Thursday, December 31, 2015

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Customers Bank Eliminates Fees From Higher One's Controversial Student Business

Jack Hollingsworth / Getty Images

Pennsylvania-based Customers Bank wants to be the "anti-Higher-One."

Higher One is the financial services company that recently agreed to a settlement with federal bank regulators for improperly collecting more than $30 million in fees from students. Now, Customers Bank, headquartered in Wyomissing, is buying up Higher One's most controversial and criticized business and getting rid of the fees.

Customers Bank said Wednesday that it would offer students debit cards that could be filled up with their financial aid money and would charge no overdraft fees, PIN fees, or ATM fees in its 55,000 ATM network.

The company, which has $7.6 billion in assets and is the country's 115th largest bank, two weeks ago agreed to buy Higher One's disbursement business, which includes its fee-heavy OneAccount, for $42 million.

The Federal Reserve and Federal Deposit Insurance Corporation ordered Higher One and a bank partner to pay tens of millions of penalties and fee reimbursements for over 1 million students. Regulators slammed the company, saying it had used “deceptive marketing practices" in selling its One Account.

“During our due diligence at Higher One, we identified the regulatory and compliance risks of the high-fee based model that the company was using to make money from its student loan disbursement business,” Customers Bank chairman and chief executive Jay Sidhu said in a statement. Referring to the massive settlement, Sidhu said "With BankMobile, students can be confident this will never happen again."

The Higher One business will be part of Customers Bank's BankMobile business, which Customers describes as "America’s first absolutely no-fee, mobile, tablet and online bank."

The changes will go into effect when the deal closes next year. The BankMobile business launched in January and already has over 100,000 accounts, BankMobile's chief strategy and marketing officer Luvleen Sidhu told BuzzFeed News. With the Higher One acquisition, BankMobile will pick up 2 million new accounts and expects to add another 500,000 a year.

AP Photo/David Mercer

Higher One's fees — including out of network ATM fees and a 50-cent fee on PIN transactions — drew frequent and harsh criticism from activists and students, who said the fees were both high and, in the case of the PIN fee, almost unique among debit card providers.

The Department of Education released final rules that will go into effect next year that mandate schools offer a wider range of options for students to receive their financial aid money and require schools not to provide options with "excessive and confusing fees."

Sidhu said that because BankMobile is a bank — unlike Higher One, which had technology to disburse student aid money and then partnered with existing banks to provide services to students — they are not as dependent on account fees to make money.

BankMobile makes money from merchants when customers use their cards to buy stuff, what's known as interchange, as well as from the difference in the interest rate they charge customers for loans and the rate they provide on deposits. The bank said that it expected about $250 million in new deposits.

"We hope people will start using their debit cards more," Sidhu said. "We make money primarily through interchange income."

When Customers Bank announced its deal with Higher One earlier this month, it said that it expected $65 to $75 million of income, mostly from interchange.

In a statement, Sidhu said that "BankMobile will never charge an overdraft fee" and described the roughly $30 billion a year banks collect in overdraft fees as "outrageous."

Sidhu said that its student accountholders, like BankMobile accountholders now, won't have to pay any ATM fees if they have a monthly deposit. BankMobile will also provide a range of financial education services to its customers including podcasts, consultations, and "financial management tools" in its app.

"We have 4 years to convince them by giving them the best banking experience, we’re going to be treating them as true customers," Sidhu said.

6 Important Business Stories That Got Buried Over The Holidays


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6 Important Business Stories That Got Buried Over The Holidays

Companies disclosed some important details in filings — while everyone was on vacation.

Digital Vision. / Getty Images

The Christmas and New Year's holidays give much of corporate America a long vacation before the start of the new year — except corporate lawyers, that is.

Following what has become a late-December tradition, companies dropped some big news as 2015 drew to a close and fewer people were paying attention. Here are some of the best.

1. SAC Capital settles class action over insider trading in Wyeth shares.

1. SAC Capital settles class action over insider trading in Wyeth shares.

Ho New / Reuters


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Wednesday, December 30, 2015

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Urban Outfitters Is Still Fighting The Navajo Nation

Navajo Hipster Panty.

Urban Outfitters / Via Court Filings

Urban Outfitters is frequently criticized for making offensive clothing and for ripping off the work of independent designers without much in the way of consequences. But it may have picked the wrong fight with the Navajo Nation.

Urban Outfitters and the group have been locked in a legal battle since February 2012, when the Navajo Nation sued Urban for its use of "Navajo" and the misspelled "Navaho" on the retailer's flasks, underwear and more. It accused Urban of trademark infringement and of violating a law known as the Indian Arts and Crafts Act, which protects Native American-made goods.

Urban has pulled out a number of defenses, including the idea that tribal names are often used "as indicators of a fashion style or trend," but a judge said last week that the Navajo Nation has standing to keep pursuing the suit under the Act.

It's a blow for Urban Outfitters, which could now see the protracted case go to trial. It's unclear how much money the Navajo Nation is seeking. Lawyers for the group and the retailer didn't return requests for comment.

"Title Unknown Techno Navajo Quilt Oversized Crop Tee"

"Title Unknown Techno Navajo Quilt Oversized Crop Tee"

Urban Outfitters / Via Court Filings

The Indian Arts and Crafts Act, enacted in 1935 and amended in 1990, makes it illegal to falsely represent products as Native American-made if they're not. The Navajo Nation raised "sufficient evidence to raise jury questions on the issues of consumer confusion and deception" with Urban Outfitters' Navajo-labeled goods, the judge in the case wrote on Dec. 21.

Urban Outfitters' main defense throughout the litigation has been that "Navajo" is a generic term, and that its customers didn't associate items like its "Navajo Print Fabric Wrapped Flask" with the Navajo Nation anyway. Given the controversy began in 2011 with some Native Americans complaining that the Navajo name was being used insensitively, it can make for awkward reading:

"Just as the term 'Light Beer' is generic for a type of beer that is light in
body or taste or low in alcoholic and caloric content, 'Navajo' is today a generic descriptor for a particular category of design and style," lawyers for Urban Outfitters wrote in an April 2012 court filing.

An $18 "Navajo Print Fabric Wrapped Flask"

An $18 "Navajo Print Fabric Wrapped Flask"

Urban Outfitters / Via Court Documents

A year later, Urban Outfitters filed photographs of other retailers with Native American prints in their stores, saying the fashion industry as a whole started "using the term 'navajo' to identify a particular type of southwestern Indian design and/or fashion that was originally influenced and/or inspired by the designs of Navajo Indians."

The company went on: "Just as FRENCH on wine and FLORIDA on grapefruit are descriptive, the term NAVAJO on textile products, including for example rugs and blankets, is not capable of protection."

The Navajo Nation, for its part, has contended that it has been known by the name Navajo since 1849, and that its Navajo Arts and Crafts Enterprise has marketed clothes, housewares and jewelry under the Navajo name since at least 1943. It has more than 300,000 members and owns a semi-autonomous territory that touches Arizona, Utah and New Mexico.

Urban, which also owns Free People and Anthropologie, also hired a trademark infringement expert, for $415 an hour, to research the use of the word "Navajo" in fashion and other industries. In an April court filing, the expert, Robert Frank, noted it's "quite possible that those in the printing and publishing industry, when hearing the word 'Navajo' do not think of the Navajo Nation but instead think of the Navajo paper manufactured by Mohawk Mills." He also offered a paint color called "Navajo White" and Jack Rogers "Navajo" sandals as other common associations.

Last year, the retailer cited a survey showing only 2.8% of its consumers mistakenly believed the Navajo products were, in fact, made by Navajo People. It added: "There can be no meaningful confusion that Defendant, a well-known mass retailer of lifestyle fashion items to a young urban demographic, was peddling Indian arts and crafts on its website."

The Navajo Nation said that it has sold more than $500 million worth of Navajo-branded goods. The group filed the lawsuit months after sending a cease-and-desist letter to Urban Outfitters, after which the company removed the offending product names from its website. The lawsuit alleges that Navajo-branded items were still being sold at Free People and in stores after that.

The group alleges it has lost sales because of Urban Outfitters' merchandise, and that the "imitation products have driven down prices of Authentic Indian products, forcing the Navajo Nation and American Indian People to offer and garner revenues for authentic products at lower prices."


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10 Major Changes For Working Americans In 2015

JD Hancock / Men at Work / Via flic.kr

This past year was a turning point for many American workers. Recent legislation will raise the minimum wages in 13 states and several cities as 2016 kicks off. In California, the country’s toughest equal pay law will guarantee equal compensation for men and women doing “substantially similar work.” Home care workers will finally be covered by minimum wage laws.

As the late reporter and historian Studs Terkel wrote in Working: labor, at its best, can be a search “for daily meaning as well as daily bread, for recognition as well as cash, for astonishment rather than torpor; in short, for a sort of life rather than a Monday through Friday sort of dying.” Here are nine events of 2015 that breathed some life back into our Monday through Friday, and one that raises some questions about the future of work.

1. Low-wage workers won raises in 13 states and localities.

JD Handcock / Flickr / Via flic.kr

This year, America's two largest cities joined Seattle and San Francisco in phasing in a $15 minimum wage. Thanks to the Fight For 15, the movement to raise the minimum wage that began in 2012, fast food workers will earn minimum of $15 an hour by 2018 in New York City. In June, Los Angeles also approved a $15 wage for all workers by 2020.

With Wage Boards and other local strategies, the movement generated 16 pending pieces of legislation and 2016 ballot proposals. Companies individually took action too. Eighteen employers reportedly increased their minimum pay to between $14 and $16 per hour, including the insurance companies Aetna and Nationwide; the banks C1, First Green, and Amalgamated; the University of California; and ice cream maker Ben & Jerry's. Facebook pledged to pay contracted workers a minimum of $15 per hour, extending the raise beyond direct employees.

Notorious low-wage employer Walmart raised its starting pay to $9 an hour in 2015, with a planned raise to $10 in 2016. McDonald's also raised base wages at company-owned stores to $1 above the local minimums this year. Other restaurant chains including Chipotle and Starbucks increased some benefits as well, such as support for employees' education.

2. Black Lives Matter joined the wage battle.


Mario Anzuoni / Reuters

The movement, sparked by police killings and brutality, expanded further this year to include the racial gap in an unemployment and other economic issues. Black Lives Matter dovetailed with the fight for higher wages in 2015, with new reports on how black women can lead the labor movement, marches and solidarity actions with the Fight for 15, and blueprints for black worker progress. Union federation the AFL-CIO initiated a task force on racial and economic justice, and in June, federation President Trumka said the AFL-CIO was “deeply immersed in a thorough review of the way we approach race, justice, and work.”

3. The government ruled in favor of an expanded definition of "joint employer."

Andrew Kelly / Reuters

The National Labor Relations Board, a government agency charged with adjudicating labor disputes, decided in August to uphold an expanded definition of what companies constitute a “joint employer," a change that will affect workers at franchised and contracted business. Labor law experts say the decision paves the way for workers at franchises (such as those at franchised McDonald's stores) to hold a parent company (such as the McDonald's corporation) jointly responsible for labor violations. At online retailer Amazon, some workers contracted by an independent warehouse center drew on the new definition to try to hold Amazon responsible for conditions in the Port of Los Angeles this year. The decision has yet to be exhaustively put to the test, although it has been upheld in the face of industry lobbying and challenges from business groups.

4. Union members demanded more from their leadership.

Rebecca Cook / Reuters

Rank-and-file members of the United Auto Workers rejected a "yes" vote on a contract agreement approved by the top union brass, ultimately winning more concessions from Chrysler. Elsewhere, Walmart workers and organizers split from the United Food and Commercial Workers union to form an independent advocacy organization. Worker participation in a host of other alt labor (or non-union) actions — from protests to hunger strikes — showed a new embrace of tactics and strategies beyond collective bargaining. (Still, the Service Employees International union has devoted considerable financial support to these causes.)

5. Workers won a raft of scheduling reforms.

President Barack Obama signs a Presidential Memorandum on paid leave for federal employees.

Gary Cameron / Reuters

After the New York Attorney General's investigation of the legality of on-call scheduling — which requires retail workers to be available to work without any guarantee of paid hours — companies including Victoria's Secret, Bath and Body Works, and J. Crew eliminated the practice nationwide (as BuzzFeed News reported this year). Some tech companies also offered more paid leave for hourly workers, as well as improved overtime and paid parental leave offerings across the country.

6. Home care workers got higher wages.

Ai-jen Poo taking part in a #100Women100Miles pilgrimage to Pope Francis in September 2015.

National Domestic Workers Alliance / Via flic.kr

Nursing, child care, and home care workers campaigned with the Fight for 15 for higher pay, more protections, and more affordable child care. Their efforts resulted in a landmark union contract in Massachusetts, where the state raised the hourly pay of home health care workers to $15 by 2018 under a collective bargaining agreement with the Service Employee International Union Local 1199. A federal appeals court also upheld a rule requiring home care agencies to pay the federal minimum wage and overtime to their employees.

7. Agricultural workers won new protections.

JD Hancock / Flickr / Via flic.kr

Children under 18 are now forbidden from handling pesticides, thanks to a 2015 Environmental Protection Agency regulation, which also re-affirmed workers' rights to organize without retaliation. There's plenty still to be done in the industry: unsafe conditions and repetitive work in meatpacking leading to grisly accidents in poultry plants this past year; child workers are still permitted to work in tobacco harvesting; and 2015 saw the widespread abuse and exploitation of workers on H2 visas.


8. Workers won in Silicon Valley.

JD Hancock / Flickr / Via flic.kr

As hourly workers at some highly-valued startups, or "unicorns," went union — for example, office space powerhouse WeWork in New York — some corporate tech workers were introduced to a salary database for pay transparency. Teamsters successfully unionized shuttle drivers contracted by Facebook and Google, and the Department of Labor cracked down on employee misclassification, a major issue for the on-demand economy.

9. Candidates competed for workers' votes.

Brian Snyder / Reuters

Heading into the 2016 election, the year saw increased political targeting of low-wage workers as a potential voting bloc. Even as Hillary racked up union endorsements, alt-labor held back on playing politics as usual. And with Senator Bernie Sanders in the race, the most looked-up word of 2015, according to Merriam-Webster, was... socialism.

10. Robots rose.

SoftBank Corp's human-like robot named "Pepper" gestures.

Issei Kato / Reuters

More companies turned to some form of automation and self-service for their businesses. Kiosks, tablets, and self-check-out machines spread in fast food spots and grocery stores across the country.

It remains to be seen what lasting effect this will have on the workforce. The National Restaurant Association, the industry lobbying group, dubbed a kiosk “the new minimum wage employee.” Worker advocates, though, called fears of automation distracting and unfounded. Some industries have managed to maintain livable wages as automation reduced the number of people needed for those jobs — such as dockworkers in some ports and shipping hubs.

As Stephanie Luce, associate professor of labor studies at CUNY, told BuzzFeed News this summer, "The question isn't just the introduction of technology: the question is about who has the power to introduce the new technology, and how it will be introduced.”


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Tuesday, December 29, 2015

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Saving the Constitution from Lawyers: How Legal Training and Law Reviews Distort

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Everlane's CEO Explains The Logic Of Its "Choose Your Price" Sale

The online retailer is offloading excess inventory in a novel way. Are some customers willing to pay more than the lowest possible price?

Everlane / Via everlane.com

Everlane, like many retailers, is holding a big sale right now to get rid of excess merchandise from shoes to sweaters. But in a twist, the online-only clothier is letting consumers pick from one of three prices on each item, betting that some people won't go for the lowest one.

Each item that's part of the "Choose Your Price" sale displays three discounted prices. On a $75 sweater, for example, the discounted prices are $32, $39 or $68. The cheapest price covers Everlane's production and shipping costs, while the second goes a step further, covering that plus "overhead for our 70-person team." The highest price, which is only $7 less than the sweater's original price, includes all of that and also allows Everlane to "invest in growth." ("Thanks!" the description adds.)

Everlane founder and CEO Michael Preysman told BuzzFeed News that the sale drew inspiration from Radiohead and the Metropolitan Museum of Art. Radiohead, in 2007, successfully allowed fans to pay whatever they wanted to download its new album, while the Met technically only charges a "recommended" admission fee that people tend to pay.

"We've literally never put anything on the site on sale," said Preysman, who launched Everlane four years ago. "Everlane's obviously for profit, so for most people, we were trying to explain how sales work and how we think about them, and maybe for those with a stronger affinity, they may have wanted to contribute in a way beyond that."

Everlane / Via everlane.com

The promotion began this weekend and will run through Thursday, Dec. 31.

This reporter was skeptical of how many people would choose to pay something other than the lowest price. After all, consumers are value-hungry these days — and paying the highest price doesn't give you anything tangible. Like, you know, a keychain, or a pin, or a future discount.

But Preysman said that in a small test of existing customers about a week ago, roughly 10% of people chose either the middle or highest price points.

"If I had to guess, because we haven't selected it this way, they might have bought two things at the lowest price and one thing at a mid-price," he said.

Preysman said he was more involved than he would normally be in the promotion's presentation and limiting the sale prices to three distinct choices. The company also considered making it a "name your price" sale, but that got too confusing, he says.

"There's quite a bit of psychology on how you explain this, and how people click through on it," he said. "We tried to simplify the concept as much as possible."

As for why someone would pay more than the lowest price, he said: "It's the affinity ... If you're honest and transparent with people, then they'll sort of treat you with decency in return."


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Meet The Benedictine Monk Of Silicon Valley

William Alden / Via BuzzFeed News

Like many techies, Brother Eckhart Camden wears a hooded garment to work. But his uniform is not a hoodie, strictly speaking. Instead, Brother Eckhart wears a black tunic and scapular — reflecting his status as probably the only Benedictine monk working at a Silicon Valley software company.

"That's for the remembrance of death — the reason why the Benedictines wear black," Brother Eckhart told BuzzFeed News in an interview in the Palo Alto garden where he prays daily. "One of the things that's to help you keep humble is to remember that you are mortal."

Brother Eckhart, 56, with an unruly beard and long gray hair, has worked in technology for more than 30 years, though he moved to California's Bay Area only in 2013, to join a software startup. Until recently, he was known as Chip Camden, and his hair was buzzed short. (A photo that appeared in the Wall Street Journal in 2013 shows his previous incarnation.) But a series of spiritual experiences in recent years, he says, helped him rediscover his Christian faith and put him on a path that culminated in a ceremony in November, when he took Benedictine vows.

Since ancient times, monks of the Order of Saint Benedict have adhered to a tradition of chastity, asceticism, and prayer. Brother Eckhart's group, the Community of St. John Cassian, is a small and relatively new Benedictine organization within the Episcopal Church, founded only last year in Berkeley. Unlike other Benedictine communities, it doesn’t have a monastery, though it is hoping to be able to afford one soon. For now, its members live alone, in conventional society, and are expected to support themselves financially.

In a role seemingly befitting a monk, Brother Eckhart oversees quality at his software startup, which is now a division of one of the region's biggest tech companies. (His employer asked not to be named in this article; in the charitable spirit embraced by Brother Eckhart, we assented.) He spends four hours a day in prayer, including Bible study and meditation, in several sessions starting when he arises at 5 a.m. This practice, he says, has helped him improve his focus and made him calmer at work — useful traits for ensuring that software development be held to a high standard.

"I do see that quality benefits from that centeredness," Brother Eckhart said. "It's often about discipline, and awareness, and paying attention to the moment, and not getting too far ahead of yourself."

At the same time, life in Silicon Valley these days can be full of potential pitfalls for anyone trying to free themselves from material things. Tech companies of all sizes offer catered meals and abundant snacks while showering their employees with perks. Brother Eckhart gave up drinking long before taking his monastic vows (he makes an exception for communion wine), although he once accidentally took a sip of white wine at a company party. "I asked for water and they gave me wine, thinking I was joking," he said.

But despite the abundant temptations on offer in the current Silicon Valley gold rush, he has been able to maintain his monastic discipline. He gave up his car when he moved to Palo Alto and lives in a one-bedroom apartment with few possessions. His youngest son has a severe mental disability, he said, and he directs a large part of his earnings toward his son's care.

"The free lunches are great," Brother Eckhart said. "But as far as the rest of the lifestyle, I try not to be too acquisitive."

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Though he came to the Benedictine order later in life, Chip Camden studied the Bible as a student at Oral Roberts University in the late 1970s and planned to become a minister. He discovered computer programming almost by accident, working a part-time job in the university's data processing department.

Soon he taught himself programming languages like COBOL and DG Eclipse Assembler, while also studying Hebrew and Greek. His first wife, whom he married while in college, noticed those four languages seemingly melding in his brain.

"One night, my wife woke me up and described for me the things I was saying," Brother Eckhart recalled. "And I was actually talking in all four at the same time."

"Programming languages are actually human languages. They're not machine languages," he added. "They're just extremely well specified."

After that marriage and a second one fell apart, and after many years working as an independent software consultant, Brother Eckhart came back to Christianity. Studying the Bible in college had shown him inconsistencies in scripture and turned him into an atheist, he said. But while listening to Anton Bruckner's Symphony No. 4, on a CD recovered from his estranged second wife, he broke down in tears upon discovering an unexpectedly beautiful passage in the music.

Later, he believed he received a divine message after praying for strength in anticipation of a heart surgery. An eagle he had seen months earlier appeared on a branch before him, seeming to represent strength, and he noticed a biblical passage, Isaiah 40:31, inscribed on plaques on nearby benches. "But those who hope in the Lord will renew their strength," it reads. "They will soar on wings like eagles."

He found the Benedictine community through an Episcopal church in Palo Alto. Adhering to a chaste life, he said, was not hard.

"After my second wife and I split, my therapist recommended that I not start another relationship for 18 months," Brother Eckhart said. "I decided to give it a try. And I suddenly found such freedom in not having to relate to people that way."

Benedictine monks are not common in the United States today, even in spiritually diverse Northern California. Brother Brendan E. Williams, the founder and prior of the Community of St. John Cassian, said he knew of just one other Benedictine community in the Bay Area, the Camaldolese monks at Incarnation Monastery in the Berkeley Hills, who are Catholic.

Still, the Bay Area is a stronghold of contemplative tradition, particularly the Buddhist variety. The Buddhist monk Shunryu Suzuki, who established the San Francisco Zen Center in the early 1960s, inspired countless Westerners to meditate, and mindfulness gurus have since infiltrated corporate offices. In the HBO show Silicon Valley, the CEO of the fictional tech giant Hooli often turns to his spiritual guru for counsel.

"It's a little trendier to be Buddhist, I think, than it is to be Christian," Brother Eckhart said. "Perhaps in Western culture we're a little too close to the seedy underbelly of Christianity's history."

Noting the similarities between his tradition and Buddhism, Brother Eckhart said he enjoys talking to a work colleague who is Buddhist.

"We have wonderful discussions about contemplative technique, and the kinds of experiences that we have in trying to find that place to be, or place to non-be, if you will," he said. “I find that I have more in common with him than I have with many Christians, who aren't familiar with the contemplative tradition of Christianity."

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In preparation for his vows ceremony in November, Brother Eckhart sent messages to colleagues informing them of his plans, including that he would be wearing a monk's habit to the office. "They've all been very supportive," he said.

His outfit — all black, down to his high-top Chuck Taylors — follows the precepts outlined by St. Benedict. He wears a traditional medal on a necklace, a black belt, and a hood, for warmth, which "gives me a Gandalf look."

And then there's that scraggly beard, which, in today's tech scene — with executives like Jack Dorsey of Twitter sporting mighty facial growth — doesn't seem very unusual at all.

"It is kind of trendy, unfortunately," Brother Eckhart said. "But I quit trimming it about a year and a half ago, and just kind of let it grow. I don't know why, exactly. I guess I like it."


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