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| Jun 22, 2009

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MOVE OVER EDELMAN: WAL-MART ADDS THREE NEW PR FIRMS

• Walmart Wraps PR Review by Adding Three Shops to Roster [Advertising Age]
  After a lengthy agency review for its multimillion-dollar consumer-PR business, Walmart has selected Interpublic Group of Cos.' Golin Harris, WPP's Cohn & Wolfe and Omnicom Group's Porter Novelli, according to industry sources. The three agencies will bid against one another for individual assignments in the retail giant's effort to drive greater cost efficiencies.

CALIFORNIA WAL-MART PAYS FOR BRONZE STATUE AFTER BUILDING ON NATIVE AMERICAN BURIAL GROUND

• Wintu memorial is healing medicine for Mother Earth and feather people [Anderson Valley Post (Calif.)]
  Even a youthful vandal who was caught in the act of bending and breaking off portions of a bronze statue's headdress couldn't stop the healing of Mother Earth that took place Saturday, June 20, at the southeast corner of the Wal-Mart Supercenter in Anderson.

ANOTHER WAL-MART SALES TAX SCANDAL; THIS TIME IN MISSOURI

• Sales tax confusion at new Walmart  [Connect Mid Missouri]
  A viewer concern prompted the KRCG Factfinder team to look into the sales tax rate at the new Walmart in Jefferson City. The viewer wanted to know if he was paying more sales tax at the new location than at the old Walmart on Missouri Blvd.

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| Jun 18, 2009

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By this time we should all be aware of the controversies surrounding credit companies - in addition to increasingly complex and confusing options for credit applicants, credit card issuers have been raising interest rates and fees for many current borrowers, many of whom were in complete compliance with their card holders’ agreements when their rates were raised. This is a major reason behind the call for continuing credit card reform.

What many people might not be aware of is the struggle between credit companies and the retailers at which their cards are used. As Bloomberg explains, this could end in a giant Visa vs. Wal-Mart rumble:

Lawmakers are promising new rules to bring down the interchange fee, a charge on purchases sometimes topping 3 percent that’s split by the two banks serving the customer and merchant. Supporters of the legislation include the biggest retail chains, restaurants and small businesses, which say the fees erode profit and inflate prices...Interchange is the second-biggest cost after payroll, Target said, and merchants want to negotiate lower payments collectively without running afoul of antitrust law.

The issue has become such a hot topic, the Government Accountability Office has been ordered to study the effect interchange fees have on both consumers and merchants. The “interchange fee” is the fraction of every credit card transaction that the card’s issuer retains. When combined with additional smaller fees levied by a retailer’s own bank (to which the retailer first submits the transaction), interchange fees can cut into retailer revenue - especially important for those retailers with slim profit margins.

Interchange fees have risen over time - interesting, since technological advances would suggest the cost of such transactions should go down - and the result is a growing battle between retailers and card issuers. Wikipedia provides a surprisingly simple example of how the fees work:

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| May 20, 2009

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It looks like Bank of America didn’t learn from Wal-Mart’s mistakes.

Just like Wal-Mart has done in years past, BOA is now taking out life insurance policies on it employees and listing itself as the primary beneficiary in order to fund executive compensation. According to an article in today’s Wall Street Journal:

The insurance policies essentially are informal pension funds for executives: Companies deposit money into the contracts, which are like big, nondeductible IRAs, and allocate the cash among investments that grow tax-free. Over time, employers receive tax-free death benefits when employees, former employees and retirees die.

Known as “dead peasant” insurance, Wal-Mart took out Corporate-Owned Life insurance (COLI) policies on unsuspecting employees until 1995. Even thought Wal-Mart stopped taking out new policies at this time, it continued to cash in on them years later. In Texas and Oklahoma, Wal-Mart paid $15 million to settle claims it did not have an insurable interest while taking out these policies. Michael D. Myers, an attorney who has represented workers on these types of cases, had this say about employers using these policies in a July 2007 Tampa Tribune article:

Creepy’s a good word for it...If you ask the executives that decided to buy these policies and the insurance companies that sold them, they would say this was designed to create tax benefits for the company, which would use the benefits for benevolent purposes such as buying employee medical benefits.

Despite widespread condemnation and lawsuits surrounding the practice, some companies never learn. Bank of America—in perpetual hot water for its roll in the financial crisis—decided it was a good idea to cash in on some of the $400 billion in death benefits consultants believe banks will get over the next few decades.

Many people feel that companies should not profit off the death of its employees. Nevertheless, government intervention and regulation has been slow to occur:

Efforts to rein in the practice largely have been unsuccessful, including the most recent rules Congress enacted in 2006. The rules limit companies to buying life insurance to just the top third of earners, who must provide consent. But the rules don’t apply to life-insurance that employers bought before the August 2006 rules, which cover millions of current and former employees. (WSJ)

With executive compensation out of control, Bank of America should rethink taking out these policies. Not only for the positive press, but to restore a good faith relationship with its employees - who are not doing as well as the executives.

Banks Use Life Insurance to Fund Bonuses [Wall Street Journal]:

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16 comments | Mar 16, 2009

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As always, some of the best blogging on Employee Free Choice is coming from Jane Hamsher. Friday, she asks why one lone Citigroup Analyst, Deborah Weinswig, mysteriously downgraded Wal-Mart’s stock from “buy” to “hold” when none of her 20 fellow analysts did. Sam Stein reports that only days later Weinswig actually moderated the anti-EFCA conference call hosted by Citigroup where she (according to Hamsher):

cited dubious research funded by an astro-turf front group for the Chamber to make the claim that the bill’s passage would increase the following year’s unemployment rate by 1%. (In 2006 the OCED did an exhaustive analysis and concluded that there was no correlation between unionization and unemployment rates.)

This is all strange, given that as recently as February 19th Weinswig was “euphoric” about Wal-Mart stock on CNBC. Hamsher raises the obvious possibility that Weinswig’s shift may have occurred because of Citigroup’s political agenda. Could Citgroup be pushing its analysts to downgrade Wal-Mart stock and to cite the looming passage of EFCA as their rationale, saying its passage would hurt Wal-Mart’s performance? Would the market’s subsequent negative reaction give further ammunition to critics of Employee Free Choice?

The original HuffPo piece is republished below:

Citigroup analyst Deborah Weinswig was euphoric on February 19 about the future of Wal-Mart, appearing on CNBC to say that the stock was “on fire” and the perfect play in this economy.  And indeed, she may be right.  Sales for all stores that had been open for a year doubled analysts’ estimates and rose 5.1% in February.  The company responded by raising its annual dividend by 15%. 

So why did she downgrade Wal-Mart from a “buy” to a “hold” on Tuesday of this week?  Because, she says, the Employee Free Choice Act (EFCA)—a bill that Majority Leader Harry Reid says will not come before the Senate until late summer —might pass. It “could be a significant drag on earnings,” she concluded.

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6 comments | Feb 09, 2009

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The Connecticut Post ran a story over the weekend that serves as yet another signal Wal-Mart is looking to extend its financial services department. The feature focuses on Wal-Mart seeking to expand its check cashing services into Connecticut, announcing in television advertisements that it will cash a paycheck for up to a $3 fee, and hopes to be providing the service within a year in Connecticut, after it gets licensed.

Wal-Mart has actually been in the check cashing business for quite a while now - in 2004 the retailer began allowing customers to cash their pre-printed payroll or government-issued check, including tax refund checks, at designated registers in Wal-Mart Stores and Neighborhood Markets in 44 states. In the others (Connecticut, Massachusetts, New York, New Jersey, Nevada, Rhode Island) Wal-Mart was applying for a license to do so. In 2007, Wal-Mart announced plans to open 1,000 in-store MoneyCenters aimed at serving people without traditional bank accounts, and also debuted a reloadable, prepaid Visa debit card that didn’t require a bank account or proof of U.S. citizenship.

Since then, Wal-Mart has received a check cashing license in Massachusetts, and apparently continues to try for one in Connecticut. As it is, CT allows retailers to cash checks without a license, but they cannot charge more than 50 cents per check. With a license, Wal-Mart could charge up to 2% of the amount cashed, although Wal-Mart has maintained that it will charge no more than $3 per check. It sounds like a modest amount per check, and indeed, it could be a substantial savings over check cashing outlets or banks where charges can reach $10-15 per transaction. Still, this is most likely nothing more than a way for Wal-Mart to attract more sales in its stores, while breaking further into a business retailers have generally shied away from.

Hank Shyne, executive director of the Financial Service Centers of America Inc., was well aware of Wal-Mart’s move and said it is something his group is paying attention to. He added regulations in the various states make it difficult for the retailer to come into the business. But it is a big and attractive market, he said. “There are a lot of people who live paycheck-to-paycheck and need the money immediately,” Shyne said. In New York in 2007, there were 32 million checks cashed worth $16 billion. “Nationwide it’s more like a $160 billion business.”

It wouldn’t be surprising if the ad push is ultimately aimed at getting more people using its MoneyCenters, and its reloadable debit card in particular.

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34 comments | Jan 21, 2009

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The saga of Wal-Mart’s efforts to provide financial services to Mexican consumers took a new twist today with word that Mexico’s Congress will consider legislation to fix the maximum interest rate that the retail giant and others can charge consumers. The move, initiated by the National Action Party (PAN), is surprising since PAN is known as Mexico’s pro-business party and in 2007 moved to enable Wal-Mart to offer banking services in-store for the first time. Nonetheless, critics have charged the government with failing to protect consumers from the exorbitant interest rates lenders, including Wal-Mart, charge. Wal-Mart spokesman Antonio Ocaranza has commented that Wal-Mart’s 69% rate on its credit card is “pretty low for this type of product”. Evidently, some in Mexico’s government do not agree.

The full story text is below:

Calderon’s Party Will Propose Law Lowering Loan Rates

Senators from Mexican President Felipe Calderon’s party will propose legislation to lower interest rates on loans, Senator Gustavo Madero said.

The proposal may set maximum interest rates that banks and other companies can charge consumers, said Madero, who is the senate leader for the National Action Party. The measure will replace or expand upon an initiative introduced in Congress last month that aimed to cap credit card interest rates, Madero said.

“Rates are too high,” Madero said late yesterday in an interview. “We’re going to address the cost of credit not only at banks, but also through commercial companies.”

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0 comments | Dec 02, 2008

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Wal-Mart has a long history of aggressively pushing into Mexico’s banking sector, and trying to keep various forms of payment within its stores. For example, earlier this year Mexico’s Supreme Court criticized Wal-Mart’s practice of compensating its employees with “voucher” cards only redeemable for goods within Wal-Mart stores, comparing this program to the existence of “company stores” under early 20th Century Mexican dictator Porfirio Diaz. Additionally, Wal-Mart also offers its own brand of banking services in-store, a practice that so far is illegal in the U.S. While Bancomer customers’ ability to pay credit card bills at Wal-Mart cash registers might seem beneficial, it could significantly draw business away from other banks who do not have access to the retail giant. And the move is particularly suspicious because Bancomer already administers Wal-Mart’s own brand of credit card, according to a recent USA Today story. With its own credit card, Wal-Mart has not exactly given fair lending terms: the card carries a whopping 69.6% annual interest rate, high even by Mexican standards. And given the recent financial crisis, caused in part by irresponsible lending practices, there is serious reason to doubt whether Wal-Mart’s offering of financial services to Mexico’s low- and middle-income consumers will serve their needs, or only drive them further into debt.

Mexican Customers Now Able to Pay Bancomer Credit Card Bills at Wal-Mart [El Sol de Mexico, 11/11/08]

Starting this week, [Mexican bank] BBVA Bancomer’s 5 million customers will be able to make credit card payments in Wal-Mart stores across Mexico, as part of the retailer’s and bank’s common strategy.

Bank customers will be able to make the payments in 745 locations of Wal-Mart de Mexico, including in different store formats, without paying additional fees and during more extensive hours than Bancomer’s own branch locations. They will be able to make payments 365 days per year in Wal-Mart, Bodega Aurrerá, Sam’s, Superama and Suburbia nationwide, taking advantage of the comfort, security and flexible hours that these stores offer.

Bancomer’s Director of Credit Cards and Consumer Banking, Rodrigo Manrique, commented that “the objective is to offer our customers more ways, and broader hours, to make their payments conveniently. Through this agreement, Wal-Mart de Mexico will receive an increased flow of customers in its stores, and both institutions will boost customer loyalty by offering them a superior service”.

For his part, Raúl Argüelles, Senior Vice-President of Corporate Affairs and Human Resources for Wal-Mart de Mexico, indicated that this commercial alliance permanently adds value to what his company offers to clients.

At the moment of paying at cash registers, users of this service will obtain a receipt of the transaction that has taken place, which they should keep since it will function as proof of payment should any further clarification be necessary. For the customer’s benefit, Bancomer will consider the day this transaction takes place, in any Wal-Mart de Mexico location, as the date of payment.

See the original article in Spanish here

32 comments | Nov 12, 2008

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Check out this week’s issue of the Wal-Mart Watch Weekly Update for Elected Officials – a compilation of Wal-Mart news from across the country and beyond.

This week’s issue begins with a Bloomberg report of Wal-Mart being placed on a list of most controversial companies. Also named - the company responsible for producing melamine-tainted milk in China. The list includes companies criticized for producing negative impacts on communities, health, and the environment, and was based on a study by RepRisk, a consulting firm that analyzes companies’ exposure to controversial issues and news.

You’ll also find stories from BusinessWeek and the Financial Times on how corporate giants like Wal-Mart are gearing up to battle potential pro-labor legislation in 2009. With President-Elect Barack Obama and the Democrats taking over next year, retailers are bracing to fight the Employee Free Choice Act – or EFCA – which could make it easier to organize unions in the workplace.

In addition to EFCA, you’ll find stories on Wal-Mart and the economy. And from the legal front, read about a $19 million discrimination lawsuit filed against Wal-Mart and Pepsi in West Virginia. Plus, in the world of product safety, read more about questions raised by the controversial chemical BPA, as well how Wal-Mart has been selling lead-tainted face paint for kids…a no-no anytime, and especially around Halloween.

And finally, check out our “Stateside” and “Wal-Mart International” sections to find out what’s going on with Wal-Mart around the country and across the globe. Chicago city aldermen have a wish list for an Obama presidency; the fight continues over whether Wal-Mart can build near a Civil War battlefield in Virginia; and towns in California and Nevada deny Wal-Mart the ability to sell alcohol on its store shelves.

Wal-Mart Watch Weekly Update for Elected Officials [November 12, 2008]

51 comments | Oct 31, 2008

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Check out this week’s issue of the Wal-Mart Watch Weekly Update for Elected Officials – a compilation of Wal-Mart news from across the country and beyond.

This week’s issue begins on Wal-Mart and the economy, and whether Wal-Mart sales statistics can be used as a new barometer for the U.S. economy. You’ll also find stories on changes in shopper behavior, now that consumers are faced with less disposable income. And, you’ll find stories on Wal-Mart’s slowed growth, and the switch to smaller store formats by retailers across the country.

In addition to the economy, you’ll find stories related to next week’s election. Barack Obama highlighted the story of a 72-year-old man forced to go back to work for Wal-Mart in his half-hour special this past Wednesday night. Meanwhile, according to Reuters Wal-Mart vows to remain non-partisan in the 2008 election season, while the Financial Times reports on the candidates attempting to woo the so-called “Wal-Mart Moms.” Plus, there are suspicions that Wal-Mart is behind a new grassroots group recently set up to fight the Employee Free Choice Act, as reported in The National Journal.

Also: Find out whether a Wal-Mart case in Montana could lead to changes in that state’s campaign finance law.

And finally, check out our “Stateside” and “Wal-Mart International” sections to find out what’s going on with Wal-Mart around the country and across the globe. A California ballot measure could lead to increased demand for more humane animal products, while citizens in Virginia continue to fight Wal-Mart’s attempt to build near an historic Civil War battlefield.

Wal-Mart Watch Weekly Update for Elected Officials [October 31, 2008]

2 comments | Oct 20, 2008

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Wal-Mart doesn’t have a bank yet in the U.S., but that isn’t stopping ‘em from forging full-steam ahead in Canada and Mexico.

In classic shrewd fashion, Wal-Mart seems to be using the financial crisis and the credit crunch to its advantage. Today’s story in PR Week isn’t the first to imply that Wal-Mart’s application for a bank in Canada might be “received favourably” by officials in a weak economy.

The story also noted for the umpteenth time that:

Wal-Mart Canada did not return calls for comment. In its notice, the retailer did not disclose what kind of banking services it would provide, but it is expected to offer credit card, mortgage, and investment products.

Meanwhile, a Bloomberg News story today tells us that Wal-Mex’s bank is growing. Wal-Mart de Mexico SAB is charging ahead south of the border and planning to unload 100,000 credit cards on Mexicans, targeting primarily the 75 percent of the population who’ve never had a bank account.

Issuing more credit cards as Mexico’s economy slows would allow Walmex, as the company is known, to collect annual interest of as high as 75 percent and encourage purchases of more expensive appliances and furniture at its stores, the only place the cards can be used. Walmex is preparing more financial products aimed at customers who have never had a bank account, about 75 percent of Mexico’s 103 million people.

In case you missed that: Wal-Mart is encouraging Mexicans to go in debt at 75 percent interest.

Presumably, Wal-Mart is trying to set up working bank operations in Canada and Mexico before trying again to apply in the U.S. And now they seem to be using the financial crisis as another tool to get into the banking game.

They certainly can’t expect us to keep quiet about any it.

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