Consumer Confidential: High court slams consumers, Apple comes clean, BofA raising rates

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Here’s your we-can work-it-out Wednesday roundup of consumer news from around the Web:

--The conservative majority of the U.S. Supreme Court has ruled that companies can prohibit customers from banding together in class-action lawsuits. The ruling arose from a California lawsuit involving AT&T cellphones, but it will have a nationwide impact. In the past, consumers who bought a product or a service had been free to join a class-action lawsuit if they were dissatisfied or felt they had been cheated. By combining these small claims, they could bring a major lawsuit against a corporation. But in its 5-4 decision, the high court says that under the Federal Arbitration Act, companies can force these disgruntled customers to arbitrate their complaints individually, not as part of a group. Consumer-rights advocates say this rule would spell the end for small claims involving products or services. The justices ruled that arbitration is an acceptable alternative to litigation. It isn’t. This is a big win for the business world.

--Apple says it was all apparently just a misunderstanding that the company’s iPods and iPads were surreptitiously tracking the whereabouts of users. The company denies that the devices are tracking users but says it ‘uncovered’ bugs that result in too much location data being stored. Apple says it kept the data on the devices to enable them to quickly provide location-based services, such as map directions. It is not a precise log of users’ whereabouts, the company says, but a database of nearby Wi-Fi networks and cell towers that can help the phone calculate routes and nearby destinations. ‘Users are confused, partly because the creators of this new technology (including Apple) have not provided enough education about these issues to date,’ the company said. That’s one way of looking at it. Another is that Apple was busted spying on people and still has some ‘splaining to do.

--Heads up: Our friends at Bank of America are informing customers that they may significantly increase the interest rate on their credit cards if people are late on payments. Notifications sent with bills this month say the bank can apply a ‘penalty rate’ of nearly 30% to future balances. A BofA spokeswoman says a late payment won’t automatically trigger a penalty rate, but it could get the ball rolling. The change will go into effect June 25. If the new rate is applied, customers will be notified 45 days in advance. Under the new policy, the annual percentage rate could reach as high as 29.9%. If implemented, the new rate will apply indefinitely, but the bank will review accounts periodically to determine if the rate might be reduced.


-- David Lazarus