August 10, 2024 | Friendly Fraud, Google & Apple, US Debt, Tax Changes in 2026, Intel (INTC), Merck (MRK), Charles Schwab (SCHW)

“Friendly fraud” is costing businesses $100 billion a year

I was surprised to learn of a new term called friendly fraud. This is when a customer disputes a legitimate charge they made on their credit card, debit card, or another payment method. According to a recent survey,35% of Americans admit to committing this kind of fraud, and 40% know someone who has. This has come at a huge cost to merchants as it is estimated to cost them $100 billion per year. Some of the fraud is accidental as it can come about when a consumer doesn’t recognize the merchant’s name used to identify a purchase on their bill. Sometimes a merchant will have a name that differs from their commonly known name. If you are a merchant, you may want to look into this as it could help save you some of these potential costs. Of those that committed this type of fraud, 29% said it was accidental. Other reasons for committing this type of fraud included economic hardship (34%) and respondents knew someone else who had gotten away with it and then gave it a try (19%). I have to say, if you have intentionally done this, it is just wrong. It is really no different than walking into the store and stealing. Ultimately, this costs other people as merchants will need to charge more for their goods to offset these costs.   Google’s monopoly ruling could be a huge loss for Apple This might sound crazy, but I believe the ruling by a federal U.S. judge that Google has illegally held a monopoly in search and text advertising might have a bigger impact on Apple’s stock than Alphabet’s. This case was filed in 2020 by the Department of Justice and a bipartisan group of attorneys general from 38 states and territories. It alleged that Google has kept its share of the general search market by creating strong barriers to entry and a feedback loop that sustained its dominance. The court found that Google violated Section 2 of the Sherman Act, which outlaws monopolies. In the ruling, the court focused on Google’s exclusive search arrangements on Android and Apple’s iPhone and iPad devices, saying that they helped to cement Google’s anticompetitive behavior and dominance over the search markets. This should be a major concern for Apple considering Google paid them $20 B in 2022 and if we annualize the recent service revenue in Q3 of $24.2 B the Google payment would account for about 25% of service revenue. I can’t imagine there are many costs associated with this for Apple, so the loss of this payment would essentially subtract $20 B from total profit. For Google the risk is that users might have other options for search engines, but with their strong reputation and well-run platform I don’t think they would lose a lot of users.    The US debt continues to climb, should you be concerned? If you haven’t heard the news already, you probably will hear it as time goes on, the US treasury estimates America’s gross national debt at $35 trillion which was hit last week. No doubt about it, $35 trillion by itself is a scary number. But this number is only half the story. In accounting, a balance sheet has assets and liabilities. To know the total equation, one needs to know what the assets are for the United States government. It is estimated the government has assets of $178 trillion which is made up of real estate, oil and natural gas rights and other assets. It is also important to know that much of the real estate was bought many many years ago and is carried at book value, not the current value or market value. Taking it one step further and looking at the debt-to-equity ratio, the government would have a debt/equity of 24.5%. This is not a bad ratio at all and I’m sure many people across the country would love to have a personal debt ratio that low. So when you hear people complain about the debt, ask them what are the assets and their value? Most people don’t have a clue! Thank you to most of the mainstream media that only wants to scare you, rather than educate you by giving you the whole story!   Financial Planning: Tax Changes in 2026 The Tax Cuts and Jobs Act of 2017 contained quite a few changes for federal taxation, but some of the more impactful differences were the tax rates themselves, the ranges of income that is subject to the tax rates, and the adjustment to deductions and exemptions. These went into effect in 2018 and are expected to sunset back to their original rules in 2026. We are now in 2024, so we only have 2 tax years left. There are 7 federal tax brackets which currently are 10%, 12%, 22%, 24%, 32%, 35%, and 37% and these are expected to increase back to 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. This is one of the more well-known adjustments, but one of the lesser-known features is that the amount of income subject to each of those tax rates will be adjusting as well. Essentially this means the same level of taxable income will climb into the higher tax brackets more quickly beginning in 2026. In other words, you may fall into the 3rd tax