The Survive and Thrive Boomer Guide

Crowdfunding scheme operator who failed to deliver charged by FTC

The operator of a crowdfunding scheme who told consumers he was raising money to develop a high-tech backpack and other products, but failed to deliver any of the products and instead used most of the funds for himself, is being sued by the Federal Trade Commission.

In its lawsuit, the FTC alleges that Douglas Monahan and his company iBackPack of Texas, raised more than $800,000 from consumers through four crowdfunding campaigns. Monahan falsely claimed the funds would be used to develop products such as the “iBackPack,” which would include batteries for charging laptops and phones, cables, and a Bluetooth speaker.

“If you raise money by crowdfunding, you don’t have to guarantee that your idea will work,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “But you do have to use the money to work on your idea – or expect to hear from the FTC.”

How to improve your finances during Financial Literacy Month

It’s a good time during April’s Financial Literacy Month to take a look at how you handle your finances.

What is financial literacy? It’s knowing how to manage your personal finances.

How are Americans doing with financial literacy? In a survey of 1,500 people, respondents estimated that lacking knowledge about personal finances cost them an average of $1,230 in 2018, according to a study by the National Financial Educators Council.

What can you do to improve your financial literacy?

Take a look at your finances.

If you don’t have one, you need a budget. It’s a financial plan that will help you reach your goals. To develop a budget, you’ll need to keep track of your spending. Write down what your fixed monthly expenses are such as car payments and rent or mortgage payments. Determine what your periodic expenses are. They include items such as vacations and tax payments. Then you’ll need to track your variable expenses – food, clothing, transportation, and entertainment, costs that probably change every month.

April is Financial Literacy Month

Financial Literacy Month has been recognized in United States in April since 2003. Its purpose is to advance financial literacy through promoting and supporting effectiveness in financial education.

Dozens of organizations offer activities during Financial Literacy Month to call attention to the need for financial literacy and the work they are doing on it.

The Jump$tart Coalition is the original promoter of April as Financial Literacy Month. It’s a coalition of more than 100 organizations from business, finance, academia, education, and government, as well as a network of 51 state organizations, which share a commitment to “financial smarts for students.”

Here are organizations that provide basic financial literacy, according to the Office of the Comptroller of the Currency:

As Valentine’s Day approaches and throughout the year, watch out for romance scams

Romance scams are different from other scams. Fraudsters prey on lonely people looking to connect with someone, and the scam can often take months to develop to the point where money changes hands. The emotional harm to the victim can be even more painful than the money lost. 

The use of online dating sites and apps has made romance fraud easier. Victims in the United States and Canada report losing nearly $1 billion over the last three years, and the Better Business Bureau estimates there may be more than a million victims in the U.S. Because most people don’t file complaints about romance scams with the BBB or law enforcement, this may a small number of those affected.

The BBB’s study, “Online Romance Scams: How Scammers Use Impersonation, Blackmail, and Trickery to Steal from Unsuspecting Daters,” looks at how romance scams work, who the scammers are, and what’s being done to combat them.

Top 14 consumer stories of 2018

All in all, it’s been another bad year for consumers. President Trump and his administration’s generate so much chaos that they get all the media attention. Meanwhile in the background, federal agencies are moving forward on the administration’s conservative regulatory priorities, which are harmful to consumers. One bright spot is the Democrats taking control of the U.S. House of Representatives. That will help curb President Trump's excesses.

Here are the top 14 consumer stories for 2018:

1. The Trump administration continues decimated consumer protections.

President Trump appointed Mick Mulvaney, his budget director, as head of the Consumer Financial Protection Bureau. Under Mulvaney's leadership, the bureau reversed prior actions and programs of the agency. It has delayed rules to protect consumers from payday lenders, dropped lawsuits, stripped enforcements of fair-lending protections, and reduced the number of fines issued.

Trump’s government shutdown is disrupting agencies that protect consumers, workers, health, and safety

Consumer, worker, health, and safety protection agencies throughout the federal government are being disrupted by federal worker furloughs coming from the partial government shutdown, according to a report Public Citizen released Wednesday.

“As long as the shutdown continues, essential consumer, worker, health and safety protections carried out by these agencies are on hold,” said Robert Weissman, president of Public Citizen. “Corporate lawbreakers are going unpunished, safety inspections are being postponed, discrimination charges are going uninvestigated, polluters are not being held in check, financial fraudsters are not being policed, consumer complaints are not being received and accident investigations have ceased.”

Many agencies are falling behind, and it could take many weeks for them to catch up, according to furloughed workers quoted in the report. More than 75 percent of workers have been furloughed at seven agencies dedicated to protecting consumers and workers, according to federal agency memos, and nearly 50,000 employees have been sent home without pay at the following agencies:

New York sues Exxon Mobile for misleading investors on climate change costs

 

Photo: Ben P L

Exxon Mobile Corp. is being sued by the state of New York for allegedly misleading investors on the risk that climate change regulations posed to its finances.

For years, Exxon told investors that it was accounting for the likelihood of stronger regulation by applying an increasing cost of emissions to its business planning and investment decisions, according to the lawsuit. However, Exxon did less than it claimed, deceiving investors on the company’s true financial exposure to climate change regulations.

Exxon marketed the company as a secure long-term investment and sought long-term investors such as life insurance companies and pension funds.

Attorneys generals intervene in lawsuit to protect retirees from dishonest financial advisors

Three attorneys general have filed a motion to intervene in Chamber of Commerce of the USA, et al. v. U.S. Department of Labor, et al. to defend regulations that require retirement investment advisors to put the interests of their clients above their own financial gain.

The regulations, known as the Fiduciary Rule, were proposed under the Obama administration and put into federal law standards for professionals who give investment advice to people saving for retirement. The New York, California, and Oregon attorneys general are intervening in the case to ensure that the rule is carried out.

“It’s common sense: financial advisors should act in their client’s best interest, not their own,” said New York Attorney General Eric Schneiderman. “The Fiduciary Rule is vital to protecting families in New York and across the country who are saving for their retirement.”

Barclays agrees to pay $2 billion to settle fraud charges related to the sale of mortgage securities prior to the Great Recession

Photo: Secretlondon

Barclays Capital Inc. and several of its affiliates agreed Thursday to settle charges of fraudulent conduct related to Barclays’ issuance of residential mortgage-backed securities between 2005 and 2007, according to the U.S. Department of Justice. Barclays, a huge British bank, will pay $2 billion in civil penalties in exchange for dismissal of the lawsuit.

The settlement is about $3 billion less than what the department originally asked for, according to a Consumer Affairs article. Barclays refused to pay $5 billion, causing the department to file a lawsuit in 2016. From the beginning, Barclays said it would refuse to pay more than $2 billion.

The department’s lawsuit alleged that Barclays caused billions of dollars in losses to investors by engaging in a fraudulent scheme to sell 36 RMBS deals, and that it misled investors about the quality of the mortgage loans backing those deals.

SEC settlement strips CEO Elizabeth Holmes of her control of blood-testing startup Theranos

Photo: Max Morse for TechCrunch

Silicon Valley-based Theranos Inc., its founder and CEO Elizabeth Holmes, and its former President Ramesh “Sunny” Balwani are being charged with raising more than $700 million from investors through an elaborate, years-long fraud in which they made false statements about the company’s technology, business, and financial performance.

Theranos and Holmes have agreed to resolve the charges against them, the Securities and Exchange Commission said Wednesday. In addition to a $500,000 penalty, Holmes has agreed to give up majority voting control over the company, as well as to a reduction of her shares which, combined with shares she previously returned, reduces her stake in the company.

The lawsuits allege that Theranos, Holmes, and Balwani made false and misleading statements in investor presentations, product demonstrations, and media articles in which they deceived investors into believing that its key product – a portable blood analyzer – could conduct comprehensive blood tests from finger drops of blood, revolutionizing the blood testing industry.