World View: AmEx Fined $112.5M over Massive Consumer Fraud

World View: AmEx Fined $112.5M over Massive Consumer Fraud

This morning’s key headlines from

  • American Express fined $112.5 million over massive consumer fraud
  • Subprime mortgages are back in volume
  • EU finance ministers appear ready to give in to Athens rioters
  • Syria’s Foreign Minister gives farcical speech at the United Nations

American Express fined $112.5 million over massive consumer fraud

Elite American Express 'Black Card'
Elite American Express ‘Black Card’

Several months ago, I reportedthat Capital One was fined $150 for massive credit card fraud. Nowit’s the turn of the crooks at American Express. Since 2003, thecompany has lied to customers, charged illegal fees, and discriminatedagainst older customers (presumably Boomers).

You may think that American Express is a “reputable company” thatwould never do anything like this, so this is a good time to remindyou of a scam that I reported in 2009. The Senate Commerce Committee discovered thescam works as follows: You make a credit card purchase online fromPriceline or other retailers. At the end of the transaction, you’reoffered a “reward” of some kind, a coupon worth a few dollars. Youclick the fine print, and it turns out that you’ve agreed to let theretailer charge your credit card $10-20 per month. According to theSenate reports, the online retailers were fully aware that they weredefrauding consumers, but they didn’t care because they were making somuch money — $1.4 billion from millions of customers.

Here’s the list of online retailers that the Senate foundcommitted this fraud:    Hotwire           Priceline.comAirTran Holdings     Intelius          Redcats       FTD               ShutterflyContinental Airlines Orbitz Worldwide  US Airways     Pizza Hut         Vistaprint USAFandango

These are like American Express: all “reputable companies,” and allcrooks who feel they have license to screw their customers in any waythey like.

I have a personal experience with American Express. I discovered thatAmerican Express had signed me up for some kind of completelyworthless “rewards” program, and was charging me $55 a year. They hadsimply added this charge to my credit card. They have computerizedprofile systems that attempt to identify the best way to market todifferent consumers, and I believe that they targeted me for thefollowing reasons:

  • I’m an older person (Boomer), and a lot of older people don’t pay close enough attention to the items on their credit card bills.
  • I use a bill payer service to pay my bills automatically. Amex knew this, and they also knew that a lot of people who use bill payer services don’t check their bills as closely as people who write out checks every month.
  • A lot of older people also have help with their bills in other ways. Perhaps an assistant or son or daughter pays his bills for him, and that person would have no idea that a “rewards” program was a scam.

Their scam certainly worked on me. I paid the annual fee twice beforediscovering it. I called up customer service and told them I neversigned up for the “rewards” program, and demanded that they cancel itand refund the two payments. I’ve been a cardholder since 1976, butcustomer service refused. So I canceled thecard entirely.

I have to repeat, as I’ve said so many times, that the world haschanged enormously since the 1990s. At that time, Amex really WAS ascam like this in the 1980s would have been next to impossible. Butever since the Gen-Xers reached middle management positions in thelast decade, we’ve had one major crime after another — from tens oftrillions of dollars in fraudulent mortgage-backed securities to therecent LIBOR scandal.

As I’ve also said many times, there may be no more criminals amongGen-Xers than among other generations, but what defines the Gen-Xersand makes then unique is their adamant refusal to blame other Gen-Xersfor anything. Boomers happily sent Boomers to jail, but the Obamajustice department has not sent a bankster to jail for themassive fraud that caused the global financial crisis. Thus, bankstersare free to continue committing crimes, with no fear of prosecution.

And sure enough, Amex is not admitting that they did anything wrong,and none of the Amex crooks will go to jail. Bloomberg

Subprime mortgages are back in volume

Financial institutions are convinced that the housing bubblecollapse is over, and that it’s time to start offering subprimemortgages at high interest rates to borrowers who otherwisewouldn’t qualify for mortgages.

This is just one more disaster waiting to happen. As I wrote last week, the housing bubblecollapse is far from over, and, I estimate that home prices will fallan additional 10-20%. The people who are saying that can’t happen areexactly the same people who were saying in 2006 that there’s no suchthing as a housing bubble, because “Everybody has to live somewhere!”UPI

EU finance ministers appear ready to give in to Athens rioters

Tempers are flaring as the EU “troika” negotiators have returnedto Greece to try once again to agree to austerity measures that Greecehas repeatedly committed to but has never implemented. It’s becomingabundantly clear to everyone that Greece will not comply with theausterity demands. Period. Especially with tens of thousands ofGreeks rioting and demonstrating outside the Parliament building.

Nonetheless, the rest of Europe is terrified at the prospect of Greecedefaulting and leaving the euro zone. The domino theory is no longerbeing discussed as a possibility, but rather as a likely scenario,with Spain and Italy quickly following Greece. It’s likely that thetroika’s final recommendations have been preordained from thebeginning: No matter whether Athens implements any austerity measuresor not, they’re going to get their bailout. Spiegel

Syria’s Foreign Minister gives farcical speech at the United Nations

Syria’s foreign minister Walid al-Moualem blamed the conflict in Syriaon “organized terrorism” sponsored by the United States and itsallies. According to al-Moualem:

“We also wonder to what extent the statements ofQatar, Saudi Arabia, Turkey, the United States, and France thatclearly induce and support terrorism in Syria with money, weaponsand foreign fighters, are in line with the internationalresponsibilities of these countries in combatingterrorism.”

One Security Council diplomat described the speech as “orthodox,predictable and completely out of touch with reality.”

Presumably al-Moualem’s speech was a response to President Obama’sspeech to the same audience last week, when he said:

“In Syria, the future must not belong to a dictatorwho massacres his people. If there is a cause that cries out forprotest in the world today, peaceful protest, it is a regime thattortures children and shoots rockets at apartmentbuildings.”

The Syria situation has been a disaster for United Nations, forobvious reasons. We have a country that tortures children and shootsrockets at apartment buildings, and the U.N. politicians have beennothing but a bunch of buffoons for 18 months. The U.N. has actuallymade the situation much worse, by providing cover for increasedviolence by Syria and Russia with such farces as Kofi Annan’ssix-point “peace plan.”

A web site reader has posed the interesting question, “Will theU.N. go the way of League of Nations?”

History has decided that the reason that the League of Nations failedin the 1930s was because the isolationist United States was never amember. That’s why, after WW II, the United States did a 180 degreeturnaround and became the world leader of the United Nations, evenagreeing to hold its headquarters in New York.

But now we’re seeing the United Nations looking as pitiful andpowerless as the League of Nations. That’s because in the 1930s, muchof the world was in a generational Crisis era, and the same is truetoday. In other eras, compromise and accommodation are possible, butin a Crisis era, nationalism and xenophobia become prevalent, andcompromise becomes impossible, on both a national and internationallevel.

Once the Clash of Civilizations world war is over, the survivors willsettle on some reason why the U.N. failed. This time, it won’t bebecause the U.S. wasn’t a member, but maybe the world community willthink up some other reason to blame the U.S. Whatever the reason, thesurvivors will form a United Nations II after the war ends.

An interesting question is: What form will the new post-war UnitedNations take? Will there still be a Security Council, and will theU.S. still have a veto? Will the General Assembly have more or fewerpowers? An interesting speculation. Al-Jazeera

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