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Equifax to forfeit profits from selling late borrowers’ sensitive information

The Federal Trade Commission has settled with Equifax for their selling lists of late borrowers’ information, and failing to act when that information was resold over and over by third parties for general marketing purposes, which is illegal.

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Big problem for major credit bureau

The Federal Trade Commission (FTC) has announced a settlement with credit bureau, Equifax over allegations that the company sold mortgage borrowers’ information to Direct Lending when late on payments, then failed to take action when they became aware that Direct Lending was turning around and reselling the information elsewhere. In two separate actions, both Equifax and the companies that allegedly bought and resold the information from it will pay a total of nearly $1.6 million to resolve charges that they violated the FTC Act and the Fair Credit Reporting Act (FCRA).

Between 2008 and 2010, Equifax is said to have sold over 17,000 separate lists containing borrowers’ personal information like credit scores, contact information, and how delinquent they had become on their mortgage. The FTC reports this pertains to millions of U.S. consumers during this period but has not released an exact number of those impacted.

Under the FCRA, it is illegal for the consumer reporting agency to share consumer information, and illegal to obtain a pre-screened list from a consumer reporting agency unless it is to make offers of credit or insurance that will be honored if consumers meet pre-selected criteria. The FTC says that Direct Lending was buying the lists and reselling them for general marketing purposes, which is strictly forbidden.

According to the FTC, companies that purchased lists from Direct Lending have been the subject of law enforcement investigations.

Settling for $1.6 million

As part of a settlement with the FTC, Equifax will pay $393,000 and is barred from furnishing pre-screened lists to any entity that it does not have reason to believe has a legal purpose to receive them, and will be barred from selling pre-screened lists in connection with offers for debt relief products or services and mortgage assistance relief products or services, when advance fees are charged, with limited exceptions.

In a separate action announced simultaneously, Direct Lending will pay a $1.2 million civil penalty, and barred from using or selling pre-screened lists without a permissible purpose, or in connection with solicitations for debt relief or mortgage assistance relief products or services.

Consumers have come to fear that a late payment on their mortgage will get credit reporting agencies’ attention and have an impact on their score, but due to it being illegal, it was surely surprising to some that they were inundated by questionable debt relief offers they had not pre-qualified for.

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

Business News

The final nail has been put in the Jet.com coffin by Walmart

(BUSINESS NEWS) Walmart is shutting down their main Amazon competing idea, Jet.com didn’t meet Walmart’s expectations even with COVID ramping up home deliveries.

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Walmart announced it will discontinue Jet.com, its online-only marketplace, after a poor showing in their Q1 earnings report. Once promising to tackle Amazon competition head-on, Walmart acquired Jet for $3 billion in 2016 and championed its potential to strengthen company e-commerce. Last year, Walmart saw a $2 billion loss in the division despite the efforts to compete as a digital-facing store.

The earnings report showed Jet.com saw a growth of less than 10% in its main US market. Thus, Walmart will withdraw guidance entering the 2021 fiscal year. Jet.com has seen its fair share of trials since Walmart took over and has faced multiple reorganizing attempts such as the full integration of Jet’s teams into Walmart’s, the shutdown of experimental shopping service, Jet black, and a site relaunch.

Although consumers are turning to online shopping and deliveries in the wake of the COVID-19 crisis, digital marketplaces face their own challenges in a changing retail landscape. Intuitively, e-commerce should be thriving, however, the pandemic has increased overhead costs for companies like Ebay and Amazon. This is setting aside what the broader effects may follow in the wake of a collapsing economy.

A statement by CFO Brett Briggs highlighted these broader concerns and the decision to remove guidance from Jet.com. “The decision to withdraw guidance reflects significant uncertainty around several key external variables and their potential impact on our business and the global economy, including: the duration and intensity of the COVID- 19 health crisis globally, the length and impact of stay-at-home orders, the scale and duration of economic stimulus, employment trends and consumer confidence,” he noted. “Our business fundamentals are strong, and our financial position is excellent. Customers trust us to deliver on our brand promise, and I’m confident in our ability to perform well in most any environment. While the short-term environment will be challenging, we’re positioned well for long-term success in an increasingly omni world.”

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Amazon may take advantage of COVID-19 decimated AMC and acquire them

(BUSINESS NEWS) Amazon is eyeing AMC as a possible purchase because of the how COVID-19 has affect theaters, but some worry that the industry won’t bounce back.

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AMC Entertainment Holdings Inc. increased 56% (to $6.41) after reportedly in talks with Amazon regarding a potential takeover. The report, made by U.K.’s Daily Mail, is yet to receive confirmation by other company. However, the market has clearly responded to the spicy rumor. If seriously considered, the move could easily solidify Amazon’s ambitions to compete with major Hollywood studios by creating another avenue for their movies and television series.

Chinese real estate billionaire Wang Jianlin acquired AMC in 2012 for $2.6 billion as part of his conglomerate, Wanda Group’s expansion into the entertainment realm. AMC shares rose 12% to a two-month high this week after the reported talks with Amazon. However, it’s been far from sunshine and rainbows for AMC. The coronavirus pandemic has hit the company hard. In mid-April, their stock was down 70% year to date. Past reports have also speculated the when AMC may announce bankruptcy rather than if.

Last month’s straight-to-streaming release of “Trolls World Tour” offers a glimpse of the entertainment market in a post-COVID world. The movie’s success offers a glimpse of an future where physical theaters are obsolete. Taking x-amount of months of social distancing into account and Amazon’s takeover makes less sense.

Amazon has carved out space on the streaming market over the past several years with Prime originals like The Marvelous Mrs. Maisel and Fleabag having racked up Emmy awards. With other great shows like Undone, Bosch, and their recent grab of The Expanse, along with new shows like Upload I would say Amazon knows a thing or two about good content.

Eric Wold, an analyst at B. Riley FBR wrote this week that since AMC is projected to see its fourth consecutive year of stock declines, the company wouldn’t appeal from an investor standpoint. If the acquisition talks are active, a cash offer for AMC is more likely.

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Business News

One big brand got $10M in PPP funding, refuses to return it

(BUSINESS NEWS) Quantum has been asked to give back its $10 million portion of the PPP loans given out, but they refuse. As if small businesses have it hard enough.

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Quantum, a data storage company, is getting pressured by Congress to return its loan from the federal Payment Protection Program, however, the company is refusing to back down and announced it is keeping the money.

Last week a House panel asked five public companies, including Quantum, to return their loans immediately. All five companies received $10 million from the program. Quantum told CBS MoneyWatch they intend to respond to lawmakers but will be keeping the funding. They are required to explain in writing why they are still eligible for the PPP loan and submit supporting documents by Friday, May 15th.

Likewise, banks have come under criticism for prioritizing PPP loan approvals for larger companies rather than small businesses where they were intended to offer much-needed aid. The program offers low-interest, government-funded loans, targeting businesses with 500 or fewer employees. The best part is the loans can be forgiven if businesses keep their workers and use those funds towards payroll. Larger public companies have jumped on the opportunity while the local mom-and-pop shops are unable to receive the highly-sought after loans before funds run out.

The congressional committee wrote in a letter to Quantum that the company currently employs 800 workers and has the option to raise funds from investors. Quantum’s largest shareholder is B. Riley Capital Management, an investment fund valued at $500 million owning 21% of company shares. As of May 11th, Quantum’s market capitalization was $173 million.

In a statement by a Quantum spokesperson, the company said “Quantum believes it owes a duty to its American employees who would lose their jobs if Quantum returned its PPP loan to demonstrate why Quantum not only falls within the technical eligibility requirements of the PPP loan program, but also falls squarely within the spirit of what was intended by the [Coronavirus Aid, Relief and Economic Security Act].”

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