GE Capital, which changed its name to Synchrony Bank earlier this month, must refund more than 6 lakh customers subjected to deceptive marketing and discriminatory practices relating to credit card products under a $225 million order from the CFPB and DOJ
When trying to pay back your credit card debt, it’s tempting to think you might have some protections if you fall into hardship, especially if you think the protections are being extended to you for free, because, well, maybe you are just special or nice or whatnot.
But before you agree to any credit card add-on products, you might want to review a recent action against GE Capital. The Utah-based company, which changed its name to Synchrony Bank earlier this month, must refund more than 600,000 customers subjected to deceptive marketing and discriminatory practices relating to credit card products under a $225 million order from the Consumer Finance Protection Bureau (CFPB) and Department of Justice (DOJ). The company was also cited for discriminating against Hispanic customers.
GE Capital promoted credit card add-on products that consumers were told would provide debt cancellation of a certain percentage of a consumer’s balance in the event of certain hardships such as unemployment or disability.
However, an investigation by CFPB and DOJ found that the company’s telemarketers misrepresented the products in four main ways:
• Marketing them as free of charge if a consumer paid off the balance of their billing statement. In fact, consumers could only avoid fees in very specific circumstances, such as if the account was not in use.
• Failed to disclose consumers’ ineligibility for some key benefits if for example they were retired or disabled.
• Did not make it clear to consumers that they were actually buying the debt cancellation product and instead made it seem as though they were receiving a benefit.
• Pressured consumers by falsely stating that the debt cancellation products were limited time offers.
In addition, regulators said GE Capital did not extend the offers to customers who preferred to communicate in Spanish or had mailing addresses in Puerto Rico.
As part of the order, the company will refund $56 million to 638,000 consumers affected by the marketing, provide $169 million to 108,000 borrowers excluded from the debt relief products, and pay a $3.5 million penalty to CFPB. Consumers affected will receive a credit to their GE accounts or a check in the mail if they no longer have a credit card from the company.
Last year the company was ordered by CFPB to refund up to $34.1 million to about one million consumers who were victims of deceptive credit card enrolment tactics at doctors’ and dentists’ offices around the country.
GE is not the first bank to pay out penalties for deceptive credit card payment protection practices and (likely won’t be the last). In April, Bank of America agreed to pay out more than $700 million for deceptively marketing credit card products and billing consumers without authorization.
The New York governor has called for closing a gap in the state’s campaign finance laws, but he’s taken far more through the loophole than his predecessors, much of it from real estate developers
When he ran for office four years ago, New York Gov. Andrew M. Cuomo pledged to close a loophole in the state's campaign finance regulations allowing corporations and individuals to pour unlimited amounts of money into politics.
Instead, he's become the loophole's biggest beneficiary.
New York State forbids corporations from giving more than $5,000 a year to candidates and political committees. But limited liability companies—businesses that share attributes of corporations and partnerships—are allowed to give up to $60,800 to a statewide candidate per election cycle and up to $150,000 a year to candidates and committees overall. What's more, corporations and individuals can set up an unlimited number of LLCs through which to donate, making the caps effectively meaningless.
Cuomo took contributions from LLCs while running for governor in 2010, but said at the time that he was only accepting them so that he could get elected and change the law. He has twice proposed legislation that would eliminate the LLC exception, most recently in his budget proposal in January, but it hasn't been enacted. He told reporters Wednesday that there was little chance any campaign finance reforms would pass before the legislative session ends next week.
Cuomo has accepted more than $6.2 million from LLCs in the three and a half years since he took office, according to a ProPublica analysis of state campaign finance filings. That's more than double the amount his two predecessors, Eliot Spitzer and David Paterson, took in during their combined four years in office. The contributions make up a sizeable chunk of the $33 million Cuomo has reported raising for his re-election campaign. (The data reflects contributions reported through mid-January, when candidates last filed disclosure reports.)
In a statement, Cuomo spokesman Matthew Wing offered this to explain the apparent contradiction: "The Cuomo campaign is following existing campaign finance laws, while the Governor is leading the charge to reform them, including closing the loophole for LLCs."
That's of little consolation to campaign finance watchdogs concerned that those who have—or are seeking to have—business with New York are continuing to use this wrinkle in the state's contribution rules to exert their influence. Much of the money coming to Cuomo through LLCs appears to be from real estate developers, with cable companies and liquor distributors among those also providing healthy cash infusions.
"This is a gaping hole," said Dick Dadey, the executive director of Citizens Union, a New York good-government group. Getting rid of it is "an easy fix that would turn the spigot down a bit of the flow of money from big contributors."
It's not always immediately apparent who controls the LLCs making the contributions. Some, like Time Warner NY Cable LLC, have familiar names. But many LLCs don't give much of a clue as to who's behind the money. Some controlled by real estate interests are named for streets or addresses—Arwin 88th Street LLC or 134 W 58 LLC—that require some digging to connect the dots.
Cuomo has also taken far more from LLCs since his election than any other New York State politician or committee. Attorney General Eric Schneiderman has accepted about $1 million from LLCs since 2011, according to ProPublica's analysis. The Senate Republican Campaign Committee has received about $851,000, while the Democratic Senate Campaign Committee has totaled about $172,000.
New York's rules for political giving by LLCs are among the loosest in the nation.
Federal regulations generally bar LLCs, along with corporations and unions, from giving directly to federal candidates. The rules vary at the state level—at least six states allow unlimited contributions from all types of donors, while others ban donations from corporations and other businesses entirely. But few states have carved out exceptions for LLCs as generous as New York's.
Maryland and the District of Columbia passed legislation to close their versions of the LLC loophole last year.
Cuomo has repeatedly called for tightening New York's campaign finance limits since his election. After lawmakers failed to pass the ethics reforms he proposed last year—including closing the LLC loophole—Cuomo formed a Moreland Commission to investigate corruption and recommend new campaign finance laws.
The commission's preliminary report, released in December, illustrated how companies use LLCs to avoid contribution limits. A "representative string of emails" subpoenaed by investigators included "a lively discussion among members of an organization about which of the organization's LLCs should be used to make a round of outsized contributions, based upon which ones had already given outsized contributions in the past," the report said. The commission recommended closing the loophole, among other reforms.
Instead, the loophole survived when Cuomo announced in March that he was shutting down the Moreland Commission. Lawmakers had agreed to adopt new bribery and anti-corruption measures, he said, so there was no longer a need for it.
But that halted the panel's investigation into potential campaign finance abuses by LLCs.
"The commission was not given the time to accomplish what it was charged with doing," said Richard Briffault, a Columbia Law School professor who served on the commission. "None of the investigations had time to be completed."
Of the LLCs giving to Cuomo, the most generous are controlled by Glenwood Management, a real estate development company headquartered on Long Island. Headed by Leonard Litwin, a reclusive 99-year-old magnate, Glenwood has given $800,000 to Cuomo since he took office using 19 separate LLCs. Glenwood's LLCs have also given millions of dollars to other New York candidates and committees, both Democratic and Republican.
Another real estate developer, the Extell Development Co., has also given extensively to Cuomo through LLCs, including two donations last year that were flagged by the Moreland Commission.
Two LLCs affiliated with Extell gave the governor a total of $100,000 on Jan. 28, 2013—two days before Cuomo signed legislation that granted a tax break to Extell's One57 skyscraper in Manhattan, as well as properties owned by four other developers. Two other LLCs with ties to Extell gave Cuomo another $100,000 six months later. (The contributions were first reported last year by The Daily News.)
"While we do not comment on any specific campaign contributions, we categorically deny any quid pro quo between contributions and legislation," Anna LaPorte, a spokeswoman for Extell, said in a statement to ProPublica. "Any suggestion to the contrary is an attempt to inhibit our constitutional right to have our voice heard on public policy issues."
There is no evidence that Cuomo played any role in inserting the tax breaks. Without naming Extell or Cuomo, however, the Moreland Commission called out the developers' donations, saying they created "the appearance of a relationship between large donations and legislation that specifically benefits large donors."
"Our investigation continues and we draw no premature conclusions" about whether the tax breaks were improper, the commission wrote in its December report, "but it is clear that the combination of very large campaign contributions and very narrowly targeted benefits to those same donors creates an appearance of impropriety that undermines public trust in our elected representatives."
Real estate interests may take advantage of the LLC loophole partly because of the way their businesses are structured. Developers typically keep each of their properties in a separate LLC to limit their legal liability, giving them plenty of LLCs with which to write checks to politicians.
"There is a lot of business they have before Albany," said Bill Mahoney, the research coordinator for the New York Public Interest Research Group, "and this is one way for them to buy more access than other folks."
Indeed, other businesses with huge stakes in New York have used LLCs to write outsized checks to Cuomo.
Since the governor took office, Time Warner Cable has contributed more than $60,000 to him through its LLC; LLCs affiliated with Cablevision have given $110,000. Two liquor distributors, Empire Merchants LLC and Empire Merchants North LLC, have given over $120,000. And two LLCs affiliated with the Ultimate Fighting Championship have contributed $115,000 to Cuomo, plus tens of thousands of dollars more to state legislators and political committees.
Cuomo has not proposed any legislation to legalize professional mixed martial arts events in New York, the only state that bans them. But almost a year after he received a $50,000 check from one of the LLCs, Cuomo seemed to come out in favor of overturning the ban.
"I think we need economic activity, especially in upstate New York," he said in a radio interview in 2013. "I think this is a major endeavor that is televised, that is happening all over the country at this point. You're not going to stop it from happening. And I'm interested in the potential economic potential for the state."
Wing, the Cuomo spokesman, said there was no connection between the governor's comments and the contributions.
Nifty may move sideways in the days to come
The Indian market opened Thursday higher and immediately hit the day’s high however as we mentioned market is currently in no man’s land, it soon started giving up gains and moved lower. US Federal Reserve gave a positive assessment and its commitment to retaining its accommodative monetary policy.
The S&P BSE Sensex opened at 25,327 and hit a high at 25,426 while NSE Nifty opened at 7,580 and moved higher to hit 7,606. Giving up intra-day gains gradually the indices edged lower to hit a low of 25,070 and 7,503. Sensex closed at 25,202 (down 44 points or 0.18%) while Nifty closed at 7,541 (down 18 points or 0.23%). The NSE recorded a lower volume of 98.42 crore shares. India VIX rose 0.87% to close at 18.7425.
Among the other indices on the NSE the top five gainers were IT (1.86%), NI15 (1.12%), Pharma (0.90%), FMCG (0.38%) and Auto (0.24%) while the top five losers were CPSE (2.73%), Energy (2.51%), PSE (2.42%), PSU Bank (1.34%) and Commodities (1.33%).
Of the 50 stocks on the Nifty, 22 ended in the green. The top five gainers were IndusInd Bank (2.60%), TCS (2.38%), Infosys (2.05%), Asian Paints (1.83%) and Sun Pharma (1.44%). The top five losers were United Spirits (7.93%), BPCL (4.98%), ONGC (4.79%), Kotak Mahindra Bank (3.97%) and Maruti (2.62%).
Of the 1,556 companies on the NSE, 648 companies closed in the green, 862 companies closed in the red while 46 companies closed flat.
The highlight of the day was the Securities and Exchange Board of India (Sebi) at its board meeting has ruled that all listed PSU should have at least 25% public shareholding in three years. Sebi has also extended the ambit of the popular offer for sale (OFS) mechanism for share sales. The regulator has said that top 200 companies will now be allowed to divest using the OFS route. Also, non-promoter entities holding more than 10% stake will also be allowed to divest through the OFS route. Earlier, only promoters were allowed to dilute using this route.
As per reports, the commerce and industry ministry has initiated the exercise to allow 100% foreign direct investment (FDI) in several segments of railways.
In spite of strengthening of the rupee today the software stocks, TCS (2.23%), Infosys (2.09%) and Wipro (1.25%), in the Sensex 30 pack were among the top four gainers. Infosys was in news that it may get three IT deals worth USD 1.4 billion this year from the US government. These deals include US Treasury office, work & pensions and patent office.
ONGC (5.13%) was the top loser in the Sensex 30 stock. Media reports suggested that the petroleum ministry has proposed that higher gas price as per the Rangarajan formula could be allowed only for incremental production over and above the current levels. This is an alternative to applying the formula unconditionally from 1 July 2014. Restricting the higher price to additional output, the ministry feels, would incentivise production while also protecting the interests of consuming industries like power and fertilisers.
Bharat Electronics hit its 52-week high today at Rs1,989.70 on the BSE. The stock was the top gainer (7.73%) in the ‘A’ group on the BSE.
United Spirits (7.73%) was the top loser in the ‘A’ group on the BSE. The lenders (IDBI Trusteeship Services) are invoking pledged shares of United Spirits, which is nearly nearly 5 million shares representing 1.24% of total equity capital, given to them earlier. These shares of United Spirits belonged to United Breweries Holdings and Kingfisher Finvest. On the other hand the open offer made by Diageo to acquire additional 26% stake in the company ends today.
US indices closed in the positive on Wednesday. After a two-day policy meeting the Fed trimmed bond-buying by $10 billion for a fifth straight meeting, to $35 billion, keeping it on pace to end the program late this year. Fed Chair Janet Yellen also said that she foresees interest rates to stay low for a considerable time, not specifying the timetable for the same, after the buying ends.
US central bank slashed its forecast for US economic growth this year to a range of between 2.1% and 2.3% from an earlier projection of around 2.9 %.
Asian indices showed a mixed performance. Nikkei 225 (1.62%) was the top gainer while Shanghai Composite (1.55%) was the top loser.
European indices were trading in the green while US Futures were trading marginally lower.