SLEAZE FILES - Company Changes Name But Not Practices

"Company That Sues Soldiers Pledges Reform, Changes Name" by Paul Kiel, ProPublica 10/7/2014

USA Discounters has undergone a makeover.

The Virginia-based retailer was the focus of a ProPublica investigation in July into its lending practices to service members.  The company still sells high-priced furniture, electronics and appliances outside military bases across the country, but it has adopted a new name for its stores, USA Living, and says it has made reforms to its collections processes.

As before, USA Living advertises that active military customers, regardless of their financial histories, are "always approved" for credit.  But it has traded in the USA Discounters' tagline, "Your incredible credit store," for a new USA Living tagline, "Credit for the life you want."

Hannah Arnold, a company spokeswoman, said the name change was made to avoid confusion.  "[T]he company is not a discount store," she wrote in an email.

Despite the name change, USA Living continues to make loans much the same way it did as USA Discounters.

ProPublica's story, published with the Washington Post, detailed how USA Discounters has filed thousands of lawsuits in two local Virginia courts against borrowers who defaulted on their loans.  Relying on a clause in its contracts, the company filed suits in those courts regardless of where service members bought the items or where they were based.  Because the service members frequently didn't show up in court, the company easily obtained judgments and could garnish the debtors' wages.  Department of Defense payroll data obtained by ProPublica showed that USA Discounters seizes the pay of more active-duty service members than any company in the country.

USA Discounters will still be filing lawsuits in those local courts, but said in a press release that it will take a number of steps to inform borrowers they have an option to be sued closer to home.  The company said it only files suit after borrowers fall several months behind and as a last resort.

Service members who take out loans from USA Living are now provided with a " Notification of Jurisdiction and Customer Rights."  The notice reiterates that the company has the right under the contract to sue the borrower in Virginia, but adds that if that does happen, the borrower can request to have the suit moved to another court and the company "will honor that request."  Borrowers are required to sign the notice as acknowledgment.

Arnold, the company spokeswoman, said that if borrowers do fall behind, they will again be notified that they have the option to transfer any lawsuit to a local court.

Carolyn Carter, director of advocacy at the National Consumer Law Center, said the changes were an improvement, but not by much.  "They're still planning to sue consumers in Virginia even though most consumers have no contact or connection with Virginia," she said.  They have made a bad practice "a little less bad," she said, by giving borrowers the option to have a suit transferred.

The company's makeover does not seem to have slowed the pace of its lawsuits in local Virginia courts.  In the last two weeks, for example, the company filed 28 lawsuits in Virginia Beach General District Court.  Only one of the defendants had a Virginia address.  The others all had addresses either on or near military installations around the country, including Fort Hood and Fort Bliss in Texas, Fort Benning and Fort Gordon in Georgia, Fort Bragg in North Carolina, Fort Carson in Colorado and Fort Campbell in Kentucky.

It is illegal under federal law for debt collectors to sue consumers in a remote court no matter how many disclosures are provided.  But the Fair Debt Collection Practices Act does not apply to a lender like USA Discounters filing suit on its own behalf.  After ProPublica's story ran, a group of senators sent letters to two different federal regulators asking them to close that loophole and investigate USA Discounters' practices.

The Federal Trade Commission's response to one of those letters confirmed the existence of the loophole in the debt collection act, but hinted that USA Discounters might be in violation of a different federal law.

Under the FTC Act, the FTC has the power to combat "unfair or deceptive acts or practices" by a wide array of companies, FTC Chairwoman Edith Ramirez wrote in a letter to Sen. Richard Blumenthal, D-Conn., one of the six senators who wrote the commission.  Ramirez cited a case where the FTC found that it was, in fact, unfair for a company to sue borrowers in a remote court.

In that case, the FTC took action against a company that offered online payday loans through a company located on a tribal reservation in South Dakota.  Much like USA Discounters, the company's contracts declared that consumers could be sued in the local tribal court, regardless of where they lived.  The FTC brought suit against the company, charging that the practice violated the law.  The FTC, however, has not, as of yet, taken any action against USA Discounters.

The Consumer Financial Protection Bureau announced a settlement with USA Discounters in August over unrelated issues.  The settlement, which centered on a $5 fee that the company charged service members in its contracts, did not preclude further action by the CFPB.  A spokesman said that the agency, which also has broad power to combat unfair business practices, had not yet replied to the senators' letter, but "remains focused on protecting our nation's servicemembers in the financial marketplace."

INTERNET - Data Brokers vs Protecting Your Privacy

"Companies tracking our online footsteps should be more transparent, says FTC" PBS NewsHour 6/13/2014

Excerpt

JUDY WOODRUFF (NewsHour):  Now, how big data is being tracked for commercial purposes.

You may not know of or have heard much about companies known as data brokers, but a recent government report says these companies actually know a lot about you and the information you share online, billions of pieces of data, actually.

Jeffrey Brown has the story.

JEFFREY BROWN (NewsHour):  Are you a mobile mixer, an urban scrambler?  Do you know what those mean or that you yourself might be characterized as one or the other?

According to a new study by the Federal Trade Commission, large companies called data brokers use such labels as they track our online buying habits, what we do in our free time, religious affiliations, and much, much more, in an industry the FTC says suffers from a fundamental lack of transparency.

It found that one company’s database alone had information that included 1.4 billion consumer transactions and more than 700 billion aggregated pieces of data.  The FTC is calling on Congress to take new steps to protect consumers.

And its chairwoman, Edith Ramirez, joins us now to talk about it.

PRIVACY - Warning, Big Data Brokers

"FTC report warns consumers about big data brokers" PBS NewsHour 5/31/2014

Excerpt

HARI SREENIVASAN (NewsHour):  Earlier this week, the Federal Trade Commission issued a report that contained consumer protection recommendations concerning what’s referred to as “big data” – the companies that collect and sell billions of bits of information about all aspects of our online lives.  Information that includes purchases, income, political affiliations – even religion. As FTC Chairwoman Edith Ramirez put it:

“It’s time to bring transparency and accountability to bear on this industry on behalf of consumers, many of whom are unaware that data brokers even exist.”

For some insight, we turn to Amy Schatz who covers tech policy issues for Re/code.

So, what were the things that this report uncovered that might surprise consumers?

AMY SCHATZ, Re/code:  I think most of the things in the report would surprise consumers, although this isn’t necessarily a new issue – this has been going around for a couple of years – but most people don’t know that there are a bunch of data collectors out there who are collecting data about you.  Whether it’s who you voted for or your political beliefs.  Whether it’s your zip code or what you purchased at the store last week or what you’re lookeingat online.  There are these profiles that are being created online of most Americans now and that information is being traded and shared in a way that a lot of consumers might find a little troubling.

TECHNOLOGY - Easy Hack Smart Devices?

One of the wost ideas is a phone-app that allows you to unlock your door at home.  Ya, great idea, give the opportunity for a hacker access the app and unlock your door, or if you loose your phone.  Boy, high-tech robbers are going to love this one.  Then the car manufacturers who offer phone-app to control and unlock your car, while you can loose your keys or phone, you cannot hack the electronic key.

"Smart Devices That Make Life Easier May Also Be Easy To Hack, Says FTC" PBS Newshour 9/5/2013

Excerpt

JEFFREY BROWN (Newshour):  New technology presents new concerns over privacy in unexpected places.

An ever-expanding array of appliances and household devices has made our lives easier and sometimes safer.  Now connected to the Web, they're becoming known as the Internet of things, baby monitors with cameras, home thermostats, even refrigerators.  These so-called smart devices are programmable and easy to access remotely, both by their owners and, as it turns out, by hackers.

Yesterday, the Federal Trade Commission cited one seller of Web-enabled video cams for its inadequate security protections.  It found that a breach in the company's software allowed hackers to post links to the live video feeds of its customers' security cameras.

Hari Sreenivasan takes the story from there.

HARI SREENIVASAN (Newshour):  Kashmir Hill is a senior editor and writes the technology and privacy column "Not-So Private Parts" at Forbes.com.
----
HARI SREENIVASAN:  Now, you said in one of your articles that there's even a search engine to help people find this.

KASHMIR HILL, Forbes.com:  There is a search engine.

It's called Shodan.  It's like Google.  But where Google crawls for websites, this actually crawls the Internet looking for connected devices.  And it's found all kinds of things.  It's found cars that are connected to the Internet, the cameras that we have heard about, building control systems for Google's headquarters in Australia and power plants and water filtration companies.

There are so many products now that are connected to the Internet, because it's so useful to be able to check on them or control things from afar.  But a lot of times, these products are being designed without good security, so that somebody can, one, see that they're there, and in some cases even go in and control those devices or access their streams.

POLITICS - FTC Is Fighting Identity Theft... Well Maybe

"Government Hit by Rash of Data Breaches" by HOPE YEN, Associated Press Writer

The government agency charged with fighting identity theft said Thursday it had lost two government laptops containing sensitive personal data, the latest in a series of breaches encompassing millions of people.

The Federal Trade Commission said it would provide free credit monitoring for 110 people targeted for investigation whose names, addresses, Social Security numbers - and in some instances, financial account numbers - were taken from an FTC attorney's locked car.

Duh! When are agencies going to realize that our personal data should not be taken out of agency's offices? The data should not be on any portable computer (laptops, notebooks, etc.). How many times do they, and private companies, have to be hit over the head with a 2-by-4 before they get it?!

Private personal data belongs only on highly secure servers that can be accessed only from equally secure desktop workstations at the office, period. This data should never be allowed to be copied to the workstation nor portable computer.

Inconvenience is not a reason to put your personal data at risk!