05.12.25 Income Inequality / Privacy Alert! Alexa Can Hear You

Summary

The Clark Howard Podcast – Episode Summary
Release Date: May 12, 2025
Episode Title: Income Inequality / Privacy Alert! Alexa Can Hear You

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Introduction

In this episode of The Clark Howard Podcast, host Clark Howard delves into pressing societal issues, notably the rampant income inequality in the United States and the growing privacy concerns surrounding smart home devices like Amazon’s Alexa. Throughout the show, Clark engages with his co-host and listeners' questions, offering practical advice and insightful commentary on financial and consumer-related topics.

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Income Inequality in the United States

Clark Howard opens the discussion by addressing the alarming income disparity in the U.S., highlighting how wealth distribution has become increasingly skewed.

• Wealth Concentration: Clark cites a recent Congressional Budget Office (CBO) report indicating that the top 10% of earners hold 70% of the nation's wealth—the highest disparity since the era of the late 1800s' "robber barons."

  "The top 10% of earners in the United States have 70% of the nation's wealth, which may be the greatest disparity in American history." (02:15)

• Impact on Society: He contrasts the struggles of the bottom 50%, who possess only 3% of the wealth, with the affluent lifestyle of the top earners. Clark illustrates this divide through everyday examples, such as the differing purchasing behaviors at stores like Dollar General and luxury brands like Hermes.

  "There is such a split right now that leads to such division in society. I don't know exactly how we fix it, but what we've got right now isn't good." (05:30)

• Historical Context & Solutions: While acknowledging that income disparities have narrowed at different points in history, Clark emphasizes the current urgency of addressing the issue to ensure societal health and economic stability.

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Light-Hearted Interlude with the Co-Host

Shifting gears, Clark engages in a humorous exchange with his co-host about his modest wardrobe choices, contrasting his frugality with discussions on wealth disparity. This segment provides a brief respite from the heavier topics, showcasing Clark’s relatable and down-to-earth personality.

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Listener Questions and Expert Advice

Clark addresses several listener-submitted questions, offering tailored advice on financial matters:

1. Managing Student Loans – Scott from Wisconsin

• Question: Scott, a retired individual, seeks advice on whether to pay off his daughter’s varying-interest student loans in a lump sum or through monthly payments.

• Answer: Clark recommends partially paying off the higher-interest loans to foster appreciation and responsibility, leaving the lowest-rate loan (3.73%) for his daughter to manage herself.

  "Leave her responsible for paying the three point something percent so that she'll appreciate more that you wiped out three of the four years of student loans that were the higher interest rates." (09:14)

2. Credit Freeze and Fraud Prevention – Michael and Georgia

• Question: After receiving a fraudulent credit application notice from Capital One, Michael seeks further protection measures despite already having credit freezes and fraud alerts in place.

• Answer: Clark commends their proactive measures, explaining that their actions effectively thwarted the fraud attempt, which could have spiraled into more extensive credit damage.

  "You have done the greatest prevention there is. You set up credit freezes with the three bureaus. You've done your work." (10:47)

3. Home Equity Agreements – Kevin from North Carolina

• Question: Kevin inquires about the viability of home equity agreements, which involve sharing future home value appreciation with investors in exchange for subsidized housing costs.

• Answer: Clark explains the concept of shared appreciation deals, outlining both benefits (e.g., affordability) and drawbacks (e.g., loss of future equity growth), and advises consulting a real estate attorney before proceeding.

  "It's an option because what it may do is it may make it possible for you to buy a home that you would not have been able to afford otherwise." (11:50)

4. Amazon Music Unlimited Charges – Brian and Georgia

• Question: Frustrated with unauthorized Amazon Music Unlimited charges and delayed refunds, the couple seeks advice on handling persistent billing issues with Amazon.

• Answer: While the co-host attempts to resolve the issue, Clark emphasizes the importance of customer service quality and the potential consequences of poor service on customer loyalty.

  "If you handle it well, you create a more loyal customer. If you provide them customer service, you alienate them and potentially lose them." (20:26)

5. Long-Term Care Facility Fees – Mariam from Wisconsin

• Question: Mariam is concerned about a $30 monthly fee charged by her aunt’s memory care facility for submitting bills to long-term care insurance, questioning its legality and fairness.

• Answer: Clark advises verifying the legality of the fee with Minnesota’s regulatory bodies and criticizes the facility’s practice as a "junk fee" that may alienate reliable customers.

  "It's a dumb business practice because it alienates you. And this is a reliable revenue stream that they're charging you a junk fee for. It's weird." (22:10)

6. Mortgage Credit Report Duplication – Corey from Ohio

• Question: Corey reports a duplication issue in his mortgage application credit report, where one credit card is listed twice with different digit sequences, causing potential confusion.

• Answer: Clark reassures Corey that mortgage underwriters are accustomed to such discrepancies and emphasizes that it should not adversely affect his loan application.

  "It is a known thing to a mortgage underwriter about the discrepancies and how something might double or triple post because of the way it's reported to the three major credit bureaus." (24:02)

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Privacy Concerns with Alexa Devices

A significant portion of the episode focuses on the privacy implications of smart home devices, particularly Amazon’s Alexa.

• Data Collection: Clark expresses concern over Amazon’s practices of collecting and using voice data without user opt-out options, noting the invasive nature of constant listening.

  "They are requiring that if you are a plus user, they get all your voice data, all of it. Used to be before I told you the option where you could opt out of it, they aren't allowing opt out anymore." (15:40)

• Security Risks: He highlights the potential for privacy breaches, referencing past scandals where Amazon employees accessed private conversations.

  "Remember the scandal with Amazon when employees were having a fun time listening to people's private conversations." (18:30)

• Personal Anecdote: Clark shares a personal story about his Google device unintentionally displaying old family photos, underscoring both the conveniences and privacy pitfalls of such technology.

  "It was a picture of the two younger kids with me. And so I was able to send it to her and she was so happy. But it's not where anybody can be listening to anything we don't want them to be listening to." (17:05)

• Co-Host’s Input: The co-host mentions using a Google device and the importance of having control over voice commands and data privacy settings.

  "There should be ways to turn off certain things, I think." (19:08)

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Conclusion

Clark Howard wraps up the episode by reinforcing the importance of financial literacy, consumer awareness, and proactive measures to safeguard personal data. He encourages listeners to submit their questions for future episodes and emphasizes the podcast’s mission to empower individuals to make informed financial decisions.

"We're all here to serve each other. We're all here to help each other, to impart knowledge and wisdom to each other so that we are in a better position to save more and spend less and avoid getting ripped off." (24:02)

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Note: This summary omits advertisements, intros, outros, and non-content sections to focus solely on the informative and engaging discussions presented in the episode.

Transcript

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[Clark Howard]

I'm so glad you've joined us here on the Clark Howard Show. You know our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. So I want to talk about something straight ahead that is a fact. We have crazy income inequality in the United States. I want to talk about how that's affecting so much in our society. And then later I want to talk about having an Amazon. I think the trade name is Echo, the one that has Alexa in its name. Hope I didn't set off your device. Something you got to know about that device I'm going to talk about later in this podcast and YouTube show. We've got such an odd thing going on in the United States. The wealth over all of the United States is by far the highest it's ever been. The United States over the last many years has out kicked almost every country on earth with growth of what's called per capita gdp. That's how much wealth the nation has per individual breathing in this country. The problem we've got is the division of that wealth has gone crazy, skewed. And we've had other times in American history this has happened. But that's how you can hear me talk out of both sides of my mouth in almost the same sentence. Sometimes I'll talk about, wow, you should know about this deal and you do this and do that and spend this money and go there and whatever. And then a second later I'm talking about people having trouble even paying their monthly rent or mortgage or paying bills of various types. So the Congressional Budget Office recently put out an update that found that the top 10% of earners in the United States have 70% 7 0% of the nation's wealth that may be the greatest disparity maybe in American history because the stats back in the 1880s, 90s, when there were the. What we called the robber barons. I don't even know if we could equally compare the stats when we had such horrific income inequality back in the late 1800s. The bottom 50% of Americans now, according to the CBO, have 3% of the nation's wealth. That's why there's so many people, half the population, struggling so much every month. No Dollar General that sells generally to people at the lower end of the income scale is having to reduce the size of their packaging because people come in and they can't afford to buy the quantity of an item they're coming in to buy. They bought before and then other people buying these fancy, fancy designer things. Do you know that Hermes, which is a brand that sells ultra high end. Hope I pronounced that right. They just push through big price increases because their target customer base, people at the ultra high end of the income line, the demand so high, they're like, okay, we're going to charge more. And a lot of their competitors have been raising prices. We are in such a split right now that leads to such division in society. I don't know exactly how we fix it. I don't know how we address it. I can tell you through history, conditions have changed over time and income disparity has narrowed. But that's no comfort to you if you're having trouble putting food on the table every day and paying rent every month and putting gas in your vehicle every time you have to fill it up. So as a man of privilege, I don't go to gas stations a lot because I drive electric. I've been driving electric for 14 years, but I rent cars like 30 times a year, more a year. And I go into gas stations and I watch people who are only putting in $2 or $5, which just is enough to get them back on the road, going down the road. And then others like me, we just fill it up and we just pay for it, tap at the pump. I mean, we really do have this split. And unfortunately, because people that are at the higher end of the income scale tend to live close to each other, hang out with each other and all that. There's a disconnect going on right now. So this is something, as a society, we need to keep doing trial and error to narrow these gaps because this is not healthy for our society to have. It's great that we have done so much better overall than the rest of the world. Almost without Exception. But it's terrible that that wealth is not shared. I'm not talking about government force redistribution or anything like that. I don't know exactly how you do it, how you fix it, but what we got right now isn't good.

[Co-host]

I know this was very much more serious, but I have to say you did pronounce Hermes correctly. And you're definitely not wearing Hermes belt or have ever purchased anything. So I'm surprised. I mean, nor am I. But what if. Where's your belt from?

[Clark Howard]

It's probably a Kirkland signature.

[Co-host]

I'm sure it is. Yeah.

[Clark Howard]

Yeah. So you take all the clothes on my body and I got. I got $22 in clothes on my body, not including the belt.

[Co-host]

Wow.

[Clark Howard]

My shoes.

[Co-host]

Nice.

[Clark Howard]

I spent too much, didn't I?

[Co-host]

All right.

[Clark Howard]

Oh, by the way, you have not noticed after we got complaints that my.

[Co-host]

Have a nice new shirt.

[Clark Howard]

Golf shirts were my members mark golf shirts had gotten really long in the tooth and we're looking really worn. So I got the new members mark style from Sam's club. They were $8 more than I paid for the last ones that were six something very nice. Are you just saying that? No, I mean it because I've been wearing them for weeks and you never notice.

[Co-host]

No, I did, I did. But you had told me, so I just. I should have said something. I'm sorry. Clark should have said they're very nice.

[Clark Howard]

I look so fashionable.

[Co-host]

You do. They're less like worn looking and. Yeah. Okay, we'll go to questions. Scott in Wisconsin says I love the show and even have my college graduate daughter listening. My daughter has over $28,000 in student loans unsubsidized with interest rates of 3.73, 4.99, 5.5 and 6.53 for each of the four years she graduated in four years from a Big Ten school. Amazing. We the parents have the financial means to pay off our loans to help her jump start her post college years without debt while we paid all her other college expenses. She is an only child and we have over 2.8 million in assets and no other debt. With my wife at 58 and retired and I'm 56 and still working, we're frugal and we don't spend money on extravagant houses, cars, vacations, et cetera. I've read about taking tax breaks for student loan interest and feel that would help ease the pain of interest over the years. Although should we. One, pay off the debt in a lump sum by giving her the money? Two, give her the money each month to pay her monthly payment of around $308 and let her deduct the interest on her taxes or three. Any other considerations?

[Clark Howard]

I would say you're in such good financial shape and your daughter made it through in four years at a state, big state university which almost no students do anymore. So she saved a whole year of expense right there. It takes six years I think often for college student now to get through not working a job while they're in school and you can afford it, particularly the 5%, the 5 and a half, the 6 and a half percent. Blow those out. And then I would say something else. Leave her responsible for paying the three point something percent so that she'll appreciate more that you wiped out three of the four years of student loans that were the higher interest rates. If you just pay them all off, she's not going to appreciate it at all. So leave her with the one at the three point something percent, kill off the others and make it her her part of her budgeting that she service that and eventually pay it off. Just my thought, one parent to another, because I think then there's more appreciation.

[Co-host]

Michael and Georgia says, I recently received an email from Capital One. It stated that my credit freeze must be removed to continue my application. The problem is I had not applied for credit.

[Clark Howard]

Oh boy.

[Co-host]

Luckily I had credit freeze from all three credit bureaus in place. Then I added fraud alerts and contacted Capital One to let them know that the application for credit in my name was fraudulent. My question is, what else should I do to protect myself?

[Clark Howard]

You have done it, Michael. You have shown the power of the credit freeze. Because without that credit freeze, if you have good credit, that crook would have gotten it. And then you got a mess on your hands. Because let me tell you, when they successfully generate one app, they turn around in the next 48 or 72 hours and they apply for credit all over the place before the credit reporting system catches up on it. And then you're chasing your tail for another year or two trying to clean up all this credit obtained fraudulently. It was not your responsibility. So you did the greatest prevention there is. You set up credit freezes with the three bureaus. You've done your work.

[Co-host]

Kevin in North Carolina says, hey Clark, I don't think I've heard you talk about a home equity agreement yet. Supposedly you don't have payments, but you are giving up part or maybe all future value of your home. Is this a good thing?

[Clark Howard]

Yeah, it's known as a shared appreciation deal. Historically they work many different ways. So Kevin, the way it works is you have basically an investor or a group of investors as part of a syndicate who subsidize your cost of living in a home and you keep responsibility for taxes, maintenance, repairs, anything with the home, but they get a big chunk of future value of that home. So it's a way that you're not hearing me say, yay, this is great. But it is an option because what it may do is it may make it possible for you to buy a home that you would not have been able to afford otherwise. It is your home to use, but you're basically in a partnership with someone else who is benefiting from the fact that they put up the money for a portion of the purchase of that home so that you can get in a home that you wouldn't have been able to own at all otherwise. So that's the idea. Know the upside is you get in that home. The downside? You don't get a lot of that growth and you have a partner in the home who may not want to do things you want to do or may not agree to things you want to do. Any shared appreciation deal, you need to hire your own real estate attorney to review the agreement and tell you the goods of it and more important, the gotchas in that agreement. Coming up ahead, a gotcha from Amazon.

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[Clark Howard]

All right, you know how every Amazon prime day mysteriously the deals on Amazon sold items, not the ones sold by third parties, but overwhelmingly they're various Amazon technology devices, tablets, echo type devices that you say that word A L E X A I'm spelling so they don't trigger your device. Amazon sells all these devices, so they recently laid off a lot of people in that part of their company and discontinued a lot of the devices. But they sell these things because it's to their benefit. Why do you think Amazon is so huge in the home security camera business and sells those cameras many times at a potential loss? Just because if you're a big Amazon customer and you're having problems with porch pirates, they got that video from you of who the thief is. I mean, they're not dumb there. How did they get to be, what, the world's second largest retailer, whatever they are, by doing things that serve their interests well. Now if you have devices that you say Alexa to, they're listening not just when you say that, but they're now requiring that if you are A plus user that they get all your voice data, all of it. Used to be before I told you the option where you could opt out of it, they aren't allowing opt out anymore. So everything personal, everything intimate, every conversation they're getting, I don't like that. I just don't like that kind of intrusion. We used to have one of those Google things you talk to in our bedroom area and my wife Lane was like, get that out of here. You can put it in the kitchen, you can put it in the living room. It's not going in the bedroom. Smart wife, right? Because even though Amazon is listening, Google said they weren't. But can you trust that? So think about these devices that you bring in and it really is Great to be able. In the case with our Google thing, we got the photos, we can see what's going on. And we'll see an old picture. Like this morning when I was getting up, my wife saw a picture that was from 15 years ago of our kids, our two younger kids. And. And she said, hey, I want that picture. I love that picture. It was a picture of the two younger kids with me. And so I was able to send it to her and she was so happy. But it's not where anybody can be listening to anything we don't want them to be listening to. So think about that with any of these devices you bring in. They can be so nice to have, but you never know what you're talking about that they're hearing. And remember the scandal with Amazon when employees were having a fun time listening to people's private conversations. And then I did the thing about how you could do the opt out and now they took away the opt out. What are you doing there at Amazon?

[Co-host]

Yeah, okay.

[Clark Howard]

Do you use an Al exa device?

[Co-host]

I use a Google device and I do know like to an extent, like our everything we use that if there are voice commands, they have to be listening for those voice commands. But yeah, there should be ways to turn off certain things, I think. Okay. Well, Brian in Georgia has another beef with Amazon. So Brian and Georgia says, I hope this email will be a beneficial public service announcement for Amazon prime members. I've been a subscriber for years and have been pleased with their shopping experience. As I'm sure you're aware, Amazon Music is something you have access to by being a Prime member. I rarely use the service and was surprised to see an Amazon Music charge on my credit card. I found out I was being charged for the music Unlimited, an upgrade I never asked for. I called Amazon. They said they would refund the money within five to seven business days and assured me the unlimited music was canceled. I received and saved an email confirmation regarding the refund. A month went by with no refund. I called Customer no Service back and they said they didn't want to honor the promised refund. I referred to the saved email and after a lengthy discussion, they said it would they would make an exception and refund the promised amount.

[Clark Howard]

Wait, wait, wait, wait. Make an exception. Come on.

[Co-host]

They also confirmed that the unlimited upgrade was canceled. We'll see if the second attempt works.

[Clark Howard]

You know, it really is true that where the rubber meets the road is when a customer has a problem with your company. How do you handle it? And if you Handle it well, you create a more loyal customer. If you provide them. Customer, no service, you alienate them and potentially lose them. Now, what's interesting is not a word from Brian that he's willing to live without Amazon. But I think about the ultimate power you have with any company when they treat you like dirt is you kick them out of your life. You couldn't live without Amazon though, could you?

[Co-host]

I could. I could live without most things. Yes, I'm sure you could live without Amazon.

[Clark Howard]

I don't know. I see you shaking just at the thought.

[Co-host]

No, stop. Okay. Mariam Wisconsin says I'm the durable power of attorney for my elderly aunt who suffers with Alzheimer's. She's in a memory care facility in the state of Minnesota. Beginning in January, the facility started charging a $30 fee per month to submit the billing to long term care insurance. That is $300 a year. Being the frugal person that I am, I called her long term care provider and asked if I could submit the bills myself. They do not allow this as they are fearful of insurance fraud. Is this fee legal? Isn't it part of doing business? Please also note that the facility has raised its rates in excess of 10% every year, always greater than the rate of inflation. Is there anything I can do? The long term care company said that they have never heard of any other facility charging this fee. The facility claims it's standard practice, although they did charge it in the past and the facility my own mother is in does not charge it.

[Clark Howard]

So whether it's legal or not depends on. You live in Wisconsin, but your aunt is in Minnesota, so you would contact Minnesota. They will have a regulatory body that oversees memory care facilities and they will be able to tell you if it violates any statute in the state of Minnesota. Okay, so there, there is a cost to a facility for handling this billing, but the biggest beneficiary of that process is the facility because they're getting paid by the insurance, by the long term care insurance, and they're cutting off their own nose despite their face because they got somebody who's a reliable payer month after month. And so even if the state of Minnesota says there is no law prohibiting it, it's a dumb business practice because it alienates you. And this is a reliable revenue stream that they're charging you a junk fee for. It's weird.

[Co-host]

Corey in Ohio says while applying for a mortgage recently, the loan application our lender provided listed one of our credit cards twice. Upon further investigation, the first listed account is for the first 12 digits of the card only. The second listed account is for the last four digits of the card only. When we inquired with our lender, they were able to provide additional information that the first 12 digits were being reported from two of the three major bureaus, with the third bureau reporting the last four digits. In short, our balance is being double counted. Thankfully, we pay off our cards every two weeks, so the balances are small. But I wonder how one would go about reconciling this issue.

[Clark Howard]

So this is, Corey, something that the mortgage underwriter would normally be familiar with. The way different loans that are outstanding are listed on different credit reports can vary, as you said in your case is listed one way on two reports and then a third way on the third. So when, when you're going through mortgage underwriting, they go through a different kind of process. That's a tri report and it's one that's put together for the mortgage underwriter that pulls all three credit bureau reports and puts them together on one master report. Normally a credit issuer for most anything else, car loan, credit card, home equity, line of credit or whatever, they're only pulling one credit report from one bureau. This kind of thing with things double posting or even potentially triple posting, to my knowledge, only occurs with mortgage underwriting and mortgage credit reports. So in terms of harm to you, probably none from this mortgage underwriter might ask a question, hey, why do you have two different accounts with this card company or whatever, but it should not be a disqualifier on what are known as ratios, how much debt you're carrying, because it is a known thing to a mortgage underwriter about the discrepancies and how something might double or triple post because of the way it's reported to the three major credit bureaus. I want to thank you so much for your question, all the questions we've had today and you being with us on our YouTube show and our podcast. And if you have a question for me, no, you can post it at clark.com ask know that the reason we're here is we're all here to serve each other. We're all here to help each other, to impart knowledge wisdom to each other so that we are in a better position to save more and spend less and avoid getting ripped off. Tomorrow, our Ask an Advisor podcast and then I'll be back with you on Wednesday day. Have a great day.