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Apple is a world leader in both design and digital payments, but you wouldn’t know it from the clumsy website where millions of iPhone users must go to claim compensation over a battery defect. The website and the process for notifying customers about the iPhone settlement is awkward and ineffective—in short, very un-Apple like. The situation is frustrating many iPhone owners and could also bring new scrutiny of a class action process that critics’ say shortchanges consumers.
The Apple class action in question is over what the tech press has dubbed “battery-gate.” It alleges that Apple manipulated its software in ways that caused the battery of certain iPhones to suddenly drain or make the phone sluggish, prompting some users to desire a new purchase.
Following a wave of lawsuits, Apple agreed to settle the matter earlier this year. The proposed settlement calls for Apple to compensate those who bought an iPhone 6 or 7 or similar devices from that era.
The document says those who qualify “shall be sent Twenty Five U.S. dollars ($25.00) for each iPhone owned,” but notes the actual amount could be more or less based on many people file claims. The deal states Apple shall pay consumers a minimum of $310 million and a maximum of $500 million.
The financial terms are straightforward but, for consumers who want to collect, the process is not. In a poll of my iPhone-owning coworkers, most had not even seen the email announcing the settlement—likely because it went to spam folders. (If you want to search your own email for it, the subject is “Class Action Notice: In re Apple Inc. Device Performance Litigation.”)
And finding the email was just the beginning. Those who do find it are directed to this settlement page, which requires claimants to enter the serial number of the device in question—a tall order given many no longer have the iPhones they bought four or five years earlier.
The page does a have feature to look up the serial number based on your email and home address. But for some, it claimed there was no match.
Meanwhile, one colleague who attempted to submit her banking details on the site encountered a series of errors and had to switch browsers several times. She ultimately elected for a paper check.
All of this raises the question of why this process is so hard. After all, Apple keeps meticulous records of its customers and likely knows very well who purchased the devices with faulty batteries. Why didn’t the settlement call for Apple to email customers directly, which would have avoid the spam filter problem? Or better yet, why didn’t Apple offer to credit the $25 to the credit cards it keeps on file for most customers?
It’s hard not to conclude the process is clumsy because the lawyers designed it to be this way. A spokesperson for Apple declined to comment on the matter, but the recent history of U.S. class action litigation suggests this “battery-gate” suit is another example where the settlement is designed to limit recovery.
Less than 10% of consumers typically get paid
Class action lawsuits are supposed to benefit consumers by letting them sue as a group. This is a more practical option than expecting individuals to sue giant companies like Apple, especially when the money at stake is relatively low. Meanwhile, the threat of class actions can deter companies from behaving badly.
It’s a good idea in theory. But in many cases, the affected consumers—in whose name the lawsuit is brought—receive little or nothing from the legal settlement. A notorious recent example is the credit agency Equifax, which allowed Chinese hackers to steal the data of at least 143 million people in 2017. The ensuing lawsuit initially promised victims would receive $125 each but, when the dust settled, those consumers are more likely to receive $5 or nothing at all—even as the lawyers pocketed around $77 million and the company’s disgraced former CEO retired with $90 million.
Meanwhile, the vast majority of people don’t even try to collect in the first place. A 2019 survey by the Federal Trade Commission surveyed 149 class recent action suits and found the median participation rate was 9%—meaning that in most cases over 90% of people never collect.
In the case of the Apple “batterygate” class action, Laurence King, one of the lead lawyers representing iPhone owners told Fortune that “we believe the claims rate will be in line with similar consumer class actions”—in other words under 10%.
As for the lawyers, the settlement could see them collect $93 million.
In response to criticism over their fees, class action lawyers typically point out—correctly—that they bear the risk of the lawsuit, and often spend millions out of their own pockets to bring the claims. It’s also true that, in the absence of class actions, some companies’ bad actions would go unpunished, and consumers would receive nothing at all.
In the case of Apple, though, it’s hard to see how a payout rate of 10% would be acceptable given how easily the company could notify the affected customers—by email or even on their iPhones. Likewise, the prospect of collecting less than $25 (which would occur if a higher than average number of people file) would also be dissatisfying to many consumers. The battery issue has been a source of frustration for years, as has Apple’s reluctance to be transparent about it.
As for the cost of Apple compensating everyone affected, it would be negligible for a company with nearly $200 billion in cash reserves.
For now, the settlement is yet to be a done deal. It must receive a final sign-off following a so-called “fairness hearing” on December 4. If the number of iPhone owners filing claims proves to be low, or if there are concerns over the class action process, a judge could reject the deal and order the lawyers to come up with a better one.
More personal finance coverage from Fortune:
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- How Americans define being “wealthy” has changed drastically during the pandemic
- Need extra money? See if you qualify for a legal payout from Apple, Facebook, and others
- Are you middle-class? This calculator will tell you
Lopez holding firm reports 26% profit decline during pandemic
First Philippine Holdings Corp. (FPH) saw its net profit in the first semester fell by 26% to P3.5 billion as the pandemic pulled down its income from operations.
In a regulatory filing, the Lopez-led holding company saw its topline falter by 21% to P53.9 billion on reduced power and real estate sales.
The company incurred one-off losses due to coronavirus pandemic-related expenses, which reached P235 million. Excluding these, its recurring net income in the period stood at P10.2 billion, lower by 21% from over a year ago.
FPH’s electricity sales declined by 18% to P10.4 billion on lower revenues from First Gen Corp.’s natural gas plants, hydro platform, and geothermal unit.
The power company in a separate disclosure said its recurring attributable profit dwindled by 15% to P6.7 billion in the first half of the year as the decline in power demand worsened in the second quarter when the economy entered into recession.
Its total revenues from power sales fell by 15% to P47.7 billion in the January-June period. First Gen’s natural gas plants delivered P4.5 billion to the holding firm’s recurring revenues, down 16% as it continues to suffer from low electricity sales in the second quarter. Making up 61% of their parent’s revenues, the gas plants posted a 17% drop in earnings due to lower average natural gas prices and a decline in their dispatch.
Energy Development Corp. posted a slightly lower earnings’ share of P2.4 billion because of a slump in revenues from lower electricity prices. It netted P2.4 billion in revenues, forming 36% of First Gen’s topline.
Its hydro platform, First Gen Hydro Power Corp., brought in P200 million, a 68% share decline, due to lower prices at the Wholesale Electricity Spot Market (WESM). Its revenues, which account for 2% of its parent’s earnings, plunged by 47% to P900 million on poor spot market sales.
Meanwhile, FPH’s real estate sales dropped by over half, or 52%, to P2.2 billion because of the combined reduced sales take-up and slow construction completion of Rockwell Land Corp. following quarantine restrictions.
It also earned 23% less from contracts and services, which stood at P3.2 billion, because of the slowdown in construction activities and drilling services of First Balfour, Inc. and ThermaPrime Drilling Corp., as well as the reduced lease revenues of Rockwell’s commercial spaces due to rent concessions.
Merchandise sale earnings dropped by 26% to P805 million as First Philippine Electric Corp. sold fewer electrical transformers after its plant went on a shutdown.
On Friday, shares in FPH inched up 0.25% to close at P59.15 each, while First Gen’s shares declined by 3.83% to close at P22.60 apiece. — Adam J. Ang
How a hair-care company went from salon supplier to sanitizer powerhouse
When AG Hair moved into its new, 70,000-sq.-foot, state-of-the-art manufacturing facility in Coquitlam, B.C., two years ago, it was part of a plan to supercharge expansion of its hair care product line to salons in international markets. Europe was next on its list. Then COVID-19 hit.
Not only was the European expansion put on hold, but salons in major markets across Canada and the United States were temporarily closed. Very few were purchasing hair products, so manufacturing was halted in mid-March, leaving most of the company’s 82 employees out of work.
AG Hair could have waited out the pandemic but instead decided to lean into its entrepreneurial culture and make a sharp pivot. It began providing hand-sanitizing products for front-line health-care workers, addressing a global shortage.
“We realized there was this massive need for health-care professionals, and we wanted to make a difference and be able to provide them with the products they needed,” says AG Hair CEO Graham Fraser.
AG Hair received Canadian and U.S. approvals a week after applying for the licences needed to make sanitizer, and produced samples to show local authorities within 48 hours.
“That rapid response time, and the fact that we had gone through all of the Health Canada regulatory hurdles, showed [the local health authorities] that we were a partner they could trust and someone they could look to, to deliver the products they needed,” Fraser says.
Within a month, the company started pumping out the products, first for the health-care industry, then for consumers on its own website and on Amazon. About 10 per cent of AG Hair’s hand-sanitizer production also went to people in need, as identified by organizations such as United Way.
Parallel 49 Brewing Company is also using AG Hair’s Coquitlam manufacturing facility to produce its own blend of liquid hand sanitizer for front-line health and emergency workers, in partnership with the B.C. government.
Fraser credits his team for its energy and creativity in making the hand-sanitizer production happen, and helping put AG Hair staff back to work.
“We realized we had an opportunity . . . and then it became this incredible, almost war-room mentality and collaboration with our owners, our executive team and our people to say, ‘How are we going to get through this?’ ” Fraser recalls. “I think our success speaks to the type of people we have and the entrepreneurial spirit of pursuing every avenue we have, understanding how we can produce the products and making it happen.”
AG Hair’s commitment to investing in future growth is a big part of what makes it a Best Managed company, says Nicole Coleman, a partner at Deloitte and co-lead of its Best Managed Program in B.C.
“Capability and innovation come through quite strongly with this company,” says Coleman, who is also AG Hair’s coach at Deloitte. “I don’t think they would be able to pivot as quickly if they weren’t so strategic and had the internal capabilities to do it.”
The manufacturing facility was a big investment, but one Coleman says has already paid dividends.
“They were looking forward with a strategic plan in mind about future growth and how they could expand, rather than just focusing on the day to day,” she says. “Best Managed companies are always pushing the envelope and are conscious about planning for the future.”
AG Hair was founded in Vancouver in 1989 by hairstylist John Davis and graphic artist Lotte Davis. The husband-and-wife team began bottling hair products in their basement and selling them direct to salons from the back of a station wagon.
The company eventually moved its manufacturing off-site, to a third party. One day, John went to watch the operations and was surprised to see salt being poured into the mixture. Although he was told salt is commonly used as a thickener, he didn’t like the potential side effects of dry hair and skin.
It was at that moment John decided the company would oversee its own manufacturing. “Through that experience, John also became an expert in product development,” says Fraser, who came to the company in 2000 as director of sales.
After having worked for more than two decades at PepsiCo and Kraft Foods, Fraser was eager to work at a smaller, more agile company where he felt he could help make a difference.
“It was perfect because I got to bring a lot of structure and process that I learned in those organizations, but I also learned an awful lot about being an entrepreneur from John and Lotte: that sense of urgency, the decision-making process, the need to get things done and drive things forward and pursue opportunities,” he says.
Fraser has helped drive AG Hair’s expansion into the U.S. and internationally, including Australia, Taiwan, and Central and South America. A portion of its sales go to One Girl Can, a charity founded by Lotte that provides schooling, education and mentoring for girls in sub-Saharan Africa.
Fraser also oversees the development of new, trending products, including a new deep-conditioning hair mask made with 98 per cent plant-based and natural ingredients. Hand-sanitizing spray and gel will be the latest addition to the company’s product lineup.
“We don’t see the demand [for hand-sanitizing products] going away,” he says. “As the isolation policies start to get lifted, people are going to need forms of security and protocols as they get back into regular life and work. We see there’s going to be a need for these types of products long-term.”
This article appears in print in the June 2020 issue of Maclean’s magazine with the headline, “Working out the kinks.” Subscribe to the monthly print magazine here.
Amazon Considers Relocating Some Employees Out of Seattle
(Bloomberg) — Amazon.com Inc. is offering Seattle-based employees a choice of smaller offices outside the city, suggesting the Covid-19 outbreak and a new local employers tax have pushed the e-commerce giant to consider alternatives to its hometown.In a message to employees Thursday, Amazon asked which communities near Seattle — including Tacoma and Redmond, Washington — they’d prefer. The title on the message, which was shared on Reddit and later deleted, was “office workplace options.” Amazon declined to comment on the matter.Amazon, which reported a total global workforce of almost 877,000 as of June 30, has been expanding beyond Seattle for years. It is building a second major office center in suburban Virginia near the nation’s capital and has satellite locations in cities including New York, Austin and Los Angeles.The company has threatened to focus employment growth outside Seattle due to a rocky relationship with city officials and new taxes imposed on big employers. The message suggests Amazon could significantly shrink its presence in its hometown, where it employs about 50,000 people in a mixture of offices it owns and leases. In 2019, it announced it would relocate its worldwide operations division, which oversees Amazon’s shipping and logistics, to nearby Bellevue where it currently employs 3,000 people.Even before the pandemic, Amazon considered building more satellite offices outside the city, according to a person familiar with the matter. The company plans to expand its Bellevue offices, which it has had since 2017. Such locations are seen as an amenity for employees tired of commuting to Seattle and as a way to reduce the company’s exposure to the city’s taxes targeting big employers, said the person, who asked not to be identified discussing private matters.Two years ago, Amazon helped defeat an effort in Seattle to raise money for homeless services and affordable housing by levying a per-employee tax on large businesses. The “head tax” would have raised about $47 million a year.The political climate has since shifted against the company after Amazon’s big spending on a Seattle City Council election backfired last year. In July, the council passed a new levy that will tax large businesses on employees who make at least $150,000 per year. The tax is expected to raise more than $200 million annually and cost Amazon even more than the earlier proposal.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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