Cedar Rapids Gazette (Newspaper) - November 19, 1974, Cedar Rapids, Iowa
The Cedar Rapids Gazett#•: Tim, Nev. lf, IJ74 7Guard Against Credit Ripoffs
By Sylvia Porter
NEW YORK - There is no law yet on the federal statute books requiring your creditors to consider sending you notices for any particular length of time of any credit balances you may have outstanding or to give you a refund, unless you specifically ask for one.
In fact, the Federal Trade Commission recently sued five major department store chains for keeping unused credit balances without informing customers that they exist or that they have every right to claim a cash refund
Pocket the Money
In many cases, the stores simply stop sending customers reminders of credit balances after a period of time, pocket the money, and write the balances off their bonks.
Thus, millions of dollars worth of credit balances owed to you, the customers, remain unclaimed.
(After the FTC suit was an
nounced. I remembered I had small — but to me still important — balances outstanding with three of New York’s most prestigious stores as a result of returns I had made of items purchased several Christmases ago When I asked for records of the balances, it took the credit departments weeks to trace my accounts and then only most ungraciously did they admit to Sally, my invincible secretary and protector, that they owed me anything
Immediately, we spent the “found” money, paid cash for any “extras” and now, Fin finished with charge accounts at those three stores )
Swing To Refund
The FTC is asking the stores it is suing to refund all of the* outstanding balances for the past five years and, in the future, to issue refunds automatically after a three-month period of inactivity in the charge account.
Other companies are now
being investigated by the FTC for similar practices and a significant number of other stores probably are indulging in the same practice throughout the U S
Be on guard! While you may not be as absent minded as I am on matters such as this, double-check your records now, see if you come up with forgotten balances
Under the important new Fair Credit Billing Act, which President Ford signed a short while ago and which goes into effect next year, you, the consumer, will be protected against many tricky and unfair credit card and charge account billing practices — but not all. In addition to the loophole outlined above, the act also fails to force creditors — particularly retailers — to es-ta hiish a more uniform and equitable method of billing.
The most frequently used credit plan — generally
thought by many experts to be unfair to consumers — is the previous balance method Under this procedure, the consumer is given no credit for having paid part of the past month’s bill or for having returned any merchandise in that period.
In computing finance charges by the previous balance method, some creditors have managed to hike the* present IK percent annual interest rate on revolving charge ac counts to as much as 3K or 4H percent.
As New York City’s former Consumer Affairs Commissioner Betty Furness put it, the systems “make a mockery of truth-in-leriding. What kind of truth makes one store arrive at a charge of 75 cents and another at $3, using the same set of figures to start with?”
To illustrate how the previous balance works to raise interest rates, say you have a balance of $300 at the beginning of the Nov. 15-Dec. 15 billing cycle During that time. you send the store a $150 payment, reducing the amount you owe by half
A store charging 1.5 percent per month on the net balance due will apply the finance charge to the actual balance still owed against the* previous bill — in this case, $150 The next statement will thus note a c harge of $2.25. a true annual rate of IS pereent.
But a store using the
previous balance of $300 to compute its charge will bill you $4 50 Although the store will state an 18 percent annual rate, the finance charge actually amounts to a true annual rate of 36 percent The rate would have been even higher had the customer paid more than half of the balance due.
The first or adjusted balance method of computing finance charges is considered the fairest to us, the consumers. But congress, concerned over the impact that outlawing the previous balance method might have on small business firms which often use this method, has left the problem to the state legislatures to be solved.
And your only real protection meanwhile is to be alert to what the different procedures mean to you in dollars and cents — and to heed the warnings in c olumns such as this.
Consumers Proclaim Recession
Gentle When Young
CHIC AGO (UPI) - Chicago, already noted for the world's busiest airport — O'Hare International — and the world s busiest intersection — State and Madison — now has yet another distinction.
Though no records are kept, the U. S. postal service says Chicago has the nations busiest mailbox.
The box — located at the intersection of Madison and Halsted streets — handles 8,700 pieces of mail daily. The load weighs 200 pounds.
The volume is so heavy, authorities said, the box has to Im* emptied six times a day.
The (instal service said it was surprised to find that the location of the mailbox is well outside the busy loop area of the city. However, postal officials say there appears to tie a lot of mail from transient traffic at the location.
The box accepts parcels as well as letters, but the postal service says letters account for 95 percent of the mail posted there.
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By John Uunniff
NEW YORK (AP) — Some of the most simply explained activities of our economy are buried today in a clutter of confusion, hidden by complex terminology and definitions that, summed up. often are irrelevant.
No term is more obscure than “recession."
Is there a recession? Yes, there is. Stripped of all the asterisks and academic limitations or exceptions or qualifications, there is a recession of economic activity.
The current quarter, in fact, is the fourth straight one in which the economy, rather than growing, has shrunk. The shrinkage amounted to 7 percent in the first quarter. I K in the second and 2.9 in the third.
But for a recession to In* official mustn't it I ie proclaimed by the National Bureau of Economic Research, a private organization, or the President or the Council of Economic Advisers?
If any group is qualified to make this determination it is
the consumer, who is today more powerful and influential than either business or government.
And the consumer, Brough surveys and studies, has declared a recession exists Professor George Katona, the dean of consumer behaviorists, for years associated with the Survey Research Center at Ann Artier, Mich., reduced the consumer definition of recession to this “Prosperous times, so people feel, are those in which they live better than a year or two earlier, while there is a recession if they live worse.
“According to this criterion, a recession set in toward the beginning of 1974."
For reasons sometimes as obscure as the definition of recession itself, many people aren't satisfied with that explanation, even though it coincides with the more scien
tifically precise definition so often given
A recession occurs, many economists agree, when there exist two straight quarters of declining production Some, however, aren't willing to concede the fact until it is so pronounced by the National Bureau, which might get around to a decision long after the recession has ended.
Webster’s New Collegiate Dictionary defines a recession as “a period of reduced economic activity." Expanding on that definition, you may assume a recession is accompanied by lagging demand, sluggish sales, reduced factory output, less overtime, fewer pay raises and rising joblessness.
Some students of consumer behavior like to jaunt out that sometimes the government is much slower than the general imputation to recognize the on
set of recession The government relies on statistics, the people rely more on instinct and subjective surveys
To some degree, in fact, the government statistics are only a delayed reflection of what has already been decided by consumers; these figures record rather than forecast the event.
A depression is a very pronounced recession. Whereas many employers ran t arry workers during a tem-porary lull in economic activity, as in a recession, they’re forced to lay them off during a depression
A depression lasts longer. And. as we have learned, it is accompanied by a depressed psychological condition, a sense of helplessness and despair. a feeling that the poor economic condition is permanent rather than temporary.
While the precise and complicated definitions have their uses, the psychological condition of consumers can never Im* ignored, because it is they who buy the cars and homes and food If the consumer feels there is a recession, therefore, the economist is likely to find verification in his figures, but several weeks or months later
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