Archive for October 2014

Kmart Announces Major Data Breach Affecting Credit Card Information

NEW YORK (CBSNewYork/AP) — Kmart on Friday became the latest retailer to announce a data breach in its payment systems.

Kmart president and chief member officer Alasdair James announced that on Thursday, the company’s IT team detected that the store payment systems had been breached. An investigation revealed that someone had deliberately infected the system with new form of malware back in early September, and credit and debit cards numbers were left compromised.

Kmart does not believe personal information such as PIN numbers, email addresses or Social Security numbers were affected. The company also does not believe customers were affected.

The data breach has been contained and the malware has been removed, Kmart said. Anyone whose credit card information might have been stolen will not be liable for unauthorized charges, and Kmart is offering free credit monitoring protection to anyone who used a debit or credit card in one of its stores in September or October up through Thursday.

Guidance on how to watch for suspicious activity on credit or bank accounts is available on the Kmart website, or by calling the Kmart customer care center at (888) 488-5978.

Kmart is also working with federal law enforcement authorities, banking partners and security experts to solve the hack.

This is the latest in numerous data breaches affecting major retailers over the past year, and the second in as many days.

On Thursday, Dairy Queen announced that 395 of its locations – including several in the Tri-State Area, had been affected by a data breach that left credit and debit card numbers vulnerable.

And just last week, JPMorgan Chase amp; Co. said a data breach affected 76 million households and 7 million small businesses that use its banking services.

Last month, Home Depot confirmed that 56 million credit and debit cards were likely affected by a data breach the breach between April and September at stores in the US and Canada. The breach amounted to the second largest for a retailer on record.

In December of last year, Target Corp. disclosed that about 40 million credit and debit cards may have been affected by the data breach that happened between Nov. 27 and Dec. 15, just as the holiday shopping season was shifting into high gear.

The UPS Store, Michaels, SuperValu, PF Chang’s restaurants, and Neiman Marcus have also been affected by data breaches this year.

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Building wealth for your child

Ladies are in the habit of confirming and reconfirming that they are pregnant. So, when your wife gives you an envelope or a white A4 paper, which is the pregnancy confirmation letter, be happy and clink glasses. Afterwards, you should know it is time to start planning the future of your unborn child.

You will agree with me that human beings, naturally, are in the habit of waiting until the need arises before they react; you don’t want to be one of such. If on your twentieth birthday, your father had given you a gift and it was a bank account revealing that you are a millionaire; you would have been better off. Imagine doing that for your child or children. I am not saying you should dump a million naira in each of your child’s account on his or her twentieth birthday. Except you are a Dangote, Mike Adenuga or an entrepreneur with undoubting hope of building a conglomerate in the future, you won’t be able to do that. So you probably need to a financial plan on how to protect the future of your child or children, making him a millionaire before his twentieth birthday. Here is what you should do:

Step One-Apply the deduction strategy: open a savings account for your unborn child in a local bank. I’m very sure your banker will be glad to help you with a flexible arrangement as long as you will be depositing your money with the bank. Then have a arrangement with your banker that at least 5% (or more if you have the gut) should be deducted from your monthly pay-check or income and automatically deposited in your unborn child’s account. If for example, you are earning 100, 000 Naira every month, 5% of your earning will be 5, 000 Naira. Parting with 5, 000 Naira every month, for a worthy course, will not break your back. After all, it is nothing compared to the amount some fellows part with, in a drinking competition with friends, in their usual bar or club on Fridays. This deduction strategy can be applied to any size of pay-check or income as long as you are willing and with a good understanding that all your problem cannot be solved with or without the deducted 5%. So why not choose a worthy course that will probably relieve you in the future and make you a proud father.

Step Two-Find an investment portfolio: based on my example, 5,000 Naira deducted from 100, 000 monthly income or salary in 12 months will equal 40, 000 Naira. By now, your child should be approximately 4 months old. This is perhaps the best time to find a secure investment that can help you grow your child’s money, away from your reach in a savings account. However, you don’t want to be named foolish because you abandoned money in a savings account; let it start working for your child. I believe if you ask your banker again, there are some juicy packages he or she can offer you on how to secure and grow your child’s money. There is child’s education fund, a replica of trust fund that can protect your child’s future. Also, these days, there are insurance policies that will accept a minimum of 2, 000 Naira every month and luckily you have more. You may want to consider such. There are also some financial houses offering typical stock broking account for as low as 5, 000. Fixed deposit is also not a bank idea; as well as T-Bill. Whatever you do, make sure you turn your child’s money into a financial vehicle that can at least bring back some percentage on investment at the end of every year for the next twenty years.

Step Three-Repeat the Strategy: there is every tendency that you will want to stop the automatic deduction of 5% from your income because you have turned over the first year savings into a growing investment. But remember the whole idea is for you to continue in this habit or strategy, every year, for the next 20 years. If you steadily maintain an income of 100, 000 naira, deducting 5% every month from it, in the next 20 years, you would have put aside 1.2 million Naira if you foolishly do not invest it. However, if you steadily grow your career, increase your income, keep deducting 5% and investing it wisely on behalf of your child, you will probably make your child a multimillionaire on his or her twentieth birthday. What better gift would your child deserve?

Step Four-Add to the list: now you don’t want only your first child to enjoy the privilege of being rich before his or her twentieth birthday. And I believe, like our fathers, you don’t want to give birth to 10 children in this harsh economy. But with a maximum number of 4 children from your loins, you can always give them the privilege of becoming financial free in the future. On 4 children, 20% deducted from your monthly income won’t make you poorer rather it will make you richer in the future. Follow this strategy diligent and your will be tagged the father of millionaires.

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Free Consumer Credit Monitoring Company Credit Karma Raises $75M, Now …

29 Sep 2014 10:24 PM EST

Free Consumer Credit Monitoring Company Credit Karma Raises $75M, Now Valued At Over $1 Billion

Credit Karma, a consumer-facing credit monitoring startup, is now worth more than a billion dollars following a new round of funding. The company announced it has raised an additional $75 million in growth funding from Google Capital, Tiger Global Management, and Susquehanna Growth Equity. The new round comes 8 months after its Series C a time when Credit Karmas user base increased by over 50%. The WSJ reported the $1 billion+ valuation this morning, and the company confirms its accurate.

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The Wisdom of Financial Planning Strategies

Winging it sounds like fun if you are going on a road trip, but for matters of personal finance, it is better to consider a financial planning strategy to get where you want to go.

Setting a financial planning strategy is not only good for the investor, it is good for the advisor helping to device the strategy. Spectrems Perspective on the relationship between investor and advisor How Financial Advisors Can Increase Client Satisfaction and Loyalty shows a direct relationship between the planning that takes place in financial concerns and the level of client satisfaction reported by investors. In some cases, the level of satisfaction is double between those that have strategy sessions with advisors and those that do not.

There are financial planning strategies for the purposes of personal budgeting, estate planning, tax matters, retirement or savings plans.

Most households should probably start with a cash flow management strategy, determining how much revenue they get and when it comes in versus the necessary spending that accrues, again with an eye toward when the bills are due or when the spending is done. This financial planning strategy will immediately determine what discretionary spending is available for the next strategy that comes up.

The next financial planning strategy that many households undertake is saving for the future. Whether it is college costs, or a new home, or retirement, a savings plan is usually required to make any of those things happen the way you want.

Many households wish to increase the amount of money they have for personal budgeting and saving for the future, and that requires an investment plan. Income that is earned through investment can be used to increase savings accounts, or can be reinvested to gain even greater wealth.

An investor who wants advice about these types of plans can get assistance using Millionaire Corners Best Financial Advisors search service.

Owning a business is not unlike having children, especially when finances are involved. A business plan can help improve business through investment while keeping an eye on costs and adjusting spending when and where it is possible to do so. Matters to be dealt with include funding for new or improved equipment, employee costs, tax considerations, and future business needs.

Caring for a child financially is similar. The immediate costs are something that is considered with a cash flow management strategy, but caring for their future, either in terms of college or estate planning down the line, requires a different form of financial planning strategy.

No matter what the reason, many investments have different tax considerations, and a financial advisor would be able to help with determining what is the best financial planning strategy for making as many dollars go as far as possible.

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IDS confirms Universal Credit rollout plan

In a statement following his announcement at last months Conservative party conference, Duncan Smith said expansion of the benefit reform scheme to all jobcentres and local authorities would take place during 2015/16.

Once fully implemented, Universal Credit will merge six existing benefits into once payment, covering some £70bn of benefit spending each year. It would also deliver savings of £35bn over a decade, Duncan Smith said in a ministerial statement.

Universal Credit claims are taken at present in around 50 Jobcentres and will be available in nearly 100 by Christmas, just over one-eighth of the total.

He said a parallel Universal Support programme would help claimants back into work.

Aspects of this were being tried out in 11 areas and included sharing data and buildings with local authorities, and funded delivery partnership agreements between councils and Jobcentre Plus would support those who need extra help.

Universal Credit work coaches would engage with households at work search interviews to assess financial capability, referring them for personal budgeting support if needed, Duncan Smith added.

He said the Department for Work and Pensions plan to expand Universal Credit had been ‘assured by the Major Projects Authority and signed off by Treasury’, he added, despite earlier worries that the programme had wasted money and been blighted by IT problems.

Responding to the announcement, Local Government Association chair David Sparks said: ‘It is good that the government’s latest approach to implementing Universal Credit now recognises the huge contribution councils and their staff have to make, a case the LGA has been making in discussions with the DWP over the past 18 months.

‘Ministers have undertaken to build on existing experiments in joint working, to share offices, and to share data more effectively.’

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The future of artificial intelligence: Will computers take your job?

The field of artificial intelligence may not be able to create a robotic vacuum cleaner that never knocks over a vase, at least not within a couple of years, but intelligent machines will increasingly replace knowledge workers in the near future, a group of AI experts predicted.

An AI machine that can learn the same way humans do, and has the equivalent processing power of a human brain, is still a few years off, the experts said. But AI programs that can reliably assist with medical diagnosis and offer sound investing advice are on the near horizon, said Andrew McAfee, co-founder of the Initiative on the Digital Economy at the Massachusetts Institute of Technology.

For decades, Luddites have mistakenly predicted that automation will create large unemployment problems, but those predictions may finally come true as AI matures in the next few years, McAfee said Monday during a discussion on the future of AI at the Council on Foreign Relations in Washington, DC

Innovative companies will increasingly combine human knowledge with AI knowledge to refine results, McAfee said. What smart companies are doing is buttressing a few brains with a ton of processing power and data, he said. The economic consequences of that are going to be profound and are going to come sooner than a lot of us think.

Many knowledge workers today get paid to do things that computers will soon be able to do, McAfee predicted. I dont think a lot of employers are going to be willing to pay a lot of people for what theyre currently doing, he said.

Software has already replaced human payroll processors, and AI will increasingly move up the skill ladder to replace US middle-class workers, he said. He used the field of financial advising as an example.

Its a bad joke that humans almost exclusively produce financial advice today, he said. Theres no way a human can keep on top of all possible financial instruments, analyze their performance in any rigorous way, and assemble them in a portfolio that makes sense for where you are in your life.

But AI still has many limitations, with AI scientists still not able to solve the problem of common sense, of endowing a computer with the knowledge that every 5-year-old has, said Paul Cohen, program manager in the Information Innovation Office at the US Defense Advanced Research Projects Agency (DARPA) and founding director of the University of Arizona School of Informations science, technology and arts program.

There is, however, a class of problems where AI will do magnificent things, by pulling information out of huge data sets to make increasingly specific distinctions, he added. IBMs recent decision to focus its Watson AI computer on medical diagnostics is a potential game changer, he said.

Medical diagnosis is about making finer and finer distinctions, he said. Online marketing is about making finer and finer distinctions. If you think about it, much of the technology humans interact with is about putting you in a particular bucket.

McAfee agreed with Cohen about the potential of AI for medical diagnosis. I have a very good primary care physician, but theres no possible way he can stay on top of all the relevant medical knowledge he would have to read, he said. Human computers are amazing, but they have lots of glitches. They have all kinds of flaws and biases.

AI machines are still a ways off from equalling the processing power of the human brain, but thats largely a problem with hardware resources, said Peter Bock, an emeritus professor of engineering at George Washington University. Scientists should be able to build an AI device that matches the processing power of a human brain within 12 years, he predicted.

That AI device would then take several years to learn the information it needs to function like a human brain, just as a child needs years to develop, he said.

One audience member asked the AI experts if the technology will ever replace computer programmers.

If scientists are eventually able to build an AI machine that has the processing power of a human brain, that machine could become a programmer, Bock said. She might become an actress. Why not? They can be anything they want.

DARPA now has a project that focuses on using software to assemble code, by pulling from code that someone has already written, Cohen said. Many programmers today focus more on assembling code from resources such as, instead of re-creating code that already exists, he said, and DARPA has automated that process.

Humans still have to tell the assembling program what they want the final code to do, he noted.

At some point, an AI program may be able to write code, but thats still years off, McAfee said. In order to deny that could never happen, youd have to believe theres something ineffable about the human brain, that theres some kind of spark of a soul or something that could never be understood, he said. I dont believe that.

There are things humans can still do, however, that have proved really, really resistant to understanding, let alone automation, McAfee added. I think of programming as long-form creative work. Ive never seen a long-form creative output from a machine that is anything except a joke or mishmash.

Grant Gross covers technology and telecom policy in the US government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grants email address is

Tags popular scienceAndrew McAfeeroboticsIBMMassachusetts Institute of TechnologysoftwarePaul Cohen

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One area of the financial services industry that has seen…

For those needing mortgages, 2 fresh ideas.

One area of the financial services industry that has seen little innovation over the past five years is home lending.

That’s not surprising, considering it was an overabundance of creativity in this sector (subprime, stated-income, interest-only, pick-a-payment mortgages, etc.) that nearly wrecked the world’s financial system.

After the crisis, it was hard to get a mortgage that wasn’t government guaranteed, although in the past year the market for jumbo loans that exceed the government’s dollar limits has come back to life. But to get a jumbo loan, you generally need an oversize down payment and credit score. The market has remained tough for borrowers who can’t get a government-guaranteed or jumbo mortgage.

That’s why two new loans — one from RPM Mortgage of Alamo and another from the Neighborhood Assistance Corp. of America or NACA — are noteworthy.

Both loans have just been introduced, and none has yet closed. It’s not clear how successful they will be, but the fact that anyone in the industry is innovating is newsworthy, says Guy Cecala, publisher of Inside Mortgage Finance.

Easing qualifications

The RPM mortgage is designed for borrowers who can’t get what is known as a qualified mortgage.

Under federal rules that took effect this year, lenders generally must look at borrowers’ income and assets and make sure they have an ability to repay. Lenders who go a step further, and make what is known as a qualified mortgage, get certain legal protections if people sue them, claiming they made an unaffordable loan.

A qualified mortgage can’t have certain features, such as interest only, negative amortization, balloon payments or terms longer than 30 years. The borrower’s debt payments, including the mortgage and other debts, can’t exceed 43 percent of monthly pretax income. There are also limits on up-front points and fees.

The qualified mortgage rules apply to loans of any size. However, there are certain exceptions for small lenders and government-backed mortgages. Loans that can be purchased by Fannie Mae or Freddie Mac can exceed 43 percent debt-to-income ratios. All FHA loans are deemed qualified mortgages.

“There is a lot of talk about the non-qualified mortgages, but relatively few are being made,” Cecala says.

RPM’s new “tailored line of products” is designed mainly for people who have “great credit, great reserves,” but can’t get a qualified mortgage, generally because their debt exceeds 43 percent of income, says Rob Hirt, RPM chief executive.

“This allows them to go as high as 50 percent of income. That difference of 7 percent is a large swath of borrowers,” he said, including self-employed and retired people.

Lenders are reluctant to make non-qualified mortgages because it’s hard to sell them. Hirt says a “very, very large institutional investor,” a money management firm he would not identify, “sought us out and said we really believe in (non-qualified mortgages) if we can define what those loan parameters will be.”

The new loan is available on amounts from $250,000 to $4 million. RPM requires only one year of tax returns (most lenders like two). The minimum credit score is 660 and the maximum loan-to-value ratio is 80 percent.

The new loan is amortized over 30 years but the interest rate is fixed for five or seven years, after which it adjusts annually. These are known as 5/1 and 7/1 ARMs.

“The rates are in the mid-4s and will reach as high as 6 percent depending on the loan program type, the borrower’s assets, equity in the home and credit score,” Hirt says. The fee is typically one point, or 1 percent of the loan amount.

For comparison, last week, rates for conforming (non-jumbo) loans averaged 4.23 percent for 30-year fixed, 3.37 percent for 15-year fixed and 3.06 for a 5/1 ARM, all with one-half of a point, according to Freddie Mac.

The loan is available in the 13 mostly Western states where RPM operates. RPM is willing to forgo the legal protections a qualified mortgage provides because “these are smart loans to qualified individuals who don’t fit in a (qualified-mortgage) box.”

Wealth-building mortgage

The other new mortgage, called the Wealth Building Home Loan, is a 15-year mortgage designed to help low- and middle-income borrowers build equity faster than they can with a 30-year loan.

Ed Pinto and Stephen Oliner of the conservative American Enterprise Institute are promoting the loan as an alternative to 30-year FHA loans. A subsidized version is being offered through NACA, a progressive nonprofit that has leaned — heavily at times — on banks to increase lending in low-income communities.

For two decades, NACA has offered 30-year loans with no down payment, points, closing costs or mortgage at competitive rates. Banks fund and subsidize the loans, in part to fulfill their community reinvestment act obligations. BofA and Citibank have committed $13 billion to NACA over the next five to seven years, says Bruce Marks, NACA’s chief executive.

The new 15-year loan will have a lower rate (3.25 percent currently) than NACA’s 30-year loan (currently 4 percent).

Borrowers can reduce or “buy down” the rate further by paying money up-front. On the 15-year loan, paying 1 percent of the loan amount (one point) reduces the rate by a half of a percentage point.

For example, on a $100,000 mortgage, a borrower can reduce the rate from 3.25 to 2.75 percent by paying one point or $1,000. Paying $2,000 would reduce the interest rate to 2.25 percent.

On its 30-year loan, paying one point reduces the rate by only one-quarter of a percentage point.

A borrower could buy down the rate to almost zero. The points can come from the borrower, the seller, the government or any other source as long as they are not borrowed, Marks says. Borrowers can get matching funds for a buydown from the banks.

There is no income limit for borrowers, but there is a maximum loan amount, which varies by city. In the Bay Area, it generally ranges from $362,790 to $450,000 on a single-family home. Borrowers must use the home as their primary residence, cannot own another property at the time of purchase and must go through credit counseling.

Word has gotten out’

There is no credit score requirement, but total-debt-to-income cannot exceed 43 percent. The loans are qualified mortgages unless buydowns exceed an allowable limit.

NACA can use funds that BofA and Citibank have already committed for the new loans.

Marks says that all 40 NACA offices (including one in Oakland) will offer them within the next 60 days. “The word has gotten out” about the new loans, he said. “There is a lot of interest.”

In Pinto’s version of the loan, banks would provide a small subsidy for low-income borrowers. For everyone else, “We would be looking to offer it as an unsubsidized loan,” he says. “We are reaching out to banks to do pilots of the wealth building home loan.”

Kathleen Pender is a San Francisco Chronicle columnist. Net Worth runs Tuesdays, Thursdays and Sundays. E-mail: Blog: Twitter: @kathpender

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Moore proposes slashing sewer rates in Jeffersonville

“The residents of Jeffersonville have been placed with a heavy burden for the last several years,” Moore said.

Sewer rate increases — which will have jumped 200 percent by the end of 2015 — were enacted to pay for an interceptor pipe built underground that will reduce the amount of sewage that overflows into the Ohio River.

The average monthly bill will go from about $24 at the time of the first increase to $73 next year, about a 200 percent jump. Rate increases have been a point of contention among residents.

The city signed a consent decree, or binding agreement, with the US Environmental Protection Agency in 2009 to mitigate sewer overflows by 2025. Failure to comply would result in a slew of fines. The highest fine would cost the city $12,000 per day after 10 days of noncompliance for every sewer discharge.

“Either fix the problem or cut the sewer rates,” Moore said. “I do not think it’s fair to impose sewer bill increases on people when the money that’s being collected is not going towards what it was meant to be going towards.

“In a nutshell, the residents deserve a break.”

Waste Water Department Utility Manager Len Ashack said that Moore would have the authority to draft an ordinance to lower sewer rates — but it may result in breaking the EPA consent decree.

“It would take away any ability to pay for the interceptor project,” Ashack said of cutting bills by 20 percent.

Moore accused the city council and sewer board — of which he is one of three members — of delays to review Jeffersonville’s financial situation for a project that was initially projected to be complete by 2017, he said.

“Sometimes government moves very slow. I understand that,” he said. “Financial analysis needs to be done. It’s been done. You don’t get to study things for a year.”

Moore also attributed delays to the council, citing its two-month process to finalize plans for development at 10th and Spring streets to wait for quotes on part of a pipe that would go underneath the property.

But sewer board member Dale Orem said that the city council is not at fault.

“It’s the sewer department that has slowed things down to make sure that we can pay for this thing and that we can get it bonded.”

The department also wants final construction estimates to come in before it seeks a $34 million bond that the state has reserved for the Jeffersonville.

Jacobi, Toombs and Lanz, Inc., is the engineering firm tasked with designing the entire interceptor project and is about 80 percent finished.

“I think everybody wants to see the 100 percent [designs], but this can be done in phases,” Moore said.


The sewer board has hired two financial advising companies to determine whether the sewer department can afford to pay back bonds on the project, taking into account revenue from the sewer increases.

Umbaugh and Associates determined in June that the city would be able to pay off bonds over the next five years of a 20-year repayment plan.

“If Umbaugh and Associates, the foremost recognized state financial advisor says the city of Jeffersonville can move forward and complete this project, that’s all I need to hear,” Moore said. “The money is there. We can do it.”

Umbaugh calculated its report from earlier estimates of $37 million, but Moore said he still feels comfortable the difference in $7 million can be covered by “the fees that are already there.”

The sewer rate increase fees were calculated to cover $33 million in sewer work based on estimates in 2008. Orem said that it’s normal for cost estimates to fluctuate, especially now that market prices for materials have been driven up by demand from the Ohio River Bridges Project.

“You never know the cost of a project until it’s bid,” he said.

But Orem said the current estimates are higher than he thought they would be.

“Nobody ever dreamed at that time that this thing would cost $44 million,” Orem said. “It’s a shock to everybody.”

Moore said he is still confident that the city can pay for the project.

“Umbaugh is still very comfortable with that,” Moore said, mentioning he had reached back out to their advisers when estimates went up.

Umbaugh included annual drainage fees of $1.4 million in its determination but did not include drainage expenses of $1.3 million leaving the department with a net revenue of $100,000 a year, Orem said.

Orem said he trusts the reports of the second contracted company Sycamore Advisors that is considering Jeffersonville’s ability to pay bonds out to 2034. Sycamore is not including drainage funds or unknown numbers, such as revenue from predicted growth at River Ridge Commerce Center.

Orem said that Sycamore president Diana Hamilton headed the state revolving fund banking system in Indiana for 10 years — the same department that Jeffersonville is looking to bond from.

“She works in nine states and has done outstanding work,” he said.


Hamilton told the sewer board and members of the city council last week that the city would have to increase sewer rates even further to pay out bonds.

City Councilwoman Connie Sellers said that she and at least four other members would not vote to increase rates again.

Instead, she supports looking at alternatives other than the interceptor pipe to comply to the consent decree.

“Let’s change it and make it work a different way if we can if it’s less expensive,” Sellers said.

She said the first round of sewer increases were an unfunded mandate because the EPA was forcing the city to come up with a way to fund the project. The mayor’s proposal to scale back isn’t feasible, she said.

“We can’t lower our rates anyway because it has to be fixed one way or another,” Sellers said.

Orem said that nobody wants another rate increase, and both he and Ashack support looking for other sources of revenue.

“How can we build this project within the sewer rate that we have set?” Orem said.

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IBM aims to profit from Jeopardy!-winning computer

About 10 months after creating an independent business unit for Watson, IBM is still figuring out how to derive significant revenue from the computing system into which it plans to invest at least $1 billion.

What gained fame in 2011 as a Jeopardy!-winning supercomputer is now analytic software that the company is aggressively marketing in a range of industries: health care, retail, financial advising and even cooking, among others. Last week, the company formally opened Watsons headquarters in New York Citys so-called Silicon Alley, the start-up dense neighborhood that will serve as a base for several hundred employees. Their mission is to refine a system that mines large volumes of information, processes natural speech and answers queries.

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Universal credit’s flaws exposed by tenants as system forces some to pay day …

A North West housing association has said a survey of its tenants has exposed flaws in the governments universal credit (UC) system, with some of those using it forced to turn to pay day lenders to get by.

One of four initial pilots in 2013s roll out of UC, First Choice Homes Oldham (FCHO) found that their tenants had suffered multiple frustrations and complications with the new system, with some saying it had forced them to face stark choices over heating or eating.

However, the Deparment for Work and Pensions has called the survey mis-leading and not reflective of the true situation.

Carried out via a telephone survey this summer, the data collected from 40% of FCHOs tenants currently on UC found that:

bull; 55% found the period between making their UC claim and receiving their first payment very difficult. 44% managed financially by borrowing and 18% had taken out a pay day loan.
bull; 74% had not been offered personal budgeting support by the Department for Work and Pensions. However, 57% of the tenants that were offered this service took up the offer.
bull; 48% did not know they could apply for an advance payment for UC.
bull; 43% who did know about this were informed too late to be able to claim advanced payment or said that their application took too long to process leading to them missing their deadline.
bull; 37% did not receive their payment on the same day each month, making budgeting even more difficult.
bull; 22% said the Job Centre had not informed them that their rent needed to be paid out of UC money.
bull; 59% of tenants had not found work since claiming UC.

When asked by FCHO to name the first three bills that would be paid once they were in receipt of UC, 19% of tenants did not name rent as a priority bill.

Many tenants said that they had to choose between which bills to pay and some said that they would have to choose between food and heating or water and electricity.

The survey also asked tenants for suggestions on how UC could be improved UC. Suggestions included:

bull; Rent being paid directly to the landlord.
bull; Improved contact with claimants tenants have struggled to pay to talk to UC teams due to the cost of phone calls and would like an email alternative or a freephone number. Tenants added that the call centre was disconnected from their problem as it wasnt in the local area.
bull; The Job Centre should loosen requirements as some tenants have had to apply for unrealistic jobs eg a job in Salford which started at 2am with claimants reliant on public transport.
bull; Credit payment should be made fortnightly rather than monthly. Despite the government aim of making payments monthly to replicate work many tenants got paid weekly or fortnightly in previous jobs and therefore it did not replicate the work that tenants were likely to get.

Reducing the time between making a claim for UC and the first payment. Many tenants were forced into debt by this wait. Some had to use food banks but found this lsquo;demeaning.

Defending UC, a DWP spokesman said: This is a mis-leading survey of only 27 people and does not reflect what we are seeing on the ground. Paying housing benefit directly to claimants is a major culture change designed to move people into the world of work. We know people are adjusting to this over time, with the vast majority of people saying they are coping well with direct payments.

The National Housing Federation has acknowledged that we have delivered real service improvements with increased support to help people adjust to budgeting, including our Jobcentre Plus work coaches discussing budgeting support with all claimants at their first interview.

Cath Green, FCHOs chief executive, said: We knew UC was going to hit customers hard which is why we have had a raft of initiatives and customer support in place since well before the pilot started.

However, this survey really shows the harsh realities of the new system, and the stark choices our customers have to make between heating, eating and paying their rent. We have been working with the Job Centre, and will continue to do so to ensure this feedback is taken on board. Supporting our customers and ensuring they have a roof over their heads remains our priority.

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