For the life of me I can’t keep up anymore with business ethics in this country. A decade ago, laws were passed mandating that dealerships had to install locks on the finance department doors and could never leave a customer’s folder unattended on a desk, lest someone walk in off the street, open that file and steal someone’s credit information. The potential fine if a dealership fails to protect its customers’ data is severe for each and every violation.
Now, the fact that no one I’ve spoken with in the car industry can recall one instance of someone’s personal information being stolen in this way doesn’t seem to have affected these regulations. Yet ironically, since those laws went into effect all those years ago, hackers have managed to steal the information on 57 million Uber users and drivers, 140 million files from Equifax and 81 million files from J.P. Morgan Chase, to name just a few.
That’s right, a car dealership has to keep everyone’s file under lock and key all the time, while well over 300 million files containing customers’ sensitive data are simply stolen online. In comparison, even if every car dealer in America posted the credit information online of every last buyer of a new car this year, that would expose a mere 17 million personal files.
I recently got a letter from Chase, which is where I bank. It informed all of us holding their credit cards that sometime in January they will be raising the interest rates from 8.24 percent to 13.24 percent; anyone who wishes to avoid paying that can call an 800 number to cancel their accounts and pay off their balances.
How generous of them.
I looked online to see if I’d missed something about a sudden interest rate jump, but no. The Fed’s discount rate is still 1.75 percent, the Wall Street Journal showed prime as 4.25 percent, and this very bank is paying 0.01 percent on savings accounts, less “account fees that could reduce your earnings.” What earnings?
Naturally, I’m spring-loaded to compare these interest rates to an automobile loan at a reputable new car dealer. Can you imagine anyone today with a top tier credit score paying 8.24 percent for a new car loan, much less paying 13.24 percent next year? No, those are subprime interest rates; anyone with great credit that a new car dealer might offer that rate to would feel so badly insulted that they would either break out laughing or storm off the showroom floor. Furthermore, if you borrow money on a new or used car, three years into a six-year note you don’t suddenly get a letter from the lender saying your interest will go up 60 percent next month — but if you would like to opt out, simply call an 800 number to cancel your loan and pay off the balance.
Now, for those who pay off balances on their credit cards every month, they wouldn’t care if Chase charged 350 percent interest. But this will have a huge impact on individuals and families, who may be carrying $10,000 or more in revolving credit card debt and need to make minimum payments.
The point is obvious. The government passed regulations because someone, somewhere, sometime might wander into a dealership, find a customer’s folder and steal his or her identity, even though there’s no proof that this has ever been a problem. But when Equifax doesn’t adequately protect customer identities on 140 million people because they didn’t update their security program, the government preaches patience for us.
Similarly, the media points out relentlessly how some dealers charge obscene interest rates on a new car, today maybe 6.9 percent; but they remain mute when banks jump interest rates on credit cards by 60 percent almost overnight.
How is it that we have reached the point in America where we only deal with the obscure, ridiculous issues that affect virtually no one and completely ignore the obvious issues whose impact virtually everyone feels?
Oh, and it gets worse.
The week I received my notice from Chase, a story came out of Washington that Congress is working on an end-around on the top interest rates that payday lenders can charge.
Why? Because many states have passed legislation to force down interest rates for this secondary loan market; according to the International Business Times, many states have put caps of 36 percent on this type of loan. But the bill being moved forward, The Protecting Consumers’ Access to Credit Act of 2017, would allow those same payday lenders to charge up to 350 percent of these loans as long as the lending entity aligns itself with a national bank. This allows federal regulations removing interest rate caps to supersede state laws that are trying to protect their citizens.
But we’re not done yet. That same week Oklahoma announced that it is going to sign a deal with Sensys Gatso, which will provide photo cameras for Oklahoma’s highways that read license plates and immediately mail citations to owners operating their vehicles without auto insurance. Oklahoma is downright giddy about this program because officials believe they can issue 20,000 citations or more each month, and each one of those is a $184 ticket.
Of course, every state faces problems with uninsured motorists, including Texas. But in reality, people who have the financial means carry insurance. People earning so little that expensive auto insurance conflicts with making basic payments on everything else, but who still need a car to go to that poorly paying job, well, they drop insurance first.
You have to wonder whether anyone in Oklahoma considered the reality here: If people can’t afford auto insurance and can’t find a better job that would let them afford it, it’s highly likely that those individuals would not be capable of paying that $184 fine; if they could pay that, they’d already have insurance.
What to do with those financially strapped motorists? Funny you should ask. The very same week Britain’s Guardian published a story about how many states suspend a person’s driver’s license simply because they cannot pay traffic fines. They start their story with Damian Stinnie, a young Virginian with a 3.9 grade point average who lost his first low-paying job, got four tickets, didn’t have a grand to pay them and now can’t legally drive. This story is not the scary part. Here in Texas 1.2 million have had their driver’s licenses taken away for various reasons, including non-payment of traffic fines. California leads the nation; over four million motorists there have suspended driver’s licenses, or more than one in six adult Californians.
The Guardian goes on to point out that some states, such as Montana, actually suspend driver’s licenses for non-payment of student loans. And that took us over to a New York Times story on unpaid student loans, which points out that South Dakota also suspends driver’s licenses for unpaid student loans — and 20 states also revoke driver’s licenses and professional licenses of those who fall behind on payments.
How We’ve Changed
Now, if your head is spinning from all this information, take a deep breath and answer this one question. Right, wrong or indifferent, how does anyone stay in our economic society and earn a living if they lose their right to drive? Hey, even in the Great Depression people would let their homes and farms go back for lack of payment; but lenders were stunned at how often the family automobile was rarely repossessed. As many said in that time, you can always get another place to live, but without a car you can’t work.
And there was yet one more story that feeds into this cycle. It comes from the Wall Street Journal and tells the story of Don Lively, a professor who wanted to start a law school for kids with low test scores or those not doing well in an accredited college. He first started the Florida Coastal School of Law 21 years ago, but then added the Charlotte School of Law in North Carolina and Arizona Summit in Phoenix. Thousands of kids attended, many dropped out or failed state bar exams; North Carolina closed that school, while attendance is falling like a rock at the other two.
Meanwhile, those students are struggling to pay back more than a billion dollars in federally backed loans. One wonders how many driver’s licenses might be lost over that debacle. The only thing different about this story is that it happened two weeks after the rest of these stories were published. But it feeds into the same mindset.
There is a connection between most of these stories: It’s about pounding those who live paycheck to paycheck because nobody cares; in many cases, people cheer that on. (Uninsured motorist discussions bring that out in lots of people. And in a way it’s understandable.) But it surprised even me to discover in how many states millions of motorists have lost their right to drive because they aren’t financially well off enough to pay down student loans or ticket fines. And meanwhile, a high-ranking Democratic Senator is pushing legislation to protect payday lenders’ “right” to charge a usurious 350 percent interest on those loans — instead of that paltry 36 percent cap many states have put on them.
One thing is for sure, even at the worst dealership in America today, no one with good credit paid 13.24 percent for a new car loan, much less 350 percent if one had less than perfect credit. Thousands of kids weren’t offered $1 billion worth of federally backed loans for their cars, only to find they couldn’t get employment and therefore couldn’t pay for them.
Now, if those things could, or ever did happen, it would be front page news nationwide. But these things are happening; they just aren’t being caused by new car dealers — where the best are starting to look like the paragons of business virtue — and so those stories often don’t even make the front section.
But we can see how we’ve changed as a nation. Back in the Fifties and early Sixties there was a TV show called Queen for a Day. The contestants shown were less advantaged — financially in need, or with pitiable medical needs in the family — and they told their tales of woe in respectful, upbeat interviews that often ended with them and the audience sobbing. Then the applause meter would determine the winner, who would become “queen for a day” and win something her family badly needed, such as medical help or a washer and dryer. Fast forward 60 years, and one of the most popular shows in TV syndication is Judge Judy. And Seth McFarlane described it best in an episode of Family Guy, when the writers introduced her character with the line, “Hi, I’m Judge Judy and I make $45 million a year to yell at people who have nothing.”
Maybe we should reset our priorities.
Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: firstname.lastname@example.org