Peer to peer lending sites, a rapidly growing industry, let consumers bypass banks and get personal loans through their computer at home. Image from Wikimedia Commons.

Peer-to-peer lending sites are starting to come into their own. Peer-to-peer lending, a form of crowdsourcing where qualified loan borrowers can solicit personal loans from investors, has been growing as flagship sites like LendingClub and Prosper have been rapidly expanding.

Peer-to-peer lender Prosper makes big haul from investors

Prosper.com, one of the largest peer-to-peer lending operations, recently announced a fairly large round of venture capital raising, according to the Washington Post. The growing site managed to raise $17.2 million in funding from new investors Crosslink Capital and Draper Fisher Jurvetson. Previous investors also threw some money in, including TomorrowVentures. TomorrowVentures is the venture capital firm founded by Eric Schmidt, the current Google CEO. The company has been growing by leaps and bounds in the past few years, having amassed a loan portfolio of more than $236 million. That includes $5 million in April alone, according to the Wall Street Journal.

Prosperous business model

The peer-to-peer lending model is a fairly recent innovation. Borrowers who qualify for loans through the site announce they need a loan, give the reason and request an amount. Investors then pledge various amounts of capital that can range from less than $50 to a few thousand. Prosper began just more than five years ago and has done hundreds of millions in loan business. LendingClub.com, another high-profile peer-to-peer (p2p) lending site, has similarly been growing steadily. LendingClub grew by 24 percent in 2010 and lent $17.5 million in loans in April of this year alone. LendingClub has captured nearly 80 percent of the market since launching in 2007, according to ABC, growing at the rate of 10 percent per month. At the beginning of 2011, the site had done $204 million in loan business.

Not subprime loans

Not everyone is eligible to borrow installment loans through these sites. Loan applicants are subject to a credit check upon applying for a membership, and neither Prosper nor LendingClub will lend to a borrower with a bad credit score. Lenders can also ask prospective borrowers about incidents in their credit history, so anyone looking to pull a fast one is not going to get far. LendingClub won’t accept customers with a credit score lower than 660. Prosper states credit is a factor for prospective borrowers and that Prosper is good for borrowers “if you have good credit.” Neither of these sites benefits from Federal Deposit Insurance Corporation backing, and lenders have to be discerning.

Sources

Washington Post

ABC

Wall Street Journal

Prosper

Lending Club

Caterpillar's first-quarter earnings this year improved on last year's total by 426 percent. (Photo Credit: CC BY-ND/tigereye/Caterpillar Machines)

Caterpillar, the largest heavy equipment maker and fourth-largest exporter in the world, reported record profits Friday. According to Agence France-Presse, first-quarter 2011 profits for the Caterpillar company hit $1.22 billion, a 426 percent increase over the same period the previous year. Sales increased 57 percent to $12.95 billion over the same period.

As Caterpillar goes, so goes the global economy

The Peoria, Ill., company is closely tied to success trends in the global economy, as Caterpillar construction and mining products are used to build infrastructure. CAT construction equipment sales climbed 71 percent over first quarter 2010; mining and resource industry gear sales rose 84 percent; and the sale of engines went up 51 percent.

To let some of the air out of the balloon, however, Caterpillar acknowledges that construction activity in the U.S. and other developed countries “remains weak,” and no more than modest gains are expected in the U.S. and Europe in 2011. The spike in CAT construction equipment sales in the U.S. is being attributed to dealers, companies and individuals replacing old rental equipment and restocking fleets. Such activity accounted for $800 million of Caterpillar’s sales in the quarter.

Earnings per share ‘an all-time quarterly record’

Caterpillar’s price per share shot up to $1.84 after the record first quarter, a 411-percent increase over the 36 cent price in the first quarter of 2010. The average prediction among analysts was $1.31. The construction equipment company’s success contributed to a 2.6 percent leap up among blue chips on the Dow Jones Industrial Average at midday Friday. In order to accommodate the increased demand for its products, Caterpillar has taken on 10,104 additional full-time employees and 10,709 flexible staff leading up to the latest explosion.

In the wake of Caterpillar’s strong showing, not everyone believes U.S. industry and manufacturing are stagnant.

“The industrial sector and the manufacturing sector of this country are much stronger than many investors have perceived,” said Rob Lutts, president and CIO of Salem, Mass., wealth management firm Cabot Money Management.

Strong mining in Latin America

Construction activity in certain parts of the developing world has grown significantly, according to the Wall Street Journal. Latin America was among the hottest growth spots for Caterpillar, as sales increased by 84 percent. According to a company press release, global economic growth has increased demand and price for commodities. Mining activity in various regions, Latin America included, has increased considerably.

Sources

Cabot Money Management

Caterpillar

Wall Street Journal

Caterpillar company profile, 2008

Wal-Mart sales have declined for seven straight quarters because its customers are “running out of money,” said CEO Mike Duke. (Photo Credit: CC BY/Julian Ayrs/The Tattler)

Wal-Mart customers have been stretched to the limit financially, company CEO Mike Duke revealed at a New York event Wednesday. Rising gas prices, rising rents, sagging wages and the increased cost of commodities have one customer after another “running out of money,” according to Duke. Frankly, Wal-Mart is worried.

Wal-Mart sales are sagging

Duke appears to be conveying a message that he understands his customers’ pain. Living from paycheck to paycheck must indeed be devastating, as Wal-Mart sales numbers for customers who typically shop in bulk at the beginning of the month when paychecks arrive were down in April. It’s all part of a downward sales trend the company has been tracking.

“Purchases are really dropping off by the end of the month even more than last year,” Duke said. “This end-of-month [purchases] cycle is growing to be a concern.”

As a yardstick for the health of the U.S. economy, Wal-Mart is in the position to make or break the psyches of analysts and laymen who are hoping for a speedy recovery. With over 140 million shoppers per week, Wal-Mart would certainly be one of the best indicators of retail recovery, but Duke doesn’t believe the recovery ship has arrived, as the “people of Wal-Mart” aren’t helping the company reach its sales projections.

How Wal-Mart deals with recession

As food prices are up worldwide, Wal-Mart has charged customers more at its Supercenter locations for fresh groceries. However, items like electronics have gone down in price as the retailer fights to stem the tide of seven straight quarters of sales decline. Not only that, but Wal-Mart has cut down on electrics inventory to free up space for lower-priced products. Sagging electronics sales were reputed to be a “prime factor” dragging down sales, according to Bloomberg.

“We couldn’t possibly sell enough TVs,” said Bill Simon, President and CEO of Walmart U.S.

Wal-Mart prices back in focus

According to Duke, the “every day low prices” commitment that made Wal-Mart a giant was partially lost over the past two years. Now, in order to ease the sting of fuel costs for customers, Wal-Mart will work harder to become a “on-stop shopping stop” that will keep people from having to drive more to purchase what they want and need. For those customers who cannot make it to the store, Wal-Mart has even tested an online grocery delivery service called Wal-Mart to Go (Project Titan by company insiders). Home delivery service fees begin at $5. The San Francisco Chronicle reports that the service has been tested in San Jose, Calif., to positive reviews.

Sources

Bloomberg

CNN Money

San Francisco Chronicle

It’s Back at Wal-Mart

Tax preparer H&R Block still has not fully recovered from the loss of refund anticipation loans. Photo Credit: socialwoodlands/Flickr.com/CC-BY

Tax preparation giant H&R Block has just filed for another quarterly loss, despite it being the busiest quarter of the year. Though tax return season is when tax preparers make the bulk of their income, the loss of the refund anticipation loan product has cost Block dearly. The loan against tax refunds is facing extinction as a product.

Number of preparations increase but fail to keep Block in the black

H&R Block, the largest tax preparation service in the nation, has just released a quarterly earnings report, but there is little in the way of good news in it. In the recent report from Block, according to the Wall Street Journal, the company disclosed that the number of tax returns it had prepared in the previous year had increased by 5.7 percent in the period ending March 31. The company also reported that retail preparations had increased by 2.6 percent during March, but preparation fees had declined by 2.2 percent. Block expects to report more significant earnings after the month of April. However, the tax preparer has been hobbled by the loss of the popular refund anticipation loan product when its financing partner, HSBC bank, was forced to stop funding the loans with block.

Refund anticipation loan going extinct

Refund anticipation loans are popular for people short of cash around tax time, and also for tax preparation services because the loans are profitable. A person has their taxes prepared by a service, such as H&R Block or Jackson-Hewitt. The preparer offers them a loan against their tax refund, which is signed over to the preparer. The borrower gets a check for the amount of their refund, less a fee for the lender. It’s technically a short term loan, as it’s repaid very soon. The product is demonized as being similar to payday loans, though there will be few firms still offering the loans soon enough. The IRS can no longer report on the amount or status of a persons’ income tax return to certain types of loan lenders, which disqualifies most banks from meeting FDIC underwriting requirements for funding RALs for tax preparation services. At the end of this tax season, Republic Bank and Trust, a small bank in Louisville, Kent., will be the only bank in the nation providing funding for RALs, according to the Washington Post.

IRS urges electronic filing

The Internal Revenue Service has long advocated that people in a rush electronically file rather than resort to any loans against their tax refunds. Direct deposit can have tax refund money in a persons’ bank account in two weeks or less, but for those that really are counting on a return are not at a loss for finding out where their return is, according to Reuters. Simply head to the Where’s My Refund? section on the IRS Website, and enter the appropriate information. Do not go to any website other than the IRS site to track your refund, as it is likely a scam.

Sources

Wall Street Journal

Washington Post

Reuters

IRS Where’s My Refund?

After bad PR from doling out safety bonuses for 2010, Transocean executives donated cash to victims of the Deepwater Horizon disaster. Image: CC Dan4th/Flickr

Transocean, the owner of the oil rig that exploded and sank in the Gulf of Mexico, doled out big “safety bonuses” over the weekend. Transocean, which investigators determined was complicit in the 2010 Gulf oil spill, said 2010 was the safest year in the company’s history. After a firestorm of criticism, Transocean announced that the safety bonuses will be donated to the families of the 11 workers killed in the blast.

Transocean: 2010 safest year ever

In 2009, Transocean withheld all executive bonuses after four employees were killed on the job “to underscore the company’s commitment to safety.” This year, Transocean awarded executive safety bonuses on April 2, calling 2010 its best year ever for safety. The explosion of Transocean’s Deepwater Horizon oil rig killed 11 people and gushed about 200 million gallons of oil into the Gulf of Mexico for 86 days. However, Transocean rationalized the safety bonuses in a security filing: “Notwithstanding the tragic loss of life in the Gulf of Mexico, we achieved an exemplary statistical safety record.” Based on the total rate of incidents and their severity, “we recorded the best year in safety performance in our company’s history.” To calculate safety bonuses, Transocean factors the rate of accidents per 200,000 employee hours with a number that rates the severity of the accidents. Despite the 2010 Gulf oil spill disaster, Transocean’s rate of accidents in dropped 4 percent from the year before.

Transocean bonus backlash

A few days after Transocean announced the safety bonuses, Interior Secretary Ken Salazar was in Mexico City with members of the presidential commission that investigated the BP oil spill to discuss offshore drilling regulation with Mexican authorities. In January, the oil spill commission concluded that the 2010 Gulf oil spill could have been avoided. Negligence and errors by BP, Transocean and Halliburton, as well as subcontractors and government regulators, contributed to the disaster. Salazar said Transocean had a role in making 2010 “the greatest year of pain” in deepwater drilling worldwide. William K. Reilly, co-chairman of commission, called the Transocean bonuses “embarrassing.” To offset the PR damage, Transocean issued an apology Monday for “insensitive” wording in the securities filing about the bonuses. When that didn’t work, Transocean said on Tuesday that its five top executives would donate their safety bonuses.

Execs keep most of their bonuses

According to the securities filing, safety accounted for 25 percent of Transocean’s 2010 executive bonuses. The top five executives received $898,282, about 45 percent of their targeted performance bonuses for the year. The safety portion of those bonuses totaled more than $250,000, which will be donated to the Deepwater Horizon Memorial Fund. Transocean has used the fund to distribute more than $1.6 million to the 11 families of the workers killed in the disaster. Transocean CEO Steven L. Newman is on the hook for about $93,500 of that money. Newman made $6.6 million in 2010 in the form of salary, bonuses, incentives, stocks, options and allowances. After giving up the safety bonuses, Newman and his executive team get to keep about $650,000 in cash, plus more valuable “long-term incentives” in the form of stocks and options.

Sources

Wall Street Journal

New York Times

Forbes

CNN

McDonald's will hire 50,000 people on April 19. (Photo Credit: CC BY/David Neubert/Flickr)

McDonald’s is doing its share to melt through the recession hiring freeze, reports MSNBC. On April 19, through its U.S. stores and website, McDonald’s will hold a hiring spree event in which as many as 50,000 people will be hired. The company acknowledged that the hiring spree has been made possible by improved business on the domestic front.

McDonald’s hiring spree boosts workforce 7 percent

All positions, from restaurant workers to senior managers, will be involved in the McDonald’s hiring spree, which will boost the chain’s total workforce by 7 percent to approximately 700,000. On average, that will equate to three or four new hires per restaurant.

On the money

Estimates by a California State University professor indicate that McDonald’s wages and salaries will increase by more than $518 million in 2011. That will also translate into $54 million in additional payroll taxes and nearly $1.4 billion in annual expenditure, or $3.5 million per day, reports FOX Business.

The numbers bode well for the U.S. job market as a whole, writes FOX. Currently on a warming trend, the U.S. job market added 216,000 jobs in March after taking on 192,000 in February. In the private sector, 230,000 new jobs were created in March after a 240,000-job infusion the previous month.

The 24-hour goal for the Golden Arches

McDonald’s currently operates 14,000 restaurants across the U.S., 90 percent of which are administered by franchisees. The McDonald’s hiring spree (alternately called “McDonald’s Hiring Day”) will enable more of those restaurants to remain open 24 hours per day. Such is the case with the 111 Golden Arches locations in southern Nevada, where the unemployment rate is currently 13.7 percent – 14.2 percent in Las Vegas – and 193,000 Nevadans are unemployed.

McDonald’s Co-op Vice President Ron Smith is well aware of the difficult job landscape.

“We feel that it’s very important, especially in light of the critical economic situation, that we put as many people as possible back to work,” he said.

Even though McDonald’s jobs in Nevada will be part time, benefits like free meals and flexible schedules will help people who are struggling financially.

A strong foundation

McDonald’s USA President Jan Fields affirmed via a statement how important employees are to the success of the company.

“Our restaurant employees are the foundation of our business. They are the men and women who interact with our customers every day, enhance the McDonald’s experience and continue to help make our business strong,” she said.

For additional information about the McDonald’s hiring spree, see the McDonald’s Careers website or visit your local McDonald’s restaurant. Applicants must be at least 16 years old.

Sources

FOX Business

FOX 5 Las Vegas

McDonald’s Careers

MSNBC

McDonald’s hiring spree set for April 19

Microsoft has joined Google's European rivals in a complaint that has triggered an antitrust investigation against the search engine giant. Image: CC Titanas/Flickr

European Union authorities launched an antitrust investigation against Google in November. Smaller European web companies, some owned by Microsoft, accused Google of shutting them out of search engine results and other anti-competitive practices. On Thursday Microsoft stood behind some of its subsidiaries and filed its own complaint against Google with the EU.

Microsoft’s antitrust complaint against Google

Alleging that Google is limiting its access to critical data it needs to compete using YouTube and other Google services to the detriment of European consumers, Microsoft filed a formal antitrust complaint in Europe against Google. Microsoft’s complaint against Google throws its weight behind an ongoing antitrust investigation by the European Union Competition Commission. Google controls about 95 percent of the Internet search market in Europe while Microsoft’s search engine, Bing, swims with the other minnows. Google, which has become Europe’s central online hub for advertisers, has also grown accustomed to European antitrust complaints about competition among search engines. After fighting antitrust investigations into Windows and billions in fines from the European Commission for years, Microsoft has reversed roles with its complaint against Google.

Has Bing drawn Google’s wrath?

Microsoft’s European antitrust complaint against Google is about background technologies such as “application programming interfaces” that unlock access to Google products and services. Microsoft alleges that Google fiddles with the application programming interfaces to interfere with access to YouTube by Bing and other competing search engines, thus herding their users toward Google. In particular, Microsoft said Google thwarts Windows Phones from working correctly with YouTube — problems Android and iPhone users don’t experience. Microsoft suspects that Windows Phones are getting the short shrift because of Bing because Apple does not compete with Google in the search engine market. Microsoft also alleges that Google blocks some advertisers from access to data they need to optimize advertising on rival platforms, allegations already being investigated by the EU antitrust probe.

Microsoft raises stakes in Google probe

An EU Commission spokesman said it will give Google an opportunity to tell its side of the story. Google has said the restraint on third-party software is to maintain the consistency of Google’s ad service and that advertisers are allowed unfettered access to data. But Microsoft’s involvement in Europe raises the stakes. Google could face a fine of up to 10 percent of annual global revenues, which exceeded $29 billion in 2010. It could also be forced to change the way it does business in Europe. Before Microsoft threw its hat into the ring, the EU commission said it would give Google a chance to avoid a fine or conviction of wrongdoing by changing the way it does business in Europe.

Sources

Associated Press

Los Angeles Times

New York Times

Wells Fargo and other banks are ending debit rewards programs as financial reform efforts are eating into their bottom line. Photo Credit: MoneyBlogNewz/Flickr.com/CC-BY

The costs of financial reform are adding up as a potential curb on interchange fees is causing banks to cancel debit card reward programs. Financial reform legislation has caused ripple effects, and the effort to legislate fairer conditions for consumers is leading to more restrictive conditions for consumers. Lawmakers are beginning to balk at the high cost of such laws.

Interchange fee cap may deprive consumers in effort to protect them

The proposed cap on interchange fees or “swipe fees,” which merchants must pay banks to complete debit card transactions, has already led to major banks trying to save money any way possible. Free checking programs and debit card rewards have landed on the chopping block. JP Morgan Chase ended its debit card rewards program and more are following suit, according to CNN. Wells Fargo subsidiary Wachovia has stopped offering debit rewards to new customers, and Wells Fargo will do likewise on April 15. Citibank recently disclosed that the bank is “in the process of evaluating potential changes,” which means it is likely going to cut debit rewards programs for customers as well.

Costs of financial reform adding up

A recent estimate by the Government Accountability Office placed a price tag of $1 billion per year on the Dodd Frank Act, or the financial reform bill, according to USA Today. The creation of a totally new agency, the Consumer Financial Protection Bureau, has already caused controversy and infighting among lawmakers. The GAO estimated that federal agencies would need to hire more than 2,000 people to enforce the laws, including any the CFPB would be enforcing. Congressional Republicans have been openly critical of the agency, which some assert has too much authority. The special adviser to the president in charge of setting up the agency, Elizabeth Warren, has defended the agency, saying that the “Wall Street behemoths” that created the need for the agency should be targets, not the CFPB, according to Bloomberg. The agency will have oversight of consumer financial products from personal loans to credit cards, when it starts operations later this year.

Consumers may end up not using credit at all

The aim of financial reform laws is to prohibit trickery by financial institutions and make the use of credit safer for consumers. That is a noble aim, but it seems to be having a chilling effect on financial institutions. Debit card rewards and free checking are falling by the wayside, but banks cannot impose fees with impunity. Loan credit is likely to get tighter, though that also means banks and lenders cannot gouge customers out of the blue. However, the debate is going to be whether the loss of convenience is worth it.

Sources

CNN

USA Today

Bloomberg

Growing microbrewer Goose Island has been purchased by Anheuser Busch, maker of the Budweiser brand, as larger brewers are buying up more of the craft brew industry. Photo Credit: Jesster79/Wikimedia Commons/CC-BY-SA

Anheuser Busch, the corporate megabrewing conglomerate, recently purchased Goose Island, a beer brewing company based in Chicago. Anheuser and chief rivals SABMiller and Molson Coors have been buying up microbreweries for years. Macrobreweries dominate the market for beer, prompting cynics to claim corporate America is out to spoil everyone’s fun.

Macrobrewing company purchases growing Chicago microbrewery

Anheuser-Busch, the macrobrewing family which includes the Budweiser beer brands, has just announced the purchase of the remaining interest in the Goose Island brewery in Chicago for $38 million, according to USA Today. Anheuser already has a distribution partnership with Fulton Street Brewery, the company which makes Goose Island beers, and the purchase essentially moves the Goose Island line in-house for the brewing giant. Anheuser bought 52 percent of Goose Island’s shares outright, and the remaining 42 percent from Craft Brewers Alliance. Craft Brewers Alliance Inc. is a conglomerate of smaller brew houses formed by the merger of Redhook and Widmer Brothers in 2008 that has since acquired other breweries, according to BizJournals. Anheuser-Busch, which was purchased several years ago by global beverage titan InBev, owns 32.5 percent of Craft Brewers Alliance Inc.

Largest companies dominate distribution

Goose Island, according to the Chicago Sun Times, is selling control to Anheuser to expand the company’s ability to distribute its beer to customers in the face of growing demand. This is not uncommon, as it is not often advertised to the public that brewers, distillers and vintners all depend on distribution companies to sell the beer, wine and spirits they produce to bars, restaurants and stores. Since large beverage companies such as Anheuser Busch/InBev, SABMiller and Molson-Coors have controlling interests in the distribution industry, small brewers such as Goose Island often have to sell themselves or partner with companies like Anheuser-Busch InBev and SABMiller in order to keep up with customer demand, as the current distribution system is mandated by law. Microbrewers, according to Reuters, accounted for 5 percent of beer sales in 2009.

Congress tries to help small brewers

The United States Senate currently has a bill before it called the Brewer’s Employment and Excise Relief Act, which would cut the excise tax on the first 60,000 barrels of beer produced by breweries in half, according to Reuters. The bill would also reduce excise taxes on breweries producing six million barrels per year or less. Currently, brewers pay a $7 excise tax per barrel on the first 60,000 barrels, and brewers that produce more than that pay a $18 per barrel excise tax. Brewers that produce six million barrels per year would pay only $16 under the new law, which would benefit craft breweries, but not corporate mega-brewers like Budweiser or Coors. A version for the House of Representatives is supposedly in the works. A bill of this sort would help to lower the price of craft beer, making it easier for those who enjoy craft brewed beer to do so.

Sources

USA Today

Chicago Sun Times

BizJournals

Reuters

John Scott Clark of Utah is being sued by the SEC for allegedly running a Ponzi scheme with the two online payday loan companies that he owns. Image from Wikimedia Commons.

The Securities and Exchange and Commission has slapped two online payday loans lending companies owned by a single man with fraud suits. John Scott Clark, of Utah, is being sued by the SEC for allegedly running a Ponzi scheme with two online financial services companies. He has allegedly bilked more than 120 investors out of millions.

SEC slaps online lending companies with fraud suit

The owner of two companies involved in lending payday loans online has been sued by the Securities and Exchange Commission for running a multimillion-dollar Ponzi scheme. The SEC sued John Scott Clark, of Cache County, Utah, for defrauding more than 120 investors over a period of five years in return for investing capital into two businesses that he owned, Impact Cash LLC and Impact Payment Systems LLC, according to the Salt Lake Tribune. Clark allegedly recruited investors by promising an average return of 80 percent in exchange for capital, which he allegedly said would be used to fund payday loans to reliable customers. Clark was allegedly recruiting investors from March of 2006 to September 2010 and was able to secure more than $47 million from the investors he convinced to join the operation, according to the Credit Union Times.

Clark accused of funding Mercedes habit with investor funds

Clark would gain the confidence of investors and allegedly use new investment funds to pay dividends to initial investors and fund his lifestyle, according to Deseret News. Clark supposedly purchased three Mercedes-Benz cars, a 1963 Chevrolet Corvette, installed a home theater system in his home that cost $25,000 and also purchased lavish home furnishings. Some of his investors were growing suspicious by 2009 and asked Clark to sell their stake in his companies and turn the proceeds over, which he refused to do. Eventually, the SEC became involved, slapping Clark with a lawsuit alleging five different violations of the Securities Act. A Federal judge has placed both Impact companies into receivership and frozen the same day loans lending companies, according to the Wall Street Journal.

One bad apple

Online payday lenders are thought by some to be a nest of vipers. That is far from the case, but transactions that are completed fairly and honestly do not go widely reported. Still, customers and investors should be careful who they deal with in financial matters. Organizations like the Better Business Bureau exist for a reason. An informed consumer will always be in a position to make a better decision, and something that sounds too good to be true usually is.

Sources

Salt Lake Tribune

Wall Street Journal

Deseret News

Credit Union Times

Hydroponic supply companies are considering initial public offerings. Image: Flickr / jpck / CC-BY

In 30 percent of the United States, medical marijuana is legal, to varying degrees. The industry surrounding medical marijuana can be a very profitable one. Now, two major marijuana industry companies have announced plans for initial public stock offerings.

Marijuana related industries

There are a variety of industries that have developed around medical marijuana. Businesses provide grow lights, humidifiers, fertilizers, processing equipment, packaging equipment, etc. Estimates say the marijuana industry could be worth $60 billion or more within 10 years. The technology sector of the industry is also continuing to grow. There are now “grow trailers” that can be controlled by smart phone apps, and hydroponic technology is improving every year. Many medical dispensaries and growth operations fund their expansion with short term loans in hopes of making big profits — and most do. Average markup for grow stores ranges between 70 and 120 percent of wholesale cost.

Initial public offerings planned

Companies that directly deal in marijuana exist in a difficult legal gray area. All marijuana is illegal on the federal level. On the state level, all recreational use of marijuana is illegal. Marijuana for medical use is legal in some states, but federal officials have raided state-compliant businesses in many states. Two companies — GrowOp Technology Ltd. and General Cannabis Inc. — both avoid this legal gray area by selling the technology and equipment, but not the actual substance. Both companies have indicated that by the end of 2011 they wish to be traded on public stock exchanges. These initial public offerings would raise more than $10 million for these businesses and allow individual investors to get in on a “growth” industry.

The problem with marijuana finances

The growth of medical marijuana has many investors hoping to get in on the action. This growth, however, could be creating another financial bubble. Since medical use was made legal in California in 1992, the price of finished product has dropped from $3,000 or more per pound to $1,800 per pound. Competition is fierce; warehouse-style operations such as WeGrow are franchising across many cities. Marijuana industry business owners are assuming that more states will continue allowing medical marijuana.

Source

24/7 Wall St

The Amazon Appstore is open, despite pending lawsuits and a coming price war. Image: Flickr / MoneyBlogNewz / CC-BY

With great fanfare and a free Angry Birds download, Amazon opened its Appstore this morning. This is despite a cease-and-desist order and federal trademark lawsuit filed by Apple computer over the use of the name “Appstore.” This is one of multiple lawsuits over the use of the term “app,” all of which could be driving up cost to consumers.

Amazon Appstore opens

The Amazon Appstore, a store for Android applications, opened on Tuesday morning. The store currently provides about 3,200 applications for Android-based phones and tablet computer systems. The Amazon Appstore also offers most applications already available on the Android Marketplace, as well as a few exclusive applications. Most applications on the Amazon Appstore cost between 99 cents and $4.99. Unlike the Android Marketplace, where the developer sets the cost of their program and gets, at times, same day loans if their app does well, Amazon takes the suggestion of the developer into account, but ultimately sets the final price of the product.

Apple files lawsuit over Appstore

Just a few days before Amazon opened its Appstore, Apple filed a trademark infringement lawsuit. The allegation of the lawsuit is that Amazon is violating Apple’s trademark of “App Store.” The lawsuit originally claimed “unspecified damages” for the trademark violation. Amazon apparently ignored the cease-and-desist order by opening the Appstore anyway. This is not the only lawsuit over use of the term “App Store” — Microsoft currently has a pending trademark lawsuit against Apple Computers, claiming that the terms “App” and “App Store” are too generic to be trademarked. These lawsuits are likely to be in litigation for years.

The Appstore lawsuit cost to consumers

The federal trademark infringement lawsuits currently pending are expected to take years. These federal lawsuits are heard in courts that are paid for and operated by taxpayer money — bad credit loans not payday loans given by tax money to the courts and paid back with “court costs” charges. Beyond this “hidden” cost of the lawsuits, the trademark cases also increase the cost to the companies, which is passed on to consumers. The likelihood this will increase the cost of most apps, however, is low. App developers, private or as a part of a larger company, are often willing to develop and release apps for free or for very inexpensive prices. In hopes of garnering subscriptions, advertising views, or simply prestige, the army of app developers could mean that the “App Store” lawsuit could prove to be a financial tempest in a teapot.

Sources

Daily Tech
Fortune.com
MocoNews

More than $5 million in guitar-lesson purchases were made through illegal ads, according to the FTC settlement filed today. Image: Flickr / tabithahawk / CC-BY-SA

When shopping online, the reviews of a product often play an important role in decision-making. In a landmark case, the Federal Trade Commission has fined a company $250,000 for creating false online reviews. Legacy Learning Systems reportedly paid affiliates for false endorsements that resulted in $5 million in sales.

FTC ruling on online reviews

In 2009, the Federal Trade Commission issued a set of guidelines about online advertising. These guidelines require anyone advertising online to fully disclose their relationship to the seller. Reviews and testimonials, according to this ruling, also count as advertising. The FTC believes that any review or online testimonial posted could have a direct effect on the sales and income of a particular product, be it installment loans or baby toys. When a company creates fake reviews or hires another company to fabricate reviews, those false pieces of advertising are called “sock puppet reviews.”

Legacy Learning Systems charged $250,000

Legacy Learning Systems is a company that creates and sells the “Learn and Master Guitar” program. Retailing for $249 or more each, these guitar lessons are popular online sellers. The FTC started investigating the company when it discovered that the company made more than $5 million in sales through an online affiliate program. Many of these affiliate links were not attached to a disclosure that revealed the person posting the link or review would make a commission if the product was purchased from that space. The FTC also found that the company paid a service that created false online reviews of their products.

What this means for your wallet

With one of every four online customers seeking out reviews and 87 percent of customers reporting that online reviews influence their purchase, reviews are big business. Customers have also been shown to be willing to pay up to a 20 percent premium for well-reviewed services. The estimation is that online sales will pass $279 billion in sales by 2015. These hefty fines and increased oversight by the FTC could be one more step in increasing the real value of what you get for your money — or they could end up just re-directing marketing dollars. Either way, remember that the way you purchase online — be it through an affiliate link, a display ad, or directly through the company website — has a big  effect. A purchase through online advertising means that the ad was successful, so only purchase through the kinds of ads you would like to see again.

Sources

WalletPop
UConn.edu (PDF)
TechCrunch

Warner Brothers is the first major studio to sign onto Facebook Movies. Image: Flickr / joevare / CC-BY-ND

Warner Bros. announced this morning that it would stream movies through Facebook. The Facebook Movies system currently offers just a few films, but the company has plans for expansion. After this news, Netflix stock fell, and buzz about Facebook Credits increased.

Facebook movies digital rentals

On the Warner Bros. Facebook page, there is a new feature. Users can now digitally rent movies and stream them directly in Facebook. This option is currently available for just a few movies, including “The Dark Knight.” Renting the movie for 48 hours costs 30 Facebook Credits, or the equivalent of about $3. This option is only available on a test basis to about 30 percent of United States Facebook users.

Netflix stock drops on Facebook Movies news

The news of Facebook Movies has already had an effect on the online rental business. Netflix shares dropped more than 3 percent in the first hour of trading after the announcement. Netflix currently accounts for about 20 percent of all online traffic. In December of 2010, a report found that Facebook accounted for almost 10 percent of online traffic to video-sharing sites. Combining the traffic of Facebook with in-line video sharing means that Netflix could be facing its first real competition — depending on the content that is eventually made available.

The question of Facebook Credits

Facebook movies is the first major non-game application to make use of Facebook’s soon-to-be-required payment system. Facebook Credits currently cost $1 for 10 Facebook Credits. There is no assurance, however, that Facebook Credits will remain a monetary system tied exclusively to the value of the dollar. By creating its own monetary system, Facebook is creating the flexibility to increase income simply by adjusting its own conversion rate. If Facebook were to change the rate, for example, to nine Facebook credits per dollar, the company would increase its revenue by 1.1 cents per credit purchased. It may seem small, but multiplied by billions of credits purchased, it adds up to a significant payday for the company.

Sources

TechCrunch
Slate
Forbes
Bloomberg

AIG recently raised more than $6 billion to pay back the U.S. Treasury. Photo Credit: David Shankbone/Wikimedia Commons/CC-BY

AIG and General Motors have been making great progress in paying the United States Treasury back for the bailout loans both companies received. AIG and GM were both maligned for the huge amount of money the firms received from the government, but they are returning to solvency. AIG was the single largest bailout performed under the program.

MetLife stock sold to pay back loans from Treasury

Insurance giant AIG sold a portion of its shares in the MetLife insurance company and turned over the proceeds to the United States Treasury, according to USA Today. AIG gave up 146.8 million shares of MetLife stock, from which the company raised $6.3 billion to make payments to the United States Treasury. AIG is using the funds in the effort to repurchase the $18.2 billion the Treasury holds in preferred equity shares of AIG. The government also holds 92 percent of AIG’s common stock, which was a condition of the bailout package the insurance giant received from the Troubled Asset Relief Program, or TARP. AIG was the single largest bailout, receiving more than $182 billion in total. The bailout included the Treasury and the Federal Reserve purchasing toxic asset from the company and $68 billion in loans.

General Motors on the road to health

General Motors, another notorious bailout recipient, borrowed $49 billion from the government to stay afloat, and the company has been making huge strides toward paying it back. General Motors recently announced in an earnings report that the company had made a profit every quarter of 2010, according to Reuters. This marks the first time since 2004 that the automaker has been profitable for an entire year, and it made the largest profit since 1999. GM posted a profit of $4.7 billion for 2010, though the stock price for the company has barely moved since the initial public offering in November. The Treasury still holds 33 percent of GM stock, which is a significant reduction since November 2010, when the Treasury held 61 percent. It is projected that the GM share price will have to rise to $53 per share for the government to break even.

End result of TARP

David Miller, the chief investment officer for the Troubled Asset Relief Program, said that the cost of corporate bailouts is not likely to be more than the money allocated for the housing crisis, according to Reuters. Miller said the Congressional Budget Office estimates that TARP will cost a total of $25 billion, and the Obama administration estimates slightly more than $28 billion. Treasury Secretary Timothy Geithner has said the estimate of $25 billion may be high. Various companies still owe the government $135 billion for TARP loans.

Sources

USA Today

Reuters on General Motors

Reuters on TARP estimates

More than 90 work from home companies have been shut down by the FTC for fraudulent practices. Image: Flickr / gpaumier / CC-BY-SA

The Federal Trade Commission and Department of Justice have teamed up to shut down more than 90 companies. These work-at-home companies allegedly defrauded customers out of millions of dollars. Most of these companies also targeted unemployed individuals with their work-at-home promises.

Work-at-home businesses targeted

In a joint action, the Federal Trade Commission and and Department of Justice sent shutdown notices and froze the assets of a variety of work-at-home marketing companies operating in the United States. These shutdowns were a part of Operation Empty Promises, an enforcement effort that has resulted in dozens of criminal counts being filed federally, on the state level and locally. The allegation is that these businesses defrauded customers, promising huge work-at-home profits with very little work for a small investment. The largest businesses shut down include:

• Ivy Capital
• Darling Angel Pin Creations Inc.
• Global U.S. Resources
• U.S. Work Alliance Inc.
• Preferred Platinum Services Network
• Abili-Staff Ltd.
• Entertainment Work Inc.
• La Asociacion Nacional de Trabajo

The cost of business fraud

The individuals targeted by these allegedly fraudulent businesses have lost significant amounts of money. In general, these companies used telemarketers to call unemployed individuals and offer webinars and classes on “how to start your own business.” The price of these webinars varied from $2,000 to $30,000. In several cases, the telemarketers would find out what kind of credit limit the customers had on their cards and then charge close to that amount. When refunds were requested, the companies would not respond, or would offer only a few hundred dollars. Just one of the 90 targeted companies, Ivy Capital, earned an estimated $40 million with this fraud.

Targeting the unemployed

By targeting unemployed individuals, these companies are making a bad situation worse. The unemployment rate is dropping in the United States, but very slowly. Many individuals are taking lower-paying jobs than they previously had, so “real” income is actually dropping, despite the increase in jobs. This essentially jobless recovery is putting further strain on social services facing funding cuts. While legal challenges are shutting these companies down, the likelihood that victims will receive compensation is, unfortunately, low.

Sources

LA Times
PC World

The first permit for offshore, deepwater drilling in months was recently issued, just as gas prices are rising. Image from Wikimedia Commons.

The Obama administration has granted a permit for offshore oil drilling to Noble Energy. It is the first offshore drilling permit in months, as offshore drilling operations were put on hold after the BP oil spill. The decision was timely, as oil and gas prices are rising because of political turmoil in the Middle East.

First permit for offshore drilling issued in months

For the first time since the national moratorium on offshore drilling was lifted in October, 2010, the first permit for offshore drilling has been granted by the government, according to the New York Times. The Department of the Interior granted Noble Energy a permit; the permit is technically a re-issue, not permission to start drilling at a new site. Noble has a deepwater drilling rig off the coast of Louisiana that was ordered to suspend operations after the Deepwater Horizon explosion and oil spill in April of 2010. With the new permit, the company is able to resume drilling operations. The rig drills at about 6,500 feet below the surface.

Long wait for permits slammed by judge

The Noble Energy permit was granted a week after federal Judge Martin Feldman, from a court in Louisiana, ordered the Obama administration to process oil drilling permit applications more quickly. However, Michael Bromwich, the Director of the Bureau of Ocean Energy Management, Regulation and Enforcement insisted that the delay was not due to a political agenda and disagreed with the ruling. There are six more permits pending for deepwater drilling operations, though there have been 37 permits issued for shallow offshore drilling. The news that a permit had been issued also led to a moderate rise in energy stocks for companies with stakes in offshore drilling, according to Reuters.

Gas prices rising

Political turmoil in the Middle East has led to a nearly consistent rise in gas prices over the past few weeks, according to CNN. Oil prices have fluctuated, but there have been guarantees from oil producing states, such as Saudi Arabia, that any drop in production would  be made up. Despite those guarantees, the ongoing Libya protests and similar situations in Bahrain, Oman, Yemen and Jordan have not inspired great confidence. Gasoline prices rose by 20 cents over the last week of February, marking a 27-cent rise in the cost of gasoline over the month of February. The average price of gasoline is sitting at $3.34 per gallon, well short of the national high of more than $4.11 in July 2008.

Sources

New York Times

Reuters

CNN

Will early adoption of ThunderBolt kill USB 3.0 like Apple killed the floppy disc and marginalized the optical drive? Image: CC markopako/Flickr

Apple unveiled its MacBook Pro 2011 on Feb. 24, which happens to be Steve Jobs’ 56th birthday. The buzz surrounding the MacBook Pro 2011 is focused on a new I/O (input/output) technology by Intel called Light Peak. Apple is the first to adopt Light Peak and has rebranded the technology as ThunderBolt on the new MacBook Pro.

ThunderBolt is lightning fast

Apple’s new MacBook Pro looks identical to the previous model, except for ThunderBolt, an innovation that has captivated technology industry pundits. Formerly known as Intel’s Light Peak, ThunderBolt has dual channel transfer rates as high as 10 gigabits per second. It is seen by Apple as the I/O technology of the future that will eventually displace USB 3.0. ThunderBolt will allow MacBook Pro users to transfer an HD movie as large as 20 gigabytes from another source in less than 30 seconds, according to Intel. Apple’s MacBook Pro lineup includes two 13-inchers, two 15-inchers and a 17-inch model. Prices run $1,200 to $2,500 before options. All MacBooks feature Intel’s Core i5 or i7 processors in dual- and quad-core versions.

ThunderBolt makes FireWire seem slow

Thunderbolt technology offers the flexibility of FireWire with transfer speeds up to three times faster. Just as with FireWire, MacBook Pros need only one ThunderBolt port because all ThunderBolt devices (when they come on the market) can be interconnected. ThunderBolt also supplies power, eliminating the need for external power adapters for peripherals. As a single interface for multiple functions, ThunderBolt automatically figures out its intended use. The technology will work as an interface for everything from external hard drives to display monitors. Intel’s Light Peak prototypes featured optical cables, but Apple’s ThunderBolt runs on copper wires in order to support bus-powered peripherals.

Apple launches I/O paradigm shift

ThunderBolt devices are expected to start shipping this spring. Meanwhile, Apple’s ThunderBolt taps peripherals directly into the PCI interface, enabling it to support FireWire and USB adapters. The new MacBook Pro also comes with two USB 2.0 ports and one FireWire 800 port. Apple is coming out ahead of the curve again with ThunderBolt, just like it was the first to abandon the floppy drive in 1998 and create a laptop, the MacBook Air, without an optical drive in 2010. Other PC manufacturers are expected to catch up with Apple by adopting ThunderBolt in 2012.

Sources

New York Times

Engadget

Techland

With LendingTree personal loans, you can be a superhero for your flagging finances. (Photo Credit: CC BY-ND/Rich Nadworny/Digital Strategy)

LendingTree, the United State’s leading online personal loan resource, connects customers seeking personal loans with online lenders who offer online loans of $1,500 or more. With the power of LendingTree’s free, no-obligation service in your corner, you can find the best personal loans to fit your needs.

LendingTree makes lenders compete for your business

Personal Money Market can cover all of your small, short-term loan needs. For customers who need more than the $1,500 loans we can help you find, LendingTree is the place to go. LendingTree offers customers interactive tools, personalized advice and resources to select the personal loans that best fit their needs. Additionally, it makes lenders compete for your business so you get better deals.

Apply online at LendingTree

After you complete LendingTree’s simple, secure online personal loan request form, you’ll know if you’re approved within minutes. Up to four personal loan offers will instantly appear in your e-mail inbox. Research the lenders with LendingTree.com’s rating and review tools, then choose the personal loan option that suits you. You can lock in your rate and complete the entire loan agreement process online. Even if you have less than perfect credit, you can apply for fixed-rate, fixed-term personal loans through LendingTree’s network. Medical bills, debt consolidation and emergency needs are just some of the ways LendingTree personal loans can help.

LendingTree is a proven, trusted company

An A-plus rated member of the Better Business Bureau, LendingTree can help you find a personal loan – and much more. Mortgage loans, refinancing, home equity loans, auto loans, insurance and credit cards are just a few of the options. As a corporation, LendingTree LLC has facilitated more than 27 million total loan requests and $207 billion in loan transactions including mortgages and other long-term credit.

Personal information stays safe

In terms of online security, LendingTree protects its customers with the latest data encryption methods. This keeps personal data out of the hands of unwarranted parties. LendingTree.com also warns customers when online and phone scammers attempt to use the LendingTree name illegally. LendingTree.com will never ask you for “advance fees,” “upfront fees” or “insurance payments” before connecting you with personal loan companies. The LendingTree online application comes with no cost or strings attached.

LendingTree.com traffic speaks volumes

LendingTree.com is a respected personal loan resource, and this respect is evident in the traffic the website receives. According to independent online traffic analyst Compete.com, LendingTree’s site received 987,844 unique visitors in January, 2011. That’s a 12.29 percent increase over the previous month, a trend that also influenced the total number of visits (1.2 million). At least 946 unique websites link to LendingTree.com, which is a sign that LendingTree also has the respect of its peers. Among the most common search terms prospective customers use to reach the site are “lending tree” (9.99 percent), “mortgage calculator” (4.88 percent) and “lendingtree” (1.87 percent).

If you need personal loans of more than $1,500, try LendingTree today

Visit www.lendingtree.com or call 800-555-TREE for more information. Personal Money Market is not affiliated with LendingTree. This article reflects information and opinions gathered independently by Personal Money Market with no input from the company LendingTree.

Sources

Guide to Smart Borrowing

LendingTree finance blog

LendingTree on Twitter

AT&T iPhones finished far ahead of Verizon in 3G network speed, but Verizon's 3G network was much more reliable. Image: CC Erik Van Leeuwen/Wikemedia Commons

AT&T has taken a lot of flack for its iPhone service, but AT&T’s 3G network was faster than Verizon’s 3G network in a head-to-head test. The average download speed on AT&T’s 3G network was about twice as fast as Verizon’s 3G network. While AT&T beat Verizon in 3G network speed, Verizon’s network provided a more reliable connection.

AT&T iPhone outruns Verizon

Dropped calls have become AT&T’s iPhone hallmark, but iPhone users who place a premium on network speed should think twice before switching to Verizon. Ookla, creators of the speedtest.net broadband test, crunched the numbers from AT&T and Verizon iPhone connecting to the Speedtest.net app. AT&T iPhone transfer rates came in at about two times faster than those calibrated for Verizon iPhones. Ookla compiled the speed test results from 42,000 AT&T iPhones  and 14,000 Verizon iPhones around the U.S. Most iPhone users ran the Speedtest.net app several times to total 106,000 AT&T iPhone tests and 40,000 Verizon iPhone tests.

Verizon iPhone wins reliability test

Speed test results for AT&T iPhone downloads averaged 1,769 kbps and uploads averaged 730 kbps. The Verizon iPhone averaged 846 kbps for downloads and 606 kbps for uploads. AT&T iPhones may have the speed advantage, but Verizon iPhones were much more reliable. Other independent reviewers reported that at times AT&T iPhones could not complete the test because they dropped the connection. The Verizon iPhone was noticeably slower but was able to maintain the connection through every test. The test results reflect the claims made by the separate networks in their advertising wars. AT&T touts “the nation’s fastest 3G network.” Verizon touts “America’s Largest and Most Reliable Wireless Network.”

Choosing an iPhone

Before choosing between AT&T and Verizon, iPhone users should think about how they will use their device. If media consumption is a priority, AT&T would be more satisfying. If reliability is at the top of the list, Verizon is the easy choice. The Speedtest.net app is the easiest and best way to test an iPhone’s 3G network speed. The Speedtest.net app is available free for the iPhone at the Apple App Store.

Sources

Wired

NPR

MSNBC