There is good news for the economy, as jobless claims and the federal deficit both drop. There is good news for consumers, as both AT&T and Citigroup agree to reimburse customers. Here is the news of the day for Oct. 9, 2014.
AT&T Will Pay For “Cramming”
Federal and state regulators announced Wednesday that AT&T has agreed to pay $105 million for putting unauthorized charges onto the monthly bills of its wireless customers. The practice is known as “cramming” and usually involves charges of $9.99 a month from third-party services that provide horoscopes, trivia and other tidbits of information. AT&T is accused of keeping at least 35 percent of the fees, and are also accused of obscuring the charges on bills so customers do not know what they are being charged for. "This case underscores the important fact that basic consumer protections -- including that consumers should not be billed for charges they did not authorize - are fully applicable in the mobile environment," Federal Trade Commission chairwoman Edith Ramirez said. Regulators have brought similar charges in seven other cases in the past year, and FCC chairman Tom Wheeler said more are coming. "For too long, consumers have been charged on their phone bills for things they did not buy," Wheeler said. "It's estimated that 20 million consumers this year are caught in this kind of trap, costing hundreds of millions of dollars."
Deficit Falls Again, This Time Sharply
The Congressional Budget Office estimates the 2014 federal deficit will report a drop of $195 billion from the previous year to roughly $486 billion. The fiscal year ended Sept. 30. The CBO says the deficit as a share of the economy dropped to 2.8 percent of Gross Domestic Product from 4.1 percent last year. The deficit is the difference between how much the government takes in from revenues and how much the government spends annually. The U.S. borrows the difference. The CBO said the improving economy, higher taxes and continued spending restraint on the part of the government were responsible for the drop in the deficit.
Gap CEO Retiring
Glenn Murphy, Chief Executive Officer of Gap Inc, announced he will retire in February and said the position will be handed over to digital business chief Art Peck as the apparel retailer tries to tap into its customer’s preference for online shopping. Shares of Gap fell 8 percent in extended trading Wednesday following the announcement, as well as a weaker-than-expected same-store sales report for September. The company owns Gap, Banana Republic and Old Navy. Murphy took over the CEO position in July of 2007 and oversaw triple growth in the company’s market value as it expanded into 50 countries, including China.
Pepsi Tops Analysts
For its third quarter, PepsiCo reported earnings well above analysts’ expectations as the soda market evolves once again. The company’s third-quarter earnings excluding items rose to $1.36 per share from $1.24 per share in the year-earlier period. Expectations were for earnings of $1.29 per share. Revenue increased to $17.22 billion from $16.91 billion one year ago. Earlier this month, Pepsi announced a new naturally sweete3nded soda called Pepsi True, which is available through Amazon.com. Coca-Cola also released a new drink with natural sweetener earlier in the summer. Both soda companies as well as Dr. Pepper pledged to cut American calorie consumption in sugary drinks by 20 percent by 2025 as part of the Clinton Global Initiative.
Citigroup to Reimburse Customers $16 Million
The New York Attorney General said Thursday that Citigroup Global Markets, a unit of Citigroup, has agreed to reimburse more than 31,000 customers a total of approximately $16 million for advisory fee overcharges. As per the agreement, some of the customers have already started to receive their refunds, Attorney General Eric Schneiderman said in a statement on Thursday. The New York AG is still investigating the firm to see if more customers were overcharged.
Jobless Claims Fall Again
The Labor Department Thursday said the number of Americans filing new claims for unemployment fell last week to close to its lowest level since before the 2008 recession. The claims total dropped 1,000 to a seasonally adjusted 287,000 in the week ending Oct. 4. Economists polled by Reuters had forecast claims rising to 294,000 last week. Claims for the previous week were revised to show 1,000 more applications received than previously reported.