I watched Frontline’s “The Retirement Gamble” with my wife tonight. It starts with the shift from company-managed pensions to 401K funds managed by all of us — or our financial planners. It is not a feel-good documentary. Many Americans are losing huge chunks of their retirement savings to fees, possibly for little or no benefit (well, not to the savers, anyway; the fund managers are getting plenty of benefit).

This was not a problem in the roaring 90s, when a monkey could make money in the stock market, but it’s a big problem now, when many Americans have seen their retirement accounts fall off a cliff, or at best, go flat.

What’s the root of the problem? According to Frontline, it’s not so much the fees, but the fact that financial advice is mostly doled out by salespeople whose only ethical requirement is to sell you something “suitable.” In other words, the financial products they sell you just have to sort of resemble the kind of product you want. They can’t sell you an insurance policy if you’re looking for a mutual fund, in other words.

Few financial advisors are fiduciaries, a word that means they would be required to put your interests ahead of their own. (Not salespeople, in other words.) It doesn’t seem to matter that most Americans have no idea what that word means or how to identify a fiduciary (hint: ask).

Are there good, well-meaning financial advisors out there who are not fiduciaries? I’m sure there are. I think my financial advisor is one of them. But whether you go with a salesperson or a fiduciary, you need to ask yourself (and your financial advisor, fiduciary or not) some important questions:

• How much of your retirement savings are going to fees?
• How are your funds performing compared to lower-fee index funds (hint: probably not any better)?
• Does your financial advisor have a fiduciary duty to you?

Above all, be involved in your retirement planning. If your investments aren’t growing, find out why — or find someone else to help you manage your investments more effectively.

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I picked up a few “Trader Ming’s” noodle boxes at Trader Joe’s the other day, thinking they would be good for a quick lunch. And the image on the box looked pretty great. The product inside does not really measure up to the cover art, though. Check it out:

I can’t say that I am all that surprised. Most food packaging is like Glamour Shots for the contents — which are, in this case, 600 calories and nearly 25% of your fat, sugar, and salt allowance for the day.

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The way we file taxes has got to be the least-efficient way possible. Every year, millions of Americans dig through a year’s worth of receipts, year-end statements, and their memories to assemble millions of stacks of paperwork that are processed by hand by an army of IRS employees and contractors.

This is ridiculous, and I’m not even talking about how complicated the tax code is.

I mean, most of our financial information starts out in electronic format, and we have to print it out on paper, file it, after which is is probably converted back into a less-useful (because the meta information has been lost) electronic format. Wouldn’t it be easier if we simply started out our taxes every year with all our electronic financial information — much of which the IRS already has — pre-loaded into our tax forms?

Yes, but of course, that would mean many of us wouldn’t need to pay tax preparers or use tools like TurboTax. I assume that is why “[p]rofessional tax preparers like Intuit, H&R Block and others have opposed programs that would allow taxpayers to pay their taxes without filing a return for years,” according to the Sunlight Foundation.

They aren’t even shy about it. Intuit apparently lists “oppose IRS government tax preparation” on its lobbying disclosures. The Sunlight Foundation calls out a few companies in particular:

• Intuit (TurboTax)
• H&R Block
• Jackson Hewitt
• American Coalition for Taxpayer Rights (tax preparer trade group)
• National Taxpayers Union (a non-profit dedicated to “lower taxes and smaller government”)
• Computer and Communications Industry Association (tax preparer trade group)

Which means that if you used TurboTax or went to H&R Block or Jackson Hewitt for your tax preparation this year, you were supporting more-expensive tax filing. I hope you are proud of yourself.

(image: http://www.flickr.com/photos/nicksee/4175998416/)

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We all assume that having things is the same thing as having wealth. You see someone driving a Mercedes, and assume he or she is wealthy. More often than not, it just means that person has a huge loan payment to make each month. Cash flow is not the same thing as wealth. Wealth means having assets — money in the bank, valuable investments, and things unencumbered by loans. If you owe money on all your things, you just have liabilities.

You can have a lot of things and still own nothing. Like the founder of Michigan Brewing Co., who just filed bankruptcy and listed $3,236 in assets and more than $8,200,000 in liabilities.

Very few people are truly wealthy. You cannot judge a book by its cover, and you cannot judge wealth by the number of things someone has. (via Daniel Gershburg)

(image: http://www.flickr.com/photos/danmoyle/5634567317/)

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When you work with a lawyer (or a financial advisor or accountant, for that matter), you almost certainly hand over a lot of confidential information. It may include things like account numbers, birth dates, your social security number, family members’ names — in short, everything necessary to steal your identity.

This could be a problem.

Above the Law’s Joe Patrice called law firms, “the soft underbelly of American cyber security.” At this year’s LegalTech conference, FBI computer security expert Mary Galligan said that “hundreds of law firms” are being targeted by hackers. Giving confidential to your lawyer could be a big problem, in other words.

Something like half the lawyers in the United States work in solo or small firms. One of the hallmarks of solo and small firms is low overhead, which means no money for an IT department. These lawyers have to manage data security themselves, and few are competent to do so. Smart solos and small firms find ways to outsource security to contractors or by using secure cloud services. Due to confusion about the cloud and lack of knowledge about security, though, many lawyers don’t actually do anything beyond setting an operating system password — which, let’s be honest, is woefully insufficient.

I think it is time for clients to start taking an interest in data security. You don’t need to be a security expert yourself to find out if your lawyer, financial advisor, or accountant has basic competence. All you need to do is ask a simple question.

Just ask your lawyer, financial planner, or accountant how their client data is secured.

If their answer is some version of “I don’t know,” confusion, or something non-responsive, find someone else. If their answer indicates they have actually considered security and have made some conscious choices, you are probably in much better shape than most clients.

There are a lot of different ways to secure client information, and many levels of security. If you have some data security expertise, definitely use your knowledge to make sure you are comfortable with your lawyer’s security precautions. Otherwise, ask a few questions to see if your lawyer has even considered data security.

(image: http://www.flickr.com/photos/freefoto/5692512457/)

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Last words are automatically interesting, but not automatically significant. This goes double or triple for last tweets, since tweeting is rarely the last thing anyone would think to do before expiring. All the same, The Tweet Hereafter archives last tweets of famous people, just in case they are significant, like the last tweet of Oscar Pistorius’s girlfriend, Reeva Steenkamp, the day before he killed her:

What do you have up your sleeve for your love tomorrow??? #getexcited #ValentinesDay

Like last words, last tweets take on new meaning after death. Like this tweet from a motorcyclist who died in a vehicle accident:

Oh yeah, and check out the CB1100 images, there are loads, they’re fabulous, and there’s a video too!

Others are pretty depressing, like this one:

I’m sorry.

Just before a suicide. Not all the final tweets are momentous, of course. As I said, not everyone reaches for their smartphone just before closing their eyes.

But if all this has you self-consciously worrying your final tweet will not be good enough, you could always try LivesOn, which keeps your Twitter stream going after you die. For some reason.

(via The Daily Beast)

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Instagram is apparently the teen and tween social network of choice. That means parents who want to do the responsible thing and monitor their children’s Instagram accounts may be tempted to demand that their children “hand over the keys” to their accounts. But accessing your child’s Instagram account is — technically, at least — a violation of federal law.

Violate the terms, violate the CFAA

Instagram’s terms of service contain a “one person, one account” policy:

you agree that you will not create an account for anyone other than yourself

The terms also prohibit any licensing or transfer of your account:

you agree you will not sell, transfer, license or assign your account, followers, username, or any account rights

If your child gives you her username and password, she is giving you a license to access her Instagram account. Maybe you don’t care too much about violating Instagram’s terms of service, but doing so is, unfortunately, also a violation of federal law. Under the the Computer Fraud and Abuse Act (CFAA), you cannot

intentionally access[] a computer without authorization or exceed[] authorized access, and thereby obtain[]

…

(C) information from any protected computer.

In other words, if you access an Instagram account (which is hosted on Instagram’s computers/servers), in violation of Instagram’s terms of service, you have probably violated the CFAA, which is at least a misdemeanor (a fine plus imprisonment of up to 1 year).

Instagram is (probably) not to blame

Now, Instagram probably does not much care whether your child gives you access to his account. I think what Instagram cares about is (1) preventing people from forcing users to share their login information (as a condition of employment, for example), and (2) not being responsible for figuring out who might have permission to access a particular account. Plus, as a general rule, the point of Instagram and other social networks is to get individuals (or entities, in the case of businesses) to interact with other individuals.

Instagram could potentially make an exception to its rule for parents, but what about estranged parents, abusive parents, or imposters? Not to mention the wholesale flight of teens and tweens if Instagram made it easy for parents to get into their accounts. That also gets into reason number 2. If Instagram were responsibe for figuring out who had a valid license to access a user’s account, they would need rooms of lawyers to sift through the evidence.

But in the end, all Instagram is likely to do if it doesn’t like the way you are using your account is to close it. It is not very likely to hand you over to federal prosecutors, assuming those prosecutors would even be interested.

Blame Congress

Nobody thinks the CFAA is supposed to prevent parents from being able to supervise their children’s social media usage. And prosecution — much less, jail time — is a remote possibility, at best. But it is still illegal. Which is stupid and scary.

The CFAA is written far too broadly, which means that lots of things are illegal that should not be, and it is up to law enforcement officers to decide which illegal activities to prosecute. Limited discretion can be a good thing, as long as laws are narrowly tailored to describe only activities that usually ought to be illegal. It allows police and prosecutors to opt not to go after a driver for safely driving 1 mile over the speed limit, and instead to focus on unsafe speeders.

But when a law criminalizes normal conduct, discretion replaces justice. It is silly to criminalize behavior that falls comfortably within the range of good parenting.

Aaron’s Law

The CFAA is nearly 30 years old, and it was last amended in 2008. It is time to revisit the law. The proposed Aaron’s Law amendment that would remove terms of service violations would be a good start.

The only problem I see with the proposed Aaron’s Law is the lack of a provision addressing employers’ demands for access to employees accounts. I think that, at a minimum, there should be some civil liability for employers who force their way into their employees’ accounts. Perhaps that should be its own, separate law, but since it involves computers and abuse, the CFAA seems like an appropriate place to address it.

But parents should definitely not have to engage in illegal activity just to keep a close eye on their children’s social media usage.

The post How Monitoring Your Kids on Instagram Could Land You in Jail appeared first on Caveat Emptor.

Under the terms of the settlement reached in several class actions against Midland Funding for its (apparently past) practice of employing robo-signers to execute affidavits for debt buyer lawsuits, each class member would receive under $20 — and that’s it. The Sixth Circuit rightly decided this was unfair (pdf).

Unfortunately, the Sixth Circuit seemed to think the settlement was unfair primarily because the named plaintiffs (i.e., those whose names actually appeared on the complaints) would receive $8,000 plus the elimination of their debts. The class members who opted into the settlement just got $17.38 each, and still owed their debts:

this disparity in relief is so great that we conclude the district court abused its discretion in finding that the settlement was fair, reasonable, and adequate

Which is true, but this reasoning would seem to suggest that the settlement would be just fine if the named plaintiffs took home $100 each and still owed their debts. That would be just as unfair, unreasonable, and inadequate. But wait! The 6th Circuit is not done (fortunately)! Here’s what else it had to say about that $17.38:

the relief actually provided to the unnamed class members is perfunctory at best

In other words, $17.38 is a pretty shitty consolation prize when you probably owe hundreds or thousands, when you will be prevented from raising the inadequacy of the plaintiff’s affidavits in court again, and when you would be entitled to $1,000 in statutory damages if you brought a Fair Debt Collection Practices Act claim yourself.

(via CL&P Blog)

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It turns out that a comically-large number (26%) of consumer credit reports may have errors. However, 95% of those with errors do not need to worry about them, because those errors do not affect their “credit risk tier.” Or, conversely, only 5% of the consumers with errors on their credit reports were “significant enough” that the consumers affected (about 10 million) might have been denied credit or paid more for it.

Which means there is a good chance that you have errors on at least one of your credit reports (which you should obviously fix), although they probably do not affect your credit.

Of course, being denied for credit or paying more for it are only two consequences of credit reporting errors. Many more people experience other consequences, like incessant calls from debt collectors looking for someone else.

Here is the meat of the findings:

Overall, we find that 26% of the 1,001 participants in the study identified at least one potentially material error on at least one of their three credit reports. Although 206 consumers (21% of the participants) had a modification to a least one of their credit reports after the dispute process, only 129 consumers (13% of participants) experienced a change in their credit score as a result of these modifications. Each affected participant may have as many as three score changes. Of the 129 consumers with any score change, the maximum changes in score for over half of the consumers were less than 20 points. For 5.2% of the consumers, the resulting increase in score was such that their credit risk tier decreased and thus the consumer may be more likely to be offered a lower auto loan interest rate.

It is cold comfort that most of the errors riddling the credit-rating system relied on by the consumer lending industry “don’t matter.”

Read the FTC report (pdf) (via Cleveland.com)

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While there are a lot of people you can blame for the state of the US economy, government regulators are at the top of the list. So it’s satisfying that someone has finally taken them to task. Elizabeth Warren, finally on the Senate Banking Committee where she belongs, had some hard questions for banking regulators yesterday, specifically on why they are happy to accept pennies on the dollar to settle claims against banks.

What she got in response was a lot of hemming and hawing by the spineless regulators in question, none of whom seemed to know the last time anyone took a bank to trial.

I’m a little concerned that too big to fail has become too big for trial.

“At Senate Hearing, Warren Comes Out Swinging” (NYT) (via Reddit)

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