crisis
- Consumer Price Index Data
- Issues of the Consumer Price Index report from the BLS for 1953–present
- ILO CPI manual – This large manual produced co-operatively by a number of international organizations is the standard work on the methods of compiling consumer price indices and on the underlying economic and statistical theory.
- BLS rebuttal to SGS CPI calculation criticisms
J. D. Power
- YouTube Video: What goes behind J.D. Power awards
- YouTube Video: Honda Wins 2011 J. D. Power and Associates Quality Awards
- YouTube Video: Riverview Medical Center Receives JD Power & Associates Award
J.D. Power is an American-based global marketing information services company founded in 1968 by James David Power III. The company conducts surveys of customer satisfaction, product quality, and buyer behavior for industries ranging from cars to marketing and advertising firms.
The firm is best known for its customer satisfaction research on new-car quality and long-term dependability. Its service offerings include industry-wide syndicated studies, proprietary research, consulting, training, and automotive forecasting. The firm is headquartered in Costa Mesa, California.
McGraw Hill Financial purchased it from James David Power III in April 2005, and the private investment group XIO Group paid $1.1 billion to acquire the company in 2016. Dave Habiger was named its President and CEO in March 2018, with the objective of continuing to aggressively build and enhance the company's data and analytics and customer insights leadership.
Click on any of the following blue hyperlinks for more about J.D. Power:
The firm is best known for its customer satisfaction research on new-car quality and long-term dependability. Its service offerings include industry-wide syndicated studies, proprietary research, consulting, training, and automotive forecasting. The firm is headquartered in Costa Mesa, California.
McGraw Hill Financial purchased it from James David Power III in April 2005, and the private investment group XIO Group paid $1.1 billion to acquire the company in 2016. Dave Habiger was named its President and CEO in March 2018, with the objective of continuing to aggressively build and enhance the company's data and analytics and customer insights leadership.
Click on any of the following blue hyperlinks for more about J.D. Power:
- History
- Marketing research
- See also:
Carfax Reports (Covering Used Cars and Light Trucks)
- YouTube Video: Cash Course- Understanding a CARFAX report
- YouTube Video: 5 Surprising Facts a Carfax Report Can Tell You
- YouTube Video: How To Get A Free Carfax Report
Carfax, Inc. is a commercial web-based service that supplies vehicle history reports to individuals and businesses on used cars and light trucks for the American and Canadian consumers.
Products and Services:
Carfax offers several free products and services and charges a fee for more comprehensive reports.
Free products and services:
In 2013, Carfax launched a new free service called myCARFAX. The service provides free access to vehicle service information reported to the company and alerts users to recommended maintenance.
The company offers four vehicle research services—Lemon Check, Record Check, Recall Check, and Problem Car. While these services are helpful, they do not contain all of the information provided in a full Carfax vehicle history report.
The company also provides Car Safety and Reliability Ratings, which provides access to reviews and other data from sources such as the National Highway Traffic Safety Administration, the Insurance Institute for Highway Safety, J.D. Power and Associates, IntelliChoice and others.
Vehicle history reports:
The Carfax Vehicle History Report is the company's core product. Users purchase either a single report or create an account for building multiple reports for different vehicles, allowing consumers to utilize Carfax over a period of time as they search for a vehicle.
Additionally, buyers can request Carfax reports for free from auto dealers who offer Carfax service, and some automakers routinely provide Carfax reports as part of their pre-owned vehicle programs.
myCARFAX:
In early 2012 the company launched a new service which uses service information reported to CARFAX to help vehicle owners with things like oil changes and routine vehicle maintenance. The service was later expanded to include alerts about open safety recalls issued by vehicle manufacturers.
Vehicle owners who are interested in having service information included on their CARFAX Vehicle History Report can find local service shops who will report them to CARFAX.
Carfax used car listings:
In April 2014, Carfax introduced another free service called CARFAX Used Car Listings. The new service gives used car shoppers the opportunity to search for used cars using make, model, and a vehicle's history. For example, consumers may search for vehicles with "no reported accident" or "service records".
Information Sources:
Carfax claims to have access to twenty billion records from more than 100,000 sources, including motor vehicle departments for all 50 U.S. states and all 10 Canadian provinces.
The company's information sources include U.S. state title and registration records, auto and salvage auctions, Canadian motor vehicle records, rental and fleet vehicle companies, consumer protection agencies, state inspection stations, extended warranty companies, insurance companies, fire and police departments, manufacturers, inspection companies, service and repair facilities, dealers and import/export companies.
CARFAX lists only information that is reported to them and consumers should not take this report to be a complete accident history. Not all accidents are disclosed and CARFAX uses the language "no accidents have been reported to CARFAX," the emphasis being on "reported". Consumers should not rely on CARFAX alone when checking out a used vehicle.
Although Carfax continuously expands its database and resources, some information is not allowed to be provided. Under the 1994 U.S. Drivers Privacy Protection Act, personal information such as names, telephone numbers and addresses of current or previous owners are neither collected nor reported.
Carfax does not have access to every facility and mistakes are sometimes made by those who input data. In the event information is disputed but cannot be verified, Carfax allows consumers and dealerships to add information to its reports.
Class Action Lawsuit:
In a 2006 class action lawsuit, the plaintiff claimed that Carfax violated consumer protection laws by not disclosing the limitations of their service, specifically their inability to check accident records in 23 states in the U.S. while stating that their database contains information from all 50 states.
The lawsuit was settled in May 2007 in the Trumbull County Common Pleas Court in Warren, Ohio. Carfax spokesman Larry Gamache said more than 10 million consumers were affected. The company asserts that it has major accident information from all 50 states and it backs up its claim with a buyback guarantee.
The settlement in the West v. Carfax, Inc lawsuit was overturned, not on the merits of the issue, but on the terms of the settlement which did not offer enough to the affected consumers and because "not enough consumers were notified and the judge should not have agreed to the settlement without knowing more about what it would cost Carfax.
See also:
Products and Services:
Carfax offers several free products and services and charges a fee for more comprehensive reports.
Free products and services:
In 2013, Carfax launched a new free service called myCARFAX. The service provides free access to vehicle service information reported to the company and alerts users to recommended maintenance.
The company offers four vehicle research services—Lemon Check, Record Check, Recall Check, and Problem Car. While these services are helpful, they do not contain all of the information provided in a full Carfax vehicle history report.
The company also provides Car Safety and Reliability Ratings, which provides access to reviews and other data from sources such as the National Highway Traffic Safety Administration, the Insurance Institute for Highway Safety, J.D. Power and Associates, IntelliChoice and others.
Vehicle history reports:
The Carfax Vehicle History Report is the company's core product. Users purchase either a single report or create an account for building multiple reports for different vehicles, allowing consumers to utilize Carfax over a period of time as they search for a vehicle.
Additionally, buyers can request Carfax reports for free from auto dealers who offer Carfax service, and some automakers routinely provide Carfax reports as part of their pre-owned vehicle programs.
myCARFAX:
In early 2012 the company launched a new service which uses service information reported to CARFAX to help vehicle owners with things like oil changes and routine vehicle maintenance. The service was later expanded to include alerts about open safety recalls issued by vehicle manufacturers.
Vehicle owners who are interested in having service information included on their CARFAX Vehicle History Report can find local service shops who will report them to CARFAX.
Carfax used car listings:
In April 2014, Carfax introduced another free service called CARFAX Used Car Listings. The new service gives used car shoppers the opportunity to search for used cars using make, model, and a vehicle's history. For example, consumers may search for vehicles with "no reported accident" or "service records".
Information Sources:
Carfax claims to have access to twenty billion records from more than 100,000 sources, including motor vehicle departments for all 50 U.S. states and all 10 Canadian provinces.
The company's information sources include U.S. state title and registration records, auto and salvage auctions, Canadian motor vehicle records, rental and fleet vehicle companies, consumer protection agencies, state inspection stations, extended warranty companies, insurance companies, fire and police departments, manufacturers, inspection companies, service and repair facilities, dealers and import/export companies.
CARFAX lists only information that is reported to them and consumers should not take this report to be a complete accident history. Not all accidents are disclosed and CARFAX uses the language "no accidents have been reported to CARFAX," the emphasis being on "reported". Consumers should not rely on CARFAX alone when checking out a used vehicle.
Although Carfax continuously expands its database and resources, some information is not allowed to be provided. Under the 1994 U.S. Drivers Privacy Protection Act, personal information such as names, telephone numbers and addresses of current or previous owners are neither collected nor reported.
Carfax does not have access to every facility and mistakes are sometimes made by those who input data. In the event information is disputed but cannot be verified, Carfax allows consumers and dealerships to add information to its reports.
Class Action Lawsuit:
In a 2006 class action lawsuit, the plaintiff claimed that Carfax violated consumer protection laws by not disclosing the limitations of their service, specifically their inability to check accident records in 23 states in the U.S. while stating that their database contains information from all 50 states.
The lawsuit was settled in May 2007 in the Trumbull County Common Pleas Court in Warren, Ohio. Carfax spokesman Larry Gamache said more than 10 million consumers were affected. The company asserts that it has major accident information from all 50 states and it backs up its claim with a buyback guarantee.
The settlement in the West v. Carfax, Inc lawsuit was overturned, not on the merits of the issue, but on the terms of the settlement which did not offer enough to the affected consumers and because "not enough consumers were notified and the judge should not have agreed to the settlement without knowing more about what it would cost Carfax.
See also:
False Advertising and the Truth in Advertising Organization (TINA.org)
Pictured below: TINA.org Alerts California Regulators to MyPillow's Continued Deception: TINA.org urges consumer protection officials to reopen their investigation.
- YouTube Video: Top 10 Misleading Marketing Tactics (WatchMojo)
- YouTube Video: 9 Brands Sued for False Advertising
- YouTube: Decoding Truth and Trust in Advertising*
Pictured below: TINA.org Alerts California Regulators to MyPillow's Continued Deception: TINA.org urges consumer protection officials to reopen their investigation.
False advertising is the use of false, misleading, or unproven information to advertise products to consumers. The advertising frequently does not disclose its source. One form of false advertising is to claim that a product has a health benefit or contains vitamins or minerals that it in fact does not.
Many governments use regulations to control false advertising. A false advertisement can further be classified as deceptive if the advertiser deliberately misleads the consumer, as opposed to making an honest mistake.
Click on any of the following blue hyperlinks for more about False Advertising: ___________________________________________________________________________
Truth in Advertising (organization):
TINA.org (TruthinAdvertising.org) is an independent, non-profit, advertising watchdog organization whose mission is to empower consumers to protect themselves and one another against false advertising (above) and deceptive marketing.
TINA.org was founded in 2012 and received its initial funding from Karen Pritzker and Michael Vlock through their Seedlings Foundation, which supports programs that nourish the physical and mental health of children and families, and fosters an educated and engaged citizenship.
TINA.org is headed by Bonnie Patten, who has served as its Executive Director since its founding.
Legal efforts and investigative journalism:
On March 28, 2013, TINA.org took action against NourishLife, LLC after finding that the company was using a number of deceptive marketing tactics to sell a potentially harmful supplement for children with speech delays.
The organization sent legal complaint letters to the company’s CEO as well as to the Federal Trade Commission, the Food and Drug Administration, and the Illinois Attorney General, urging each of them to take action.
On Aug. 14, 2013, the National Advertising Division of the Better Business Bureau recommended that the company discontinue and amend certain claims used to market the product. The company has since corrected its website and has begun amending its product packaging.
TINA.org’s investigation and criticism of Vemma, which makes the energy drink Verve and enlists students ostensibly to sell its products, has been cited and quoted in New York Post articles that raised questions about whether Vemma is running a legitimate multi-level marketing business or an illegal pyramid scheme.
A subsequent class-action lawsuit against Vemma cited TINA.org's reporting of numerous complaints about Vemma that have been submitted to the Federal Trade Commission.
In 2017, Truth in Advertising investigated Goop and accused them of making deceptive health claims about the products they sell.
Journalism about TINA.org:
See also:
Many governments use regulations to control false advertising. A false advertisement can further be classified as deceptive if the advertiser deliberately misleads the consumer, as opposed to making an honest mistake.
Click on any of the following blue hyperlinks for more about False Advertising: ___________________________________________________________________________
Truth in Advertising (organization):
TINA.org (TruthinAdvertising.org) is an independent, non-profit, advertising watchdog organization whose mission is to empower consumers to protect themselves and one another against false advertising (above) and deceptive marketing.
TINA.org was founded in 2012 and received its initial funding from Karen Pritzker and Michael Vlock through their Seedlings Foundation, which supports programs that nourish the physical and mental health of children and families, and fosters an educated and engaged citizenship.
TINA.org is headed by Bonnie Patten, who has served as its Executive Director since its founding.
Legal efforts and investigative journalism:
On March 28, 2013, TINA.org took action against NourishLife, LLC after finding that the company was using a number of deceptive marketing tactics to sell a potentially harmful supplement for children with speech delays.
The organization sent legal complaint letters to the company’s CEO as well as to the Federal Trade Commission, the Food and Drug Administration, and the Illinois Attorney General, urging each of them to take action.
On Aug. 14, 2013, the National Advertising Division of the Better Business Bureau recommended that the company discontinue and amend certain claims used to market the product. The company has since corrected its website and has begun amending its product packaging.
TINA.org’s investigation and criticism of Vemma, which makes the energy drink Verve and enlists students ostensibly to sell its products, has been cited and quoted in New York Post articles that raised questions about whether Vemma is running a legitimate multi-level marketing business or an illegal pyramid scheme.
A subsequent class-action lawsuit against Vemma cited TINA.org's reporting of numerous complaints about Vemma that have been submitted to the Federal Trade Commission.
In 2017, Truth in Advertising investigated Goop and accused them of making deceptive health claims about the products they sell.
Journalism about TINA.org:
- "Dishonest Ads Are No Laughing Matter -- Or Are They?", Grace Chung, Advertising Age, March 22, 2014
- "Mascara Ads: Thick Lashes, Fine Print", Andrew Adam Newman, New York Times, Nov. 12, 2013
- "J&J Pays $2.2B to Settle Charges of Improper Risperdal Marketing" PDF
- "When dental hygiene meets class action lawsuits", Manatt Phelps & Phillips LLP, Lexology, Nov. 1, 2013
- "Time to better regulate cosmetics claims and ads in the U.S., says TINA", Andrew McDougall, CosmeticsDesign.com, Oct. 23, 2013
- “Philips Airfloss buyers shafted in false ad deal, court told” Law360.com, Oct. 16, 2013
See also:
Consumer Watchdog Organization
- YouTube Video: Consumer Watchdog Founder Harvey Rosenfield on Healthcare Reform
- YouTube Video: KTTV-GDLA: Jamie Court Explains California's High Gas Prices
- YouTube Video: Consumer Watchdog Exposes Reckless Robot Cars
Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer Rights) is a non-profit, progressive organization which advocates for taxpayer and consumer interests, with a focus on insurance, health care, political reform, privacy and energy.
The organization was founded in 1985 by California Proposition 103 author Harvey Rosenfield and is headquartered in Santa Monica, California. Its chief officers include President Jamie Court and Executive Director Douglas Heller. Other notable staff include consumer advocate John Simpson.
Click on any of the following blue hyperlinks for more about the Consumer Watchdog Organization:
The organization was founded in 1985 by California Proposition 103 author Harvey Rosenfield and is headquartered in Santa Monica, California. Its chief officers include President Jamie Court and Executive Director Douglas Heller. Other notable staff include consumer advocate John Simpson.
Click on any of the following blue hyperlinks for more about the Consumer Watchdog Organization:
- Early history
- Issues
- Healthcare reform
- Energy regulation
- Political reform
- Stem cell oversight
- Privacy
- Legal cases
Consumer Financial Protection Bureau (CFPB)
Below:
Image below: Consumer Financial Protection Bureau’s fate is again in the hands of the Supreme Court (CNN): "The Supreme Court may decide as soon as Friday whether to tackle a new case that could further constrain the power of US regulators to delve into American businesses and individual lives...."
Below:
- Consumer Financial Protection Bureau (Wikipedia)
- Consumer Financial Protection Bureau (Federal Program)
- Welcome to the Consumer Financial Protection Bureau (CFPB)
- How to File a CFPB Complaint
- DIY Credit Repair - How does the Consumer Financial Protection Bureau (CFPB) help me?
Image below: Consumer Financial Protection Bureau’s fate is again in the hands of the Supreme Court (CNN): "The Supreme Court may decide as soon as Friday whether to tackle a new case that could further constrain the power of US regulators to delve into American businesses and individual lives...."
Consumer Financial Protection Bureau (CFPB)(Wikipedia)
Website: Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States government responsible for consumer protection in the financial sector.
CFPB's jurisdiction includes:
Since its founding, the CFPB has used technology tools to monitor how financial entities used social media and algorithms to target consumers.
The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the financial crisis of 2007–08 and the subsequent Great Recession and is an independent bureau within the Federal Reserve.
The CFPB's status as an independent agency has been subject to many challenges in court. In June 2020, the United States Supreme Court found the single-director structure removable only with-cause unconstitutional but allowed the agency to remain in operation.
Role:
According to former Director Richard Cordray, the Bureau's priorities are mortgages, credit cards and student loans. The CFPB qualifies as a large independent agency that was designed to consolidate its employees and responsibilities from a number of other federal regulatory bodies, including:
The bureau is an independent unit located inside and funded by the United States Federal Reserve, with interim affiliation with the U.S. Treasury Department.
The CFPB writes and enforces rules for financial institutions, examines both bank and non-bank financial institutions, monitors and reports on markets, as well as collects and tracks consumer complaints.
The CFPB opened its website in early February 2011 to accept suggestions from consumers via YouTube, Twitter, and its own website interface. According to the United States Treasury Department, the bureau is tasked with the responsibility to "promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services".
According to its web site, the CFPB's "central mission...is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products".
In 2016 alone most of the hundreds and thousands of consumer complaints about their financial services—including banks and credit card issuers—were received and compiled by CFPB and are publicly available on a federal government database.
Once a financial institution acquires $10 billion in assets, it falls under the guidance, rules, and regulations under the CFPB. The bank will then be known as a CFPB regulated bank.
The CFPB will examine the institution for compliance with bank regulatory laws.
The regulations implemented by the Bureau are housed in Chapter X of Title XII Banks and Banking of the U.S. Code of Federal Regulations, and consist of:
History:
In July 2010, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, during the 111th United States Congress in response to the late-2000s recession and financial crisis. The agency was originally proposed in 2007 by then Harvard Law School professor Elizabeth Warren, who later became a US senator.
The proposed CFPB was actively supported by Americans for Financial Reform, a newly created umbrella organization of some 250 consumer, labor, civil rights and other activist organizations.
On September 17, 2010, President Obama announced the appointment of Warren as Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau to set up the new agency. Due to the way the legislation creating the bureau was written, until the first Director was in place, the agency was not able to write new rules or supervise financial institutions other than banks.
On July 21, 2011, Senator Richard Shelby wrote an op‑ed for The Wall Street Journal affirming his continued opposition to a centralized structure, noting that both the Securities Exchange Commission and Federal Deposit Insurance Corporation had executive boards and that the CFPB should be no different. He noted lessons learned from experiences with Fannie Mae and Freddie Mac as support for his argument.
Politico interpreted Shelby's statements as saying that Cordray's nomination was "dead on arrival". Republican threats of a filibuster to block the nomination in December 2011 led to Senate inaction.
Elizabeth Warren, who proposed and established the CFPB, was removed from consideration as the bureau's first formal director after Obama administration officials became convinced Warren could not overcome strong Republican opposition. On July 17, President Obama nominated former Ohio Attorney General and Ohio State Treasurer Richard Cordray to be the first formal director of the CFPB. Prior to his nomination, Cordray had been hired as chief of enforcement for the agency.
However, Cordray's nomination was immediately in jeopardy due to 44 Senate Republicans vowing to derail any nominee in order to encourage a decentralized structure of the organization.
Senate Republicans had also shown a pattern of refusing to consider regulatory agency nominees. The CFPB formally began operation on July 21, 2011.
Since the CFPB database was established in 2011, more than four million complaints have been published. CFPB supporters include the Consumers Union claim that it is a "vital tool that can help consumers make informed decisions".
CFPB detractors argue that the CFPB database is a "gotcha game" and that there is already a database maintained by the Federal Trade Commission although that information is not available to the public.
On January 4, 2012, Barack Obama issued a recess appointment to install Cordray as director through the end of 2013. This was a highly controversial move as the Senate was still holding pro forma sessions, and the possibility existed that the appointment could be challenged in court. This type of recess appointment was unanimously ruled unconstitutional in NLRB v. Noel Canning.
On July 16, 2013, the Senate confirmed Cordray as director in a 66–34 vote.[28] Cordray resigned in late 2017 to run for governor of Ohio.
The Financial CHOICE Act, proposed by the House Financial Services Committee's Jeb Hensarling, to repeal the Dodd–Frank Wall Street Reform and Consumer Protection Act, passed the House on June 8, 2017. Also in June 2017, the Senate was crafting its own reform bill.
Testimony in US Congressional hearings of 2017 have elicited concerns that the wholesale publication of consumer complaints is both misleading and injurious to the consumer market. Rep. Barry Loudermilk (R-GA) said at one such congressional hearing, "Is the purpose of the database just to name and shame companies? Or should they have a disclaimer on there that says it's a fact-free zone, or this is fake news? That's really what I see happening here."
Bill Himpler, executive vice president of the American Financial Services Association, a trade group representing banks and other lenders responded "Something needs to be done." "Once the damage is done to a company, it's hard to get your reputation back.
Mick Mulvaney, as acting director of the CFPB, removed all 25 members of the agency's Consumer Advisory Board on June 5, 2018, after eleven of them held a press conference on June 3 in which they criticized him.
On February 13, 2021, President Joe Biden formally submitted to the Senate the nomination of Rohit Chopra to serve as director of the CFPB. His nomination was approved on September 30, 2021, by a 50-48 vote.
Regulatory activities:
From its creation until 2017, the CFPB "has curtailed abusive debt collection practices, reformed mortgage lending, publicized and investigated hundreds of thousands of complaints from aggrieved customers of financial institutions, and extracted nearly $12 billion for 29 million consumers in refunds and canceled debts."
Public outreach:
The CFPB has created a number of personal finance tools for consumers, including Ask CFPB, which compiles plain-language answers to personal finance questions, and Paying for College, which estimates the cost of attending specific universities based on the financial aid offers a student has received.
The CFPB has also attempted to help consumers understand virtual currencies such as Bitcoin.
Consumer data protection:
In 2016, the CFPB took its first enforcement action against a company that the CFPB alleged had failed to properly protect the privacy and security of consumers data.
Controversies:
A 2013 press release from the United States House Financial Services Committee criticized the CFPB for what was described as a "radical structure" that "is controlled by a single individual who cannot be fired for poor performance and who exercises sole control over the agency, its hiring and its budget."
Moreover, the committee alleged a lack of financial transparency and a lack of accountability to Congress or the President. Committee Vice Chairman Patrick McHenry, expressed particular concern about travel costs and a $55 million renovation of CFPB headquarters, stating "$55 million is more than the entire annual construction and acquisition budget for GSA for the totality of federal buildings."
In 2012, the majority of GSA's Federal Buildings Fund went to rental costs, totaling $5.2 billion. $50 million was budgeted for construction and acquisition of facilities.
In 2014, some employees and former employees of the CFPB testified before Congress about an alleged culture of racism and sexism at the agency. Former employees testified they were retaliated against for bringing problems to the attention of superiors.
As described in articles in Motor Finance and The Wall Street Journal, the CFPB has been criticized for the methodology it uses to identify instances of racial discrimination among auto lenders.
Because of legal constraints, the agency used a system to "guess" the race of auto loan applicants based on their last name and listed address. Based on that information, the agency charged several lenders were discriminating against minority applicants and levied large fines and settlements against those companies.
Ally Financial paid $98 million in fines and settlement fees in 2013. As the agency's methodology means it can only guess who may be victims of discrimination entitled to settlement funds, as of late 2015, the CFPB had yet to compensate any individuals who were victims of Ally's allegedly discriminatory practices.
Cordray was accused of multiple violations of the Hatch Act as Director of the CFPB and investigated by the Office of Special Counsel (OSC), who found no violations.
Amendments:
On May 21, 2018, US President Donald Trump signed into law Congressional legislation repealing the enforcement of automobiles lending rules. On May 24, 2018, Trump signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act, exempting dozens of banks from the CFPB's regulations.
Proposed amendments:
On September 26, 2013, the Consumer Financial Protection Safety and Soundness Improvement Act of 2013 (H.R. 3193; 113th Congress) was introduced into the United States House of Representatives.
If adopted, the bill would have modified the CFPB by transforming it into a five-person commission and removing it from the Federal Reserve System. The CFPB would have been renamed the "Financial Product Safety Commission".
The bill was also intended to make it easier to override the CFPB decisions. It passed in the House of Representatives on February 27, 2014 and was received by the Senate on March 4. It was never considered in the Democratic controlled Senate.
Legal challenges:
Further information: Dodd–Frank Wall Street Reform and Consumer Protection Act § Constitutional challenge to Dodd–Frank
Two lawsuits were filed in the early years of the CFPB; they were both dismissed by federal courts, but one was appealed and is still ongoing.
The first one, filed on June 21, 2012, by a Texas bank along with the Competitive Enterprise Institute, challenged the constitutionality of provisions of the CFPB. One year later, in August 2013, a federal judge dismissed the lawsuit because the plaintiffs had failed to show that they had suffered harm.
In July 2015, the United States Court of Appeals for the District of Columbia Circuit affirmed in part and reversed in part, holding that the bank, but not the states that later joined the lawsuit, had standing to challenge the law, and returned the case for further proceedings.
A lawsuit filed July 22, 2013, by Morgan Drexen Integrated Systems, a provider of outsourced administrative support services to attorneys, and Connecticut attorney Kimberly A. Pisinski, challenged the constitutionality of the CFPB.
The complaint, filed in the U.S. District Court for the District of Columbia, alleged that the "CFPB's structure insulates it from political accountability and internal checks and balances in violation of the United States Constitution. Unbridled from constitutionally-required accountability, CFPB has engaged in ultra vires and abusive practices, including attempts to regulate the practice of law (a function reserved for state bars), attempts to collect attorney-client protected material, and overreaching demands for, and mining of, personal financial information of American citizens, which has prompted a Government Accountability Office ("GAO") investigation, commenced on July 12, 2013."
On August 22, 2013, one month after Morgan Drexen's lawsuit, the CFPB filed its own lawsuit against Morgan Drexen in the United States District Court for the Central District of California alleging that Morgan Drexen charged advance fees for debt relief services in violation of the Telemarketing Sales Rule and engaged in deceptive acts and practices in violation of the Consumer Financial Protection Act (CFPA).
The CFPB won this lawsuit and Morgan Drexen was ordered to pay $132,882,488 in restitution and a $40 million civil penalty.
In October 2016, the Court of Appeals for the District of Columbia Circuit ruled that it was unconstitutional for the CFPB Director to be removable by the President of the United States only for cause, such as "inefficiency, neglect of duty or malfeasance."
Circuit Judge Brett Kavanaugh, joined by Senior Circuit Judge A. Raymond Randolph, wrote that the law was "a threat to individual liberty" and instead found that the President could remove the CFPB Director at will.
Circuit Judge Karen L. Henderson agreed that the CFPB Director had been wrong in adopting a new interpretation of the Real Estate Settlement Procedures Act, finding the statute of limitations did not apply to the CFPB, and fining the petitioning mortgage company PHH Corporation $109 million, but she dissented from giving the President a new power to remove the Director, citing constitutional avoidance.
The U.S. Court of Appeals for the District of Columbia Circuit vacated the decision and ordered en banc review.
On January 31, 2018, the en banc D.C. Circuit found that the CFPB's structure was constitutional by a vote of 7–3. Judge Cornelia Pillard, writing for the majority, found that the Take Care Clause does not forbid independent agencies, while each of the circuit judges from the earlier panel wrote separate dissents.
In June 2018, New York Federal District Court judge Loretta Preska ruled against its structure.
In January 2019, the Supreme Court denied review of the DC Circuit Court decision.
In October 2019, the Supreme Court announced it would review the constitutionality of the Bureau's structure in the case Seila Law v. Consumer Financial Protection Bureau considering the split decision of the lower courts. Oral arguments began on March 3, 2020.
On June 29, 2020, the Supreme Court ruled in a 5–4 decision that the firing protections are an unconstitutional restraint on the president's ability to oversee executive branch agencies.
"Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control,"
Chief Justice John Roberts wrote in the majority opinion, which was joined by his conservative colleagues. The statutes around the Director's position on the CFPB were considered severable from the remaining structure of the CFPB, and the Court ordered that "The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will."
The dissenting opinion, written by Justice Elena Kagan, stated that the majority's decision has the court "second-guessing" the two political branches of government (Congress and the president) on how to structure the executive branch and "wipes out a feature of [the CFPB] its creators thought fundamental to its mission—a measure of independence from political pressure."
2017 dispute over acting director:
See also: English v. Trump
On November 24, 2017, Director Cordray appointed Leandra English to the position of deputy director, and announced that he would leave office at the close of business that day.
Cordray indicated that would make English the acting director after his resignation, citing provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act providing that the deputy director of the CFPB becomes acting director in the "absence or unavailability" of the director.
Later the same day, however, President Donald Trump appointed the incumbent director of the Office of Management and Budget, Mick Mulvaney, as acting director, citing the authority of the Federal Vacancies Reform Act of 1998.
On November 25, the Office of Legal Counsel released an opinion, written by Assistant Attorney General Steven Engel, asserting that the President has the authority under the FVRA to designate an acting CFPB Director.
The OLC memo maintained that "both the Vacancies Reform Act and [§1011(b)(5) of Dodd-Frank] are available for filling on an acting basis a vacancy that results from the resignation of the CFPB's Director" but that "when the President designates an individual...outside the ordinary order of succession, the President's designation necessarily controls." This position was also supported by the General Counsel of the CFPB, Mary E. McLeod.
On November 26, English (represented by former CFPB Senior Counsel Deepak Gupta) filed a lawsuit in the United States District Court for the District of Columbia seeking a temporary restraining order and declaratory judgment to prevent Mulvaney from becoming acting director,
Mulvaney was given access by unnamed individuals with the keys to the director's office on November 27 and ordered all CFPB employees to disregard any claims from English that she is the acting director.
Both English and Mulvaney sent emails to the entire 1,600-person staff of the CFPB, each signing as "Acting Director" of the agency. On November 28, 2017, U.S. District Judge Timothy J. Kelly, who had been appointed by President Trump just a few months earlier, denied English's motion for a preliminary injunction and allowed Mulvaney to begin serving as CFPB Acting Director.
2019 dispute over CFPB leadership:
See also: Seila Law LLC v. Consumer Financial Protection Bureau
Seila Law LLC (Seila Law), a law firm that provided debt relief services, was under investigation by the CFPB. As part of its investigation, the CFPB issued a civil investigative demand (CID) to Seila Law, which required Seila Law to produce certain documents.
Seila Law declined to comply with the CID and challenged the constitutionality of the CFPB. The CFPB brought a motion to enforce the CID to the United States District Court for the Central District of California, where District Judge Josephine Staton granted the motion after finding the CFPB was constitutionally structured.
Seila Law's appeal to the Ninth Circuit was dismissed. The 9th Circuit panel affirmed the District Court's ruling, and agreed that the Supreme Court's prior decisions upholding for-cause removal in Humphrey's Executor and Morrison were "controlling". It also referred approvingly to the en banc decision of the DC Circuit in PHH Corp. v. CFPB (2018), in which the Circuit found that the structure of the CFPB was constitutional.
There was arguably a circuit split on the question presented in Seila Law. While the Ninth Circuit and DC Circuit had held that the CFPB's structure is constitutional, the Fifth Circuit in Collins v. Mnuchin (2018) held that the structure of the Federal Housing Finance Agency—another agency whose director can be removed only for cause—violated the separation of powers.
The Supreme Court granted certiorari in Seila Law on October 18, 2019, and heard oral argument on March 3, 2020.
The Court issued its decision on June 29, 2020. The 5–4 decision ruled that the CFPB structure, with a sole director that could only be terminated for cause, was unconstitutional as it violated the separation of powers, vacating the lower court judgement and remanding the case for review.
The Court recognized that the statutes around the director of the CFPB was severable from the rest of the statute establishing the agency, and thus "The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will."
Chief Justice John Roberts wrote the majority opinion joined by Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, and Brett Kavanaugh. Roberts wrote that the CFPB structure with a single point of leadership that could only be removed for cause "has no foothold in history or tradition", and has only been used in four other instances: three current uses for the United States Office of Special Counsel, the Social Security Administration, and the Federal Housing Finance Agency, and temporarily for one year during the American Civil War for the Office of the Comptroller of the Currency.
Roberts wrote that the three current uses "are modern and contested. And they do not involve regulatory or enforcement authority comparable to that exercised by the CFPB." Roberts also wrote that the CFPB structure "is also incompatible with the structure of the Constitution, which—with the sole exception of the Presidency—scrupulously avoids concentrating power in the hands of any single individual."
Roberts referred back to the precedent established by Humphrey's Executor and Morrison as a basis for the majority's decision.
Justice Elena Kagan wrote the dissent joined by Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor. Kagan wrote that "Today's decision wipes out a feature of that agency its creators thought fundamental to its mission—a measure of independence from political pressure."
Kagan challenged the separation of powers argument presented by the majority: "Nowhere does the text [of the Constitution] say anything about the President's power to remove subordinate officials at will." The dissenting Justices did concur on the matter of severability of the remaining structure of the CFPB outside of the director.
2022 dispute over funding structure:
Main article: Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited
In 2018, the Community Financial Services Association of America sued the CFPB over its 2017 rule that blocked lenders attempting to collect funds from borrowers' accounts after two consecutive failed attempts, unless the borrower had consented.
Part of its argument in the case was that the CFPB's budgetary structure was unconstitutional, as it did not receive funding through Congressional appropriations but requested its funding through the Federal Reserve.
While the district court ruled against the association, the Fifth Circuit ruled in favor of the association in October 2022, deeming that its funding structure was unconstitutional.
That opinion has been appealed to the US Supreme Court.
2023 sanctioned over conduct:
The Eleventh Circuit affirmed sanctions levied by the United States District Court for the Northern District of Georgia against the Consumer Financial Protection Bureau due to its conduct during discovery.
Click on any of the following blue hyperlinks for more about the Consumer Finacial Protection Bureau:
Consumers Financial Protection Bureau Web Site (below):
Website: Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States government responsible for consumer protection in the financial sector.
CFPB's jurisdiction includes:
- banks,
- credit unions,
- securities firms,
- payday lenders,
- mortgage-servicing operations,
- foreclosure relief services,
- debt collectors,
- and other financial companies operating in the United States.
Since its founding, the CFPB has used technology tools to monitor how financial entities used social media and algorithms to target consumers.
The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the financial crisis of 2007–08 and the subsequent Great Recession and is an independent bureau within the Federal Reserve.
The CFPB's status as an independent agency has been subject to many challenges in court. In June 2020, the United States Supreme Court found the single-director structure removable only with-cause unconstitutional but allowed the agency to remain in operation.
Role:
According to former Director Richard Cordray, the Bureau's priorities are mortgages, credit cards and student loans. The CFPB qualifies as a large independent agency that was designed to consolidate its employees and responsibilities from a number of other federal regulatory bodies, including:
- the Federal Reserve,
- the Federal Trade Commission,
- the Federal Deposit Insurance Corporation,
- the National Credit Union Administration
- and even the Department of Housing and Urban Development.
The bureau is an independent unit located inside and funded by the United States Federal Reserve, with interim affiliation with the U.S. Treasury Department.
The CFPB writes and enforces rules for financial institutions, examines both bank and non-bank financial institutions, monitors and reports on markets, as well as collects and tracks consumer complaints.
The CFPB opened its website in early February 2011 to accept suggestions from consumers via YouTube, Twitter, and its own website interface. According to the United States Treasury Department, the bureau is tasked with the responsibility to "promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services".
According to its web site, the CFPB's "central mission...is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products".
In 2016 alone most of the hundreds and thousands of consumer complaints about their financial services—including banks and credit card issuers—were received and compiled by CFPB and are publicly available on a federal government database.
Once a financial institution acquires $10 billion in assets, it falls under the guidance, rules, and regulations under the CFPB. The bank will then be known as a CFPB regulated bank.
The CFPB will examine the institution for compliance with bank regulatory laws.
The regulations implemented by the Bureau are housed in Chapter X of Title XII Banks and Banking of the U.S. Code of Federal Regulations, and consist of:
- ECOA (Equal Credit Opportunity Act- Regulation B),
- HMDA (Home Mortgage Disclosure Act - Regulation C),
- Alternative Mortgage Transaction Parity Act of 1982 (Regulation D),
- EFTA (Electronic Fund Transfer Act - Regulation E),
- FDCPA (Fair Debt Collection Practices Act - Regulation F),
- SAFE Act (Federal & State), Land Registration (Regulation J & K), Special Rules of Practice (Regulation L), Consumer Leasing (Regulation M), Privacy of Consumer Financial Information (Regulation P),
- FCRA (Fair Credit Reporting Act - Regulation V),
- RESPA (Real Estate Settlement Procedures Act - Regulation X),
- TILA (Truth in Lending Act - Regulation Z),
- Truth in Savings Act (Regulation DD), and Payday, Vehicle Title, and Certain High-Cost Installment Loans Act (Payday Lending Rule).
History:
In July 2010, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, during the 111th United States Congress in response to the late-2000s recession and financial crisis. The agency was originally proposed in 2007 by then Harvard Law School professor Elizabeth Warren, who later became a US senator.
The proposed CFPB was actively supported by Americans for Financial Reform, a newly created umbrella organization of some 250 consumer, labor, civil rights and other activist organizations.
On September 17, 2010, President Obama announced the appointment of Warren as Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau to set up the new agency. Due to the way the legislation creating the bureau was written, until the first Director was in place, the agency was not able to write new rules or supervise financial institutions other than banks.
On July 21, 2011, Senator Richard Shelby wrote an op‑ed for The Wall Street Journal affirming his continued opposition to a centralized structure, noting that both the Securities Exchange Commission and Federal Deposit Insurance Corporation had executive boards and that the CFPB should be no different. He noted lessons learned from experiences with Fannie Mae and Freddie Mac as support for his argument.
Politico interpreted Shelby's statements as saying that Cordray's nomination was "dead on arrival". Republican threats of a filibuster to block the nomination in December 2011 led to Senate inaction.
Elizabeth Warren, who proposed and established the CFPB, was removed from consideration as the bureau's first formal director after Obama administration officials became convinced Warren could not overcome strong Republican opposition. On July 17, President Obama nominated former Ohio Attorney General and Ohio State Treasurer Richard Cordray to be the first formal director of the CFPB. Prior to his nomination, Cordray had been hired as chief of enforcement for the agency.
However, Cordray's nomination was immediately in jeopardy due to 44 Senate Republicans vowing to derail any nominee in order to encourage a decentralized structure of the organization.
Senate Republicans had also shown a pattern of refusing to consider regulatory agency nominees. The CFPB formally began operation on July 21, 2011.
Since the CFPB database was established in 2011, more than four million complaints have been published. CFPB supporters include the Consumers Union claim that it is a "vital tool that can help consumers make informed decisions".
CFPB detractors argue that the CFPB database is a "gotcha game" and that there is already a database maintained by the Federal Trade Commission although that information is not available to the public.
On January 4, 2012, Barack Obama issued a recess appointment to install Cordray as director through the end of 2013. This was a highly controversial move as the Senate was still holding pro forma sessions, and the possibility existed that the appointment could be challenged in court. This type of recess appointment was unanimously ruled unconstitutional in NLRB v. Noel Canning.
On July 16, 2013, the Senate confirmed Cordray as director in a 66–34 vote.[28] Cordray resigned in late 2017 to run for governor of Ohio.
The Financial CHOICE Act, proposed by the House Financial Services Committee's Jeb Hensarling, to repeal the Dodd–Frank Wall Street Reform and Consumer Protection Act, passed the House on June 8, 2017. Also in June 2017, the Senate was crafting its own reform bill.
Testimony in US Congressional hearings of 2017 have elicited concerns that the wholesale publication of consumer complaints is both misleading and injurious to the consumer market. Rep. Barry Loudermilk (R-GA) said at one such congressional hearing, "Is the purpose of the database just to name and shame companies? Or should they have a disclaimer on there that says it's a fact-free zone, or this is fake news? That's really what I see happening here."
Bill Himpler, executive vice president of the American Financial Services Association, a trade group representing banks and other lenders responded "Something needs to be done." "Once the damage is done to a company, it's hard to get your reputation back.
Mick Mulvaney, as acting director of the CFPB, removed all 25 members of the agency's Consumer Advisory Board on June 5, 2018, after eleven of them held a press conference on June 3 in which they criticized him.
On February 13, 2021, President Joe Biden formally submitted to the Senate the nomination of Rohit Chopra to serve as director of the CFPB. His nomination was approved on September 30, 2021, by a 50-48 vote.
Regulatory activities:
From its creation until 2017, the CFPB "has curtailed abusive debt collection practices, reformed mortgage lending, publicized and investigated hundreds of thousands of complaints from aggrieved customers of financial institutions, and extracted nearly $12 billion for 29 million consumers in refunds and canceled debts."
Public outreach:
The CFPB has created a number of personal finance tools for consumers, including Ask CFPB, which compiles plain-language answers to personal finance questions, and Paying for College, which estimates the cost of attending specific universities based on the financial aid offers a student has received.
The CFPB has also attempted to help consumers understand virtual currencies such as Bitcoin.
Consumer data protection:
In 2016, the CFPB took its first enforcement action against a company that the CFPB alleged had failed to properly protect the privacy and security of consumers data.
Controversies:
A 2013 press release from the United States House Financial Services Committee criticized the CFPB for what was described as a "radical structure" that "is controlled by a single individual who cannot be fired for poor performance and who exercises sole control over the agency, its hiring and its budget."
Moreover, the committee alleged a lack of financial transparency and a lack of accountability to Congress or the President. Committee Vice Chairman Patrick McHenry, expressed particular concern about travel costs and a $55 million renovation of CFPB headquarters, stating "$55 million is more than the entire annual construction and acquisition budget for GSA for the totality of federal buildings."
In 2012, the majority of GSA's Federal Buildings Fund went to rental costs, totaling $5.2 billion. $50 million was budgeted for construction and acquisition of facilities.
In 2014, some employees and former employees of the CFPB testified before Congress about an alleged culture of racism and sexism at the agency. Former employees testified they were retaliated against for bringing problems to the attention of superiors.
As described in articles in Motor Finance and The Wall Street Journal, the CFPB has been criticized for the methodology it uses to identify instances of racial discrimination among auto lenders.
Because of legal constraints, the agency used a system to "guess" the race of auto loan applicants based on their last name and listed address. Based on that information, the agency charged several lenders were discriminating against minority applicants and levied large fines and settlements against those companies.
Ally Financial paid $98 million in fines and settlement fees in 2013. As the agency's methodology means it can only guess who may be victims of discrimination entitled to settlement funds, as of late 2015, the CFPB had yet to compensate any individuals who were victims of Ally's allegedly discriminatory practices.
Cordray was accused of multiple violations of the Hatch Act as Director of the CFPB and investigated by the Office of Special Counsel (OSC), who found no violations.
Amendments:
On May 21, 2018, US President Donald Trump signed into law Congressional legislation repealing the enforcement of automobiles lending rules. On May 24, 2018, Trump signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act, exempting dozens of banks from the CFPB's regulations.
Proposed amendments:
On September 26, 2013, the Consumer Financial Protection Safety and Soundness Improvement Act of 2013 (H.R. 3193; 113th Congress) was introduced into the United States House of Representatives.
If adopted, the bill would have modified the CFPB by transforming it into a five-person commission and removing it from the Federal Reserve System. The CFPB would have been renamed the "Financial Product Safety Commission".
The bill was also intended to make it easier to override the CFPB decisions. It passed in the House of Representatives on February 27, 2014 and was received by the Senate on March 4. It was never considered in the Democratic controlled Senate.
Legal challenges:
Further information: Dodd–Frank Wall Street Reform and Consumer Protection Act § Constitutional challenge to Dodd–Frank
Two lawsuits were filed in the early years of the CFPB; they were both dismissed by federal courts, but one was appealed and is still ongoing.
The first one, filed on June 21, 2012, by a Texas bank along with the Competitive Enterprise Institute, challenged the constitutionality of provisions of the CFPB. One year later, in August 2013, a federal judge dismissed the lawsuit because the plaintiffs had failed to show that they had suffered harm.
In July 2015, the United States Court of Appeals for the District of Columbia Circuit affirmed in part and reversed in part, holding that the bank, but not the states that later joined the lawsuit, had standing to challenge the law, and returned the case for further proceedings.
A lawsuit filed July 22, 2013, by Morgan Drexen Integrated Systems, a provider of outsourced administrative support services to attorneys, and Connecticut attorney Kimberly A. Pisinski, challenged the constitutionality of the CFPB.
The complaint, filed in the U.S. District Court for the District of Columbia, alleged that the "CFPB's structure insulates it from political accountability and internal checks and balances in violation of the United States Constitution. Unbridled from constitutionally-required accountability, CFPB has engaged in ultra vires and abusive practices, including attempts to regulate the practice of law (a function reserved for state bars), attempts to collect attorney-client protected material, and overreaching demands for, and mining of, personal financial information of American citizens, which has prompted a Government Accountability Office ("GAO") investigation, commenced on July 12, 2013."
On August 22, 2013, one month after Morgan Drexen's lawsuit, the CFPB filed its own lawsuit against Morgan Drexen in the United States District Court for the Central District of California alleging that Morgan Drexen charged advance fees for debt relief services in violation of the Telemarketing Sales Rule and engaged in deceptive acts and practices in violation of the Consumer Financial Protection Act (CFPA).
The CFPB won this lawsuit and Morgan Drexen was ordered to pay $132,882,488 in restitution and a $40 million civil penalty.
In October 2016, the Court of Appeals for the District of Columbia Circuit ruled that it was unconstitutional for the CFPB Director to be removable by the President of the United States only for cause, such as "inefficiency, neglect of duty or malfeasance."
Circuit Judge Brett Kavanaugh, joined by Senior Circuit Judge A. Raymond Randolph, wrote that the law was "a threat to individual liberty" and instead found that the President could remove the CFPB Director at will.
Circuit Judge Karen L. Henderson agreed that the CFPB Director had been wrong in adopting a new interpretation of the Real Estate Settlement Procedures Act, finding the statute of limitations did not apply to the CFPB, and fining the petitioning mortgage company PHH Corporation $109 million, but she dissented from giving the President a new power to remove the Director, citing constitutional avoidance.
The U.S. Court of Appeals for the District of Columbia Circuit vacated the decision and ordered en banc review.
On January 31, 2018, the en banc D.C. Circuit found that the CFPB's structure was constitutional by a vote of 7–3. Judge Cornelia Pillard, writing for the majority, found that the Take Care Clause does not forbid independent agencies, while each of the circuit judges from the earlier panel wrote separate dissents.
In June 2018, New York Federal District Court judge Loretta Preska ruled against its structure.
In January 2019, the Supreme Court denied review of the DC Circuit Court decision.
In October 2019, the Supreme Court announced it would review the constitutionality of the Bureau's structure in the case Seila Law v. Consumer Financial Protection Bureau considering the split decision of the lower courts. Oral arguments began on March 3, 2020.
On June 29, 2020, the Supreme Court ruled in a 5–4 decision that the firing protections are an unconstitutional restraint on the president's ability to oversee executive branch agencies.
"Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control,"
Chief Justice John Roberts wrote in the majority opinion, which was joined by his conservative colleagues. The statutes around the Director's position on the CFPB were considered severable from the remaining structure of the CFPB, and the Court ordered that "The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will."
The dissenting opinion, written by Justice Elena Kagan, stated that the majority's decision has the court "second-guessing" the two political branches of government (Congress and the president) on how to structure the executive branch and "wipes out a feature of [the CFPB] its creators thought fundamental to its mission—a measure of independence from political pressure."
2017 dispute over acting director:
See also: English v. Trump
On November 24, 2017, Director Cordray appointed Leandra English to the position of deputy director, and announced that he would leave office at the close of business that day.
Cordray indicated that would make English the acting director after his resignation, citing provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act providing that the deputy director of the CFPB becomes acting director in the "absence or unavailability" of the director.
Later the same day, however, President Donald Trump appointed the incumbent director of the Office of Management and Budget, Mick Mulvaney, as acting director, citing the authority of the Federal Vacancies Reform Act of 1998.
On November 25, the Office of Legal Counsel released an opinion, written by Assistant Attorney General Steven Engel, asserting that the President has the authority under the FVRA to designate an acting CFPB Director.
The OLC memo maintained that "both the Vacancies Reform Act and [§1011(b)(5) of Dodd-Frank] are available for filling on an acting basis a vacancy that results from the resignation of the CFPB's Director" but that "when the President designates an individual...outside the ordinary order of succession, the President's designation necessarily controls." This position was also supported by the General Counsel of the CFPB, Mary E. McLeod.
On November 26, English (represented by former CFPB Senior Counsel Deepak Gupta) filed a lawsuit in the United States District Court for the District of Columbia seeking a temporary restraining order and declaratory judgment to prevent Mulvaney from becoming acting director,
Mulvaney was given access by unnamed individuals with the keys to the director's office on November 27 and ordered all CFPB employees to disregard any claims from English that she is the acting director.
Both English and Mulvaney sent emails to the entire 1,600-person staff of the CFPB, each signing as "Acting Director" of the agency. On November 28, 2017, U.S. District Judge Timothy J. Kelly, who had been appointed by President Trump just a few months earlier, denied English's motion for a preliminary injunction and allowed Mulvaney to begin serving as CFPB Acting Director.
2019 dispute over CFPB leadership:
See also: Seila Law LLC v. Consumer Financial Protection Bureau
Seila Law LLC (Seila Law), a law firm that provided debt relief services, was under investigation by the CFPB. As part of its investigation, the CFPB issued a civil investigative demand (CID) to Seila Law, which required Seila Law to produce certain documents.
Seila Law declined to comply with the CID and challenged the constitutionality of the CFPB. The CFPB brought a motion to enforce the CID to the United States District Court for the Central District of California, where District Judge Josephine Staton granted the motion after finding the CFPB was constitutionally structured.
Seila Law's appeal to the Ninth Circuit was dismissed. The 9th Circuit panel affirmed the District Court's ruling, and agreed that the Supreme Court's prior decisions upholding for-cause removal in Humphrey's Executor and Morrison were "controlling". It also referred approvingly to the en banc decision of the DC Circuit in PHH Corp. v. CFPB (2018), in which the Circuit found that the structure of the CFPB was constitutional.
There was arguably a circuit split on the question presented in Seila Law. While the Ninth Circuit and DC Circuit had held that the CFPB's structure is constitutional, the Fifth Circuit in Collins v. Mnuchin (2018) held that the structure of the Federal Housing Finance Agency—another agency whose director can be removed only for cause—violated the separation of powers.
The Supreme Court granted certiorari in Seila Law on October 18, 2019, and heard oral argument on March 3, 2020.
The Court issued its decision on June 29, 2020. The 5–4 decision ruled that the CFPB structure, with a sole director that could only be terminated for cause, was unconstitutional as it violated the separation of powers, vacating the lower court judgement and remanding the case for review.
The Court recognized that the statutes around the director of the CFPB was severable from the rest of the statute establishing the agency, and thus "The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will."
Chief Justice John Roberts wrote the majority opinion joined by Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, and Brett Kavanaugh. Roberts wrote that the CFPB structure with a single point of leadership that could only be removed for cause "has no foothold in history or tradition", and has only been used in four other instances: three current uses for the United States Office of Special Counsel, the Social Security Administration, and the Federal Housing Finance Agency, and temporarily for one year during the American Civil War for the Office of the Comptroller of the Currency.
Roberts wrote that the three current uses "are modern and contested. And they do not involve regulatory or enforcement authority comparable to that exercised by the CFPB." Roberts also wrote that the CFPB structure "is also incompatible with the structure of the Constitution, which—with the sole exception of the Presidency—scrupulously avoids concentrating power in the hands of any single individual."
Roberts referred back to the precedent established by Humphrey's Executor and Morrison as a basis for the majority's decision.
Justice Elena Kagan wrote the dissent joined by Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor. Kagan wrote that "Today's decision wipes out a feature of that agency its creators thought fundamental to its mission—a measure of independence from political pressure."
Kagan challenged the separation of powers argument presented by the majority: "Nowhere does the text [of the Constitution] say anything about the President's power to remove subordinate officials at will." The dissenting Justices did concur on the matter of severability of the remaining structure of the CFPB outside of the director.
2022 dispute over funding structure:
Main article: Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited
In 2018, the Community Financial Services Association of America sued the CFPB over its 2017 rule that blocked lenders attempting to collect funds from borrowers' accounts after two consecutive failed attempts, unless the borrower had consented.
Part of its argument in the case was that the CFPB's budgetary structure was unconstitutional, as it did not receive funding through Congressional appropriations but requested its funding through the Federal Reserve.
While the district court ruled against the association, the Fifth Circuit ruled in favor of the association in October 2022, deeming that its funding structure was unconstitutional.
That opinion has been appealed to the US Supreme Court.
2023 sanctioned over conduct:
The Eleventh Circuit affirmed sanctions levied by the United States District Court for the Northern District of Georgia against the Consumer Financial Protection Bureau due to its conduct during discovery.
Click on any of the following blue hyperlinks for more about the Consumer Finacial Protection Bureau:
- List of directors
- See also:
Consumers Financial Protection Bureau Web Site (below):
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If you don't see the product or service you want to complain about listed, check out usa.gov to find other places to submit complaints. It includes ways to submit complaints about phone, internet, and cable companies as well as companies that sell other products and services and more.
If you think you’ve been a victim of scam, there are a few important steps you should take right away.
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