Consumers are starting to get worn down by rising prices

Check-out stress
I do a lot of the grocery shopping in our household. For the last several months, maybe this whole year, really, the experience has been different. Every single time I check out, I get antsy. It seems like no matter how many or few things I buy, the total is always higher than … well, not than it should be, but certainly what it used to be. 

I'm not alone in this. Nearly 80% of consumers surveyed by JD Power in July said they are seeing changes in their daily expenses. And for many that's driving them to change their spending habits.

Grocery and gas prices are causing them the most angst, and the result is they are cutting back on discretionary spending, switch to cheaper brands, put off purchases, and go out less. 

Even worse, about 30% of those surveyed say their changing finances are forcing more extreme choices, like selling possessions just to cover bills, missing their rent or mortgage or utility payments, or skipping on prescriptions. 

I'm always a little hesitant to put too much weight on surveys, no matter who is doing them. JD Power surveyed 4,000 people. That is a lot in terms of how many people one could realistically survey, but it's a tiny fraction of all Americans. But the direction of this survey seems to be correct. 

The Chicago Federal Reserve's National Activity Index, which came out Monday, slipped to -0.08 in July. I've talked about this index before; it's a measure that comprises dozens of other economic indicators, and blends them into a series that measures momentum in the economy. What I like about this report is it's not measuring an absolute level; it's measuring momentum. Numbers above zero indicate a generally growing economy, and numbers under zero indicate a subpar economy. The July reading isn't hugely concerning; the index isn't a flashing warning sign for the economy until it reaches -0.70, according to the Chicago Fed. Still, in the last 12 months, the NAI has been negative 10 times. There is very little momentum in the economy.

Fraud-as-a-service
We've written recently about fraud and the serious problem it presents for banks. Most of the time, the fraud we see is either a small-time crook or an organized ring perpetrating some scheme. But what if the fraudster wasn't just perpetrating a fraud, but offering what amounts to a fraud service?

That is what the owner of a sham company called CB Surety was offering, as our Carter Pape reported yesterday. Thomas Eide ran the company, which sold this service to other conspirators: Eide offered a complex scam in which co-conspirators who were running their own fraudulent companies used CB Surety to both open fraudulent bank accounts and to load money onto prepaid cards that would be used to make numerous small purchases at the clients' companies.

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The effect of that was to create a lot of seemingly real activity that would obfuscate the actual fraud CB's clients were perpetrating. The whole goal was to hold down a bank's chargeback ratio and not have the account shut down, in order to extend the time the scam could operate even as real customers getting ripped off were reporting it.

A normal fraud would invariably come with a high chargeback ratio, as scammed customers reported the scam. Eide's scam was a way to make those chargeback requests seem smaller as a percentage of the total activity and not set off alarms at the banks.

The whole scheme pushed more than $111 million in transactions through the scammy accounts. Eide pleaded guilty on Aug. 20.