More Year-End Considerations Given The Coming Likely Republican Tax Plan

A prior post discussed the questionable benefits and year-end considerations for middle-class taxpayers of the likely Republican tax reform plan making its way through Congress. The likely tax plan includes lower tax rates paired with many deductions eliminated.

The professional who prepares my taxes provided another warning:

"Dear clients:
It looks like almost a sure thing that, if you itemize deductions, beginning in 2018, you will no longer be able to take a deduction for the Excise Tax on your car or the income taxes that you pay to Massachusetts and other states. You will PROBABLY still be able to deduct your real estate property taxes up to $10,000 a year. If you currently pay the Alternative Minimum Tax (line 45 of your Form 1040), check with me before you follow these recommendations.

All others who itemize, I recommend that you consider the following actions this month (December):

  1. If your total property taxes (including those for a second home) are more than $10,000, pay your city or town as much as you possibly can in December.
  2. Be sure to pay... maybe even over-pay... as much of your State Income Tax as possible by December 31st. If you make estimated payments, your 4th quarter Massachusetts payment is due by January 15th. YOU SHOULD DEFINITELY PAY IT IN DECEMBER INSTEAD.
  3. Even if you don't usually make Estimate Payments to Massachusetts, you should consider making one in December... For example, if you made a payment of $1,000, you might save $150 or $250 or more on your 2017 federal tax return. You will save NOTHING on any state income taxes that you pay in 2018.

I will reach out again if and when the tax bill is finalized and signed into law if there are any other changes that might affect your plans in December."

Obviously, you should consult the professional that prepares your income taxes, since your situation and state may dictate different actions. And, I am not an income tax professional. New legislation always has consequences, and it seems wise to be aware. hence, this informational blog post.

Some additional thoughts. Capping the real estate property tax deduction at $10,000 might help pay for the increased deficits the Republican tax plan would generate, but it will also hurt persons living in high-cost areas (e.g., cities, states with high state taxes, areas with high real estate prices). Plus, the tax cuts are temporary for individuals but permanent for corporations. Slick, eh? Is it fair? Seems not.

My college friends and I are discussing via e-mail the considerations listed above and in my prior blog post. The proposed elimination of deductions for state and local taxes (SALT) is a hot topic. You can find online articles discussing the advantages and disadvantages of eliminating SALT deductions. Regardless, more to discuss with your accountant and/or income tax professional.


Doug Jones Wins In Alabama, Net Neutrality, And The FCC

[7:30 am EST] Congratulations to Doug Jones and his supporters for a stunning victory Tuesday in a special election in Alabama for the open U.S. Senate seat. His victory speech is available online. Late last month, Doug Jones tweeted this:

Later today, the commissioners at the U.S. Federal Communications Commission (FCC) will likely vote during their December 2017 Open Commission Meeting to kill net neutrality rules protecting consumers free and open internet access. The planned vote comes despite clear and mounting evidence of widespread identity theft by unknown persons to submit fake comments distorting and polluting FCC record and website soliciting feedback from the public.

Yesterday, FCC Commissioner Jessica Rosenworcel released the following press release:

"Upon receipt of a letter from New York Attorney General Eric Schneiderman stating that it now appears that two million Americans’ identities may have been misused in the FCC record and a separate letter from 18 State Attorneys General calling on the FCC to delay its net neutrality vote because of its “tainted” record, FCC Commissioner Jessica Rosenworcel released the following statement:

“This is crazy. Two million people have had their identities stolen in an effort to corrupt our public record. Nineteen State Attorneys General from across the country have asked us to delay this vote so they can investigate. And yet, in less than 24 hours we are scheduled to vote on wiping out our net neutrality protections. We should not vote on any item that is based on this corrupt record. I call on my colleagues to delay this vote so we can get to the bottom of this mess.” "

Despite the widespread identity theft and fraud, FCC Chairman Ajit Pai has maintained his position to proceed with a vote today to kill net neutrality protections for consumers. President Trump appointed Pai as FCC Chairman in January, giving the Republican commissioners a majority when voting. Pai has blown off the identity theft and fraud charges as maneuvers by desperate net neutrality advocates.

[Update at 2:20 pm EST: earlier today, the FCC commissioners voted along party lines to kill existing net neutrality rules protecting consumers.]


Was Your Identity Information Misused To Submit Fake Comments To The FCC About Net Neutrality?

After creating a webpage specifically to help New York State residents determine if their identifies were misued for net neutrality comments, Attorney General Schneiderman announced:

"In the last five days alone, over 3,200 people have reported misused identities to the Attorney General’s office, including nearly 350 New Yorkers from across the state. Attorney General Schneiderman urges New Yorkers to continue to check whether their identity was misused and report it to his office in order to inform the investigation."

The webpage automatically links to only net neutrality (Docket 17-108) comments with the U.S. Federal Communications Commission (FCC)  site. So, at least 3,200 persons have confirmed the misuse of their identity information by unknown persons (or bots) to pollute feedback by the public about net neutrality rules protecting consumers' broadband freedoms. You'd think that FCC Chairman Ajit Pai would be concerned about the pollution and fraud; and would delay the upcoming December 14th vote regarding net neutrality. But he's not and blew off the fake comments allegations, as explained in this earlier blog post.

You might think that Chairman Pai and the FCC would be concerned about pollution and fraud in feedback submitted to the FCC site, given the massive Equifax data breach in September which exposed the data elements (e.g., name, street addresses) criminals and fraudsters could easily use to submit fake comments.

This makes one wonder if the FCC can be trusted under Chairman Pai's leadership. Hopefully, Attorneys General in other states will provide similar webpages to help residents in their states... and not only for comments about net neutrality.

Being curious, I visited the webpage by AG Schneiderman. It instructed:

"The Office of the New York State Attorney General is investigating whether public comments regarding net neutrality rules wrongfully used New Yorkers’ identities without their consent. We encourage you to search the FCC’s public comment website and tell us if you see any comments that misuse your name and address.

First, search below to find any comments that may have misused your identity. If results appear, click on any comment that uses your name, and when the comment appears review the name, the address, and the comment text. (If no results appear, your identity most likely was not misused.)"

You don't need to be a New York State resident to use this online tool. My initial search produced 1,046, so I narrowed it by entering my name in quotations ("George Jenkins") for a more precise match. That second search produced 40 comments about net neutrality (e.g., Docket 17-108), a manageable number. I browsed the list which included my valid comment submitted during May, 2017.

I did not see any other comments using my name and address. That's good because I only submitted one comment. I noticed comments by persons with the same name in other states. That seems okay. It's reasonable to expect multiple persons with the same name in a country with a population of about 360 million people.

I did not check the addresses of the other persons with the same name. I realize that could easily hide synthetic ID-theft. In traditional synthetic ID-theft, criminals mix stolen (valid) Social Security numbers with other persons' names to avoid detection. In the ECFS comments system, one could enter valid names with fake addresses; or vice-versa. I hope that AG Schneiderman's fraud analysis also checks for both types of synthetic ID-theft: 1) fake names at real addresses, and 2) real names at fake addresses.

If I had found fraudulent entries, I would have notified AG Schneiderman, the Attorney General's office in the state where I live, and the FCC.

Did you check for misuse of your identity information? What did you find?


Governors and Federal Agencies Are Blocking Nearly 1,300 Accounts on Facebook and Twitter

[Editor's note: today's guest blog post, by the reporters at ProPublica, highlights a little-known practice by some elected officials to block their constituents on social networking sites. Today's post is reprinted with permission.]

By Leora Smith and Derek Kravitz - ProPublica

Amanda Farber still doesn’t know why Maryland Gov. Larry Hogan blocked her from his Facebook group. A resident of Bethesda and full-time parent and volunteer, Farber identifies as a Democrat but voted for the Republican Hogan in 2014. Farber says she doesn’t post on her representatives’ pages often. But earlier this year, she said she wrote on the governor’s Facebook page, asking him to oppose the Trump administration’s travel ban and health care proposal.

She never received a response. When she later returned to the page, she noticed her comment had been deleted. She also noticed she had been blocked from commenting. (She is still allowed to share the governor’s posts and messages.)

Farber has repeatedly emailed and called Hogan’s office, asking them to remove her from their blacklist. She remains blocked. According to documents ProPublica obtained through an open-records request this summer, hers is one of 494 accounts that Hogan blocks. Blocked accounts include a schoolteacher who criticized the governor’s education policies and a pastor who opposed the governor’s stance against accepting Syrian refugees. They even have their own Facebook group: Marylanders Blocked by Larry Hogan on Facebook.

Hogan’s office says they “diligently adhere” to their social media policy when deleting comments and blocking users.

In August, ProPublica filed public-records requests with every governor and 22 federal agencies, asking for lists of everyone blocked on their official Facebook and Twitter accounts. The responses we’ve received so far show that governors and agencies across the country are blocking at least 1,298 accounts. More than half of those — 652 accounts — are blocked by Kentucky Governor Matt Bevin, a Republican.

Four other Republican governors and four Democrats, as well as five federal agencies, block hundreds of others, according to their responses to our requests. Five Republican governors and three Democrats responded that they are not blocking any accounts at all. Many agencies and more than half of governors’ offices have not yet responded to our requests. Most of the blocked accounts appear to belong to humans but some could be “bots,” or automated accounts.

When the administrator of a public Facebook page or Twitter handle blocks an account, the blocked user can no longer comment on posts. That can create an inaccurate public image of support for government policies. (Here’s how you can dig into whether your elected officials are blocking constituents.)

ProPublica made the records requests and asked readers for their own examples after we detailed multiple instances of officials blocking constituents.

We heard from dozens of people. The governors’ offices in Alaska, Maine, Mississippi, Nebraska and New Jersey did not respond to our requests for records, but residents in each of those states reported being blocked. People were blocked after commenting on everything from marijuana legislation to Medicaid to a local green jobs bill.

For some, being blocked means losing one of few means to communicate with their elected representatives. Ann-Meredith McNeill, who lives in western rural Kentucky, told ProPublica that Bevin rarely visits anywhere near her. McNeill said she feels like “the internet is all I have” for interacting with the governor.

McNeill said she was blocked after criticizing Bevin’s position on abortion rights. (Last January, Bevin’s administration won a lawsuit that resulted in closing one of Kentucky’s two abortion clinics, the event that McNeill says inspired her comment.)

In response to questions about its social media blocking policies, Bevin’s office said in a statement that “a small number of users misuse [social media] outlets by posting obscene and abusive language or images, or repeated off-topic comments and spam. Constituents of all ages should be able to engage in civil discourse with Governor Bevin via his social media platforms without being subjected to vulgarity or abusive trolls.” McNeill told ProPublica, “I’m sure I got sassy” but she made “no threats or anything.”

Almost every federal agency that responded is blocking accounts. The Department of Veterans Affairs blocked 18 accounts as of July, but said most were originally blocked before 2014. The blocked accounts included a Michigan law firm specializing in auto accident cases and a Virginia real estate consultant who told ProPublica she had “no idea why” she was blocked. The Department of Energy blocked eight accounts as of October. The Department of Labor blocked seven accounts. And the Small Business Administration blocked two accounts, both of which were unverified and claimed to be affiliated with government loan programs.

Many governors and agencies gave us only partial lists or rejected our requests altogether. Outgoing Kansas Gov. Sam Brownback’s office told us they would not share their block lists due to “privacy concerns for those people whose names might appear on it.” Alabama declined to provide public records because our request did not come from an Alabama citizen.

Missouri Gov. Eric Greitens’ office declined to share records from his Facebook or Twitter accounts, arguing they are not “considered to be the ‘official’ social media accounts of the Governor of Missouri” because he created them before he took office.

Increased attention on the issue of blocking seems to be having an impact. In September, the California-based First Amendment Coalition revealed that California Governor Jerry Brown, a Democrat, had blocked more than 1,500 accounts until June, shortly before the organization submitted a request for his social media records.

At some point before fulfilling the coalition’s request, Brown’s office unblocked every account.

Vermont Gov. Phil Scott, a Republican, blocked the activist group Indivisible Vermont on Twitter on Aug. 25. On Aug. 28, Vermont reporter Taylor Dobbs submitted a request for the governor’s full blocked list, shortly after ProPublica’s similar request. Later that day, Scott unblocked the group and released a statement saying the account was “misconstrued as spam.”

Wisconsin Gov. Scott Walker’s office unblocked at least two Facebook users after receiving ProPublica’s request. Here are screenshots they sent us showing that the users have been unblocked:

In the last year, a series of legal claims have called into question the legality of government officials blocking constituents on social media.

At least one federal district court held that government officials who block constituents are violating their First Amendment rights.

Constituents have pending lawsuits against the governors of Kentucky, Maine, and Maryland, as well as Representative Paul Gosar, R-Ariz., and President Trump.

We asked the White House, which is not subject to open-records laws, to disclose the list of people Trump is blocking. Officials there have not responded.

Filed under:

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Photos: December 7 Demonstration In Boston To Keep Net Neutrality

Demonstrations occurred nationwide on December 7 to save net neutrality. Citizens took to the streets to keep our internet services open. About 200 persons attended the demonstration in Boston on Boylston Street. It was encouraging to meet several students from local universities participating in the event. They understand the issue and its seriousness. Several A.C.L.U. members also participated:

Boylston Street, Boston. December 7, 2017. Keep net neutrality demonstration. Image 4910

Boylston Street, Boston. December 7, 2017. Keep net neutrality demonstration. Image 4897

Boylston Street, Boston. December 7, 2017. Keep net neutrality. Image 4904

Boylston Street, Boston. December 7, 2017. Keep net neutrality demonstration. Image 4900

Boylston Street, Boston. December 7, 2017. Keep net neutrality demonstration. Image 4905

Boylston Street, Boston. December 7, 2017. Keep net neutrality demonstration. Image 4908

Boylston Street, Boston. December 7, 2017. Keep net neutrality demonstration. Image 4906

Browse photos from other demonstrations nationwide on December 7. Contact your elected officials in Congress, and learn about the next day of action on December 12, 2017. More resources:


Futurism: Your Life Without Net Neutrality Protections

Federal communications Commission logo You've probably heard that Ajit Pai, the Chairman of the U.S. Federal Communications Commission (FCC), is leading his agency towards a vote on December 14, 2017 to kill net neutrality. How will consumers' online lives change? Futurism described what your online life will be like without net neutrality:

"You’re at work and want to check Facebook on your lunch break to see how your sister is doing. This is not exactly a straightforward task, as your company uses Verizon. You’re not about to ask your boss if they’d consider putting up the extra cash every month so that you can access social media in the office, so you’ll have to wait until you get home.

That evening, you log in to pay your monthly internet bill — or rather, bills.

See, there’s the baseline internet cost, but without net neutrality, you also have to pay a separate monthly fee for social media, another for "leisure" pages like Reddit and Imgur, and another still for liberal-leaning news sites — because your provider’s CEO is politically conservative. Not only is your bill confusing, you’re not sure you can really afford to access all these websites that, at one point in time, you took for granted.

In addition to the sites you can access if you pay for them, there are also websites that have just become lost to you. Websites that you once frequented, but that now, you aren’t even sure how to access anymore. You can’t even pay to access them. You used to like reading strange Wikipedia articles late at night and cruising for odd documentaries — but now, all those interests that once entertained and educated you in your precious and minimal free time are either behind yet another separately provided paywall or blocked entirely. You’ve started to ask around, see if your friends or coworkers with other providers have better access... but the story is pretty much always the same."

Net neutrality meme highlighting blocked content. Click to view larger version In short, without net neutrality:

  1. You will lose the freedom to use the internet bandwidth you've purchased monthly as you desire;
  2. Corporate internet service providers (ISPs) increase their their revenues and profits by adding tolls to each package in a sliced-and-diced approach to internet content;
  3. Your internet bill will become just as confusing, frustrating, and expensive as your cable-TV bill, where ISPs force you to buy several expensive packages of sites in order to access your favorite sites;
  4. The new, expensive tolls allow ISPs to decide what internet content you see and don't see. Sites or content producers unwilling to pay fees to ISPs will find their content blocked or relegated to "slow" speed lanes; and
  5. Both middle-class and poor online users will bear the brunt of the price increases.

If you think this can't happen in the United States, consider:

"Some countries are already living this reality. In New Zealand, Vodafone offers mobile internet packages that are comprised of different types of services. You might have to pay a certain amount to access social apps like Snapchat and Instagram, and a separate fee to chat with friends via Facebook Messenger and iMessage. A similar framework is used by Portugal’s MEO, where messaging, social media, music streaming, video streaming, and email are also split into separate packages.

Long ago, FCC Chairman Pai made his position clear. Breitbart News reported on April 28, 2017:

"Federal Communications Commission (FCC) Chairman Ajit Pai told Breitbart News in an exclusive interview that an open and free internet is vital for America in the 21st century. During a speech at the Newseum on Wednesday, Pai said he plans to roll back the net-neutrality regulations and to restore the light-touch regulatory system established by President Bill Clinton and Congressional Republicans by the 1996 Telecommunications Act... Chairman Pai said during his speech that the internet prospered before net neutrality was enacted... Breitbart News asked the FCC chief why he thinks that net neutrality is a problem, and why we must eliminate the rule. He said: "Number one there was no problem to solve, the internet wasn’t broken in 2015. In that situation, it doesn’t seem me that preemptive market-wide regulation is necessary. Number two, even if there was a problem, this wasn’t the right solution to adopt. These Title II regulations were inspired during the Great Depression to regulate Ma Bell which was a telephone monopoly. And the broadband market we have is very different from the telephone market of 1934. So, it seems to me that if you have 4,462 internet service providers and if a few of them are behaving in a way that is anti-competitive or otherwise bad for consumer welfare then you take targeted action to deal with that. You don’t declare the entire market anti-competitive and treat everyone as if they are a monopolist. Going forward we are going to propose eliminating that Title II classification and figure out the right way forward. The bottom line is, everyone agrees on the principles of a free and open internet what we disagree with is how many regulations are needed to preserve the internet." "

Note the language. Pai uses "free and open internet" to refer to freedoms for ISPs to do what they want; a slick attempt to co-opt language net neutrality proponentsused for freedoms for consumers go online where they want without additional fees. Pai's "Light touch" means fewer regulations for ISPS regardless of the negative consequences upon consumers. Pai's comments in April attempted to spin existing net neutrality laws as antiquated ("the telephone market of 1934"), when, in fact, net neutrality was established recently... in 2010. Even the same Breitbart News article admitted this:

"Net neutrality passed under former Democrat Tom Wheeler’s FCC in 2010."

Pai's exaggerations and falsehoods are astounding. Plenty of bogus claims by Pai and net neutrality critics. In January of this year, President Donald Trump appointed Ajit Pai, a former lawyer with Verizon, as the FCC Chairman. Earlier this year, CNN reported:

"More than 1,000 startups and investors have now signed an open letter to Pai opposing the proposal. The Internet Association, a trade group representing bigger companies like Facebook, Google, and Amazon, has also condemned the plan. "The current FCC rules are working for consumers and the protections need to be kept in tact," Michael Beckerman, president and CEO of the Internet Association, said at a press conference Wednesday."

Regular readers of this blog are aware that more than "a few" ISPs committed abused consumers and content producers. (A prior blog post listed many historical problems and abuses of consumers by some ISPs.) Also, consider this: Pai made his net-neutrality position clear long before the public submitted comments to the FCC this past summer. Sounds like he never really intended to listen to comments from the public. Not very open minded.

As bad it all of this sounds, it's even worse. How? An FCC Commissioner, 28 U.S. senators, and the New York State Attorney General (AG) have lobbied FCC Chairman Pai to delay the net neutrality vote planned by the FCC on December 14, due to clear and convincing evidence of the massive fraud of comments submitted to the FCC's online commenting system.

In short, the FCC's online comments system is corrupted, hacked, and unreliable. The group (e.g., FCC commissioner, 28 Senators, and NY State AG) also objects to the elimination of net neutrality on the merits.

The fraud evidence is pretty damning, but Chairman Pai seems intent upon going ahead with a vote to kill net neutrality despite the comments fraud. Why? How? Ars Technica reported on December 4th:

"FCC Chairman Ajit Pai says that net neutrality rules aren't needed because the Federal Trade Commission can protect consumers from broadband providers... When contacted by Ars, Pai's office issued this statement in response to the [delay request] letter: "This is just evidence that supporters of heavy-handed Internet regulations are becoming more desperate by the day as their effort to defeat Chairman Pai's plan to restore Internet freedom has stalled. The vote will proceed as scheduled on December 14."

I find the whole process deeply disturbing. First, only 28 U.S. Senators seem concerned about the massive comments fraud. Why aren't all 100 concerned? Second, why aren't any House members concerned? Third, President Trump hasn't said anything about it. (This makes one wonder if POTUS45 either doesn't care consumers are hurt, or is asleep at the wheel.) Elected officials in positions of responsibility seem willing to ignore valid concerns.

Logo-verizon-protestsMany consumers are concerned, and protests to keep net neutrality are scheduled for later today outside Verizon stores nationwide. What do you think?


The Limitations And Issues With Facial Recognition Software

We've all seen television shows where police technicians use facial recognition software to swiftly and accurately identify suspects, or catch the bad guys. How accurate is that? An article in The Guardian newspaper discussed the promises, limitations, and issues with facial recognition software used by law enforcement:

"The software, which has taken an expanding role among law enforcement agencies in the US over the last several years, has been mired in controversy because of its effect on people of color. Experts fear that the new technology may actually be hurting the communities the police claims they are trying to protect... "It’s considered an imperfect biometric," said Clare Garvie, who in 2016 created a study on facial recognition software, published by the Center on Privacy and Technology at Georgetown Law, called The Perpetual Line-Up. "There’s no consensus in the scientific community that it provides a positive identification of somebody"... [Garvie's] report found that black individuals, as with so many aspects of the justice system, were the most likely to be scrutinized by facial recognition software in cases. It also suggested that software was most likely to be incorrect when used on black individuals – a finding corroborated by the FBI's own research. This combination, which is making Lynch’s and other black Americans’ lives excruciatingly difficult, is born from another race issue that has become a subject of national discourse: the lack of diversity in the technology sector... According to a 2011 study by the National Institute of Standards and Technologies (Nist), facial recognition software is actually more accurate on Asian faces when it’s created by firms in Asian countries, suggesting that who makes the software strongly affects how it works... Law enforcement agencies often don’t review their software to check for baked-in racial bias – and there aren’t laws or regulations forcing them to."


Lower Tax Rate And Fewer Deductions. Questionable Help For Middle Class Taxpayers

Yesterday, I received an alert from the professional that prepares my income taxes:

"Dear Clients,
I know that Congress has not yet finalized the new tax law, but it looks pretty certain that Certain Miscellaneous Deductions will no longer be allowed in 2018. If you want to know if that affects you, see if there is an entry on your Schedule A, Line 27 from 2016. If you take the standard deduction, then don’t worry about it. These deductions include expenses for using your car on the job, un-reimbursed overnight travel and meals, union dues, uniforms, tools, and job training/education.

Some of my clients have huge union dues (police officers, carpenters, electricians, etc.) and others have Second Job Travel or 10-30,000 miles a year in their sales jobs. Every one of you will be hurt by this change.

If there are any expenses you can pay in December, be sure to do that so you can save 15 - 25% on your federal taxes... maybe even more. For example, do you have the option of paying your annual union dues all at once in December? Were you planning to buy a computer used for your job sometime soon? Is there a job-related course... or some tools and supplies... that you can pay for in December rather than next year? Remember... every $100 that you pay in December will save you $15 to $33 in taxes when we meet in a couple months...”

If you haven't consulted with your tax advisor, then now seems to be a good time to do so. I am not an income tax professional, and this blog post is informational.

Many people return to school to get better, high-paying jobs, or as required by their profession. The tax code allows companies to deduct expenses for business and trade associations, so why prevent union members from doing so? It seems that taxpayers with plenty of miscellaneous deductions will be hurt more than persons with fewer or no deductions.

And Republicans are probably hoping that voters won't notice nor feel the pain until after the 2018 elections. President Trump and the Republications promised to help the middle class and poor with tax reform, but the above impacts don't seem helpful. The benefits of lower tax rates are offset by the lost deductions. To use an old saying, that seems like Congress and Republicans are giving taxpayers, "the sleeves off their vests."

You might say this is a "mugging" of many taxpayers. What are your opinions?


Report: Several Impacts From Technology Changes Within The Financial Services Industry

For better or worse, the type of smart device you use can identify you in ways you may not expect. First, a report by London-based Privacy International highlighted the changes within the financial services industry:

"Financial services are changing, with technology being a key driver. It is affecting the nature of financial services from credit and lending through to insurance and even the future of money itself. The field known as “fintech” is where the attention and investment is flowing. Within it, new sources of data are being used by existing institutions and new entrants. They are using new forms of data analysis. These changes are significant to this sector and the lives of the people it serves. We are seeing dramatic changes in the ways that financial products make decisions. The nature of the decision-making is changing, transforming the products in the market and impacting on end results and bottom lines. However, this also means that treatment of individuals will change. This changing terrain of finance has implications for human rights, privacy and identity... Data that people would consider as having nothing to do with the financial sphere, such as their text-messages, is being used at an increasing rate by the financial sector...  Yet protections are weak or absent... It is essential that these innovations are subject to scrutiny... Fintech covers a broad array of sectors and technologies. A non-exhaustive list includes:

  • Alternative credit scoring (new data sources for credit scoring)
  • Payments (new ways of paying for goods and services that often have implications for the data generated)
  • Insurtech (the use of technology in the insurance sector)
  • Regtech (the use of technology to meet regulatory requirements)."

"Similarly, a breadth of technologies are used in the sector, including: Artificial Intelligence; Blockchain; the Internet of Things; Telematics and connected cars..."

While the study focused upon India and Kenya, it has implications for consumers worldwide. More observations and concerns:

"Social media is another source of data for companies in the fintech space. However, decisions are made not on just on the content of posts, but rather social media is being used in other ways: to authenticate customers via facial recognition, for instance... blockchain, or distributed ledger technology, is still best known for cryptocurrencies like BitCoin. However, the technology is being used more broadly, such as the World Bank-backed initiative in Kenya for blockchain-backed bonds10. Yet it is also used in other fields, like the push in digital identities11. A controversial example of this was a very small-scale scheme in the UK to pay benefits using blockchain technology, via an app developed by the fintech GovCoin12 (since renamed DISC). The trial raised concerns, with the BBC reporting a former member of the Government Digital Service describing this as "a potentially efficient way for Department of Work and Pensions to restrict, audit and control exactly what each benefits payment is actually spent on, without the government being perceived as a big brother13..."

Many consumers know that you can buy a wide variety of internet-connected devices for your home. That includes both devices you'd expect (e.g., televisions, printers, smart speakers and assistants, security systems, door locks and cameras, utility meters, hot water heaters, thermostats, refrigerators, robotic vacuum cleaners, lawn mowers) and devices you might not expect (e.g., sex toys, smart watches for children, mouse traps, wine bottlescrock pots, toy dolls, and trash/recycle bins). Add your car or truck to the list:

"With an increasing number of sensors being built into cars, they are increasingly “connected” and communicating with actors including manufacturers, insurers and other vehicles15. Insurers are making use of this data to make decisions about the pricing of insurance, looking for features like sharp acceleration and braking and time of day16. This raises privacy concerns: movements can be tracked, and much about the driver’s life derived from their car use patterns..."

And, there are hidden prices for the convenience of making payments with your favorite smart device:

"The payments sector is a key area of growth in the fintech sector: in 2016, this sector received 40% of the total investment in fintech22. Transactions paid by most electronic means can be tracked, even those in physical shops. In the US, Google has access to 70% of credit and debit card transactions—through Google’s "third-party partnerships", the details of which have not been confirmed23. The growth of alternatives to cash can be seen all over the world... There is a concerted effort against cash from elements of the development community... A disturbing aspect of the cashless debate is the emphasis on the immorality of cash—and, by extension, the immorality of anonymity. A UK Treasury minister, in 2012, said that paying tradesman by cash was "morally wrong"26, as it facilitated tax avoidance... MasterCard states: "Contrary to transactions made with a MasterCard product, the anonymity of digital currency transactions enables any party to facilitate the purchase of illegal goods or services; to launder money or finance terrorism; and to pursue other activity that introduces consumer and social harm without detection by regulatory or police authority."27"

The report cited a loss of control by consumers over their personal information. Going forward, the report included general and actor-specific recommendations. General recommendations:

  • "Protecting the human right to privacy should be an essential element of fintech.
  • Current national and international privacy regulations should be applicable to fintech.
  • Customers should be at the centre of fintech, not their product.
  • Fintech is not a single technology or business model. Any attempt to implement or regulate fintech should take these differences into account, and be based on the type activities they perform, rather than the type of institutions involved."

Want to learn more? Follow Privacy International on Facebook, on Twitter, or read about 10 ways of "Invisible Manipulation" of consumers.


Facebook to Temporarily Block Advertisers From Excluding Audiences by Race

[Editor's note: today's guest blog post, by the reporters at ProPublica, discusses advertising practices by both Facebook, a popular social networking site, and some advertisers using the site. Today's post is reprinted with permission.]

By Julia Angwin, ProPublica

Facebook said it would temporarily stop advertisers from being able to exclude viewers by race while it studies the use of its ad targeting system.

“Until we can better ensure that our tools will not be used inappropriately, we are disabling the option that permits advertisers to exclude multicultural affinity segments from the audience for their ads,” Facebook Sheryl Sandberg wrote in a letter to the Congressional Black Caucus.

ProPublica disclosed last week that Facebook was still allowing advertisers to buy housing ads that excluded audiences by race, despite its promises earlier this year to reject such ads. ProPublica also found that Facebook was not asking housing advertisers that blocked other sensitive audience categories — by religion, gender, or disability — to “self-certify” that their ads were compliant with anti-discrimination laws.

Under the Fair Housing Act of 1968, it’s illegal to “to make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin.” Violators face tens of thousands of dollars in fines.

In her letter, Sandberg said the company will examine how advertisers are using its exclusion tool — “focusing particularly on potentially sensitive segments” such as ads that exclude LGBTQ communities or people with disabilities. “During this review, no advertisers will be able to create ads that exclude multicultural affinity groups,” Facebook Vice President Rob Goldman said in an e-mailed statement.

Goldman said the results of the audit would be shared with “groups focused on discrimination in ads,” and that Facebook would work with them to identify further improvements and publish the steps it will take.

Sandberg’s letter to the Congressional Black Caucus is the outgrowth of a dialogue that has been ongoing since last year when ProPublica published its first article revealing Facebook was allowing advertisers to exclude people with an “ethnic affinity” for various minority groups, including African Americans, Asian Americans and Hispanics, from viewing their ads.

At that time, four members of the Congressional Black Caucus reached out to Facebook for an explanation. “This is in direct violation of the Fair Housing Act of 1968, and it is our strong desire to see Facebook address this issue immediately,” wrote the lawmakers.

The U.S. Department of Housing and Urban Development, which enforces the nation’s fair housing laws, opened an inquiry into Facebook’s practices.

But in February, Facebook said it had solved the problem — by building an algorithm that would allow it to spot and reject housing, employment and credit ads that discriminated using racial categories. For audiences not selected by race, Facebook said it would require advertisers to “self-certify” that their ads were compliant with the law.

HUD closed its inquiry. But last week, ProPublica successfully purchased dozens of racist, sexist and otherwise discriminatory ads for a fictional housing company advertising a rental. None of the ads were rejected and none required a self-certification. Facebook said it was a “technical failure” and vowed to fix the problem.

U.S. Rep. Robin Kelly, D-Ill., said that Facebook’s actions to disable the feature are “an appropriate action.” “When I first raised this issue with Facebook, I was disappointed. When it became necessary to raise the issue again, I was irritated,” she said. “I will continue watching this issue very closely to ensure these issues do not raise again.”

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State Of Washington Sues Uber For Alleged Data Breach Law Violations

The Office of the Attorney General (AG) for Washington State has filed a lawsuit against Uber, the popular ride-sharing company, for alleged violations of the state's data breach laws. The AG's office explained in a press release:

"Under a 2015 amendment to the state’s data breach law requested by AG Bob Ferguson, consumers must be notified within 45 days of a breach, and the Attorney General’s Office also must be notified within 45 days if the breach affects 500 or more Washingtonians. This is the first lawsuit filed under the revised statute... Uber notified the Attorney General’s Office of the breach Nov. 21, 2017, roughly 372 days after it discovered the breach. Rather than reporting the breach as required by law, the company has admitted to paying the hackers to destroy the stolen data."

Uber logo The massive data breach affected 57 million users, including both riders and drivers. This is critical because:

"... the hackers also obtained the names and driver’s license numbers of about 7 million drivers for the company. About 600,000 of those drivers live in the United States, and at least 10,888 live in Washington... The [AG's] office argues each day Uber failed to report for each individual qualifies as a separate violation under the law. Ferguson’s lawsuit asks for civil penalties of up to $2,000 per violation, which should result in a penalty in the millions of dollars. The state also asks for recovery of its costs and fees."

Important information for residents of Washington State:

"Washington has two data breach laws: One applying to individuals and businesses, the other for local and state government agencies. The laws are essentially the same and require notification to Washingtonians at risk of harm because of a security breach that includes personal information, meaning someone’s name and any of the following: a) Social Security number; b) Driver’s license number or Washington identification card number; or c) Bank account number or credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual’s account."

Since 48 states have data breach notification laws, I expect many more lawsuits. (Consumers in Alabama and South Dakota might ask their elected officials why their states don't have laws requiring notice.) When a company intentionally decides not to comply with states' laws, there must be consequences. Corporate executives must be held accountable for their actions and decisions; especially when they negatively affect consumers.

What are your opinions?


Security Researchers Announce Another Method To Defeat Apple Face ID

Bkav-artificial-mask
You may remember, earlier this year Apple launched its iPhone X with Face ID feature for users to unlock their phones:

"Your face is now your password. Face ID is a secure and private new way to unlock, authenticate, and pay... Face ID is enabled by the TrueDepth camera and is simple to set up. It projects and analyzes more than 30,000 invisible dots to create a precise depth map of your face."

Like it or not, there is no security system for your smartphone that can't be defeated. Mashable reported yesterday that security researchers have found another method to defeat Face ID:

"The same Vietnamese team that managed to trick Face ID with an elaborately constructed mask now says it has found a way to create a replicated face capable of unlocking Apple's latest and greatest biometric using a series of surreptitiously snagged photographs. Apple has copped to the fact that Face ID, for all its technical prowess, isn't perfect. It can be tricked by twins. For

The Bkav researchers explained in a blog post how their crude mask defeated Face ID:

"Bkav used a 3D mask (which costs ~200 USD), made of stone powder, with glued 2D images of the eyes. Bkav experts found out that stone powder can replace paper tape (used in previous mask) to trick Face ID' AI at higher scores. The eyes are printed infrared images – the same technology that Face ID itself uses to detect facial image. These materials and tools are casual for anyone. An iPhone X has its highest security options enabled, then has the owner's face enrolled to set up Face ID, then is immediately put in front of the mask, iPhone X is unlocked immediately. There is absolutely no learning of Face ID with the new mask in this experiment."

The same blog post also explained how a three-dimensional model can defeat Face ID:

"Bkav researchers said that making 3D model is very simple. A person can be secretly taken photos in just a few seconds when entering a room containing a pre-setup system of cameras located at different angles. Then, the photos will be processed by algorithms to make a 3D object.

It can be said that, until now, Fingerprint is still the most secure biometric technology. Collecting a fingerprint is much harder than taking photos from a distance. Meanwhile, just by taking photos from a distance to create 3D objects as mentioned above, both Apple's Face ID and Samsung's Iris Scanner can be bypassed easily."

Experts advise consumers to continue using passcodes, especially for online banking apps. And high-value targets (e.g., senior corporate executives, government officials, politicians, attorneys, etc.) probably shouldn't use facial recognition features to unlock their mobile devices.

I guess that 3-D models will provide law enforcement (and spy agencies) with new ways to use their archived collections of facial images. The Guardian reported earlier this year:

"Approximately half of adult Americans’ photographs are stored in facial recognition databases that can be accessed by the FBI, without their knowledge or consent, in the hunt for suspected criminals. About 80% of photos in the FBI’s network are non-criminal entries, including pictures from driver’s licenses and passports. The algorithms used to identify matches are inaccurate about 15% of the time, and are more likely to misidentify black people than white people."

What do you think?