Student loan payments restart as global interest rates surge
Student loan repayments begin in October, Amazon sued by FTC over Prime deception, and global interest rates continue to climb
Highlights:
Students set to begin loan repayments in October after a three-year pause.
Amazon sued by the FTC for deceptive sign-up and cancellation processes.
Global interest rates climb as inflation stays persistent despite optimism.
Get Ready, Get Set, PAY!
For over three years students have not owed a dime to the U.S. Department of Education. This was a result of the pandemic-related student loan forbearance that began in March 2020. That changes in October when payments are set to begin.
Students have repeatedly been told that payments would resume but the pause has been extended each time.
However, the Education Department is serious this time. As noted in the notification displayed at the top of their website, Congress recently passed a law that was a part of the debt ceiling agreement that terminates the student loan pause at the end of August.
This is sure to send a shockwave that ripples through the entire economy as nearly 40 million Americans have student loan debt. The average payment is roughly $350 a month, an amount that will now be absent from consumer spending power, barring consumers who set money aside for three straight years.
Nearly all consumers took advantage of the pause as well, according to analysis from higher education expert Mark Kantrowitz less than 1% of borrowers continued to make payments.
Student loan debt has continued to climb in the US. A problem that President Biden attempted to place a dent in with a plan to cancel up to $20,000 in student loans. This is currently held up in court, a decision is expected sometime this month.
In the meantime, students’ expectations of their balance… will hang in the balance.
Do you have student loans?
Amazon Sued by FTC for Deceptive Prime Sign-Up Practices
The Federal Trade Commission (FTC) filed a lawsuit against Amazon on Wednesday, alleging that the company used deceptive practices to sign up millions of consumers for its Prime program without their consent.
The FTC claims that Amazon used "dark patterns," or deceptive design tactics, to make it difficult for consumers to understand that they were signing up for a recurring subscription when they clicked on a button to complete their purchase. The agency also alleges that Amazon made it difficult for consumers to cancel their Prime subscriptions, even after they had decided they no longer wanted the service.
"Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money," said FTC Chair Lina Khan in a statement.
Amazon has denied the FTC's allegations, saying that the company makes it "clear and simple" for consumers to sign up for or cancel Prime.
“The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership. As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience, and we look forward to the facts becoming clear as this case plays out,” said Amazon spokesperson Heather Layman.
The lawsuit is the latest in a series of legal challenges facing Amazon. In recent years, the company has been sued by the European Commission and the state of New York for anti-competitive practices.
The FTC's lawsuit is likely to be closely watched by other companies that offer subscription services. If the FTC is successful, it could set a precedent for other lawsuits against companies that use deceptive practices to sign up consumers for recurring subscriptions.
Amazon AMZN 0.00%↑ shares were essentially unaffected, trading down 0.76% on the news.
Global Interest Rates Continue Upward
While the US Central Bank (The Federal Reserve) decided a brief pause in the midst of heightening interest rates was acceptable, four other central banks pressed on.
The Bank of England hiked 0.5% alongside Norway, the Swiss National Bank raised 0.25%, and the Turkish central bank, which had been cutting rates to fight 40% inflation, reversed course and hiked 6.5%.
The story seems to be one of optimism and reality. The US is seeing inflation begin to return to historically normal levels yet Federal Reserve Chairman Jerome Powell has made it abundantly clear that rates will continue to rise and will stay elevated for an extended period of time. Meanwhile, Britain experienced inflation of 7.1% in May (year over year), up from 6.8% in April.
Below are the inflation rates on a year-over-year basis for the G20:
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