Business

Disney pulled the Jonathan Majors movie “Magazine Dreams” movie from its schedule.
Majors, also a star in Disney’s Marvel franchise, faces a trial for assault charges in New York.
It’s not clear whether the schedule change was connected to Majors’ legal issues.

Jonathan Majors, and his girlfriend, Meagan Good, flanked by his lawyer Priya Chaudhry (R), arrive to Manhattan Criminal court for his pre trial hearing on August 03, 2023 in New York City.
Alexi Rosenfeld | Getty Images

Disney on Friday said it was pulling troubled star Jonathan Majors’ next film, “Magazine Dreams,” from the schedule this December.
The movie had been set for a Dec. 8 release. Now it’s no longer set for a release at any time, according to a statement from the company, but Disney could choose to add it back to the schedule. Majors’ trial for assault charges is scheduled to begin Nov. 29 in New York.

It’s not clear whether the schedule change is connected to Majors’ legal issues. Disney hasn’t weighed in on the matter, despite Majors being front and center for the company’s plans for its lucrative Marvel Cinematic Universe. His roles in “Loki” and “Ant-Man and the Wasp: Quantumania” have positioned him as the next major villain for the franchise.
Disney didn’t immediately respond to CNBC’s request for comment Friday.
Majors was on a fast track to superstardom, following his turns in HBO’s “Lovecraft Country,” the Marvel properties and March’s “Creed III.” But then later in March, New York police arrested him over accusations that he assaulted his then-girlfriend, choreographer Grace Jabbari.
Majors has denied wrongdoing, but a judge this week rejected his bid to dismiss the case.
“Magazine Dreams,” a drama about a bodybuilder played by Majors, premiered at the Sundance Film Festival earlier this year to critical acclaim. It was at one point considered a potential Academy Award contender.
Disney also moved the timing of several other planned releases, including a live action remake of “Snow White,” which was delayed by a year to March 2025. More

Spirit Airlines posted a third-quarter loss and forecast another for the last three months of 2023.
The carrier told pilots it will suspend new pilot and flight attendant training next month.
The budget airline reported softer demand and said it will have to ground dozens of planes due to a Pratt & Whitney engine manufacturing issue.

A Spirit Airlines airplane taxis for takeoff at Denver International Airport in Denver on Feb. 7, 2022.
Michael Ciaglo | Bloomberg | Getty Images

Spirit Airlines will suspend training for new pilots and flight attendants next month “until further notice,” according to company memos, as it plans for slower growth amid softer demand and the expected grounding of dozens of aircraft for inspections because of a manufacturing problem with some Airbus planes’ engines.
The company had already slowed hiring and captain upgrades, Greg Christopher, vice president of flight operations at Spirit, said Thursday in a memo to pilots, which was seen by CNBC. “With these recent developments, however, we will also be suspending all new-hire training efforts starting in November, until further notice.”

The company told flight attendants that it will halt new flight attendant training starting Nov. 7 for the foreseeable future. It is also planning to offer voluntary time off for cabin crew members, according to a separate memo from Tina Milton, vice president of inflight experience.
A Spirit spokesman confirmed the changes.
“This is not a decision we’ve taken lightly, but it’s necessary to ensure our crew staffing levels match our operational need given the number of aircraft we can fly,” he said in a statement.
The Miramar, Florida-based discount carrier said it expects to have to ground an average of 26 Airbus A320neo aircraft for inspections of engines made by RTX unit Pratt & Whitney after that company disclosed a manufacturing defect in August. The carrier said it expects 13 grounded planes in January, rising to 41 in December of next year. The airline had a fleet of 202 Airbus planes as of Sept. 30, according to a filing.
“This expectation drives a dramatic decrease in the Company’s near-term growth projections,” Spirit said in a filing. It said it expects capacity to be flat to up mid-single digits next year compared with 2023. The airline is in talks with RTX about compensation for the issue.

Last month, RTX said it expected repairs to take between 250 and 300 days, with an average of 350 planes powered by the geared turbofan engines grounded worldwide between 2024 and 2026.
The budget airline Spirit on Thursday posted a net loss of $157.6 million, which was more than four times its loss a year ago. It forecast negative margins for the last three months of the year.
“We continue to see discounted fares for travel booked through the pre-Thanksgiving period,” CEO Ted Christie said in an earnings release. “And, unfortunately, we have not seen the anticipated return to a normal demand and pricing environment for the peak holiday periods.”
JetBlue Airways is in the process of trying to acquire Spirit, a deal the Justice Department has already sued to block. The trial is expected to begin next week in Boston.
Frontier Airlines, a fellow discount carrier, continues to hire flight attendants, pilots, and mechanics, an airline spokeswoman said.Don’t miss these CNBC PRO stories: More

Contract negotiations between the United Auto Workers and General Motors are set to reconvene Friday after intense talks occurred Thursday night and into the morning.
Both GM CEO Mary Barra and UAW President Shawn Fain participated in the marathon bargaining, however the union leader was doing so virtually, said two sources.
Fain was also negotiating with Stellantis, including North American COO Mark Stewart.

Striking United Auto Workers (UAW) members from the General Motors Lansing Delta Plant picket in Delta Township, Michigan September 29, 2023.
Rebecca Cook | Reuters

DETROIT — Contract negotiations between the United Auto Workers and General Motors are reconvening midday Friday after intense talks occurred Thursday night and into the morning, according to sources familiar with the discussions.
The potential deal is being based on a tentative agreement the union reached Wednesday with Ford Motor and appears to be nearing the finish line, said three sources who agreed to speak on the condition of anonymity because the talks are private.

Both GM CEO Mary Barra and UAW President Shawn Fain participated in the marathon bargaining, however the union leader was doing so virtually, said three of the sources.
Fain was attempting to simultaneously negotiate with GM and Chrysler parent Stellantis, which were hosting talks with the union roughly 30 minutes from one another. Stellantis, including North American COO Mark Stewart, also held extensive talks overnight, two of the sources said.
Stellantis also could be closing in on a deal after the sides also negotiated into the early morning, however issues still remained. The sides are scheduled to reconvene Friday afternoon, according to one source.
The sources said the talks remain fluid and could change. Spokespeople with GM, Stellantis and UAW declined to comment on specific details of the talks.
Tentative agreements would likely put an end to six weeks of targeted labor strikes by the union after the sides failed to reach new deals before a Sept. 14 deadline. The union called back striking Ford workers after reaching a tentative deal with the automaker.

Ford’s deal included 25% pay increases over the term of the agreement, including an initial increase of 11%. The raises and benefits cumulatively raise the top wage to more than $40 an hour, including an increase of 68% for starting wages to over $28 an hour.
It also reinstated cost-of-living adjustments, reduced an eight-year path to top wages to three years and allowed the right to strike over plant closures, among other significantly enhanced benefits.
Any tentative deals still must be approved by local UAW leaders and then ratified by a simple majority of each automaker’s union-represented workers.
The progress came after contentious negotiations between UAW leaders, including Fain, and company executives, which saw thousands of union members walk out of plants and onto picket lines beginning Sept. 15.
The strikes have collectively cost GM, Ford and Stellantis billions of dollars in lost production. Ford said Tuesday that the union’s strike has cost it $1.3 billion and the deal, if ratified by members, would increase labor costs by roughly $850 to $900 per vehicle produced.
The proposed agreements are record-setting for the union, which was far more confrontational and strategic during the talks than in recent history.
The union initiated negotiations with all three automakers at once, breaking from recent history when UAW leaders would bargain with each automaker individually, select a lead company to focus efforts on and then pattern the remaining deals off a leading tentative agreement.
It’s not immediately clear how much the labor deals will increase labor costs for the companies, which had argued that giving in to all of the union’s demands would affect their competitiveness and even long-term viability.
Deutsche Bank recently estimated the overall cost increase of the agreement at Ford to be $6.2 billion over the term of the agreement; $7.2 billion at GM; and $6.4 billion at Stellantis. More

Pharmacy employees at some of the U.S.’s largest drugstore chains say they’re at a breaking point.
Workers are concerned that companies like Walgreens and CVS are placing unreasonable demands on them, without providing enough staffing or resources to safely execute tasks. 
CNBC spoke to employees from both Walgreens and CVS, including pharmacists, pharmacy technicians and a store manager, about what their typical workday looks like.

Signs offering COVID-19 vaccinations are seen outside of a CVS pharmacy in Washington, DC.
Mandel Ngan | AFP | Getty Images

Many pharmacy employees at some of the largest U.S. drugstore chains say they’re reaching a breaking point. 
On top of verifying, filling and dispensing prescriptions, pharmacists and support staff are responsible for administering vaccines, fixing insurance issues, transferring prescriptions to other pharmacies and tending to dozens of patients in stores and over the phone, among other tasks. Those workers have said they are concerned that companies like Walgreens and CVS are placing unreasonable demands on them, without providing enough staffing or resources to safely execute tasks. 

Frustrated by what they describe as increasing workloads, understaffing and cuts to their hours, pharmacy staff from Walgreens locations around the country and CVS stores in the Kansas City area have walked off the job in recent weeks — and some employees are planning to walk out again from Oct. 30 to Nov. 1.
CNBC spoke to employees from both Walgreens and CVS, including a pharmacist, two pharmacy technicians and a store manager, about what their typical workday looks like. The employees, all of whom requested anonymity for fear of retaliation, described ending their shifts exhausted after spending hours juggling dozens of tasks around the pharmacy without enough extra hands to support them.
The two companies were the biggest pharmacies in the U.S. based on prescription drug market share in 2022. Both CVS and Walgreens operate around 9,000 retail store locations across the U.S. 
CVS has more than 30,000 pharmacists and 70,000 pharmacy technicians, while rival Walgreens has more than 86,000 health-care service providers, including pharmacists, pharmacy technicians and other health-related professionals. CVS pharmacists make $61.44 an hour on average, while Walgreens pharmacists make $53.85 per hour on average, according to employment website Indeed.
A spokesperson for Walgreens said the company recognizes the “incredible work our pharmacists and technicians do every day” and has taken several steps in its pharmacies “to ensure that our teams can concentrate on providing optimal patient care.” 

More CNBC health coverage

The company’s ongoing efforts are focused on how it can recruit, retain and reward pharmacy staff, the spokesperson said. They added that Walgreens has improved technology and centralized many operations to help maintain appropriate workloads in pharmacies. 
A spokesperson for CVS said the company is facing “unprecedented demand and a clinical workforce shortage in the health care industry and [is] making targeted investments in our retail pharmacy business in direct response to feedback from our pharmacy teams.”
Those investments include enabling teams to schedule additional support as needed, enhancing pharmacist and technician recruitment and hiring and strengthening pharmacy technician training, according to the spokesperson. They said those changes will begin in November and roll out throughout next year. 
Here’s what a typical day looks like for some staff from the two chains, according to the accounts related to CNBC. 

Walgreens pharmacist 

A Walgreens pharmacist said their shifts range anywhere from six to 12 hours on three to five days of the week. The pharmacist said they typically arrive for work at 8 a.m., an hour before the shift. 
The pharmacist typically begins the shift by completing several paperwork tasks, which take about five to 10 minutes.
Then, the pharmacist checks which medications are out of stock. The pharmacist said that task is primarily the responsibility of pharmacy technicians, but it often falls to them because their colleagues are stretched thin with other duties. 
The pharmacist also takes about 20 to 30 minutes to check which medications weren’t delivered to the pharmacy by drug distributors, and calls patients to inform them about when they can expect their prescriptions to be ready.
The pharmacist then spends 10 to 15 minutes canceling vaccination appointments for shots the pharmacy doesn’t have in stock, which involves calling patients and redirecting them to other store locations with vaccines available. The pharmacist said Walgreens is allowing people to schedule appointments for any vaccine online, even if a store location doesn’t have it in stock. 
The Walgreens spokesperson acknowledged that some pharmacy locations had to reschedule appointments when vaccines first became available this fall due to delays in supply, and added that the chain has apologized for any inconvenience caused to consumers. However, the spokesperson said that all locations had the necessary supply “within a few days.”
By 9:15 a.m., vaccine appointments begin and continue until 6:45 p.m., according to the pharmacist. Their store usually takes one appointment every 15 minutes, and some patients get up to four vaccines at a time.
The pharmacist and a pharmacy technician then juggle administering shots with several other tasks. Giving jabs has become even more challenging in recent months due to the arrival of new vaccines against Covid and respiratory syncytial virus.
Among the other duties is addressing the prickly problems related to insurance coverage for prescriptions, the pharmacist said. Their store receives 100 to 160 insurance issues in their system each day, so the pharmacist dedicates up to three 30-minute to one-hour chunks of their shift to addressing them. 
Both pharmacists and technicians also have to tend to customers in-store and over the phone. The pharmacist said they get eight to 10 phone calls per hour on average, which can take up to 10 to 15 minutes each. 

A sign advertises COVID-19 (coronavirus) vaccine shots at a Walgreens Pharmacy in Somerville, Massachusetts, August 14, 2023.
Brian Snyder | Reuters

All of those tasks — along with other minor responsibilities — are additional to the pharmacist’s main job of verifying and dispensing prescriptions.
The technician typically handles the first part of that task, which involves processing new prescription orders from doctors.
The pharmacist said they have to check that all prescription information entered into the system matches what the doctor ordered for a patient. Their store typically receives 300 prescriptions a day, so the pharmacist said they review around 25 an hour. A technician or the pharmacist then fills those prescriptions, and the pharmacist does a final review to make sure the medications in the bottles are correct. 
The pharmacist said they are often interrupted when performing tasks, given the urgency of other issues. The disruptions can create a backlog of work. 
The pharmacist noted that the pharmacy closes for their scheduled lunch break from 1:30 p.m. to 2 p.m., which they often work through. By lunch, they often have to address new insurance issues or catch up on other work they couldn’t get to while working directly with patients.

Pharmacy technicians from CVS, Walgreens 

Pharmacy technicians are medical professionals who work alongside pharmacists to help and support patients. 
One CVS pharmacy technician said they typically come to their store location at 7:50 a.m., 10 minutes before their eight-hour shift starts. The technician said they typically work with one to two other technicians and one pharmacist during their shift, which they believe is not enough to handle the workload. 
The technician said they start off their day by processing new prescription orders from doctors — a task that they continuously do throughout the day. The technician said they have to match each prescription to the patient profile in the CVS system and enter all the correct information before sending it to a pharmacist for review.
The technician also takes care of another part of the process, which involves filling the prescriptions and printing labels before the pharmacist reviews it for a final time. They said their store location’s prescription volume is 600 to 1,000 per day.
The technician said that as soon as their store location opens, they and their co-workers have to handle dozens of patient phone calls, and customers waiting to get their prescriptions or other essentials through the drive-thru. 
In addition to filling prescriptions and tending to patients, the technician said they alternate performing several other tasks throughout the day. The duties include administering vaccines and returning medications that weren’t picked up by patients to pharmacy shelves. 

A CVS pharmacy stands in a Brooklyn neighborhood on February 08, 2023 in New York City.
Spencer Platt | Getty Images

A technician from Walgreens has similar duties, but their shift is usually from 5 p.m. to 11 p.m. That technician said they feel anxiety whenever they start their shift because there is typically an influx of patients coming to the store who are just getting off of work: “You’re pretty much walking right into chaos.”
Patients often end up waiting for help due to what the Walgreens technician called understaffing at their location. They added that frustrated patients sometimes yell or snap at pharmacy staff, which can be “extremely overwhelming.”
The Walgreens technician said they typically stay longer after their shift to help complete mandatory closing duties, such as taking out the garbage and disposing of sensitive patient information. After arriving home, they said they “completely crash” due to exhaustion.
Some employees who don’t technically have responsibilities in the pharmacy may end up helping stressed-out pharmacists and technicians. 
A CVS store manager said that on three to four days of the week they work at the front of the store from 8 a.m. to 12 p.m. and then help out at their location’s pharmacy until 9 p.m. The manager still has a pharmacy technician license, which allows them to perform tasks like administering vaccines. 
The store manager said they are a salaried employee, so they are “essentially working in the pharmacy for free” to give their staff extra support.
“In some shape or form, myself or my staff are being pushed into an aspect of the business that we didn’t sign up for,” the store manager said. “We’re being pushed back there because we don’t have the resources.” More

Banks closed 10.7% of their in-store branches in the year ended June 30, according to Federal Deposit Insurance Corp. data. The closure rate for other branches was 1.4% in that period.
While the financial industry has been closing branches for years, the pace accelerated sharply in 2021 after the pandemic turbocharged the adoption of mobile and online banking.
Regional banks PNC, Citizens Financial and U.S. Bank shut the most in-store locations recently at chains including Safeway and Stop & Shop.

Customers at a Safeway store in San Francisco.
Getty Images

American banks have been shuttering branches located within supermarket chains at a rate seven times faster than other locations amid the industry’s profit squeeze and customers’ migration to digital channels.
Banks closed 10.7% of their in-store branches in the year ended June 30, according to Federal Deposit Insurance Corp. data. The closure rate for other branches was 1.4% in that period.

Most of the branches within grocery stores are operated by regional banks, which have been under pressure since the March collapse of Silicon Valley Bank. PNC, Citizens Financial and U.S. Bank shut the most in-store locations during the 12-month period at chains including Safeway and Stop & Shop. Among retailers, Walmart stores house the most bank branches with 1,179, according to an S&P Global report released this week.
While the financial industry has been closing branches for years, the pace accelerated sharply in 2021 after the pandemic turbocharged the adoption of mobile and online banking. That year, banks closed nearly 18% of their in-store branches and 3.1% of other locations, the S&P Global report said.
“In-store branches have fallen out of favor at many banks,” said Nathan Stovall, head of financial institutions research at S&P Global Market Intelligence. “We’ve seen banks look to shrink their branch networks, with a focus on cutting less-profitable branches that generate less customer traffic and fewer loans and high net worth accounts.”
Banks began building branches inside supermarkets in the 1990s because the scaled-down locations were far cheaper to set up than regular locations. But the industry now views branches as a place to entice customers with wealth management accounts, credit cards and loans rather than just a place to withdraw money, and that favors full-sized branches.
The pace of closures has slowed since the 2021 peak, but are still at an elevated level compared to before the pandemic. For instance, in 2019, banks shut 4.2% of in-store locations and 1.7% of other locations.
The moves come as the industry is adjusting to higher funding costs as customers have moved balances into higher-yielding options like money market funds and CDs. U.S. banks registered a 15% decline in deposits from in-store branches, while deposits at other branches fell 4.7% in the year ended June 30, according to the FDIC. More

The Employee Retention Credit, or ERC, was intended to be a financial lifeline to small businesses struggling to make ends meet during the pandemic. The government program led to the emergence of an industry focused on helping businesses claim these credits, with some taking large percentages of the awarded refunds for their services. 
In September, the Internal Revenue Service put a moratorium on new applications until 2024, citing “questionable claims” and “fraud” concerns across the entire industry. The agency said it was looking into businesses who claimed the credit and ERC promotion companies that helped businesses submit applications to the IRS.
Innovation Refunds, an ERC consulting firm, was among the most visible advertisers promoting the credit to small business owners. It takes a 25 percent fee of the credit claimed for its work, after a business is paid by the IRS.
CNBC spoke to 20 former employees and contractors at the company, many of whom described a culture of aggressive sales of the ERC to Main Street. But others spoke well of both their time at the company and its practices, saying it complied with guidelines and helped small businesses access needed capital.

The Employee Retention Credit was intended to be a financial lifeline to small businesses struggling to make ends meet during the pandemic.
The government program, seemingly flush with cash, led to the emergence of an industry of its own, which focused on helping businesses claim the credits. Suddenly, a parade of ads encouraging businesses to apply for the credit were everywhere. Companies promised fast approvals and made statements claiming many businesses qualify for the Employee Retention Credit, or ERC. Some of the companies also took large percentages of the awarded refunds for their services. 

Demand for the aid surged, as businesses deemed eligible for the credit could claim up to $26,000 per employee by submitting amended tax returns for years in which their operations were affected by Covid-19.
In September, the Internal Revenue Service, the agency that processes these credits, put a moratorium on new applications until 2024. The agency cited “questionable claims” and “fraud” concerns across the entire industry. IRS Commissioner Danny Werfel said the ERC program was not meant to become a “gravy train” for companies that promote and profit from the refund. The IRS has not named individual promotion companies or consultants.
Innovation Refunds — a consulting firm that focuses on the ERC — was one of the most visible advertisers during the tax credit’s heyday. CNBC spoke to 20 former employees and contractors at varying levels of the company, many of whom requested to remain anonymous due to fears of retaliation.
From many of those interviews, a picture emerged of a company focused on “aggressive” growth and sales of the product that some called “bullying” or “hound”[ing] of small businesses, up against a “shot clock” to cash in on the ERC. But others spoke well of both their time at the company and its practices, saying it complied with guidelines and helped small businesses access needed capital.

How Innovation Refunds works

On its website, Innovation Refunds makes it clear it is not a tax professional.

The company is positioned as a middleman between small business owners and independent tax attorneys. Innovation Refunds markets to clients, determines if they are viable candidates for the credit and then collects businesses’ documentation. For its services, it charges a contingency fee, which amounts to 25% of the refund once it’s paid out to the business, according to its website.

A person walks by a row of stores closed during the outbreak of Covid-19 in New York, March 28, 2020.
Andrew Kelly | Reuters

Innovation Refunds does not, however, make the final decision on eligibility for the credit or determine how much money a business should receive. For this, it says it contracts independent tax attorneys and professionals. 
Some former employees said this could insulate Innovation Refunds from potential liability if ineligible businesses claimed the credit. Innovation Refunds doesn’t sign off on the returns submitted to the agency — the independent tax partners and small businesses do, according to documents viewed by CNBC. The company also says it provides audit protection for small businesses, but would not outline what that entails when asked for comment.
Innovation Refunds declined to participate in this story.
A former employee in a leadership position said, in their opinion, because of this business model “management was encouraged to take aggressive tax positions on qualifications in order to maximize their contingency fee.” Two other former workers echoed this view, saying the company put through businesses whose eligibility fell into a gray area. This was not the case, however, for those who were outright ineligible, as those businesses were rejected, the two former workers said.
“Get as many deals through the door and let the IRS decide who was qualified,” as one former midlevel accounting and finance employee put it.
The ERC ‘shot clock’
Innovation Refunds spent millions to make businesses aware of its services.
The company had ads appear on television during major sporting events and on CNBC, as well as radio and on social media. Many of the commercials featured the company’s CEO, Howard Makler, and Ty Burrell, the affable father figure from ABC’s “Modern Family.”
A representative for Burrell did not respond to requests for comment on this story.
Some of these commercials touted a simple application process for small business owners, saying they could qualify in as little as eight minutes. In another TV ad, the company encouraged businesses to contact Innovation Refunds even if a CPA previously told them they don’t qualify.
“Our independent tax attorneys will work with your CPA to determine if your company is eligible,” the ad said. In addition to these promotions, the company offered $1,000 gift cards to clients who referred other businesses that wound up filing, according to solicitation emails CNBC reviewed.
The marketing worked. Through May, the company said it had processed more than $4 billion in ERC claims since the credit was introduced. Rob Domenico, the company’s former executive vice president of financial partnerships, told CNBC the company had processed nearly $7 billion worth of claims and he was aware of fewer than 10 clients under audit when he left in mid-September as part of a round of layoffs, adding all had results “moving along positively.”
But advertising came to a halt for Innovation Refunds and other ERC companies after the IRS announced the moratorium that paused all new applications.
“We believe we should see only a trickle of employee retention claims coming in. Instead, we are seeing a tsunami,” Werfel told reporters on a media call Sept. 14.

IRS Commissioner Danny Werfel testifies during the Senate Finance Committee hearing on the fiscal year 2024 IRS budget and the IRS’ 2023 filing season, in the Dirksen Building in Washington, D.C., April 19, 2023.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

The agency at the time said its inventory of unprocessed claims was over 600,000, virtually all of which had been received in the last 90 days, even though the program is more than three years old. Since its inception, more than 3.6 million claims have been submitted, with an estimated $230 billion paid out from the program since mid-September, according to the IRS.
Makler promoted the idea that Innovation Refunds’ mission was to help small businesses. “Small businesses are the foundation of our economy and are the motivation behind the work we do here at Innovation Refunds,” he wrote on LinkedIn.
But former employees and contractors, many of whom were tasked with selling the tax credit to businesses, said the metrics they were supposed to hit were “unrealistically high,” which fostered an “aggressive” outreach approach.
“It was being pushed down our throat to call, call, call, old leads that had already been called many times,” one former contractor said. 
Nine former employees and contractors spoke of a culture of aggressive sales or growth targets, with several noting incentives to stay and sell. An internal email CNBC obtained said all employees hired by March 31, 2023, were eligible for a $100,000 bonus payment if the company closed 50,000 lifetime deals. Former employees said deal counts were broadcast on a screen at the company’s headquarters in Des Moines.
Another former employee said that as time passed, and prospective customers ran dry, the follow-ups with viable leads only got more aggressive.
“If I were somebody receiving those emails or calls, I would feel like it was very scammy or spammy, and I would stay away from it,” they said. The employee added that the company’s visible advertising enticed many owners. But the person said the company did not initially have proper guidelines in place for sales staff for communicating with customers, adding that it didn’t provide those rules until January.

Kate Rogers speaks with a former Innovation Refunds employee who says the company insulated itself from blame by partnering with outside tax attorneys and professionals.

‘It only takes eight minutes to qualify’

There are two ways businesses can qualify for the ERC refund, according to IRS guidelines. The first is  through a “gross receipts” test — a more black-and-white method where a business needs to show revenue losses. The second way to qualify is if a government order impacted the business. The IRS continued to update language around the guidelines through September. Some have said the credit’s guidelines, certain of which were open to interpretation, paved the way for promoters of the credit who profited off small business submissions.
Former employees and contractors CNBC spoke with said most of the small businesses Innovation Refunds approved for the ERC credit were greenlit through the less clear-cut method, which it refers to as “limited commerce” on its website and in customer communications. Several former employees and contractors also told CNBC they understood limited commerce to be more “subjective” and encouraged many businesses to apply through this method. 
CNBC viewed an exchange between Innovation Refunds and a potential client prior to the Sept. 14 moratorium, where a sales representative told the company one of its third-party tax firms qualified it under “limited commerce” due to pandemic shutdown orders, even though the business was able to operate remotely. The IRS issued updated guidance as of the September moratorium that states “if all your employees were able to telework during the pandemic and your business continued to operate, your business wasn’t suspended.”
On its website, Innovation Refunds writes, “The IRS expects 70-80% of SMBs are good candidates for taking the ERC.” In a statement to CNBC, the IRS said it “has not published estimates of the percentage of taxpayers expected to qualify for the Employee Retention Credit.”
A former contractor said that if a claim was “totally questionable” the tax attorneys would reject it but that very few of the applications that person oversaw were denied.  
CNBC also spoke with several Innovation Refunds customers who said they were enticed with large preapproval estimates from the company. In one instance, a potential customer was sent a preapproval notice for more than $300,000. The company gave these emails titles such as “Apply or Say Goodbye” and “Save your place in line” to encourage prospective clients to apply for the credit through Innovation Refunds.
But five of the 20 former employees and contractors CNBC spoke with spoke positively about their time at the company.
Innovation Refunds employees “pride themselves on being ultra conservative and compliant,” Domenico, the former executive vice president, wrote on LinkedIn after the IRS moratorium in September. He also told CNBC most of the company’s leads were “already enticed by the marketing” and many of the businesses initiated the outreach to Innovation Refunds as a result.
CNBC also spoke with a client who said applying for the ERC through Innovation Refunds was a “seamless” process. The client said they felt comfortable using the company because it had licensed and insured tax attorneys. 
“They did a good job,” the client said. “It was very smooth — I had continuous communication with a number of their employees.”

Lavish events and layoffs

Many of the former employees and contractors CNBC spoke with said the company appeared to prioritize employee well-being and offered enticing bonuses — at least at first. 
A free-spending culture also emerged as the company pursued business.
Former workers described lavish large-scale events Innovation Refunds hosted for employees. For one holiday party, the company hired a marching band, had interpretation artists entertain guests and decorated the venue with Innovation Refunds-themed ice sculptures, three former employees said. 
“We saw a whole lot of use of capital in irresponsible ways,” the former employee said. “Hosting very large, extravagant parties, showering employees with all kinds of gifts.”
Many former employees and contractors told CNBC the allure of big bonuses and a strong pipeline of leads initially drew them to the job. But as time went on and potential clients began to dry up, the draw of bonuses turned into an empty promise, as many said there were not enough leads for the $100,000 to pan out. 
“We were working on recycled leads,” one former contractor said. “It got toward the end where people were complaining left and right because they were being called every day.”
Many former workers who spoke to CNBC said they feared losing their jobs as the company carried out several rounds of layoffs. Shortly after the IRS moratorium in September, Innovation Refunds abruptly laid off more than 40% of its staff and paused advertising, according to an internal memo CNBC reviewed.
Makler, often eager to take center stage before employees, spoke briefly on a Zoom call looking visibly affected, two former employees said. The company sent Slack messages to those who lost their jobs, and shuttered their computer access. Many received 30 days of severance.
The employees who remained after the layoffs were instructed to gather around a fire and toss a piece of paper with a negative emotion written on it into the flames, according to a video recording of the exercise CNBC obtained. 
“We must look like a bunch of complete weirdos,” Makler said on the video.
The video shows dozens of employees standing in a circle outdoors, with Makler at the center of the circle explaining the practice. Makler then tosses a piece of paper into the fire.
“And with that, we can allow that energy to stay here so we can all get back to better things,” he said.

Concerns across the industry

The IRS said it is now investigating a cottage industry that exploded onto the scene promoting the ERC program to small business owners, as well as investigating some businesses that filed for the credit.
The Department of Justice is now involved to pursue what the agency in its moratorium announcement called fraud that is “fueled by aggressive marketing,” without naming any individual companies.
The IRS, which had been warning businesses about potential scams related to the ERC for months, continued to update eligibility guidance for submissions for the program, which had been open since 2020, through the moratorium.
Across the industry, CPAs, attorneys and consultants have been raising red flags about the promotion of the ERC to small businesses who may not be eligible under IRS guidelines.

Jenn McCabe, a partner at accounting firm Armanino LLP, said she has been raising red flags about the promotion of the Employee Retention Credit to small businesses that may not be eligible under IRS guidelines.

“The rules were completely getting tossed out the window,” Jenn McCabe, a partner at the accounting firm Armanino LLP who has been consulting with businesses on the credit, told CNBC.
The IRS has updated and clarified the program’s guidelines, but ineligible small businesses may have applied, with or without knowledge they were ineligible.
“I’m helping so many people determine if they were eligible a year after they’ve already banked the money, and that’s sad,” McCabe said.
If audited, small businesses that filed inaccurate claims could have to return the money they received — and may owe penalties on top of that.  
The IRS said in September it is working on initiatives to help business owners, including a settlement program for repaying ERC claims that were improperly received. In mid-October it announced details for a special option for those whose claims have not been processed yet but who believe they were improperly filed to either withdraw them completely or reduce the amounts.
“I don’t know if I’ll ever know if it was done correctly on a case-by-case basis,” the former Innovation Refunds employee said. “But it makes me very queasy that people could be owing a lot of money back.”
ERC scams top the IRS’ “Dirty Dozen” list of potential tax schemes for 2023. The agency doesn’t name specific companies, but it lists “unsolicited calls,” ads mentioning an “easy application process,” and “fees based on a percentage of the refund amount” of the ERC as red flags. Many ERC promoters relied on such tactics during the marketing frenzy that unfolded.
“The promoters should be held accountable,” McCabe said. “They’ve trained huge sales organizations. They’ve set themselves up to be distanced from these mistakes. They’ve planned for this; they’re sophisticated.”
— CNBC’s Damita Menezes contributed to this report. More

Shein and Forever 21 are slated to unveil a co-branded clothing line that will be primarily sold on Shein’s website.
The companies launched a joint venture earlier this year that saw Shein take a majority stake in Forever 21’s operator Sparc Group.
The partnership serves larger goals for both companies that go beyond a sales boost.

Shoppers walks past advertisements on the opening day of fast fashion e-commerce giant Shein, which is hosting a brick-and-mortar pop up inside Forever 21 at the Ontario Mills Mall in Ontario Thursday, Oct. 19, 2023. 
Allen J. Schaben | Los Angeles Times | Getty Images

Shein and Forever 21 are slated to unveil a co-branded clothing line after the two retailers launched a joint venture earlier this year that turned the would-be competitors into partners, the companies announced on Friday. 
Under the partnership, Shein will design, manufacture and distribute a line of co-branded Forever 21 apparel and accessories that will be sold primarily on Shein’s website. 

The line will span both men’s and women’s apparel and include new sportswear, activewear and swimwear, the companies said. 
The announcement comes about two months after Shein and Forever 21’s operator Sparc Group inked a deal that saw both companies take a stake in each other’s businesses. 
Under the agreement, Shein acquired about one-third of Sparc Group — a joint venture that includes brand management firm Authentic Brands Group and mall owner Simon Property Group — while Sparc took a minority stake in Shein. 

A line of shoppers get the first opportunity to shop on the opening day of fast fashion e-commerce giant Shein, which is hosting a brick-and-mortar pop up inside Forever 21 at the Ontario Mills Mall in Ontario Thursday, Oct. 19, 2023.
Allen J. Schaben | Los Angeles Times | Getty Images

The partnership has allowed Shein to sell its myriad low-priced apparel at Forever 21’s retail stores, which has helped the company to meet a broader customer base and show off its wares in person. 
Now, Forever 21, which is mostly known for its mall stores, will be able to leverage Shein’s digital prowess and massive customer base to boost its e-commerce capabilities and expand its online footprint.

While the partnership is designed to boost sales for both brands, it also serves larger goals. 
Shein, which is rumored to be exploring a U.S. IPO, has been working to sanitize its reputation and beat back accusations that it uses forced labor in its supply chain, exploits U.S. tariff law and steals designs from independent artists. It is facing increasing pressure from lawmakers and regulators, who also have concerns about Shein’s ties to China, the country where it was founded and where its supply chain is primarily based. The company has highlighted various efforts it has made to remedy those issues.
In its partnership with Sparc, Shein doesn’t just get its clothes in malls, it now has a powerful ally on its side, which could help legitimize the company in the eyes of U.S. regulators and work to assuage concerns from lawmakers. 
For Forever 21, its partnership with Shein helps the retailer to regain the relevancy it once had in the mid-2010s and win over younger customers who are more likely to shop online than they are in malls. 
“Shein’s innovative approach to engaging with consumers gives them the ability to deliver trends at speed. With an evolving retail landscape, where digital interaction has become the cornerstone of e-commerce, Shein has led the way in redefining how brands connect with consumers,” Jamie Salter, the founder and CEO of Authentic, said in a news release. “We are excited to partner with SHEIN, as this collaboration perfectly fits into our distribution strategy for the brand’s new key markets.” More

Comcast lost 18,000 broadband customers in the third quarter and said growth wouldn’t return in the fourth quarter.
Comcast shares slumped Thursday morning.
Investors shrugged at Comcast’s wireless growth and NBCUniversal’s theme park gains and Peacock adds.

Signage is displayed in the window of a Comcast Corp. Xfinity store in King Of Prussia, Pennsylvania.
Charles Mostoller | Bloomberg | Getty Images

Comcast has tried to move investors away from focusing on residential broadband net additions. The market reaction to the company’s third quarter results suggests that isn’t working.
Comcast shares fell more than 8% Thursday after the company reported a loss of 18,000 residential broadband customers in the third quarter and warned losses will be larger in the fourth quarter.

Rising interest rates have slowed the buying and selling of houses, which has led to a decline in new home internet connections. Mortgage demand is at its lowest point in nearly 30 years. The 30-year fixed mortgage rate hit 8% last week for the first time since 2000. Additionally, new competition for home broadband from wireless providers such as T-Mobile and Verizon had added to Comcast’s lack of residential growth.
Comcast’s lack of broadband growth started last year, when the largest U.S. internet provider reported no additions in the second quarter of 2022 for the first time in the company’s history. Since then, Comcast has reported net broadband losses in three of the last five quarters.
Comcast executives have pushed investors to focus on broadband’s rising average revenue per user (ARPU) growth, driven by price increases and upselling packages, rather than net additions. Comcast’s residential broadband ARPU rose 3.9% in the quarter.
“As we continue to manage this balance, we expect ARPU growth to remain strong and our primary driver of broadband revenue growth with somewhat higher subscribers losses expected the fourth quartercompared to the 18,000 loss we just reported in the third quarter,” Comcast Chief Financial Officer Jason Armstrong said during the company’s earnings conference call Thursday.

Shrugs for NBCUniversal

Comcast also owns NBCUniversal, a company ostensibly worth tens of billions. Theme park revenue rose more than 17% in the quarter, and streaming service Peacock added 4 million subscribers in the quarter, stemming losses from a year ago.

But investors shrugged at those results and focused on the company’s guidance that broadband growth won’t return next quarter.
Comcast on Thursday reiterated it plans to return to broadband growth eventually, while not offering a specific timeline. While a rough housing market is a clear headwind on broadband additions, T-Mobile added 557,000 new high-speed broadband customers in its third quarter. Verizon reported net additions of 434,000. That speaks to Comcast’s decision not to engage in a price war with wireless competitors.
“It’s a pretty competitive environment,” Comcast cable President Dave Watson said on Thursday’s earnings call. “We’ve seen the expansion of both fiber and fixed wireless’s footprint. Part of our game plan is we’re going to continue invest in a better network and compete aggressively but we’re going to maintain financial discipline. That means making certain decisions when it comes to balancing rate and volume.”
Comcast added 294,000 wireless subscribers in the quarter, as it fights back against wireless company competition by eating into some of their subscribers. Still, residential broadband has a much higher profit margin for Comcast and derives far more revenue for the company.
Comcast reported broadband revenue of $6.4 billion in the quarter from 32.3 million subscribers, or an average of about $200 in revenue in the quarter per subscriber. Comcast reported $917 million in revenue from its 6.3 million wireless customers — $145 in revenue per subscriber for the quarter.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
WATCH: Comcast reports third-quarter earnings. More