Frontline: the Secret History of the Credit Card

Frontline put together (this is old news) an impressive investigation of the credit card industry. You can now watch the entire program online, but there is also more information about credit card usage. Frontline’s “Eight Things a Credit Card User Should Know” after the jump.

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Zombie 7 Sue Minneapolis

In other news, the seven zombies who were jailed for two days have filed a lawsuit against the City of Minneapolis and Hennepin County. The Zombie 7 and their attorney, Jordan Kushner, allege that the city and county violated their right to free speech (and presumably, falsely arrested them). They also claim the police wrongfully seized an artificial leg belonging to one of their members, Jake Sternberg, and kept it for two days. Maybe the police thought he was faking it.

Do the undead even have a right to free speech?

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Worst Landlord in Minnesota?

Tonight I caught a Fox investigative report on Jim Eischens, owner of Twin Cities Housing & Realty, LLC, who sounds like he may be one of the worst landlords in Minnesota. (Although we have reservations about that, since we are currently suing two landlords who may be far worse.)

Eischens apparently owns about 80 properties in the Twin Cities, mostly in student neighborhoods. He has had nearly 1,500 code violations in the last ten years. His attorney, Patrick Burns, was remarkably evasive, and pled ignorance at every opportunity. But we suppose there isn’t much else he could do, since the proof is a matter of public record.

More after the jump.

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Payday Loans Are the Devil

I didn’t realize how many people really use payday loans until I stumbled across the Debt Consolidation Care forums. I don’t know much about the affiliated debt counseling service,, but from what I can tell from the internet facade, they are are on the up-and-up. It seems like nearly all the forum members, though, are drowning in payday loans (called “PDLs” in internet shorthand). Before I ran across the forums, I also did not know about the prevalence of internet payday loan web sites.

Let’s take a look at one of them, PayDayOne. The front page, as you can see, advertises “low rates” with pictures of their friendly employees who obviously just want to help you succeed. How will they help you succeed? By lending you very small sums to “cover unexpected expenses or pay bills.”

And how fast will the interest on that “low rate” loan accumulate. Read the fine print: “$1 per day per $100 which is equivalent to an APR of 365%.” Wait, 365%?!? Yup.

So even assuming there are no late fees for not paying in full by payday, a $100 loan will cost $365/year, plus you have to pay back that $100. Um, yeah. Good deal. Payday loans make credit cards look like a wise spending decision. After all, most credit cards have an APR in the teens. Or maybe around 30%. Which is a steal compared to a payday loan.

So what is the solution to unexpected expenses? A savings account with a few hundred dollars in it, saved bit by bit by cutting unnecessary spending. Or, barring that, a credit card. Payday loans are like buying a one-way ticket to insurmountable debt. Buyer beware, indeed!

Might As Well Screw the Soldiers, Too

Credit Slips, and NACA general counsel Ira Rheingold point out that Senator Tim Johnson of South Dakota wants to roll back the recent legislation limiting interest rates on loans to service members. This was a landmark piece of legislation, although we would rather see it applied to the entire lending industry. Who really needs more than 36% interest, anyway?

Apparently, Senator Johnson thinks that the law “may have a lot of unintended consequences that will go far beyond just the payday industry” and says that “[w]e are going to have to revisit that issue and make sure that the end result of this legislation isn’t to deny military members and their families access to banking services that they’ve always assumed would be there.” Somehow that just doesn’t square.

Here’s what we think is going on. Under federal law, the interest rates a lender may charge are governed by the laws of the state in which the lender is incorporated. Take a look at the information for your credit card when you get a chance. There is a 100% chance (well, maybe there’s a rogue, but I don’t see how they would stay in business) your credit card company is incorporated in either Delaware or South Dakota. Your payday lender? Same thing.

Wonder why that is? Guess which states have no usury law. Yup. Delaware and South Dakota.

Wait, where was Senator Johnson from again? Oh yeah, South Dakota. It all makes sense now.

Just goes to show you, it doesn’t matter who is in Congress; few politicians are on the side of consumers.

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Paramount/MPAA are Really Out of Touch

DRM, or digital rights management, is the term applied to the media industries feeble and damaging attempts to limit your idea to use the music and movies that you buy. I’m sure everyone has heard that the RIAA (Recording Industry Association of America, or of A-holes, or something) is suing everyone whose address they can find, regardless whether they even have a computer, are dead, or don’t even know what a computer is.

And now, in a great test of consumers’ rights to fairly use the media they buy, Paramount and the MPAA (Motion Picture Association of America/A-holes) have sued Load ‘N Go, a company who sells iPods and DVDs, and if you buy the two together, rips the DVDs you buy to the iPod. One would think there is no problem here, but the MPAA argues that the very act of ripping the DVD is a violation of its copyright. Does that make sense to anyone else?

The main problem here is that judges and legislatures seem so out of touch with technology that this sort of fair use seems somehow sinister. It isn’t. Let’s hope that Load ‘N Go has the means to challenge the lawsuit, and that the courts give them a full and fair hearing. And that Congress sits up and takes notice of the absurdity of the situation made possible (or at least conceivable), apparently, under current copyright laws.

Incredible UCLA Library Event Caught on Video

I’m sure by now everyone has heard of the UCLA student, Mostafa Tabatabainejad, who chose to leave the library rather than show his ID. The police apparently stopped him on his way out and started tasering the hell out of him. This is apparently the third in a string of incidents caught on video recently in LA. ACSBlog linked to this YouTube video of the event.

It is hard to see how the officers could justify their actions, especially as multiple witnesses reported that Tabatabainejad was heading for the door when they started to work him over. As you can see, their treatment of him seems uncalled-for and sadistic. I admire the restraint of the onlookers, actually. Police behavior like this was just asking for a mob reaction.

Detroit Leads a 43% Increase in Foreclosures Nationally

According to CNN, Detroit is leading the way in the foreclosure trend, with 1.25% of households undergoing foreclosure. Foreclosures are up 43% from the same time last year, showing a frightening trend.

Local events, such as the auto industry slump in Detroit, certainly play a part, but so does the depression of the real estate market generally. The recent surge in predatory lending such as equity stripper most certainly plays another part.

If you are facing foreclosure, contact an attorney that can help you find help.

[redirect] Things to keep in mind when settling a debt

This blog confuses me a bit. It’s a blog about debt settlement and credit restoration, apparently sponsored by a credit repair organization, but that tells readers to avoid credit repair organizations. I don’t get it.

Still, these tips on negotiating settlement terms are very helpful (see them after the jump):
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Early Termination Fees Endangered!

Today is mooch-off-Consumerist day, and they have once again clued us in to a great consumer link. Idaho consumer lawyer Curt McKenzie represents the law firm of Greener, Banducci, Shoemaker, which is suing T-Mobile on the grounds that its early termination fee bears no relation to the damages suffered by T-Mobile in the event a customer cancels a contract before its expiration.

The law firm cancelled its T-Mobile contract for apparently poor service, and was charged a cancellation fee. But liquidated damages provisions in contracts–which is essentially what an early termination fee is–must bear some relation to the damages that would be suffered in the event of breach (early termination, in this case). The lawsuit alleges that since the fee does not change no matter when a customer terminates their contract, it cannot bear any relation to the actual damages.

The lawsuit may turn into a class action, which is good news for consumers. I applaud any measure that makes it easier to switch cell phone companies. Maybe then companies will concentrate on providing good service rather than making money on spurious fees. One has to wonder if early cancellations aren’t part of the plan, after all.

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