Tales From the Loop
Tales From the Loop
Loop Industries, Facebook, Arise, and Mariner Finance
Loop Industries
Plastic is everywhere. Invented in the early 1900s, the low cost and flexibility of the plastics have made them one of the most urgent environmental challenges on the planet. Not only do plastics degrade and screw up ecosystems and poison living things, they aren’t as easily reusable as, say, aluminum, and so major recycling efforts have largely failed.
Enter Loop Industries. The company was founded in 2014 in Quebec, and claimed it had patented proprietary technology to break down PET plastic - one of the more difficult forms to recycle.
Why haven’t we heard about Loop Industries? If they’ve truly solved the problem of how to break down the plastic contributing to a huge percentage of the planet’s dangerous landfill, beating out rivals like 3M, Dow Chemical, and DuPont, why aren’t they all over the news?
Well, I think we know why. Our friends at Hindenburg Research released another report this week, and, well:
As we will show, Loop’s claimed breakthroughs in PET plastic recycling are fiction. Our investigation into Loop, spanning 6 months, has included speaking with multiple former employees, company partners, polymer/plastic experts, and competitors.
Uh oh! Loop, like Nikola, went public in 2015 via a reverse merger which Wikipedia explains is a way for a company to “bypass the lengthy and complex process of going public” and, conveniently, avoid shareholder scrutiny of their finances and business model. Again, if Loop had groundbreaking technology, why wouldn’t they want to let the world know so investors would buy their shares? Well:
Former employees painted a picture of a chaotic company, whose lead scientists are twenty-something “liars”, with no relevant work experience other than Loop, that were able to achieve “impossible” results in a secret second lab that rank-and-file employees weren’t allowed to access.
Loop’s supposed proprietary process is a black box that has not shown itself to be more efficient or cost effective than comparable solutions, contrary to the company’s claims, according to former employees and outside experts.
Loop’s CEO, who has no specific educational background in chemistry, sought out the help of several convicts to put together Loop’s startup capital, according to litigation records.
Perhaps Goldman Sachs would balk at a company run by twenty-somethings with no scientific experience and funded by convicts? I don’t know.
Despite the co-founders having…sketchy backgrounds that include various lawsuits and allegations of stock manipulation, let’s give Loop the benefit of the doubt and take a look at the science:
The company’s current (Generation II) process was invented and patented by two brothers in their 20s, Adel and Fares Essaddam, who have no apparent post-graduate studies in chemistry or polymers or any work experience other than Loop. Adel started at Loop just months after completing his diploma and Fares started working for Loop while still attending university.
The Essaddam trio - two brothers and their dad - has attempted to build on a patent their father filed, a depolymerization process he claimed would break down plastics. The major improvement they’ve made in the last six years appears to be naming it GEN II instead of GEN I, which is how you can tell they’re doing science.
Loop built two labs, one for the Essaddams and one for the rest of its researchers. The “R&D” lab produced results that the founders wanted to see - the process was working great! The non-Essadam lab existed primarily to analyze samples from the R&D lab, according to staff.
The company kept the entire R&D process secret from other employees, straight out of the Theranos playbook. Employees pointed out that the results were impossible, and were told they were wrong. As early as 2017, Loop was telling investors it was breaking plastics down into “industrial grade purity” but employees disagreed:
The MEG “was not even isolated at that time,” the former employee told us. It was “still mixed with dyes, water and solid wastes.”
The former employee also told us they “never saw any test report from an outside lab or manufacturer”.
Loop told investors it was breaking plastics down into 100% reusable component parts, something no other company or research lab has come close to doing. Again, if this was true, couldn’t they license their tech to every major chemical company on the planet?
Instead, Loop continued under a veil of secrecy and began touting partnerships with major brands - sound familiar? None of the companies Loop claimed to be working with would admit to using any of their recycled material.
While it was issuing press releases about strategic partnerships with brand names, one thing Loop wasn’t doing was publishing any results of its research. In fact, it hadn’t published a single peer-reviewed paper describing its process. Experts Hindenburg spoke to said their groundbreaking tech simply…wasn’t:
…the chemistry is there and has been there. Implying that it is ‘new’ and implying that it is ‘simple/ easy,’ and profitable as a standalone process, just isn’t true.
[…]
I would concur with that opinion. He is right in saying it’s very well-known processing. Big companies like Coca Cola and so forth have been doing this for a number of years – depolymerizing.
So, a company that has spent 3 years claiming it has solved the problem of plastic recycling hasn’t provided any verified research or proof. Its lead scientists are two kids fresh out of college. They can’t point to a single business partnership they’ve delivered on. People have given them tens of millions of dollars based on what appears to be a total fantasy. They’re listed on the NASDAQ! You can buy stock in a plastic recycling company that doesn’t recycle plastic! What a world.
In case this wasn’t depressing enough, here’s an excellent piece about plastic pollution to help put in perspective how critical it is we actually solve this problem.
Facebook
Our upcoming election - for a whole variety of reasons - presents a unique challenge to our country’s decaying local infrastructure. Because of the way America works, each county and municipality is responsible for overseeing elections - there are over eight thousand of them! The federal government provides some funds, but has refused to pony up for the increased costs associated with the pandemic. And so, the richest country in the world is begging its billionaires for money to pay for its elections. Very normal.
One billionaire who has donated money to election efforts is Mark Zuckerberg. In early September, he and his wife donated $300 million to two organizations trying to help states and counties cope with COVID-19 related costs and challenges. Then, this week he donated another $100 million. This caused immediate outcry from Republicans, who do not believe in voting. Whatever you think of Zuckerberg, it is a searing indictment of how completely fucked our democracy has become that we are depending on the largesse of our wealthiest citizens to stage an election.
Zuckerberg has taken a lot of PR hits lately, with his company under fire for any number of scandals nearly all the time. But, in light of this particular bit of reputation shining, let’s see what Facebook is up to on the election security front?
The Real Facebook Oversight Board, a group established last month in response to the tech giant’s failure to get its actual Oversight Board up and running before the presidential election, was forced offline on Wednesday night after Facebook wrote to the internet service provider demanding the group’s website — realfacebookoversight.org — be taken offline.
The group is made up of dozens of prominent academics, activists, lawyers, and journalists whose goal is to hold Facebook accountable in the run-up to the election next month. Facebook’s own Oversight Board, which was announced 13 months ago, will not meet for the first time until later this month, and won’t consider any issues related to the election.
Fantastic. Facebook said it was an automated takedown request because the domain contained their brand name, and that they alerted the ISP to the mistake. And, as of this writing, the domain is now redirecting to another location that, presumably, does not violate any trademarks.
However! Rather than admitting it was a mistake, apologizing and moving on, a Facebook spokesman said this:
And, previously, a senior executive at the company contacted three people involved in funding the project to complain. A thing you do when you’re not worried, because you have a great Oversight Board that will start doing Oversight some time next year.
And theeeeen. Facebook is back in the right wing’s crosshairs for “reducing distribution” of a NY Post hit piece on Hunter Biden that I will also not link because it is a laughably contrived piece of nonsense from Rudy Giuliani. Twitter somehow managed to handle this faux controversy even worse by blocking people from retweeting the story, but Facebook, as usual, said one thing and (didn’t) do another:
Facebook has also announced new rules around political ads and then election, but their platform remains absolutely dominated by right-wing media. In other words, it’s going to get much, much worse over the next few months.
Arise
When you call a company, whether it’s to book a dinner at Disney World, or get help with your Comcast account, the person on the other end of the line may not actually work there. That’s because even large, highly profitable companies are outsourcing their call center work to third party companies these days. One of the biggest is called Arise, and ProPublica and NPR recently did an investigation into their labor practices. Spoiler alert, they are not good:
To prospective agents, Arise touts that you can “be your own boss,” as its website says. “Set your own schedule.” “No commute, no suit!” Arise targets its pitch to those who might have limited mobility or options: stay-at-home mothers, caretakers, military spouses or people with physical disabilities.
[…]
But often people discover that despite the layers of legal paperwork between them, the brand-name company at the top can still retain strict control over agents at the bottom. Rigid workplace formulas often govern everything from length of calls to frequency of refunds. Deviate from these standards and an agent can lose her job.
Control over the agents in Arise’s network can extend beyond work-performance measures. Some contracts require agents to work a set number of weekends and holidays. In multiple contracts reviewed by ProPublica, Arise reserved the right to make agents submit to drug testing “at any time.” And one former agent, testifying in an arbitration hearing, said: “Arise sent two instructors to my home, to audit my home. I’m not sure exactly what they were looking for, but they checked my ID. They looked around, too. They took a look at my internet connection.”
Uhhh. Working as an “independent” contractor for a company who monitors your calls, forces you to work weekends and holidays, and sends people to your house? That doesn’t sound legal! As it turns out, it really isn’t, and judge after judge has agreed:
Arise has faced, and lost, legal challenges alleging that its arrangements with agents violate federal labor law and cheat workers of what they are rightfully owed. One judge called the arrangement an “elaborate construct” created by Arise to get around labor law.
Nice! Hell yeah! So Arise is changing its business model, right?
Nevertheless Arise has been able to avoid altering its model in any significant way, aided in part by a 5-4 ruling from the Supreme Court, written by Trump appointee Neil Gorsuch.
Ah, of course not. Arise hasn’t made a secret of what it’s doing, either:
The “biggest benefit” Arise provides is to help companies “squeeze wastage out of a typical workday,” as John Meyer, a former Arise CEO once explained to a trade publication. Meyer, who has remarked that “business is sports for adults,” said that “a typical employee has a utilization rate of 65 percent because you’re paying for their lunch, breaks, and training.” Without that “low utilization” and other overhead, Arise costs up to 30% less than a traditional call center, Meyer said.
Without paying employees for things like lunch breaks, training, or benefits, you’re saving so much money! It’s great. Oh, and Arise eliminates the cost of training by charging their workers for it:
Pendergraft testified that she put in “50, 55” unpaid hours a week during the AT&T training, which cost her $199. “Practice, practice, practice, practice,” instructors told trainees, who had to pass a succession of tests to keep moving on. Her class — or “wave,” as each was called — had about 60 people at the start. All paid to take the course. Only half finished. They did not get their money back.
And, every time an agent wants to contract with a new Arise client, they pay for more training!
A woman from Douglasville, Georgia, filed a declaration saying her initial Arise training had cost her approximately one week and $99. She then worked with six companies that contracted with Arise. To be eligible for each gig, she paid an upfront training fee, and for each, her training time was unpaid.
[…]
Added up, she had spent about $1,000 for about eight months of training, unpaid.
If that wasn’t bad enough, agents had their calls rated on a complex scale that generated scores down to the 6th decimal point:
An agent who worked in Florida testified that he answered calls from customers for Barnes & Noble. Someone hired by Arise would listen to some of the agent’s calls and then send him a scorecard — with 40 items.
Arise now describes itself as a “platform” company who connects independent call center agents with corporate clients. This - just like Uber, Lyft, Instacart, and the other gig companies - is how they avoid having to treat their workers as employees. This also, in theory, allows the companies who hire Arise to keep the agents at arm’s length. The reality, of course, is that companies track every agent’s performance and can fire them, just like an employee:
Internal documents obtained by ProPublica show the level of control Intuit has over call agents, even when they’re three contract hops away. Intuit provides the training materials that Arise and other contractors distribute to agents. Intuit staffers receive, in return, detailed performance data showing, for example, the percentage of “non-talk time,” or NTT, on each agent’s calls.
[…]
If a particular agent isn’t doing well, the agent can be, in Intuit’s parlance, “deskilled,” according to the former Intuit staffer. That means fired.
Huh. Well, at least Neil Gorsuch doesn’t think they’re employees, just entrepreneurs who can be deskilled for any reason. Last year Warburg Pincus, a New York private equity firm run by Timothy Geithner bought Arise, and the Arise client list continues to include some of the biggest US corporations, eager to find ways to cut costs and offload work that used to require managing call centers to poor, exploited people working from home during a pandemic for low pay and no benefits.
Mariner Finance
You may remember Tim Geithner as Obama’s Treasury secretary, or the guy who didn’t know how to do his taxes. If you’ve read anything about the financial crisis of 2008, you’d know he was an asshole and aggressively bailed out Wall Street, leaving average Americans to suffer. Anyhow, after he left Treasury he went to Warburg Pincus, and now buys companies like Arise and Mariner Finance. Who is Mariner Finance? Well:
“It’s basically a way of monetizing poor people,” said John Lafferty, who was a manager trainee at a Mariner Finance branch for four months in 2015 in Nashville.
Hmm! Surely it can’t be that bad, right?
The check arrived out of the blue, issued in his name for $1,200, a mailing from a consumer finance company. Stephen Huggins eyed it carefully.
[…]
Within a year, the company, Mariner Finance, sued Huggins for $3,221.27. That included the original $1,200, plus an additional $800 a company representative later persuaded him to take, plus hundreds of dollars in processing fees, insurance and other items, plus interest. It didn’t matter that he’d made a few payments already.
“It would have been cheaper for me to go out and borrow money from the mob,” Huggins said before his first court hearing in April.
So, Mariner Finance would send checks unsolicited to people it thought would be likely to take out high interest loans. Then it would load them up with penalties if they couldn’t quickly repay, and eventually sue them.
The world of payday loans and subprime borrowing is nothing new, but Mariner is unusually aggressive:
Among its rivals, Mariner stands out for the frequent use of mass-mailed checks, which allows customers to accept a high-interest loan on an impulse — just sign the check. It has become a key marketing method.
The company’s other tactics include borrowing money for as little as 4 or 5 percent — thanks to the bond market — and lending at rates as high as 36 percent
[…]
Mariner enforces its collections with a busy legal operation, funded in part by the customers themselves: The fine print in the loan contracts obliges customers to pay as much as an extra 20 percent of the amount owed to cover Mariner’s attorney fees, and this has helped fund legal proceedings that are both voluminous and swift. Last year, in Baltimore alone, Mariner filed nearly 300 lawsuits. In some cases, Mariner has sued customers within five months of the check being cashed.
Mariner calls its business “installment” lending, because payday loans sound dirty to the Wall Street investors it depends on for its flow of cheap cash. Other companies call it “peer-to-peer lending”. The fact is, these companies prey on the poor and financially illiterate. In a country where an estimated 78% of people are living paycheck to paycheck, any crisis could put them in a tough situation. Companies like Mariner sit ready, waiting to pounce.
We suffered through the last financial crisis, which bailed out the banks and the wealthy who caused it, at the cost of normal people. Now the people who failed to clean up the first mess are running the companies profiting from the resulting misery. It really is disgusting.
Short Cons
The Atlantic - “The ’Ndrangheta has proved hard for prosecutors to crack, because its organizational structure is based on blood ties. In other Mafias, the structure is looser, and members more easily break away.”
Politico - “The health department is moving quickly on a highly unusual advertising campaign to "defeat despair" about the coronavirus, a $300 million-plus effort that was shaped by a political appointee close to President Donald Trump and executed in part by close allies of the official, using taxpayer funds.”
ProPublica - “Despite a history of underperforming properties, Kushner Companies received a near-record sum from a government-backed lender. Should it default, taxpayers could be forced to foot much of the bill.”
NY Times - “YouTube on Thursday became the latest social media giant to take steps to stop QAnon…”
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