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Apple pledged $25 to iPhone users over battery problems. Why is it so hard to collect?



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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:

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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The skin care brand striving to make medical-grade topicals both more luxe and accessible



This is an installment of Startup Year One, a special series of interviews with founders about the major lessons they have learned in the immediate aftermath of their businesses’ first year of operation.

Many new skin care and beauty brands tout leaning on ingredients that are natural, vegan, and intended for all skin types. But not all of them are medica-grade, and few are founded by health care professionals.

Founded by a nurse practitioner and a beauty industry veteran, The Route launched in October 2019. The pair wanted to make medical-grade skin care products more luxurious, but also mass market-accessible while simplifying the skin care routines of busy moms like them—both women are in their fifties and live in Southern California.

Fortune recently spoke with cofounders Courtney Baber and Nancy Pellegrino, RN (a.k.a. Nurse Nancy) to learn more about their business, the lessons learned, the hurdles overcome, and their plans for next year.

The following interview has been condensed and lightly edited for clarity.

Courtney Baber and Nancy Pellegrino, RN, cofounders of The Route.
Photograph courtesy of The Route

Fortune: What were you doing professionally prior to launching The Route?

Baber: I graduated from the University of Cincinnati with a major in Communications and minor in Retail Marketing. But the most valuable education I received was at Estee Lauder, one of my first jobs in the beauty industry. I like to say I got my Masters there. And when I was with Sephora, over a decade later, I helped bring Indie Beauty to Europe, which meant I got to travel and live and work abroad. The lessons learned and experiences I had overseas was like getting a PhD in life and business. Urban Decay was the culmination of all of these experiences and is what gave me the tools and ability to launch my own brand. On-the-job education has been priceless and has taught me probably more than I learned in college. 

Pellegrino: I went to nursing school at Cal State Long Beach and got my Masters in Nursing at UCLA; I’m proud to say I graduated top of my class. I started out my nursing career as a hospital nurse in the cardiac catheterization lab. I went on to nurse practitioner school and began working in internal medicine with a focus on women’s health. I did this for eight years.

In 1991, I decided to get into aesthetic nursing, a field that was largely uncharted. I was drawn to the opportunity to help women in a different way. To do what I could to help them feel a little more confident and beautiful. I’d always been fascinated by makeup, even working as a makeup artist during nursing school, and the field of aesthetics seemed to tie my two passions, nursing and makeup artistry, together nicely.

There was no formal training or programs when I started in 1999, so I would travel around the country to get my hands on every class and lecture I could. I researched and then researched some more. I wanted to learn the best of the best techniques, participate in think tanks, and find mentors so I could perfect my craft as quickly as possible. I opened my own aesthetics business in Newport Beach in 2007.

What inspired you to launch The Route? How does it stand apart in the skin care industry? 

Pellegrino: I met Courtney at NP Aesthetics 12 years ago. She was a senior vice president at Urban Decay and just had her second child. We became fast friends and discovered our shared desire to create a skin care brand that was beautiful, medical grade, results-driven, and didn’t cut corners. As mothers of young children who had tried and tested virtually every cream, serum, and treatment in the business, we knew that together we just might be able to create something amazing. I had dreamt of creating a skin care line a decade prior, but never made it happen. When I met Courtney, I knew that this was my chance, and I grabbed onto it.

With Courtney’s prestige beauty expertise and my experience treating thousands of women’s skin, we knew we could bring a fresh yet educated perspective. In addition to creating best-in-class products, we wanted to make medical-grade skin care more widely available. And because there are so few nurse-founded skin care brands, we were even more motivated to do it right. We sought out arguably the best medical grade skin care formulator on the planet, John Garruto; he’s often referred to as the godfather of cosmetic chemistry. When we met him, we knew he was the one we wanted to help us create our formulas. 

Baber: I think it’s fair to say Nurse Nancy and I are early pioneers of aesthetic nursing and indie beauty, respectively. We have combined 60 years in the beauty industry and seeing how the indie beauty industry has evolved over time has been fascinating. Fusing our decades of experience with our unique, complementary expertise is one of the things that makes us stand out as a brand and we tried really hard to make it shine through in our products.

Because we’re both in our fifties, we started by addressing all the reasons the skin ages. We made sure the formulas could stand the test of time and were looked at through both medical-grade and luxury skin care lenses. We also made sure to use all ingredients at their clinically tested levels of efficacy because that’s what makes them perform the way they’re intended. We made a pact to one another from the start that we would not skimp on any ingredients, which is something that happens too often in the industry. Taking the easy route isn’t in our DNA. We want to do what works best, and we want to do it right. It’s expensive to do but if you want to see results, it’s crucial. It took us three years to develop the formulas because we are very thoughtful and careful with everything we do; we are laser-focused on creating a brand capable long-term success. 

The Route makes vegan creams, primers, and invisible peels that are meant to work on virtually all skin types.
Courtesy of The Route

How have you divided up the workload between yourselves? How has your workforce grown since establishing the company? 

Baber: For the most part, it divided naturally based on our areas of expertise. Nurse Nancy is the cook in the kitchen working with the formulators and the chemist. Nancy is also more of the face and voice of the brand because she’s a nurse and has been working on people’s skin for decades. She also creates more of the video content, social media, and education, whereas I focus on the strategy, operations, running the business, and leading the team. 

Our workforce has evolved primarily on the operations side. A year ago, we didn’t think we needed an operations lead, but learned quickly that it was a vital part of the business and something we should have had from Day One. The day we hired a head of operations is the day things started to fall into place and feel more manageable. We use consultants and contractors for everything else—creative, IT, social, PR, etc.—and made the choice not to set up payroll early on. We will probably begin setting it up in 2021, but as a new company, it’s a big burden. My recommendation is only hire what you absolutely need, leverage your network, and be able to work high and low every day—meaning ship packages one day, negotiate a deal the next.

Pellegrino:  There are a lot of people graduating and struggling to find jobs right now. They are savvy about the digital world and can see things from a fresher perspective. Hiring them to help out with social media can be wonderful and for us, it was just that. We brought on some interns in the beginning and are also lucky to have some really nice friends with invaluable expertise who were happy to lend it to us when needed.

The founders say they wanted to make medical-grade skincare products more luxurious—but also mass market-accessible—while simplifying the skincare routines of busy moms like themselves.
Courtesy of The Route

Skin care is increasingly outselling cosmetics in the beauty business. Why do you think that is? How much of a role does social media play in your branding and marketing? 

Baber: There is a movement of people wanting to take care of themselves, which includes their skin and being more minimalist about makeup. Social media has helped fuel this fresh face, healthy skin, #nomakeup trend. People are now looking at beauty from a skin-first lens. And skin care is far more innovative and creative than ever before. There is no shortage of amazing ingredients out there, and I don’t think it was as interesting or cutting edge 10 or 20 years ago. 

Pellegrino: I agree with Courtney. When I started out in aesthetics skin care was referred to as “lotions and potions,” the latter making it seem magical or unreal. And people are still somewhat skeptical of skin care claims. But now, thanks to ingredient technology and science, you really can have transformative results. In the era of COVID, people are staying home, going on zoom, and choosing comfort. They are working out, eating better, taking care of their skin, and letting their skin breathe, which is always a good thing and something I encourage my patients to do. A little skin freedom goes a long way. Simplifying your routine has become a movement, too. For the most part, more is no longer more when it comes to skin care.

Baber: As far as social media goes, it is a key part of who we are and how we market ourselves. It’s a non-negotiable. But you have to figure out how to play in the world of social media in a way that makes sense for your brand. And that’s not that easy to do. Your website and social media are the windows to your brand. So whatever you put out there has to reflect your brand DNA. And how you do it has to be extremely thought through and unique to your brand. But the first year is a learning experience, for sure.

Pellegrino: We chose from the start that we would write the copy ourselves as much as we could because we wanted to be authentic and have our personalities and voices shine through. We will continue to do that.

What has been your most successful or greatest “hero” product since launching? Have customers been asking for any new offerings in particular? 

Baber: By far, The Party Peel. It’s the gateway to The Route. It’s something you can get both immediate and long-term results from, not to mention it’s selfie-worthy and super fun to use. It is our number one product.

Pellegrino: The Party Peel is the first product that we made. It’s patent-pending, and based on the most popular peel I did in my office. I wanted to bring it to people at home, no appointment necessary. Customers have been asking us for an SPF and cleanser to round out the routine and really make the brand give you everything you need. We agree, and we want them to be special and different just like our other products. These two products will add to our essential line, which currently includes our day and night face and eye creams and our next-gen retinoid, The Golden Rule. We didn’t want to rush the development so just like all of our products, it’s taking time to formulate and get just right. I have stacks and stacks of tester bottles to prove how long this process takes for us. But we plan to launch both in 2021. 

The Route launched in October 2019 and rolled out to Ulta Beauty stores as lockdowns orders were beginning in March 2020.
Courtesy of The Route

How are you funded? And given the ongoing economic crisis, what has been raising funds been like during this time? 

Baber: Up until October 2020, we’ve been self-funded. Bootstrapping allowed us to be really thoughtful about what we were doing and what we wanted to do without having to answer to anyone else. When you have to supply 400 stores with inventory after being in business for just a few months, that’s a big undertaking. But being able to do this in the first year of business is an honor. It’s also a challenge and we wanted to do it right, not cut corners, and ensure things rolled out exactly how we wanted them to.

Not everything is seamless; for example, the week we launched with Ulta, the first lockdown orders were going into effect and stores had to close, but we kept at it and evolved accordingly. We just did our very first friends and family raise, and think it will keep us going for the foreseeable future. We are very grateful and plan to do them proud.

Pellegrino: We waited until we felt we had proven ourselves to raise money. We wanted what we had done already and what we were offering to be exciting and compelling. During this uncertain time, having real proof is vital and also ensures you can feel confident in what you’re selling. Not just the proof that we could do it pre-2020, but that we were able to both survive and ultimately (and thankfully) thrive amidst an economic time like no other. Both Courtney and I asked people who we wanted to go on this journey with us first. What we learned was that people believed in us and wanted us to succeed. That was so validating.

Post-pandemic and five years down the road, where do you see The Route in the market?

Baber: I want to set the brand up to be uber-successful in the U.S. initially and recognized as a top medical-grade, luxury skin care brand. I also hope we can partner with someone who will help us propel the business and expand globally. I’ve learned early on from mentors to do one thing and do it really well. That’s such a great recommendation. You can only handle so much so prioritize and excel accordingly. 

NN: I want to be traveling around the world on a leisure trip and see The Route in women’s bags and suitcases. I want to see The Route at the local beauty boutique down the street, in a thousand languages. I want to continue helping people feel beautiful in their skin. I want to teach my daughter what I learned along the way and have her upstage me in business and in life.

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