More on credit freezes and Pennsylvania's new law

My article in Monday's Inquirer on Pennsylvania's new credit-freeze law (click here to read it) was supposed to include a box with some basic questions and answers, and links to further information. It was inadvertently left out of the paper, and will appear in Wednesday's Business section. Meanwhile, here's what the missing box said:

If you want to freeze your credit file immediately or are just curious about the law, here are answers to a few basic questions:

How does Pennsylvania’s law compare to those in other states? It’s stronger than some in one crucial way, according to Consumers Union, which supports and tracks the proposals: It allows anybody, not just identity-theft victims, to freeze his or her credit file. Five other states’ laws, including two that go into effect Jan. 1 in Kansas and Hawaii, only apply to victims.

How much does a security freeze cost? Each of the three national credit bureaus can charge you up to $10, unless you’re 65 or older, or are a victim of identity theft and can submit a police report to prove it. In those situations, a freeze is free. (New Jersey’s law, which went into effect a year ago, makes a freeze free for all consumers.)

What about a temporary thaw? That also costs $10 per credit bureau, except for identity-theft victims, although any consumer can permanently lift a freeze for free.

Is there any way to save? There may be. If you’re car shopping or doing something else that may necessitate a credit check, ask whether the business needs all three reports. In some cases, you may satisfy its needs by thawing just one of your credit files.

How do I proceed? Although the credit bureaus are allowed to accept freeze requests via secure Internet connections, the law only requires them to accept requests via certified mail. For instructions, contact TransUnion at 1-888-909-8872; Equifax, 1-800-685-1111; Experian, 1-888-397-3742 [Note: Experian's general number does not provide information for Pennsylvanians on how to initiate a credit freeze. For instructions in Pennsylvania, call 1-800-290-5195 - or see my earlier blog entry here.]

For detailed instructions from the credit bureaus, see my earlier blog entry here.

For sample letters you can modify to request a freeze from each of the three main credit bureaus, and an excellent how-to guide prepared by Consumers Union, click here.

For New Jersey security-freeze instructions from the New Jersey Division of Consumer Affairs, click here. For information from NJPIRG, click here.

How to take advantage of Pennsylvania's new credit-file security freeze

As of Jan. 1, Pennsylvania residents will join consumers in more than a dozen other states, including New Jersey, who have a right to freeze their credit files whether or not they have already fallen victim to identity theft.

It's a great tool for blocking so-called "new-account theft," in which a criminal uses your personal information - perhaps as little as your name, Social Security number and date of birth - to create fake IDs, and with them starts establishing new accounts in your name. A security freeze blocks access to your credit file, and only you can unblock it, with a secret password or PIN code like those you use at a bank machine.

The credit-reporting agencies don't make initiating a freeze especially easy. Here are instructions I've found online from each of the three national credit bureaus:

Equifax

To request that we place a security freeze on your Equifax credit file your request must be in writing, sent to us via certified mail, and include the following information:
1. Name
2. Address
3. Date of Birth
4. Social Security Number
5. Proof of current address such as a current utility bill
6. Payment of applicable fees to request a security freeze of your credit file [$10 in Pennsylvania, unless you send proof that you are 65 or older, or send a copy of a police report showing that you're a victim of identity theft].

We accept personal checks, American Express, Mastercard, VISA, and Discover Cards for payment of fees. If you are paying by credit card, please include the following information:
a. Name of the person as it appears on the credit card
b. Type of credit card (American Express, Mastercard, VISA, or Discover Card)
c. Complete account number
d. Expiration data (month and year)
e. For American Express - 4 digit Card Identification Number (on front of card above the account number)
f. For Mastercard, VISA, or Discover Card - 3 digit Card Identification Number (on back of card at the end of the account number.
Please do not send cash through the mail.
7. If you are an identity theft victim and are requesting a security freeze you must also include a copy of a police report, Identity Theft report, or other government law enforcement agency report, such as a DMV report. [Note: For a fee waiver, Pennsylvania residents must provide a police report.]

Please send your security freeze request information via certified mail to the address below.
Equifax Security Freeze
P.O. Box 105788
Atlanta, Georgia 30348

Once we receive your security freeze request information and place a security freeze on your Equifax credit file we will send you via US mail a confirmation letter that contains a 10 digit security freeze confirmation number. You will need to provide us your security freeze confirmation number to request temporary lifts of your security freeze or permanent removal of your security freeze. Please store this confirmation letter in a safe place to prevent delays when requesting a temporary lift or removal of your security freeze.

For more information from Equifax about security freezes, click here and then scroll down.

Experian

Requests for a security freeze should be submitted via certified or overnight mail to:
Experian
P.O. Box 9554
Allen, TX 75013

Freeze requests must include all of the following:
1) Full name, with middle initial and generation, such as JR, SR, II, III, etc.
2) Social Security number
3) Date of birth
4) Current address, and previous addresses for the past two years.
5) One copy of a government issued identification card, such as a driver’s license, state ID card, military ID card, etc.
6) One copy of a utility bill, bank or insurance statement, etc.
[Note: Experian says to "make sure that each copy is legible (enlarge if necessary), displays your name and current mailing address, and the date of issue (statement dates must be recent). We are unable to accept credit card statements, voided checks, lease agreements, magazine subscriptions or postal service forwarding orders as proof."]

We will send you a confirmation notice once the security freeze has been added, and you will be given a personal identification number that will be required in order to remove the freeze temporarily (in order to apply for credit or for any transaction that requires that another party access your personal credit report) or permanently.

For more information from Experian, including instructions on how to thaw a freeze, click here.

TransUnion

Your security freeze request must include:
1) Your name
2) Your address
3) Your Social Security Number
4) A credit card number and expiration date to pay the applicable fee, if any, for the service.
5) If you're requesting a waiver under Pennsylvania law, be sure to provide proof that you are 65 or older or a police report showing that you're a victim of identity theft.
[Note: Pennsylvania law requires you to send your security-freeze request by certified mail, and allows you an exemption from the $10 freeze fee if you're 65 or older (include proof of age) or a victim of identity theft (include a copy of a police report).]

Mail your request to:

TransUnion
Fraud Victim Assistance Department
P.O. Box 6790
Fullerton, CA 92834

If you are a victim of identity theft in an eligible state and can provide TransUnion with a copy of a valid identity theft report, a department of motor vehicles investigation report, or similar proof that you have been a victim of ID theft, you will not be charged a fee for the Security Freeze services. If you are not a victim of identity theft, please refer to the Security Freeze Table for fees (if any). Acceptable forms of payment are American Express, Discover, MasterCard and Visa.

For more information from TransUnion on security freezes, click here.

New Jersey has a year's worth of experience with security freezes. For information from New Jersey's Division of Consumer Affairs, click here.

For security-freeze instructions from NJPIRG, click here.

For sample letters you can modify to request a freeze from each of the three main credit bureaus, and an excellent how-to guide prepared by Consumers Union, click here.

Consumer advocates raise alarms on Senate bill

It's hard to dispute the value to consumers of getting some competition for their cable companies. Senate Bill 2686, sponsored by Commerce Committee Chairman Ted Stevens of Alaska and co-sponsored by his Democratic counterpart, Daniel Inouye of Hawaii, was intended to make that possible more quickly, by making it easier for the Baby Bells to enter the TV business.

But consumer advocates are warning - as loudly as they can without big bucks to advertise - that the phone and cable companies are overreaching big-time on the version of S. 2686 that's headed to the Senate floor without rules for Internet neutrality but with other goodies sought by telecom lobbyists.

Just a few of the flaws that Consumers Union, Free Press and others have identified:

* The bill would eliminate the requirement that pay-TV companies offer service to all residents in a community they serve. Though promoted as a policy that would allow the Bells to build-out their systems gradually, CU says, the provision would also allow allow them "to redline low-income or minority neighborhoods," and at the same time "permit cable companies to withdraw or degrade service."

* It would end prohibitions on rate discrimination, which would allow cable companies o discount rates for well-off customers in areas first targeted by the Bells and make up the difference by raising rates in less-affluent sections of the same communities that don't yet have - and may never get - competitive service.

* It would bar states from enforcing laws governing the terms and conditions of wireless-phone service. Though they are already barred from regulating wireless rates, and the wireless market remains reasonably competitive in most places, state regulators and attorneys general argue that they have an important role in policing the market against abusive practices.

* The legislation also eliminates local authority to regulate prices for entry-level "basic" cable service, which typically includes just broadcast channels, public- and community-access stations, and a handful of other offerings such as C-SPAN. Cable companies won't say how many customers opt for this service, which also allows customers to buy premium channels such as HBO without having the buy the 50- to 80-channel "standard" or "expanded" tier in between. In 1996, the last time Congress addressed such a broad swath of telecom issues, it deregulated all cable prices except for basic service and the equipment necessary to receive it.

"The only winners today are big money, special interest industry groups," CU's Jeannine Kenney said yesterday after a series of consumer-oriented amendments were defeated and the bill was sent to the Senate floor on a 15-7 vote. "The result is that consumers, especially middle and low-income families, can expect higher prices and worse service from their current cable provider when they have no other competitor to turn to."

One key issue ended in an 11-11 draw: "network neutrality," or as some prefer to call it, "Internet neutrality." (Read the Center for Democracy and Technology's thoughtful new proposal here.)

Carefully crafted neutrality rules would prevent the cable and phone companies that CU says control 98 percent of today's broadband market from distorting the free and open nature of the Internet by blocking or degrading some sites, or favoring others, for financial or even political reasons.

"Nearly a million Americans have weighed in with their support for network neutrality," Ben Scott of Free Press, an open-media advocacy group, said in a statement. "The public outcry over today's action will be loud and vast. Consumers know what happens when just one or two telecommunications companies are allowed to shut out competitors - higher prices, fewer choices and bad service. They see it in cable and in local phone service. They won't stand for it on the Internet." (Click here for the Save the Internet Coalition's Web site, and a link to Sen. Ron Wyden's plan to block legislation that lacks a neutrality requirement. Click here to see my latest Philadelphia Inquirer piece on network neutrality, which explains how network owners could behave without it.)

I have great confidence in the market's ability to sort out winning technologies and strategies from losing ones. But when a particular market is dominated by two industries nurtured through government-granted monopolies, much more than Adam Smith's "invisible hand" is at work.

As consumers, entrepreneurs, and especially as citizens, we all have gained tremendously from the Internet revolution. We need Congress to act so that it doesn't get derailed.

FTC: Don't trust that Internet cell-phone rumor!

If you tend to believe any gossip, you're probably forgetting one of those essential lessons you learned in kindergarten: what happens when people whisper some news down the line. We used to call it playing "Telephone."

It hardly mattered what was said. Within 10 or 20 or transmissions, even the simplest message was distorted. "Steve's got the ball" begot "Steve's in the hall" begot "Cheese on the wall." From there, it was straight downhill.

Internet rumors have different life cycles, but the results can be even worse. Yes, the Internet is a great way to pass along accurate information rapidly, thanks to the virtues of mass e-mails and the verity of cut-and-paste. But if the original information is exaggerated, distorted, or just plain wrong, the result can be a persistent Internet "urban legend."

Internet legends spread like viruses - computer viruses, that is - and mutate like the natural kind. Just like both kinds, they can circulate and then lie dormant for a while, only to re-emerge as virulent as ever.

Thankfully, the Internet is also a great resource for curing bad-information viruses. My favorite antidote is going to www.Snopes.com, which researches and debunks urban legends whether they spread online or the old-fashioned way.

Often, Snopes relies on government agencies to debunk rumors on their turf, as the Federal Trade Commission did today when it issued a new warning about an old Internet legend on cell phones and telemarketers. The misleading rumor hasn't hit my computer lately, but I'm sure it will.

The FTC, which now has 125 million phone numbers on the National Do Not Call Registry, said that "despite the claims made in e-mails circulating on the Internet, consumers should not be concerned that their cell phone numbers will be released to telemarketers at any time in the near future. ... It is not necessary to register cell phone numbers on the DNC Registry to be protected from most telemarketing calls to cell phones."

The agency noted that Federal Communications Commission regulations prohibit
telemarketers from using automated dialers to call cell phone numbers. Since such equipment is widely used, that rule alone stops most marketers from cold-calling consumers on their cell phones. The FTC added that telemarketing industry groups say their members "do not intend to start calling consumers' cell phones."

The FTC also debunked another widely circulating Internet rumor: "While the telecommunications industry has been discussing the possibility of creating a wireless 411 directory, according to the FCC, even if a wireless 411 directory is established, most telemarketing calls to cell phones would still be illegal." For more information about the wireless directory proposal, click here.

For more information on the FTC's Do Not Call Registry, including instructions for registering a phone number, click here.

Nearly illegible fine print ... in the next day's newspaper

In yesterday's Consumer Watch column about the fine print in auto ads, I responded to a complaint about an ad in last Monday's Philadelphia Inquirer.

I wrote that "mouse type" in print ads and the broadcast equivalent, fast-talking disclaimers before or after a radio or TV commercial, were longstanding problems in the marketing of autos (as well as other products), and had prompted numerous actions over the years by the Pennsylvania attorney general and others who monitor the marketplace. I concluded, though, that I'd seen far worse examples than what Dale Shaw complained about: the small-type phrase "with $2,000 cash or trade-in" alongside a $17,990 price for a used 2006 Volkswagen Passat.

Leave it to an eagle-eyed reader to point out one of those worse examples - in at least some editions of today's Philadelphia Inquirer. (In my paper, it ran on a page marked "PA F1.")

The Hopkins Ford ad lists a number of cars, and in big type touts an offer of zero-percent financing "plus $1,000 drive on us bonus cash or we'll pay for your gas up to 2007.*"

And what does that "*" refer to? Donald Bandera of South Philadelphia called to complain that he had no idea, because the footnote appears not only in tiny type - much smaller than the Passat ad's 8- or 9-point small print - but also in white print on a blue background.

I could barely make it out myself, with eyes that are 20-odd years younger than Bandera's, but finally found good enough light to focus: It's a disclaimer that says the no-interest financing is "in lieu of rebate" but compatible with the "drive on us" offer, and that explains how the gas offer works.

Printing in color isn't the easiest thing on newspaper presses. Perhaps this ad wasn't meant to be nearly illegible. If I get a response from Hopkins or our ad department, I'll post it here.

For now, it's worth noting that Bandera assumes otherwise, and it's hard to argue with his determination to exercise a healthy skepticism in a competitive market.

"I’m looking around for a car, but I’d never buy one with an ad like that," he told me. "As soon as I see that, that’s like a flag. "I don’t know what they’re trying to hide."

Maybe nothing, or at least nothing surprising. But if Bandera can't read it, even after trying a magnifying glass, how would he ever know?

Guess what just disappeared from Stevens' telecom bill

Senate Bill 2686, which Senate Commerce Committee Chairman Ted Stevens (R., Alaska) has already dubbed the Telecommunications Act of 2006, has grown considerably since the original, 135-page version was introduced May 1. The latest working draft, unveiled today, is 25 pages longer.

But even though it goes on for nearly 160 pages, one section has suddenly vanished without a trace: the "Sports Freedom Act," taken from a bill introduced by Sen. John Ensign of Nevada, one of Stevens' Republican colleagues. That was the section that would bar cable companies everywhere from doing what Comcast Corp. does with its Philadelphia SportsNet station: refusing to provide the local sports telecasts it controls to competitors, relying on a loophole in the Cable Act of 1992.

In May, Stevens said: "While satellite companies are barred from hoarding exclusive sports programs, the so-called terrestrial loophole does not impose the same mandate on cable companies. As a result, through the acquisition of regional sports networks by cable operators, competition with satellite providers has been stymied."

Last week, Comcast VP David L. Cohen told a Senate committee that since Comcast doesn't treat any other community the way it treats its home town, the issue wasn't something "that rises to the level" of requiring congressional attention. In other words, Comcast told Congress to give it a pass. (Click here to read more of what Cohen said.)

I guess his arguments were persuasive. In the latest version, the Sports Freedom Act was replaced with an expanded section on a subject closer to Stevens' heart: ensuring that Alaska and Hawaii get adequate satellite-TV service.

Juneau wins. Philadelphia loses. I'm looking forward to hearing Sen. Stevens explain why.

Cutting costs: Saving on lodging, bank fees, and heating oil or propane

Readers continue to share their money-saving tips, which I invited last month in a Philadelphia Inquirer column on free directory assistance. As long as they do, I'll continue to post them here or write about them in the newspaper, as I did in Monday's Consumer Watch column and Consumer Inq posting and in Tuesday's posting on the Philadelphia overstock outlet, Jomar.

Some of the best advice is informed by particular knowledge consumers can acquire on either side of the sales counter, or from the experiences of friends, relatives or neighbors.

Here's one from David Muff, a former hotel manager who hails from Havertown:

When booking hotel rooms, I like to save money by asking for a cheaper rate than the one just quoted to me. As a former hotel manager, I know that reservationists and front-desk clerks are flexible in the selling price when it appears the hotel may not sell out. I’ve had front-desk clerks come down in price three times before accepting their offer. It doesn’t hurt to ask for a cheaper rate. If it appears you are hesitant in accepting their initial offer and the hotel knows it needs to sell that room, then they will most likely discount the room to make that sale.

Mike Morris, also of Havertown, is a lifelong credit-union member who says he can't understand why more people don't take advantage of these nonprofit alternatives to banks:

Use a credit union for checking, ATM, and other non-investment cash-management needs. The fees, if managed correctly, should cost little or nothing each month.

I have been a member of the same credit union since I was in grade school (through my dad's employer - Bell Telephone). I am now in my mid-40s. Over that entire time, my fees have probably totaled less than $100 (for some bounced checks due to sloppy record-keeping when I was much younger). I use the Credit Union for ATM service, checking, money market savings, CDs, and VISA cards, all provided at no charge.

Given the recent relaxation of the rules for credit-union membership, I can't understand why anyone would use a regular bank that beats you up with fees, minimum balances, etc.

After last fall's spike in energy prices, these two suggestions for saving money on heat - one for those who heat with fuel oil, the other for those who use propane - seem timely even in June.

From Victoria Matishen, of Somerdale:

We have belonged to NJCAOG - New Jersey Citizen Action Oil Group - for over 20 years. This is a cooperative of independent home heating oil distributors in this area. We have saved at least 10 cents per gallon of heating oil during that time. This past winter our two deliveries totaling 310 gallons saved us 15 cents a gallon, or $46. We were assigned one distributor. Service has been great and we've never run out of oil.

When we first joined, annual membership was $25. It may be as high as $40 now. Since we are now seniors, our membership is only $15. Either way, one can save money with just one delivery.

There is also an incentive plan for recommending new customers, so if 50 or so of your readers mention our name we'll have free membership for the rest of our lives. (Just kidding.)
For me, there is the added attraction of supporting small, independent businesses.

[Thanks, Victoria. There are similar co-ops in Pennsylvania. Two I know of are PIRG Fuel Buyers and the Energy Cooperative.]

From Jeff Carlow, of West Chester:

Hi Jeff. Interesting article on saving some money on 411 calls today. I found a way to save some money, but it is more of a long-term commitment.

I bought my house 8 years ago. Our house is heated by propane, and a 2,ooo-gallon tank was installed when it was built. We signed a bunch of papers for the tank to be installed with the obligation to buy the propane from Amerigas in Malvern.

I recently was speaking with a neighbor who bought out his lease on the tank. I was surprised and didn't know that was an option. He explained to me that if you lease your tank you can't go out and shop for the best propane price. If you wanted to shop the price per gallon you had to have proof that you owned the tank. I decided to call a few propane distributors for price and regulations on ownership. I found that I could save between 49 and 54 cents per gallon. Take that savings times the number of gallons you use per year and, for me, I figured that payback would happen in approximately 3 years. You also have to have proof that you own the tank. There must be a law or agreement among the propane distributors not tamper with each others' customers.

You've got to bite the bullet and buy out the lease. Amerigas puts the tank on a 30-year depreciation schedule, which is a joke. They told me the tanks can last 50 years. The tank cost $2,100 installed, and the buyout price was approximately $1,600 after 8 years. I told them that the depreciation schedule was ridiculous but they pulled out my documentation from 8 years ago that showed what I had signed up for. They also told me to check if my homeowners insurance would go up. It didn't. They also told me I'd be responsible for any problems with the tank once I owned it. Understood.

I bought out the lease and they quickly quoted me a 50-cent reduction in my per-gallon rate. It was a 25% savings ($2.09 lease price versus $1.59 owner price per gallon). They also sent me proof of ownership of the tank. I called around and got a better price and called Amerigas to see if they could beat the rate, and they offered an additional $.02 off. I'm still with Amerigas but now how some open-market leverage on costs.

Amerigas doesn't advertise this buyout option, as best as I can tell. They are making a premium off their lease customers. You bought and paid for that tank with that premium after 2 to 3 years. Granted, they have complete service/support responsibility for the tank. The rest is gravy for them over the next XX years. I'll be saving at least $ 500 to $700 per year. I'll be staying in my house a long time, so the buyout made sense for me.

I also learned that you can call Amerigas in June or July and lock in your rates for the winter. Again, I don't think they advertise this opportunity. [One warning: Unless it allows your rate to float down if prices decline, a rate lock can work against you as well as for you.]

I look forward to other tips from your readers! It was a good tip from my neighbor.

Got a comment on this tip or others, or on anything else consumer-related? Use the "Comment" button below, and remember to fill in the "word verification" box.

Comcast's special gift to Philadelphia?

To we Philadelphia sports fans who count ourselves as captive customers of Comcast, there always seems to be an awkward subtext in the way the company defends its most glaring use of market power: its refusal to share its dominant Philadelphia sports station, Comcast SportsNet, with its satellite competitors.

With the cable and Internet markets currently under scrutiny in Washington, Comcast had another chance today to explain its position. It came during a Senate Judiciary Committee hearing this morning on the future of telecommunications, when Chairman Arlen Specter asked his Philadelphia homeboy, David L. Cohen, how Comcast's sports programming would be affected by S. 2686, the omnibus telecommunications bill sponsored by Specter's colleague and fellow Republican, Sen. Ted Stevens of Alaska.

The Senate Commerce Committee is considering the bill, and Stevens is its chairman, so it stands as good a chance of passing this year as any telecommunications bill - which is not to say that it's a given, with some of the nation's most powerful companies pushing Congress in conflicting directions.

So far, most of the public debate has centered on two issues: "Internet neutrality," which the bill currently sidesteps by ordering an FCC study, and expedited local franchising for phone companies such as Verizon that want to compete with cable by offering television along with Internet and phone service, which the bill includes.

But the bill also includes a section known as the Sports Freedom Act, intended to prevent Comcast and its cable counterparts from monopolizing local sports telecasts through exclusive deals as Comcast has for years in Philadelphia.

Cohen, chief of staff to Ed Rendell when he was Philadelphia's mayor, is now making millions of dollars a year as Comcast's executive VP. As I know personally from my days on the Philadelphia Inquirer's city desk staff, Cohen is a true master of spin, able to put forward the best possible case for just about any point he argues. It can't hurt that he's probably the smartest guy in the room just about any place he shows up.

His talents were abundantly on display today as he addressed the big national issues. But when it came to SportsNet and Comcast's decision to keep it exclusive in Philadelphia, even Cohen couldn't escape the inevitable awkwardness.

Cohen started with the usual arguments - that Comcast withholds SportsNet because it's legal under the "terrestrial exemption" to the 1992 Cable Act's program-access rules; that it only withholds SportsNet from the satellite companies, not RCN in the small corner of the region it serves as a cable "overbuilder"; and that one of the satellite companies, DirecTV, has an exclusive deal with the National Football League for a package of out-of-town games known as the NFL Sunday Ticket, which Cohen called "the key and most important exclusive sports programming that exists today."

Then Cohen added one more justification - not for Comcast's practice, but for why Congress should, well, give it a pass: Philadelphia is the only market where Comcast keeps local sports away from its competitors.

That's true: Comcast offers satellite companies SportsNets in the Washington area, Chicago and San Francisco (although sometimes on terms that provoke other complaints from the satellite companies).

Cohen didn't bother to say why Comcast SportsNet in Philadelphia is an exception - only that its Philadelphia strategy "has not proved to be a dominant model." Then he added: "My submission to this committee would be that it is not something that rises to the level of the need for legislative reform of the program-access rules."

So that's Comcast's bottom line: We only treat our hometown sports this way, so leave us alone.

For another take on the Senate deliberations, see media activist Joshua Breitbart's blog. For a economics-savvy explanation why saying, "Yeah, but what about NLF Sunday Ticket?" invokes an apples-and-oranges comparison, see Ruby Legs' blog posting: Welcome to Phillyville: Comcast, the Great Equivocator.

Cutting costs: Owner touts his local overstock chain, Jomar

Yesterday's Consumer Watch column on reining in expenses mentioned Mark Davidsaver, the aptly named Illinois software developer (for diesel engines and transmissions) who runs the "YourMoneyPage" website as a hobby.

Davidsaver, like many Internet hobbyists, sells ads for his site, so in that sense he's also a businessman. He wasn't the only one I heard from.

In the spirit of localism and fair play - I've previously pointed readers to Overstock.com as a source for savings - here's an e-mail from Mark Segal, a local businessman whose six-store chain, Jomar Inc., also sells overstocked items. The difference: You can see and touch his stores' merchandise. You don't have to rely on Web-site photographs and descriptions, or pay for shipping.

I haven't been to Jomar yet myself, but with two teenage daughters, I intend to investigate. (One of Jomar's rare mentions in our newspaper archives referred to it years ago as a favorite of Marjorie Margolies Mezvinsky, the former newscaster and congresswoman who now runs Women's Campaign International.)

Mark Segal didn't drop any names - he just told me that he was proud of his company and the savings it offers to consumers. One of the ironies of the modern marketplace is that the best bargains may well be at places that you've rarely or never heard of, because retailers have to build marketing costs into their prices.

Segal writes:

There is only one true factory outlet store left in this city and that is a six-store chain called Jomar Inc. We buy everything a department store or catalog company does not sell, or everything a customer returns to that particular store, and sell it for a fraction of the original retail price.

Did you ever wonder what happens to that dress shirt your wife bought you at Macy's that was not quite right? Well, when your wife returns it, it does not go back to inventory; it goes to Jomar. [Clarification: Not all of it; Segal says Jomar is "one of maybe four companies in the United States" that get Macy's overstock and returns.]

Bottom line: If you want to buy a $40 department store garment in this city for $5 or $6, every day, Jomar is the only game in town. We carry anything a department store carries plus furniture and fabrics. We are Philly-born and family-owned since 1967.

I understand that our company may not fit into your "little secrets" concept, but after reading your article, my passion for my company, and the fact that we offer the public true value, compelled me to send you this e-mail.

Thanks for your time.
Mark Segal
Jomar Inc.
"Phillys Best Kept Secret"

If you've had experiences with Jomar, good or bad, please feel free to comment by clicking on the word Comment beneath this posting. (Remember to fill in the word-verification box to prove you're not a spammer-bot.)

Cutting costs: Readers' ideas on using the Web, avoiding interest, economizing on gas, and reusing bags, foil and containers

My column in today's Philadelphia Inquirer column focused on a few readers' suggestions for reining in expenses. Here and in postings later this week, I'll share readers' strategies in their own words - with some fixes for the typos and other small errors that seem endemic to e-mail and an occasional bracketed note to clarify a point or respond to a suggestion.

Feel free to use the "Comment" button beneath the posting to respond. Whether you agree or disagree, we'll all benefit from a dialogue. (Remember to fill in the "Word Verification" box at the bottom of the screen - it's necessary to ensure you're a reader, not a robotic spammer.)

From Pat Asher:

Here's my favorite place to save: www.zooba.com. I've always bought books, but this site offers the most recent at $9.95 (no tax or shipping costs). [Note: The Zooba Web site's FAQs says sales tax applies in Pennsylvania, New York and Indiana.] The gimmick is that you have to join and pay the fee monthly, but they'll ship the books as gifts if you want, and at that price it's no hardship to buy a book a month (sort of a pun - the company is a branch of the Book-of-the Month Club). The shipping is also very quick - that's important to me.

From Fred Schumacher, King of Prussia:

A very good way to save $42 every 8 weeks is to cancel home delivery of the Inquirer and read it on the Internet or your local library. [Gee, thanks, Fred. If you didn't get here from there, our Web address is www.philly.com.]

From Tevis M. Goldhaft, Haverford:

I am now 92 years old, and when I got married in 1935 my father said to me, "Never pay interest; collect interest " To simplify it, you never buy anything you can't pay for right then and there.

I've had an American Express card since 1972 and an Exxon card since they were first issued. I buy things with them, pay the bill when it is tendered, and over these many years I have never paid either issuer any interest.

From Steve Sherman, Audubon, PA:

My wife and I have worked out a couple of things which promise to save us $30-$35 a month on gasoline at current prices. ...

The first thing we've done to save money is to switch who's using which cars. We have an old '95
Ford Escort which my son drives to school and work, and because he's a cautious driver, he gets 25-26 mpg on the thing, so that's fine. But my wife was driving her '03 Ford Taurus station wagon (6 cyl.) 22 miles round trip to work, getting about 16-17 mpg, and I was driving our recently-acquired '03 Hyundai Accent (4 cyl.) 4-5 miles round trip to my part-time job (I'm
semi-retired), getting 24-26 mpg. By switching cars, we figure to save $25-$30 a month on gas, we hope.

Also, I recently applied for and received a AAA Visa card, which gives a 3% rebate on gas purchases. (Some gas companies, e.g., Lukoil, offer a bigger rebate on cards which they sponsor, but often only at their own stations. The AAA card is good at ALL stations.) That figures to save us perhaps another $7 a month or so. So we hope to be seeing some savings on our gas purchases this month.

Gene Apice, Northeast Philadelphia, phoned with a similar suggestion:

Apice, a retired police sergeant, signed up for a Hess Visa that offers 10 percent back on gas purchases for 90 days, then switches to a 5 percent rebate - still on the high end for a cash credit-card rebate. To take maximum advantage of the rules, he first got one for himself and requested cards on the account for other drivers in his household. After three months, he had his wife sign up and also request cards for other drivers. Then he'll have his son do the same. With five drivers and four cars, the family pays as much as $500 to $800 a month for gasoline. Saving 10 percent is worth $50 to $80 a month, and even saving half that in the long run will help.

From Joan Mill, of Phoenixville - who says she considers these strategies "intelligent thinking" rather than "being cheap":

* I use the plastic grocery bags in my wastebaskets; haven't bought small bags in years.
* I re-use aluminum foil that isn't too soiled.
* I wash out zipper freezer bags and re-use.
* I save all aluminum containers to freeze my excess meals.

Tales of the Marketplace, Vol. 3

Has anybody else noticed something like this?

I've had a series of increasingly strange "coincidences" lately with co-payments on my health insurance. (Yes, I know I'm lucky just to have health insurance.)

The coincidence: I pay the co-payment – by credit card, if I can, and insisting on a receipt, the better to create a paper trail. Then I get billed, anyway.

In years of dealing with co-pays, I'd only had one such experience before. The Hospital of the University of Pennsylvania was convinced that I hadn't paid a $5 doctor's visit co-pay – my, that was a long time ago – and tried to collect. Fortunately, though I'd paid cash, I had a receipt.

These latest experiences, mostly with an institution I won't identify here, could simply be a result of sloppy record-keeping. But I wonder whether there could be a systemic failure, or worse. I wouldn't be the first to observe that medical billing is so confusing to most people that a percentage of those who are misbilled undoubtedly pay such dual billings without challenging them.

If it's an occasional error, it's frustrating but understandable – better in the billing department than in the OR, right? But that brings me back to my initial question: Has anybody else noticed evidence of a pattern?

The Internet Model or the Cable TV Model: Why 'Net Neutrality' Is Crucial to the Internet's Future

Today in Congress, primary attention will be on immigration, which everyone agrees is crucial to the future of our society and economy (even if they can't agree how, why, or what to do about it). But elsewhere on Capitol Hill, action will begin to unfold on other legislation - much less well-known - that could be equally crucial to our economy, because its fate could prove critical to the future of the Internet.

The proposal is a legislative guarantee of "net neutrality," which has been gaining steam in recent weeks despite bitter opposition from the telecom and cable companies that own virtually all the "last-mile" fiber-optic or cable links to office buildings, universities and homes.

Various proposals crowd the field - for a detailed rundown on the proposal, see this piece by CNet's Declan McCullagh. The Senate Commerce Committee will address the issue during the second of two hearings on a broad-based telecom bill sponsored by its chairman, Sen. Ted Stevens (R., Alaska). So far, that bill lacks such a guarantee and instead calls for that classic congressional delaying tactic: a new study.

But the real action to watch today on net neutrality may occur in the House Judiciary Committee. The House panel is scheduled to begin debate on H.R. 5417, “The Internet Freedom and Nondiscrimination Act of 2006,” a bipartisan proposal that supporters say would do what its title promises. Its primary sponsor is the Judiciary Committee chairman, F. James Sensenbrenner Jr., a Wisconsin Republican.

[This just in: The House bill was approved, 20-13, this afternoon.]

A lot of voices have been raised on this issue. Still, many people without technological backgrounds continue to steer clear, perhaps because they find it too tough to grap, or too esoteric to try. Trust me: It may be esoteric, but it matters to you, to your children, and probably to any company you work for or own.

One metaphor I find useful is that the two industries that own key network infrastructure are pushing for "the cable model." They want to preserve their right to control what services are delivered over their network - much as cable-TV companies now pick and choose which channels to offer, and bundle them in tiers that you can buy or not buy. They say they have no intention to block any sites or services, though they acknowledge that some might work better than others based on financial deals they negotiate.

Many other companies that don't own key infrastructure - as large as Google and as small as Joe's Amazing New Internet Startup - want to preserve and protect "the Internet model." They want Internet users to be able to choose their services directly, using the telecom or cable company's pipeline that they already pay for but without having to pay extra tolls or suffer degraded service simply for choosing to do business with a company that competes with one favored by the pipeline owner.

Why has this subject come up now? Because technologists, Internet companies and some Congress members have finally grasped the implications of the Brand X decision last year by the U.S. Supreme Court, which declared that cable companies did not have to offer competing companies access to their broadband pipes, as phone companies were required to do under the Telecommunications Act of 1996.

As I and others predicted at the time, the FCC quickly moved to "level the playing field" by giving telephone companies the same right to keep their broadband facilities to themselves.

The result put the Internet model - which evolved under an open-access obligation that still exists for dial-up service - at risk in the broadband future that's rapidly arriving. Good legislation can ensure its survival. With it, the Internet can continue to serve as an extraordinary engine for innovation and entrepreneurial growth.

It's fair to ask why you should care which group of companies wins this battle. Perhaps you work for or own shares in one of our pre-eminent Philadelphia institutions, Comcast Corp., or for Verizon Communications, which are leaders of the lobbying effort against net neutrality legislation, alongside hardware companies and conservative think tanks that call it - wrongly - a new layer of government regulation. Perhaps you think it's only fair that they profit freely from the networks they've built, any legal way they can.

No question, the cable and telecom companies are acting as any business probably would in similar circumstances: They want to maximize their profits - in their case by marketing bundles of services, including television programming, phones, and Internet access, and by developing new services that will leverage additional profits from the data pipelines they own. Their lobbying aims at protecting that business model.

From that perspective, they're not much different the Googles and Amazons and Joes of the world: Those companies want to maximize their profits by inventing or growing services that can be delivered to homes and offices over the same pipelines. How can that be fair?

On this point, I'll defer to Professor Lawrence Lessig of Stanford University Law School, probably the nation's leading expert on the laws governing technology and the Internet, who has urged Congress to essentially put "fairness" out of its mind on this subject.

In February, Lessig told Stevens' committee that "there is something especially wrong with network owners telling content or service providers that they can't access a meaningful broadband network unless they pay an access tax." Then he added:

"I don't mean 'wrong' in the sense of immoral, or even unfair. My argument is not about the social justice of Internet access. I mean 'wrong' in the sense that such a policy will inevitably weaken application competition on the Internet, and that in turn will weaken Internet growth."

It comes down to this: The cable model will stifle competition. And vigorous competition - with winners and losers and constant innovation - is one of the obvious keys to the Internet's tremendous success.

An open-access Internet is crucial for the United States to stay competitive in a global economy. As even Stevens noted in a statement when he introduced his bill, “the United States is less than 16th in adoption of broadband worldwide. We are not only behind most of the developed world, we even lag behind some of the less developed parts of the globe.” (We also lag in the speeds that we define as broadband - but that's a subject for another post.)

The Internet model or the cable-TV model? It's our choice to make, so tell your Congress members what you think. (Click here to contact U.S. senators. Click here to contact U.S. House members.)

PS: I'm not normally impressed by joint letters to Congress, but one that crossed my desk yesterday was an exception - mostly for its huge list of signatories, which illustrates the agreement among Internet behemoths and pipsqueaks. So here it is in full:

May 24, 2006

The Honorable F. James Sensenbrenner, Jr.
Chairman, Committee on the Judiciary
United States House of Representatives
Washington, DC 20515

Dear Chairman Sensenbrenner:

We would like to thank you, Ranking Member Conyers, and the Members of the Judiciary Committee for your recognition of the importance of Net Neutrality for the protection of American consumers, competition and our global competitiveness. H.R. 5417, “The Internet Freedom and Nondiscrimination Act of 2006” addresses the need for meaningful and enforceable Net Neutrality legislation to ensure that the Internet continues as a vital force of innovation and economic benefit for all Americans.

We are a broad and diverse group of Internet companies, public interest organizations, innovators and entrepreneurs, trade associations, consumer groups, individual content providers, and family groups who make our livelihoods on the Internet and depend on its open architecture to innovate, create and evolve the Internet for the future. We strongly believe that your Committee has a clear obligation to protect the original and fundamental laws that govern the Internet. These principles, embodied in the historic legal framework that today is known as Net Neutrality, have been present from the Internet’s inception, and have benefited all of us until very recently when the Federal Communications Commission acted to eliminate them for the first time in the Internet’s history. As a result, Congress must act to reinstate this framework to prevent discriminatory behavior on the Internet, maintain consumer safeguards against monopolistic practices and preserve an innovative spirit of competition that has kept America as the leader in the global marketplace.

We greatly appreciate the Committee’s actions in the interests of the millions of Internet users who depend upon the open Internet. The Committee has played a long, historical role in ensuring that our nation’s communications policies preserve the competitive telecommunications landscape and we hope that legacy will continue as Congress protects the Internet with meaningful Net Neutrality legislation.


Sincerely,


Acopia Networks
Adaptive Marketing LLC
Adobe
Advancedmultimedia.com
Aegon Direct Marketing Services, Inc.
Airespring
Amazon.com
American Association of Libraries
AnalogZone
AngleBeds.com
Ask.com
Association of Research Libraries
Awow Communications
Bandwidth.com
Bloglines
Borsetti & Co.
Business Software Alliance
CALTEL
Cendant
Chemistry.com
Christian Coalition
CinemaNow
Circumedia LLC
CitySearch
CommPartners Holding Company
COMPTEL
Comunicano, Inc.
Consumer Federation of America
Consumers Union
Corliant
Cornerstone Brands, Inc.
Dagdamor Media
Data Foundry
Dave Pettito Direct
DiMA
Domania
Downstream
Dreamsleep.com
Dresses.com
EarthLink
eBay
eBrands Commerce Group
Economics & Technology, Inc.
Educause
Elaine P. Dine
Electronic Retailing Association
Entertainment Publications
Evite.com
Excite
Expedia
Free Press
Free World Dialup
GetSmart
Gifts.com
Google
GotVoice, Inc.
Graceline Canada
Hawthorne Direct
Home Shopping Network
Hotels.com
Hotwire
HSE24
IAC/InterActiveCorp
Iceland Health Inc.
iFreedom Communications
iNest
InPulse Response
INS
Intel
Interactive Travel Services Association
InterMetro
Internet2
Interval International
Intervox.com
IntraISP
Invens Capital
Isen.com, LLC
IVR Technologies
iWon
J. Arnold & Associates
JohnnyZip
Lafayette Group, Inc.
LendingTree
Lingo, Inc.
Listyourself.net
Livemercial
Match.com
McFadden Associates
MCM Telecom
Media Access Project
Media Partners Worldwide
Mercury Media
Merrick Group
Microcom
Miller & Van Eaton
National Retail Federation
Nationalblinds.com
NetCoalition
Objectworld
Pac-West
PointOne
PRC
Primus Telecommunications
Product Partners LLC
Public Knowledge
Pulver.com
RealEstate.com
ReserveAmerica
Rifftone.com
S & B Technical Products
Savatar
Savvier
ServiceMagic
Shelcomm
Shoebuy.com
Skype
Sling Media Inc.
SOHOlutions
Sonus Capital Management
Sony Electronics Inc.
SunRocket
Symantec
Symercy Financial Corp.
Techviser
Telekom Austria
Telephia
TELLO
Ticketmaster
Tier1Research
TiVO
TNS
Tonystickets.com
Tranquilitymattress.com
Travelocity
udate.com
VI Technologies
Vivox
WCW Networks
Yahoo!

Would Senate bill liberate cable sports but squash the Internet?

When you’re the chairman of the Senate Commerce Committee, and you’ve just introduced the first major overhaul of telecommunications law in a decade, you can clearly expect prompt action.

Just 16 days ago, Sen. Ted Stevens (R., Alaska) introduced S. 2686 — formally, the “Communications, Consumer’s Choice, and Broadband Deployment Act of 2006.” (To read the 135-page bill, click here.)

Tomorrow, his committee begins the first of two hearings on the bill — which Stevens immediately relabeled “the Telecommunications Act of 2006.”

One week later comes the next hearing. Two weeks after that, on June 8, markup is scheduled. In other words, a near-finished draft of this complex, controversial legislation could reach the Senate floor in less than a month.

It’s almost an understatement to say that after a decade of revolutionary change in telecom technology and business strategies, it's time to address serious concerns that have arisen since Congress passed its even-more-ambitious predecessor, the Telecommunications Act of 1996.

Stevens deserves credit for taking a stab at some of the biggest, including the Baby Bells' push for permission to bypass local-franchising processes so they can more quickly introduce pay-television service that competes with cable and satellite companies. The vast majority of cable customers would welcome any competition, but the changes — the first subject at tomorrow's hearing — are bitterly and vocally opposed by the cable industry and its allies.

Other big devils lurk in the bill's details. Here’s a quick preview on two key issues that aren't on tomorrow's agenda and that may get short shrift unless consumers speak up. One is of national interest; the other seems to particularly affect Philadelphia residents of Comcast Country:

* Net neutrality. Despite the urgings of Democrats such as Sen. Daniel Inouye of Hawaii, the bill’s co-sponsor and the committee’s minority chairman, S. 2686 does nothing to guarantee against what many consumer advocates and technologists fear: that the broadband Internet will be duopolized by Big Cable and Big Telecom, which will charge high prices and squeeze out competition from companies that want to provide alternative services over networks that the cable and phone companies control.

* Comcast’s stranglehold over most of Philadelphia’s local sports telecasts, which it has achieved because of a 1992 law that allows it to withhold Comcast SportsNet from competitors — a tactic Comcast hasn't employed elsewhere but that other cable companies are starting to use. Stevens’ bill, as drafted, would stop new attempts to monopolize local sports and hinder competition by relying on what's known as the “terrestrial loophole.” But it would grandfather in contracts in place before July 1, 2003, and is at best ambiguous about what happens when they run out. (When were the current contracts signed that allow Comcast to withhold most Phillies, Flyers and Sixers' telecasts? When do they expire? Comcast won't disclose the terms of its SportsNet agreements, says spokesman Tim Fitzpatrick. About S. 2686, all he'll say is this: "Chairman Stevens and co-Chairman Inouye have put a broad legislative proposal on the table, and we are studying their bill, including the provisions related to sports and video content.")

Stevens calls the bill “a working draft intended to stimulate discussion," and says he "is open for comments and suggestions for change.” (You can offer your comments to Stevens via the Web by clicking here.)

Inouye says it needs major changes — especially when it comes to net neutrality. (Got ideas? Contact Inouye by clicking here.)

If you want more information on the growing campaign by consumer groups, media-rights advocates and technologists to persuade Congress to adopt net-neutrality standards, visit the Web site of the Save the Internet coalition.

Meanwhile, all I can say is stay tuned. I’ll try to keep you posted.

Will a few big companies destroy the Internet's promise?

If you want to better understand the gathering fight over "net neutrality," check out Farhad Manjoo's new piece in Salon, The corporate toll on the Internet. (It's worth reading even if you have to sit through an annoying online commercial for a "day pass.")

If you've read about the subject in my columns, you know where some key battle lines have been drawn: Ed Whitacre, chairman of a resurgent telecom company that has taken back the name (and, it hopes, the mantle) of AT&T, wants to set up new tollbooths on the broadband Internet "pipes" his company owns or plans to lay. Cable companies such as Comcast, having won the Supreme Court's assurance that they don't have to open their pipes to leasing by competitors, are trying to stave off video competition from the Baby Bells – the only other companies that own their own broadband network – but siding with the Bells against net neutrality as an onerous new form of "regulation." And Congress and the FCC seem inclined to let the market take its course – even if the result will be an unregulated duopoly for years to come.

Manjoo sorts through this whole mess, which will affect consumers and the economy for years to come.

An end to payday lending? Not quite, but it's a start

Inquirer readers may have noticed a fascinating little story last week by my colleague Todd Mason, buried in the Business section on Friday, that chronicled the latest blow to the payday-lending industry in Pennsylvania: Under pressure from the Federal Deposit Insurance Corp., the out-of-state bank that services one of Pennsylvania's largest payday lenders, Advance America, plans to quit the business here on March 27.

Todd's story (read it here) went on to quote the state banking secretary as saying that BankWest's withdrawal removed the primary impetus for the Rendell administration's support of legislation to legalize payday lending in Pennsylvania: the opportunity to regulate a business that was already operating here, anyway.

"If we were to support the legislation, we would be enabling these payday lenders to stay in business," Secretary A. William Schenck III told Todd. "That is not what we are about at the Department of Banking. ... The governor is strongly in favor of not going forward."

Yesterday came word of the final nail in this particular coffin: According to PennPIRG and Irv Ackelsberg, a Community Legal Services advocate who has also been fighting the payday-lending bill, the state Senate committee considering it has decided to set the subject aside for the "foreseeable future."

Don't count the payday lenders out just yet, though. Cash Today, for one, has showed disturbing resilience since it lost its own out-of-state banking partner.

At first, it operated under the pretense that it was making "Internet" payday loans from inside its offices. After Ackelsberg filed a lawsuit in December challenging that practice, it sought bankruptcy-court protection, but it remains in business. Walk up to the check-cashing window, ask about a loan, and you'll be given a toll-free phone number to borrow money: 800-899-CASH.

It's a seductively simple process, like any payday loan: No credit check, no muss, no fuss. All you need is a fax machine or an Internet connection.

Give the company proof of a regular paycheck, and the keys to your checking account, and it will gladly deposit, say, $300 in your account. Two weeks later, if you can't afford to pay it off, the lender will happily roll the principal over and take only the two weeks' interest, perhaps $75. Just don't think too long – especially about how a $300 loan will have cost you $300 in interest in just eight weeks.

"Legal loansharking" is a fair characterization for this business. The fact that desperate people use it, and that some manage to pay off loans and walk away, is no justification for legalizing a business built on repeat customers who pay the annual equivalent of 400 percent or more for small, short-term loans that will likely just dig them deeper into a financial pit.

Schenck has said that he'd like to persuade credit unions and other financial institutions to offer similar loans at an APR that would exceed our current small-loan usury limit but still be modest in comparison – perhaps 50 to 100 percent. He believes they could do so without a change in the law, by classifying some of the loans' costs as fees.

Could a market develop at rates in that range? Perhaps. The rates still sound excessive – a credit-card cash advance would probably be better for anyone who has that option. But they'd beat 400 percent.

Here's part of what PennPIRG said today in a news release crowing about payday lending's sudden troubles in Pennsylvania:

Yesterday, Chairman Gibson Armstrong’s office confirmed that the Senate Committee on Banking and Insurance would not be considering House Bill 1478 for the foreseeable future. A February committee vote on HB 1478 had been tentatively postponed for the week of March 13, 2006. This comes on the heels of Banking Secretary Bill Schenck’s withdraw[al] of the department’s support for HB 1478. Recent FDIC activity convinced the Secretary that HB 1478 was ultimately an authorization bill.

Payday lending in not authorized by Pennsylvania law, but it has been going on anyway due to the existence of partnerships between payday lending companies and out-of-state banks. While Pennsylvania usury law would prohibit payday lenders from making these directly, banks are not covered by state usury laws. By making the loans in the name of the banks, the payday lenders have been able to circumvent the law. However, pressure from the FDIC has resulted in all such banks pulling out of these partnerships during the last several weeks.

"The consequence of these two actions – the FDIC stopping "rent-a-bank" scams and the death of HB1478 – means that payday lending is, for all practical purposes, over in Pennsylvania," explained Irv Ackelsberg of Community Legal Services in Philadelphia. "This is a very satisfying victory for Pennsylvania consumers."

We can only hope he's right.

Is builders' bill truly 'working in 27 other states'? A top Texas official would beg to differ

In its campaign to persuade Gov. Rendell to sign House Bill 1467, the "Residential Construction Dispute Resolution Act," the Pennsylvania Builders Association has said repeatedly that similar legislation "already is working in 27 other states," as Brad Elliott, the PBA president, put it in a letter to the editor in Sunday's Inquirer

The next letter, from Cindy Schnackel of Homeowners Against Deficient Dwellings, disputes that conclusion, calling these laws "wolves in sheep's clothing."

But you don't have to take an advocate's word – or mine – that serious doubts have arisen since these "tort reform for builders" laws started to spread swiftly thanks to a national lobbying campaign by the home-building industry. Just listen to criticism about one of those 27 laws by a state official who has looked closely into her own state's version: Texas Comptroller Carole Keeton Strayhorn.

Strayhorn, in case you're wondering, is no died-in-wool Democrat or anti-business flame-thrower. Although she recently left the Republican Party to run for governor as an independent, she calls herself a "common-sense conservative." One of her sons, Scott McClellan, is press secretary to President Bush. Still, she doesn't pull any punches about the Texas law's strong tilt in favor of contractors over consumers.

The Texas law differs a bit from Pennsylvania's, in part because it establishes a Texas Residential Construction Commission to oversee the new dispute-resolution process. But the goals of the Texas law and its dispute-resolution procedure are similar to what the builders and contractors lobbyists are on the brink of getting here. And that dispute process drew scathing criticism from Strayhorn in a January report.

Strayhorn said her "research found no evidence the Texas Residential Construction Commission has had a favorable impact on the homeowner. It is clear that the Texas Residential Construction Commission functions as a builder protection agency."

"If our standard is giving all Texans a fair shake, this agency has fallen far short of that goal," Strayhorn added. You can read Strayhorn's whole statement here.

If Rendell wants to give all Pennsylvanians a fair shake, he should stop HB 1467 before it becomes law.

New Jersey wrestles with the Brave New World of insurance

When New Jersey rewrote its insurance laws in 2003 with an eye toward encouraging more competition and lower prices, most people focused on the likelihood that new entrants would seek a competitive edge by drawing different ratings maps or using credit histories in pricing — already common practices in Pennsylvania and most other states.

Little attention was paid to the other aspects of the sophisticated pricing models that have moved into the industry’s mainstream over the last decade. But that changed abruptly last week, when the Star-Ledger of Newark reported that Geico was using education and occupation as part of its New Jersey pricing models.

The head of New Jersey Citizen Action labeled the practice unconscionable, and told the paper: “I would love to know who they are marketing themselves to? Are they writing letters to doctors and lawyers? Everybody should be putting down that they are Rhodes scholars.”

Now, legislators have introduced bills in both the General Assembly and the Senate to ban the practice. “Education and occupation has nothing to do with someone’s driving record,” said Assemblyman Neil Cohen of Union County, who introduced one of the bills, according to an article in today’s Star-Ledger. “There’s no relationship at all except to give someone the opportunity to charge regular folks a higher rate.”

The same criticisms have been leveled at insurers' use of credit information — typically reduced to a credit-score-like "insurance score" or "financial-responsibility score" — in pricing. How can it be a legitimate factor, critics ask, when whether you pay your bills on time has no obvious relationship to driving performance?

Insurers who rely on credit — probably the vast majority now — respond that they use the data along with a host of other factors to try to predict the likelihood that they'll have to pay out claims on somebody they insure. Whatever the underlying reasons, they say, how you handle your finances has proved to be a pretty good predictor of their risk of future losses.

But the jury is still out on the use of credit-based scores in auto insurance. Pennsylvania doesn't allow their use in decisions to cancel or rerate an existing policyholder — so your premium can't go up, say, if your bill-paying performance suffers because you lost your job. But it doesn't bar insurers from using credit in their initial decisions to issue a policy or assign it to a pricing tier.

Interestingly, "occupation" is among the classifications that Pennsylvania bars insurers from using in deciding whether to write a policy, or whether to refuse renewal, according to Randy Rohrbaugh, a deputy insurance commissioner. It's listed in the state's Unfair Insurance Practices Act, along with race, religion, nationality, ethnic group, age, sex, family size, place of residence, and marital status.

But the state does allow occupation — unlike race, religion, nationality or ethnic group — to be used in pricing policies, so long as they have data showing that occupation does, in fact, help them predict risk. That's the same standard New Jersey has adopted in allowing Geico and other insurers to use occupation and education in auto-insurance pricing.

One oft-heard argument against the use of credit data could also be raised against the use of education and occupation: that they could be proxies for discrimination against racial or ethnic groups. Since insurers treat their scoring models as proprietary, it's been very hard for outsiders to judge. But the Geico story has provided an unusual glimpse into one company's use of occupation-based ratings.

According to the Star-Ledger's initial article, a Geico internal manual showed how the company viewed a person's job and education.

Accountants, architects, lawyers, teachers, engineers and dentists were listed as occupations with "superior loss experience," the paper quoted Geico as saying. Among those at the other end of the spectrum were clerks, long haul drivers, route men, and "unskilled and semi-skilled blue- and gray-collar workers."

As for education, the manual said: "Risks who have achieved at least a high school diploma or its equivalent are more favorable than those without a high school education. Bachelors, masters and other advanced degrees are considered most favorable."

Is that discrimination? Absolutely. But it's the kind of discrimination routinely defended as a key aspect of the insurance business: finding ways to slice and dice the population to predict relative risk, and charging enough to cover a range of risks at a profit. The law says insurers "can't unfairly discriminate," Rohrbaugh says.

Rohrbaugh points out that some insurers have built entire business models around occupational classifications — offering to cover "all members of the Grange," for instance, which means covering farmers, or to cover active members of the military.

He says Pennsylvania has disciplined some companies for refusing to cover some people because of their occupations — for instance by turning down professional athletes, students or actors. But if what you do can be shown to be a reliable predictor of how much you'll cost your insurer in claims over the long haul, the state isn't saying no.

"That’s why we always talk about 'shop, shop, shop,'" Rohrbaugh told me. As a consumer, you want to find a company that elevates factors that make you look good, and discounts factors that don't.

Personally, I'm glad to see New Jersey's experience shedding more light on how insurers do their business. Insurance really is all about discrimination. That's why regulators and the public should want to know more of the disturbing details — because when it comes to discrimination, deciding what's unfair and what's unfair is really up to us.

Unhappy with House Bill 1467? Here's how to tell Gov. Rendell – it's all up to him now

Readers have been asking how to contact Gov. Rendell about House Bill 1467, the "Residential Construction Dispute Resolution Act," which has been passed by the Pennsylvania legislature and made its way to the governor's desk – for signature or veto – with virtually no news coverage.

Here's how:

* Call Rendell's office at 717-787-2500.

* Send an e-mail via a Web-based form.

* Send a letter to:

Governor Edward G. Rendell's Office
225 Main Capitol Building
Harrisburg, PA 17120

If nothing else, HB 1467 deserves much more scrutiny – and opportunity for the public to comment – than it has gotten. (Click here to read my column urging Rendell to veto the bill.)

Passed without any real public hearings, this stealth legislation could affect any consumer in the state. HB 1467 would apply to new homes and condos, but it also would apply to many much smaller jobs – even a new porch or deck that costs $2,000 or more (To read the bill itself, click here.)

The bill would mandate a step-by-step procedure for dispute resolution, and would meanwhile bar any lawsuit for at least 75 days. It's part of a national push by homebuilders to address a purported problem – too many lawsuits, and high liability-insurance prices as a result – that Pennsylvania builders don't even seem to have.

The legislature got nailed last year for its stealthy pay-raise legislation, but this time it's doing more than lining its own members' pockets. If an entire new procedure is going to apply to Pennsylvania consumers in disputes with contractors, shouldn't we have at least been in the loop?

A 24/7 marketplace with security that takes weekends off

The more I hear from experienced eBay users about their experiences, the more I suspect that eBay shares some responsibility for the kinds of scams Blakely Smith and others encounter while doing business on the online auction site. (Click here to read about Smith and the phantom Monique Lhuillier wedding gown.) Something about eBay's hands-off attitude smacks more of a strategy of minimizing legal liability than of doing the utmost to minimize problems.

Exhibit 1, shared by Beverly Okin-Larkin, is how hard it is to report a scam-in-progress. Okin-Larkin knows, because she recently discovered one on a weekend, and was told that she could file a complaint, but that having a "live chat" with security would have to wait till Monday morning. (Don't even think of reaching somebody by phone.)

Okin-Larkin's day job is as a human-resource trainer at a Texas state facility. By night, she runs an eBay-based business, selling stuff (OK, condoms) to buyers too embarrassed to visit their local pharmacies. EBay is proud of people like Okin-Larkin. As spokesman Hani Durzy told me last week, more than 724,000 professional sellers in the United States use eBay as a primary or secondary source of income.

Proud, but apparently not-so-interested in the security problem she unraveled. Listen to her account of what happened when she was shopping on eBay for a camera to use in her work:

I noticed a scam IN PROGRESS three weekends ago, was interested (and admittedly greedy) to see a $2,000 camera being listed for a low reserve price of 700$ (sic). Now, I am an experienced eBayer (and Internet type), so I started looking at what this person was selling. I always try to research the people before I bid.

Hmm. LOTS and LOTS of cameras and other high priced electronics - all with conveniently low reserve pricing. I look back further to see his feedbacks and look at what he was selling last month - whoa. Car parts ... and only car parts.

I go back and look at the listings and I start noticing how the syntax is weird (especially the "$" sign after the monetary amount) and that this new batch of listings is supposedly coming from someone in Boston, MA, when the car parts were sold from Santa Monica, CA.

Now I am really noticing the differences, and I realize that someone else has posted all this merchandise - well over 40 auctions, all posted in the most expensive way possible: color, photo feature, extra headlines, etc. Wow. I only thought this happened in movies - someone hacked into a guy's account and was posting a mess of auctions. [Okin-Larkin says each auction also included an outside e-mail address, and told buyers to contact him directly because of glitches in the seller's eBay e-mail.]

However, when I go to look to find assistance through the ever-unhelpful Site Map and try to report what looks like a hijacked account to eBay - well, it's Sunday, and little did I know that their Security department is closed on weekends. I even went to a Live Chat area [for 24/7 technical support], and no one helps except to tell me to "use the web-based reporting form." Some old timers in a chat room told me "no one's home at eBay on the weekends" - I bet the scammers know that, too.

Anyway, I do fill in the form, wasting 20 minutes, and noticed that people were starting to bid like crazy for all sorts of stuff. I actually started e-mailing the victim of the original eBay account AND the potential buyers trying to warn them off these bogus listings.

I even got bold enough to e-mail the "seller" - after three emails I find out that he wanted me to send "Western Union money order as my Paypal is not working," and when I asked for his address, he's located in Romania.

I sent the info to both the victim and eBay.

The victim thanked me, the potential scam victims thanked me - however the next day eBay sent me a "Why were you using our message service so much - we're suspicious" e-mail. They never contacted me from the web-based form info I sent. Sheesh eBay, thanks a lot.

Still over three weeks later, nothing from eBay - honestly I think eBay just wants our money and doesn't truly care about security. If they did, then their security department would be open 24/7 just like eBay and the internet.


Anyway, let me tell you what I consider my "tells" for "safe" eBaying:

1) Feedback - always read it and look at the negatives
2) While at Feedback - check the previous auctions: Do they usually sell this merchandise, especially high-end items?
3) E-mail the seller - I ask questions and look for more pictures if necessary
4) Never do business outside of eBay. [PayPal is owned by eBay, Okin-Larkin points out. If someone says their PayPal account is broken, rest assured it will be fixed, because the seller will want the money and eBay will want its cut.]
5) Don't use money orders unless you can trace them

In the 5+ years I been using eBay, I've only been burned once and that was early on over a DVD. Learned my lesson, cheaply. Not for $2,400.

Anyway THANKS!

- Beverly Okin-Larkin

Stuck in interactive-voice-response hell? Here's how to get help!

A while back I told Consumer Inq readers about this great new tool for anybody who's sick and tired of getting the electronic run-around when they try to reach a company about a billing, service or technical question. Yes, that means everybody I know, and probably everybody you know, too. (I imagine mega-millionaires don't complain, but I could be wrong – maybe they gripe about how many hours their butlers or personal assistants have to spend on hold.)

Well, that wonderful tool, Paul English's IVR Cheat Sheet, has a new home: www.GetHuman.com.

The founder of Kayak.com – an entrepreneur who's definitely wealthy enough to pay his assistants to wait on hold – is hoping to foment a revolution in customer service. I'm hoping he succeeds. Click here to read my recent column about his growing ambitions.

Does eBay need to be more aggressive on fraud?

Today's column on how an eBay newbie was scammed out of $2,400 while trying to buy a wedding dress – a scam that won't even add to eBay's fraud statistics, but it says she fell victim to a "back alley," off-eBay transaction that just isn't its problem – drew some telling response from experienced eBay users.

A common thread: It's a wonderful place to do business, but eBay could and should do more to address fraud problems – especially in such areas as password theft and account tampering that eBay can't so easily disavow.

This e-mail from Denny Hannigan of Northeast Philly, who does business on eBay as Way Back When Antiques, makes the point better than I can:

Just read your column in today's Inquirer and had to post a reply.

While Ebay buyers and sellers must be cautious and abide by all the safety rules, there is definitely some responsibility on the part of Ebay management. Ebay, as a consumer service company, must be more receptive to the problems and scams encountered by customers. They cannot just provide warnings and conclude that the customers must be more wary.

I've been a registered Ebay member since their early days in 1997. I deal with them on a daily basis for the last several years and have an impeccable transaction record with no negative marks. I was a recent victim of a scam attempt where a predator was able to get my Ebay passwords and info and list items under my account. He was able to run up a very large dollar amount in fees before I even noticed it was going on. Ebay DOES NOT provide a direct phone number to contact anyone in the event of this type of problem (or any problem for that matter). Due to this I was forced to get online in a chat room with an Ebay rep and after several hours got the problem resolved (with NO explanation from Ebay how this happened). I realize Ebay cannot have an open line for the whole world to call on trivial matters but they need a direct line for scam protection, at least for registered members. This scammer I ran into was able to represent himself as me through no fault of my own.

Also Ebay provides system called FEEDBACK where members can complain or praise other members on the results of a transaction. This system is a great concept but seriously flawed in that it allows a "questionable" member to make erroneous claims against a member with a good record. Ebay has no upfront system of reviewing these disputes and just posts the comments for all to see. A disreputable member can smear the record of an upstanding member with no review by Ebay (until much later down the road). This can cost the reputable seller/buyer a great deal of business.

In conclusion, my point is that while Ebay is a wonderful venue that has changed the course of online buying and selling, it must be more receptive to it's members. Create a hot line to stop scams as they are discovered, allowing members to contact someone at Ebay. Establish a review board to look at feedback issues to protect honest Ebay members and their reputations. Ebay must remember, its strength is in it's continued use by contented customers. They must not isolate themselves from their customer base and continue to point to problem issues as being caused by the weaknesses of their users.

Whoops! The FCC admits earlier study was biased, says a la carte cable WOULD benefit consumers

Remember the computer programmer's postulate: "Garbage in, garbage out"? Today's stunning news once again proves the point.

The Federal Communications Commission now says its staff's 2004 conclusion that a la carte pricing would provide little benefit to consumers was based on a study that made "unsupported and unrealistic assumptions," and then piled mistaken calculations on top of them.

How mistaken? The 2004 study said a consumer who purchased as few as nine networks would likely face an increase in monthly bills under a la carte pricing. But the FCC now says that even if you accept that study's questionable assumptions, a customer could buy as many as 20 channels without any increase. That's three more than the average household watches.

After reevaluating several hypothetical scenarios, the new study concluded that a household's monthly bill could drop by as much as 13 percent under a la carte pricing. The 2004 study predicted that bills could rise by as much as 40 percent under a la carte.

Some credit for the FCC's reversal must go to the strange bedfellows who have been pushing for more control over what cable channels they buy. The a la carte concept was embraced early on both by conservatives, who don't want to pay for programming they don't approve of, and consumer advocates, who don't think people should have to put up with cable's monopolistic practice of charging ever-higher prices for ever-larger bundles of channels that customers may not want.

But you have to give FCC Chairman Kevin Martin credit, too - and praise the FCC's staff for its willingness to admit having been bamboozled. I don't know the back story yet, but the FCC news release outlines how the agency was misled by an erroneous Booz Allen Hamilton study submitted by the cable industry to support its argument that a la carte was a bad, bad idea.

Not true, the FCC now says. Further examination reveals that a la carte could actually help combat rising pay-TV prices and lower consumer bills.

As the FCC's new study itself puts it, dryly:

For example, under a la carte, a consumer could cut his programming bills merely by electing to purchase fewer networks. And a la carte could make service affordable to those who cannot afford bundled rates. A la carte also could offer consumers the ability to pay only for the programming that they value.

We could save money by paying only for programming we value? Now that's a novel concept.

The big question now is what lawmakers, regulators and the industry will do in response to this sudden attack of FCC common sense.

As they like to say in TV-land: Stay tuned.

Penn hospital says not to worry: No more trans-fat fries

The Hospital of the University of Pennsylvania says french fries made with unhealthy trans fats were never served to patients - just to unwitting staff and doctors, it seems - and haven't been served to anybody since the HUP cafeteria began undergoing renovations in late November.

That response comes courtesy of my colleague, reporter John Sullivan, whose article on the killer fries in hospitals appeared in yesterday's Inquirer.

HUP says that once its new cafeteria is done, it will serve fries without trans fats.

Kudos to the Center for Science in the Public Interest for conducting its little study. It demonstrates the huge gulf between standards for labeling most packaged foods, which since Jan. 1 have been required to list trans fats on ingredient labels if a product is intended for interstate commerce, and the complete lack of knowledge we have about the content of most restaurant or food-service foods. Even if they were shipped in labeled packages, how are you going to know? Dig through the trash for labels that refer to "partially hydrogenated vegetable oil"?

Trans fats don't exist in nature - they're chemically altered fats. There's a growing mountain of evidence that they increase cardiovascular risks at any level in your diet. Yet some hospitals weren't even bothering to cross them off the shopping list.

There was one saving grace for HUP, though. As Sullivan's article notes, Massachusetts General in Boston originally led the list of hospitals with trans-fat-laden fries. But when hospital officials found out the "food police" were on the case, they made sure the kitchen switched to trans-fat-free cooking oil.

For more information about trans fats, the Food and Drug Administration has an excellent Q&A page.

Killer trans-fats ... in hospital food?

OK, I kind of expected junk-food manufacturers to be slow to adjust to the damning evidence against trans fats - the partially hydrogenated vegetable oils that make foods taste better and last longer, but are worse for you even that saturated fats.

But hospitals?

The Center for Science in the Public Interest had its suspicions, so it had an independent lab analyze French fries sold in cafeterias at 18 of the nation's top hospitals.

Bad news, Philadelphians: The Hospital of the University of Pennsylvania was the worst offender, according to the study's findings. A six-ounce serving contained 5.3 grams of trans fat - enough to infer that HUP still uses partially hydrogenated oil in its deep-fryers, CSPI said.

(Amounts under 2 grams - such as the 1.2 grams in fries sold at Children's Hospital of Philadelphia - suggest that the institution is using a non-hydrogenated vegetable oil, but buying frozen French fries that had been par-fried in partially hydrogenated oil. )

CSPI is trying to draw more attention to the trans fats that people are unaware of in their diets. New labeling requirements have made their presence more obvious in packaged foods, but restaurants and food-service companies aren't affected by those rules. So consumers suffer - as do doctors, other hospital employees, and perhaps even some patients at these hospitals, apparently.

Trans fats not only raise blood levels of LDL cholesterol ("bad" cholesterol), as saturated fats do; they also lower levels of HDL, the so-called "good" cholesterol that helps guard against heart disease. It's a double-whammy that leads many scientists and nutritionists to the conclusion that no level is acceptable in a healthy diet.

The National Academies' Institute of Medicine concluded in 2003 that Americans should eat as little trans fat as possible, CSPI says. In 2004, the Dietary Guidelines Advisory Committee recommended that Americans consume less than 1 percent of their calories from trans fat - about 2 grams per day.

I have to second CSPI's conclusion: Hospitals should know better.

Too many consumer stories, too little time

One of my new year's resolutions was to try to keep you more up to date on the steady flow of consumer news that comes my way - everything from word of scams and misleading marketing to reports about useful research and about regulatory action (or inaction) that affects the marketplace.

Today, a quick update on gift cards - the subject of two recent Consumer Watch columns (one on gift-card trends and another on the bizarre rules that make them a minefield) and a news story and sidebar today by my colleague Joe DiStefano, who explains why every last diner and pizza parlor is suddenly hawking these things.

The news is that New Jersey's legislature, with little fanfare, passed some slightly improved rules last month for Garden State consumers. Last week, acting Gov. Codey signed a new law, most of which goes into effect on April 4.

The good news: Gift cards and gift certificates sold after that date will not be allowed to expire for at least two years. "Dormancy fees," which eat away at the value of a card even before it expires, also can't be imposed for at least two years - two years after the card is issued, or if it has been used, two years after the last activity. And dormancy fees will be capped at $2 per month.

The bad news: New Jersey cards can still expire. You can give your Aunt Jan a shiny $100 gift card to use at the mall, and if she loses it in her purse for a couple years - you know how scatterbrained that Aunt Jan is! - it will be worth zip when she tries to use it.

There's no good solution for reminding the Aunt Jans of the world, short of gift cards with built-in alarm clocks, satellite locators, and mini-squawk boxes that could boom out "Spend me!" from her purse whenever she gets within 200 yards of a mall. (Hmm, maybe I should patent that!)

Most of those lost cards will never reappear, which is why some states - such as Pennsylvania and Delaware - make the funds "escheatable" to the state after, say, five years. The state gets the cash for safekeeping, gets the interest from it outright, and makes it possible for a consumer to make a belated claim for the money if a misplaced or forgotten card turns up.

Personally, I think that's a better solution than simply letting a store, restaurant, bank or mall owner keep the cash from Aunt Jan's gift. But the best solution would be to outlaw expiration dates and money-munching fees entirely.

For decades, American Express has sold travelers checks on that basis. I haven't checked lately, but in the past many were issued with no fee at all. Amex was content to profit from the time value of the money and the unstated expectation that some checks would get thrown out in the trash or lie in drawers so long they'd disintegrate (or be worth much less because of inflation). That's a reasonable model for gift cards, too.

At the very least, it's worth a try. If it dries up the market for these ubiquitous cards, what's the harm? You can still give Aunt Jan cash, or take the time to pick a thoughtful gift. (As everybody's Mom used to say, it's the thought that counts.)

My bet is that such rules wouldn't dry up the market at all, although the latest iteration - let's call it the "Joe's Diner Gift Card" - might disappear. But Joe never really needed gift cards, anyway.

Personally, I wouldn't mind if the unclaimed funds stayed with a company, if the value remained intact for consumers, though I'm sure officials in Pennsylvania, Delaware and other states would miss the extra cash flow.

But the bottom line is: You gave the gift to Aunt Jan. She should be able to use it or lose it, but without any time limits. It was your money. Now it's hers. It never belonged to the mall.

New Jersey legislators took a small step in the right direction. Pennsylvania legislators have periodically proposed eliminating gift-card nuisance fees, but their leaders have let the bills languish. It's time they stepped up to the plate, perhaps with a push from State Treasurer Robert P. Casey Jr.

Casey's spokeswoman told me recently that her boss would support legislation to eliminate nuisance fees on gift cards and certificates. “Real money was paid for something, and the goods were never received. The consumer is entitled to that money," she said.

I couldn't agree more. Now would be a good time to follow through.

Sony's latest high-tech product: Music CDs equipped with spyware

It's not enough to have to worry about evil-genius 15-year-old hackers in Hackensack or renegade Romanian criminal gangs that want to bore their way into your computer to steal your data, money and identity, or to turn your innocent little Dell desktop into a zombie drone that sends out millions of spam e-mails for cheap knockoff Viagra.

Now you've got to worry about Sony, one of the most respected names in technology, sneaking something called a "rootkit" onto your computer when you play one of its music CDs. According to blogger Mark Russinovich, rootkits "are cloaking technologies that hide files, Registry keys, and other system objects from diagnostic and security software, and they are usually employed by malware attempting to keep their implementation hidden."

In less-techie terms, Sony essentially employed a tool of malicious hacking to try to keep CD buyers from copying its music onto extra CDs or iPods. But the rootkit did much more - including opening CD-users' computers to other harmful spyware that might be impossible to detect with ordinary methods, and getting Sony into a whale of a public-relations pickle.

Last month, Russinovich detailed the mess in a blog entry. On Wednesday, Russinovich declared victory in his blog: almost total capitulation by Sony, including the recall of the offending CDs. (If those accounts are too technical, here's a good overview of the story from USA Today columnist Andrew Kantor.)

I've never been convinced by the argument that information, music, or anything else people create or assemble through their labors, "just wants to be free." As a professional writer, I believe creative work has value, and I know that much of it would never be created but for mechanisms of compensating the writers or artists. I'd hate to return to an era when artists required individual wealthy patrons to survive.

But increasingly, I find myself rooting against others - Sony, for one - who make the same argument. Computers and the Internet are extraordinary tools for creativity - for creating, distributing and, yes, sharing creative products. If I buy its music, what right should Sony have to stop me from listening to it on my iPod? For that matter, why isn't its secretly installing a rootkit on my computer a crime?

The ultimate consumer tool: A key to getting a human being on the phone

OK, I may have just discovered the single most useful consumer tool ever conceived: a Web site from Paul English, co-founder of Kayak.com, that shows you how to cheat your way to a person when you're stuck in the voice-mail hell of businesses' "interactive voice response" systems.

I can't vouch for it completely, but if it works even a fraction of the time, I may swear it's the best thing since sliced bread, and not be joking. But I just verified that it helped me get through to a live human being at 1-800-CHASE24. Check it out: www.paulenglish.com.

More on credit freezes - and what to do if you live in Pennsylvania or another state that doesn't require them

If you want to get control over who has access to your credit report, a credit freeze is the answer. But so far, only 12 states require them - and some limit the right to a freeze to people who are already victims of identity theft.

In Pennsylvania, House Bill 1243 and Senate Bill 180 each would establish some rights to a freeze. They're better than nothing, but neither goes far enough to address the huge problem our credit-reporting system has created: Easy access to "instant" or "pre-approved" credit has led to the free flow of our credit reports, without our knowledge or permission. As many an identity-theft victim has learned belatedly, the same easy access you enjoy to instant credit in the checkout line at Home Depot or Circuit City can also allow a thief to open a new account in your name. A freeze would prevent that, because the thief would need more than the information available in your wallet or even on a stolen credit report - he'd need a secret PIN code that you would use each time you wanted to authorize a business to see your report.

New Jersey's law, which goes into effect Jan. 1, isn't perfect, but it's easily the nation's best so far. It allows any resident to establish a freeze - no need to wait till you've been a victim. It allows the freeze to be requested by phone or Internet, instead of only by certified mail. Though it initially gives the Big Three credit-reporting agencies up to three business days to temporarily lift a freeze - something you'd want to do when applying for credit, signing up for a new cell-phone service, or anything else that involves a credit check - it sets year-by-year goals for faster service. By January 2009, a consumer will be able to electronically authorize a report's release within five minutes, and to authorize its release within an hour by phone. And it allows the credit bureaus to charge just $5 apiece to lift the freeze, and nothing to establish it. By contrast, the Pennsylvania Senate Bill allows each to charge $10 to establish a freeze (except if you're already a victim, or over 62 years old) and $8 to lift it.

As far as I'm concerned, any charge for this service is too high a charge. Lenders and the credit bureaus have developed a financially beneficial system: To control their risk and generate new business, lenders already pay for our credit information - as they will any time we authorize a frozen report's release. If it costs more to run a system that doesn't do collateral damage to consumers, there's an easy solution: Raise the price to lenders.

Millions of consumers are harmed, and the rest of us put at risk, by the system these guys have established. We shouldn't have to pay to fix it.

More buzz about buzz

Yesterday's column about Tremor, Procter & Gamble's secretive word-of-mouth marketing venture that has enlisted a quarter-million influential teens as a volunteer force of "buzz" marketers, drew this response from Maryann Devine, director of marketing and public relations at Philadelphia's Academy of Vocal Arts:


Dear Jeff:

Have you seen the Word of Mouth Marketing Association’s Code of Ethics, which puts transparency among its chief points? My own opinion is that word-of-mouth marketing, whether between teens or adults, only works if the buzz is honest and the product is fantastic. Anyone who deceptively promotes an item to their friends and acquaintances will soon lose credibility - and therefore lose value to the company who recruited him in the first place. Although I'm sure the stats are different for teens (for whom instant messaging and text messaging are extremely important), WOMMA's research says that 80% of word of mouth happens face-to-face, not via the Internet as many assume. By the way, I’m not a member of WOMMA.

In fact, I was curious about how word-of-mouth marketing firms work, so I signed up a year or so ago to participate in a couple of Bzzagent’s campaigns. Sure, I got a free book out of the deal, but it was so awful that I would never recommend it to my colleagues. No one tried to coerce me into talking positively about what I felt was a poor offering. (It was Return on Customer, by the way.) Bzzagent is upfront about only talking up what you love, and not hiding your part in the campaign.

On the other hand, my husband and his friends carefully planned their attendance of the movie Serenity for opening weekend – not because they had to be among the first to see it, but because they’re keenly aware of how opening weekend box office revenue affects a sequel’s prospects, and they’re all serious fans of the canceled series, Firefly, that spawned the movie.
They also planned to see it again in that first week, for the same reasons. I understand there was a word-of-mouth campaign for Serenity, but my husband didn’t know about it till after the fact, when I mentioned it to him. He and his friends do that on their own, for films they care about. I’ll bet if Tremor or Bzzagent had given them some other ideas, they’d have been happy to put them into action.

The point is, people are doing this anyway, and they’re savvier about the effects of their actions and influence than you might guess. This is not to say that deceptive marketers don't exist, but people will always buzz about great stuff. And buzz that is suspect is worthless to everyone, including Tremor.

Sincerely,

Maryann

My (slightly edited) reply:

Dear Maryann -

Thanks for the thoughtful note. My 14-year-old makes much the same point, albeit with a lot less sophistication, about buzz only working if the products are worth praising.

Yes, I've seen the WOMMA code of ethics, and interviewed a couple of the association's top officials. I'm still skeptical, though, in part because Tremor is not a WOMMA member, and the worst "stealth" marketing may come from nonmembers. But beyond that, I'm skeptical because I can't escape the idea that this involves more man-behind-the-curtain manipulation than most of us expect from traditional marketing.

PR people are always hoping to influence "word of mouth" or "viral" spreading of positive opinion about their clients or their products. At some level, that's your main goal, isn't it? Sure, you want mass or niche media to cover what you do, but ultimately, you must want positive opinion to spread as far as people can carry it.

The question is what levers you're able and willing to pull. Some word-of-mouth techniques are hard to criticize -- Andy Sernovitz of WOMMA told me about campaigns such as Krispy Kreme's selling donuts at a discount to nonprofits, to spread positive feelings about the company, and a software company's decision to sponsor user groups so that customers could share feedback (and even criticism) of its products, and feel good about the company's willingness to promote such useful discussion.

My concern is with the campaigns that aren't so obvious and visible. Your story about "Serenity" suggests a plausible example. I've got no problem with savvy fans taking it upon themselves to see the film quickly and repeatedly because they want it to succeed and encourage a sequel. I've got no problem with their trying to spread the word to other fans via e-mail or on the Web - probably the only real way individuals could have a chance at much impact with films that open on thousands of screens around the country.

But I don't like the idea that marketers, watching that organic behavior, might then be scheming about how to manipulate it - say, by systematically identifying a quarter-million "connector" filmgoers and sending them all sneak-preview or first-weekend passes. A decent film marketed that way might surpass much better films in those crucial early measures. Come to think of it, the studios are probably doing that right now. Maybe that's why so much shlock is so successful - as well as why we'll never know.

But I agree that this isn't a black-and-white issue. Thanks for sharing an insider's perspective.

Best,

Jeff

Is AARP making money but losing its way?

I rarely get as much response as I did from a recent column about a Philadelphia consumer who was disturbed by high price quotes he'd gotten for AARP auto insurance. He's still waiting for an explanation beyond the obvious - that auto coverage is so complex nowadays that next-door neighbors may get widely varying quotes from the same company, and no single company offers the best deal to anyone - for premiums that were three or four times as high as his current coverage.

Many readers focused on the devil's bargain made by AARP: It supports its extensive advocacy work by licensing its name and marketing products through a for-profit subsidiary, and sometimes the potential conflicts-of-interest are painfully obvious. AARP threw its weight beyond President Bush's prescription-drug plan for Medicare - its support was probably the single biggest key to its passage. Now AARP stands to profit from marketing a Medicare Part D prescription plan.

Last year, I discovered when I looked at AARP's financial reports, its royalties and related fees brought in $350 million. Today's New York Times points out how AARP is upping the ante on its commercial ventures.

As the Times' Claudia Deutsch reports, AARP has big plans for next year, with these products in its wings:

There is an investment fund aimed at people over 50, the first such product it has developed on its own. There is a consulting service to help companies develop their own products for the 50-plus crowd. There is a "seal of approval" program in which, for a fee, AARP will endorse products it likes.

AARP is also talking to several drugstores about possibly selling AARP-branded items that are now available only by mail. And it is prodding companies to develop new products for older people, not just passively vetting the products that industry comes up with. For example, it is looking for a telecommunications partner to help it devise an elder-friendly cellphone service, and for vendors who will make easy-to-open luggage, better home lighting and other products that AARP can sell.

"We're finally being proactive, instead of waiting for companies to come to us with ideas, " said Dawn Sweeney, president of AARP Services, the for-profit subsidiary that handles product sales.

Judging from what I heard - much of it from AARP members - the group has a big-time brand identity problem. It risks losing at least a little credibility each time somebody discovers that just because it says AARP, it isn't necessarily a good deal for seniors.

Is AARP an advocacy group, or is it something else?

Could rogue geeks raid my bank account?

We've been chattering for years about the checkless future, but this new study by MasterCard still takes me by surprise. Does anybody else worry that this flood of direct debits may magnify the potential for huge frauds? Those concerns aren't theoretical. We recently learned, for instance, how an insiders' scheme almost took down Britain's ATM system in the 1990s?

I advise people all the time to scrutinize every statement, not only from their credit-card companies but also from their banks and phone companies. Any business that has the ability to sneak off with small amounts of money from large numbers of people is at risk from computer-savvy employees who've "gone rogue," as the Brits so smartly put it. Nowadays, the booty could wind up with terrorist cells as well as with ordinary criminals.

I use my American Express card and direct bank debits to pay bills, for the convenience and because some companies offer incentives. The MasterCard study is oddly silent on the latter method, though it may wrap them in with "debit-card" payments. If it's a MasterCard or Visa debit card, of course, the business probably has to cough up a bigger service fee - a cost you'll end up paying eventually, of course, in higher prices.

But convenience aside, the new system we're so blithely adopting gives me the creeps: It vastly increases the number of businesses that have the keys to my bank account, and offers a wider playing field for the rogues.

This new efficiency could come at a very high price.

For Recurring Bills, Automatic Payments Now Surpass Checks, Study Says

Surprising data put out today from MasterCard International. Here are some excerpts from its news release:

Automatic payments have for the first time surpassed check writing as the dominant method for paying recurring bills, according to the results of a MasterCard International consumer research study released today.

The 2005 MasterCard Recurring Payments Awareness, Behavior & Attitude study showed that more than two thirds ofU.S. households (67 percent) now pay some recurring bills automatically compared to those writing checks (64 percent). Nearly four in ten households link payments automatically to a credit card (38 percent) and three in ten households charge them automatically to a debit card (31 percent). [What about direct debits from a checking account not linked to a MasterCard or Visa debit card? The release doesn't say, but presumably they're wrapped in with the debit-card payments, even if they don't generate the same rich service fees.]

In addition, among automatic bill paying households, the number of bills paid automatically rose in the last five years, from an average of 3.1 bills per household in 2000 to 4.4 bills today. During the same period, the number of checks written declined by nearly 50 percent, from 4.4 to 2.4 among these households.

"Consumers have enthusiastically embraced the convenience of using their credit and debit cards to automatically pay their recurring bills," said Donna Johnson, Vice President, New Markets, US Acceptance, MasterCard International. "They value knowing their bills are paid on-time, without worrying about late fees, and even earning rewards, depending on the payment card they use. While there’s still plenty of room to grow, our study shows that more consumers than ever realize that checks simply cannot match the advantages of automatically paying recurring bills through a credit or debit card," added Johnson.

While credit card-based recurring payments remain the number-one method of automatically paying bills, debit-card payments have shown the most growth, with the proportion of households using debit cards to automatically pay recurring bills increasing from 26 percent in 2000 to 31 percent in 2005.

The survey also found that nearly half of the credit cardholders (47 percent) and more than half of debit cardholders (53percent) would consider adopting or adding additional recurring payments. The service categories with the highest proportion of customers using an automatic method for paying recurring bills include telecom, online/internet services, health club memberships, Internet service providers, commuting expenses and toll-paying.

Nearly six in ten (57 percent) consumers who use debit card recurring payments, and half (50 percent) of those using credit card recurring payments, cited convenience as their primary motivation to begin automatic recurring payments. About two-thirds of consumers (67 percent who use debit card recurring payments; 64 percent who use credit card recurring payments) said convenience was the reason they continued to use the recurring payments option.

About the 2005 MasterCard Recurring Payments Awareness, Behavior & Attitude Study MasterCard International commissioned the study as a part of an ongoing effort to better understand recurring payment behavior and attitudes among consumers, including the use and appeal of different payment methods. In 2000 and 2003, MasterCard commissioned related studies, which were used as benchmarks for this year’s findings.

From May 25 - June 5, 2005, MasterCard International conducted in-person interviews with 762 consumers from 25 geographically dispersed markets. Of the 762 respondents, half were men and half were women. All respondents were between the ages of 21 and64, responsible for most/all of their household bill paying, and owned a personal credit card and/or debit/check card. The margin of error for 762 completed interviews is +/- 3 percent.

Tales of the Marketplace, Vol. 2

I wrote a column this morning about a Philadelphia resident who keeps on getting outsize auto-insurance prices from AARP – triple or even quadruple what he’s currently paying, and twice as high as any quote he’s gotten in the same period from any other insurer.

So far, readers’ response seems to be split. Some think I was unfairly trashing the Hartford subsidiary that offered coverage for prices ranging from about $6,000 to $7,500 a year. Usually their reason was that Hartford had been good for them.

Others think I was unfairly trashing AARP, which essentially licenses its name to Hartford, as it does to other companies for other kinds of insurance. Usually their reason was that AARP insurance had been good for them.

And some said right on, often because they, too, had gotten expensive quotes or coverage through AARP or directly from Hartford.

I’ll post some of their stories later, but many of the responses missed a key point: that with auto-insurance prices based on complicated formulas and personal data – including credit information and territories that companies are free to draw however they wish – it’s impossible to say that one company or another in general offers the best prices. That's why it's absolutely essential to shop around.

I’ve seen this over and over again, and I see it in the calls and e-mails from readers today: The same company can offer the best deal to one customer and the worst deal to another – and that second person can living across the region or across the street.

The point is to check as many prices as possible. And that' no slap at Hartford or AARP.

Tales of the Marketplace, Vol. 1

I'm on vacation for two weeks, but for a consumer writer, time away from the office often doubles as field work. I've already had one experience that has me pondering whether an unfamiliar practice is fair or foul. I'm not ready to condemn it – for now, I'm just interested in hearing what other people think. If you have information or a reaction, hit the comment button and let me know.

The story takes place at Lenscrafters, where I was shopping for a new pair of eyeglasses that I needed in a hurry, before I hit the road. As I tried on frames, I saw a sign offering $100 off a new pair of prescription glasses. I even asked the manager about it; she assured me it applied to all prescription eyeglasses orders.

That was welcome news. Though I'm fortunate to have eye-care coverage under my health-insurance plan, I knew it paid a limited amount. I expected the balance for my bifocal, scratch-resistant lenses and new frame would still come to more than $200. When she totaled the tab, she confirmed I was right.

But a funny thing happened when it came time to pay. No $100 discount.

Why not? Because my insurance paid part of the cost, and the rule was one subsidy per order. "You don't get both," she told me.

I didn't raise a fuss – I wanted the glasses, and figured a protest might mean a delay. Besides, I could easily imagine a rationale, perhaps advanced by some thoughtful employee at a corporate retreat: "You know, these prices are pretty stiff, especially for folks who don't get a subsidy from their insurance company. Maybe we should target a discount for the people who have to pay he full price." I'd have no quarrel with a pharmacy taking that approach for prescription drugs, because I know cash-paying customers are stuck paying artificially high prices for them. In effect, they subsidize deep discounts negotiated by insurers and pharmacy benefit managers.

But as far as I know, this Lenscrafters' policy is something else. My insurer hasn't negotiated a special price – unless there are some sorts of undisclosed rebates involved. The insurer simply pays part of the tab, and I pay the rest. The bottom line seems to be that Lenscrafters takes in $100 more for a pair of glasses from somebody with insurance than from somebody without.

Justified or not? Tell me what you think – or if I'm looking at this through a faulty lens.

Help writing a complaint letter is just a click away

In this age of instant communication, letter writing sometimes seems a lost art, eclipsed not just by the telephone but by e-mail, instant messaging, even cell-phone texting.

That's sad for those who cherish the care and thoughtfulness of an old-fashioned letter – even one composed on a computer. But for a dissatisfied consumer, it can be costly, too. Sometimes a written complaint is the only way to get someone's attention. Sometimes it's necessary to preserve your legal rights. And it's a crucial step if you'll ever need to document the facts of your complaint.

Here's the good news. The Internet may have contributed to a common discomfort with letter writing, but it also can lead to a solution, through its wealth of sample complaint letters that can be cut, pasted and modified to the specifics of almost any situation.

Here are a few that I've found in a quick search – use them, or look for your own.

Have a problem with a product? The Federal Citizen Information Center in Pueblo, Colorado, is is a great resource for all sorts of information, much of it available on its Consumer Action Website. It offers a generic sample complaint letter – in printer-ready form, no less – that's adaptable for gripes about virtually any goods or services.

But the Web’s real advantage is its specificity.

Say you have a problem with a mortgage-loan service company, perhaps related to the transfer of your loan, problems with escrow, or the imposition of unreasonable fees. It may be covered by the federal Real Estate Settlement Procedures Act; this FTC mortgage-rights brochure will help you figure that out. And it includes a sample letter you can use to try to enforce your rights.

What about a problem with a credit-card account? Bankrate.com offers this sample letter for disputing a charge.

Or say you’ve been dunned by a company for a payment you’ve already made. Scroll through this “How to Complain and Get Results” brochure from the Indiana Department of Financial Institutions, and you’ll find a Microsoft Word formatted complaint letter that fits the bill, so to speak.

How about a complaint about cell-phone service? Consumers Union has a sample letter to a wireless carrier that yours will hear loud and clear. It also has a page full of carriers’ addresses, plus instructions for filing complaints with state and federal regulators, if you can’t solve a problem on your own.

You can even find a sample letter of complaint about a fabric-care problem. No longer do you have to create one out of whole cloth.

Obviously, I'm just scratching the surface. With a search engine and a little imagination, you’ll easily find scores of sample letters. But before you start, a couple of caveats:

One is that you’ll also find a number of sites, some managed by law firms, that will offer to draft a letter on your behalf – for a fee. You might ultimately need legal advice in any dispute. But you can probably take the first step yourself, with a little help from the Internet.

The other is that, just like in elementary school, neatness counts, so take care that your cut-and-paste letter doesn't look like a sloppy clip job. And be sure to proofread carefully. Trust me: Your complaint will carry more weight if it doesn't include a return address like "1234 Main Street, Anywhereville, USA."

Above all, remember your goal: A good letter gets your gripe on the record and gives a company a clear chance to do the right thing. With any luck, that's all you'll need to do.

Two titans on a level playing field: Who gets crushed?

Ever since June's Brand X decision, in which the Supreme Court ruled that cable companies weren't required to sell access to their lines to competing Internet services, everybody has assumed that the FCC would soon give in to a longstanding demand for a "level playing field" from the Baby Bell phone companies, which usually own the only alternative "last-mile" of wire to people's homes.

Today, the Federal Communications Commission did the deed. The text of its decision isn't out yet, and won't be at least until next week, but the outline is clear from the main news release and the accompanying commissioners' statements. It seems as if the FCC's two Democrats, who concurred in the ruling supported (and presumably written) by the two Republicans, traded their tacit approval of the inevitable with what they hope will be tangible consumer protections.

Their biggest achievement may be this policy statement, titled "New Principles Preserve and Promote Open and Interconnected Nature of Public Internet." In theory, it should prevent companies like Verizon or Comcast from blocking access to Internet sites that sell content or services that compete with what they sell – think VoIP phone services, or movies-on-demand – or intentionally undermining those sites' performance. In practice, it remains to be seen whether that policy can be enforced.

Beyond that, it's hard to see the promotion of a dupoly – a well-entrenched cable franchisee vs. incumbent Baby Bell – as an improvement. The FCC's ruling does include some provisions that may help alternative DSL providers such as Covad survive, but it will be much more plainly at the sufference of Verizon, SBC and the rest of the companies that inherited Ma Bell's old network. (To see how two leading consumer groups reacted, see my previous posting.)

In the short run, duopoly is the best we'll get in most places unless Congress takes steps to counter the laissez-faire legacy of former FCC Chairman Michael Powell, who argued that the only real competition would come from companies that own their own networks.

The picture is cloudier here than almost anywhere else. Philadelphians might enjoy extra competition if the city succeeds with its plan for a municipal wireless-broadband network. But Verizon's plan to invest in a fiber-optic system and go head-to-head with Comcast will be hobbled by another set of arcane rules: the ones that govern access to programming.

The problem is this: Even if Powell's dream comes true – if this kind of big-boys-only competition eventually breeds broadband innovation from fixed-wireless providers or electric utilities or somebody else – there will never be meaningful competition with companies like Comcast if they can control and limit access to content, as Comcast does in Philadelphia by refusing to share Comcast SportsNet with satellite competitors.

At the very least, we need Congress to close the "terrestrial loophole" – the rule that enables Comcast to keep that must-have local programming to itself.

If that issue indeed comes up this fall in Senate hearings, as rumors on Capitol Hill suggest, Philadelphians need to make some noise – just as we're urged to do at those Phillies and Sixers games we can't see on TV without paying Comcast's toll.

Consumer groups blast the FCC's 'level playing field' for Baby Bells

I have mixed feelings about the wisdom of the Federal Communications Commission's decisions today to level the playing field between DSL and cable broadband providers, as I explain in a separate posting. Under the circumstances, the leading pro-consumer voices on the commission, Michael Copps and Jonathan Adelstein, may have made the best deal possible.

But here's a less-mixed review from consumer advocates who follow FCC policy more closely than anyone else who holds down a day job. There's no on-line link yet, so I'm just cutting and pasting the text:

(Washington, DC) – Consumers Union (CU) and the Consumer Federation of America (CFA) warned that today's Federal Communications Commission (FCC) order restricting access of competitors to digital subscriber lines (DSL) will force existing independent broadband providers out of the market and drive up the price of high-speed Internet for consumers.

"The Federal Communications Commission continues down the wrong path on deregulation, allowing giant phone companies to tighten their stranglehold on competition, stifle innovation, and reach even deeper into the pockets of consumers," said Gene Kimmelman, Public Policy Director at CU. "Consumers will be forced to pay higher prices for Internet access."

"Open access requirements for Bell-owned DSL lines are responsible for some of the only true competition that exists in the residential high-speed Internet market today," said Mark Cooper, Research Director at CFA. "Unfortunately, the FCC has eliminated these requirements and virtually guaranteed those consumers lucky enough to have both cable and DSL options will have to buy a package of high-priced services they may not want just to get high-speed Internet."

Despite disagreeing with the FCC's approach to DSL lines, the consumer groups applauded the FCC's adoption of principles providing guidance that cable and telephone companies should allow their subscribers to use the Internet as they wish. But, the groups cautioned the policy did not include enforcement measures.

"The policy may help to prevent cable and telephone companies from using their monopoly power to block consumer access to websites, prohibit their use of competing Internet telephone service, or prevent them from using computer applications" said Cooper. "This is an important clarification to ensure consumer choices and rights to diverse points of view."

Cooper added, "However, if the Commission fails to make clear its intention to act promptly to enforce these principles and take action against any violations, it provides mere lip service to consumer's right to unfettered access to Internet content and services. A right without a remedy is no right at all. If the FCC won't make that clear, Congress must."

"The FCC's action today underscores the need for a competitive broadband alternative that does not depend on cable or phone lines-wireless Internet," said Kimmelman. "As the FCC shuts off competitor access to DSL and cable lines, it should free up airwaves to foster affordable wireless Internet offered by independent companies."

Regulation, shmegulation

To a journalist, there are few things more frustrating than realizing you have unknowingly passed along misleading information.

For years, I've told readers that the Telecommunications Act of 1996 deregulated cable-TV prices, with one exception: the price of limited-basic service and of the equipment needed to watch it. Those are still regulated by local franchise authorities, I've repeated each time the subject came up.

But what does that mean? Last month, while researching a column on the question of why Comcast requires its Philadelphia customers to rent a converter box – and why it could raise the price tag for a converter by about 20 percent in one year – I discovered the answer: less than you might think. (To read last week's column, click here.)

City officials say Comcast fills out Federal Communications Commission forms and uses FCC formulas to compute a "maximum allowable price" for each regulated service. As long as it comes in beneath that price, all the city can do is nod approvingly. Moreover, Comcast isn't just allowed to recover the costs of these devices that it says we must have to protect the security of its cable signal. It's guaranteed a profit on its investment in them.

Does any outsider examine a cable franchisee's computations? The city doesn't – it doesn't have the expertise, city officials say. Nor, as far as I can tell, does the FCC.

So how would anybody, anywhere, know whether a cable company was cooking its books? They wouldn't.

Stay tuned. I'm still trying to figure out why Comcast's maximum allowable price for converters could change so dramatically from one year to the next. City residents who subscribe to Comcast's standard "expanded-basic" service tier now pay almost $5 a month for a converter and remote.

I'll let you know what I find.

Alice in Spyware Land

The battle over adware just gets curiouser and curiouser.

Adware makers say they're Internet visionaries. Claria Corp., for instance, boasts that it can boost "conversion" rates, in which a click is converted to a sale, by as much as thirty-fold. What revenue-hungry publisher wouldn't salivate at the thought? Yahoo alone lists partnerships with Claria and more than 30 other "ad networks." (Click here to see the list.)

But if Claria has become more respectable – its latest move is a divorce from Kazaa, its longtime download partner – it also has a past to live down. That's why so many Web watchers are shocked at rumors that Claria may be a Microsoft acquisition target.

In a recent posting on his Web site, Ben Edelman, the whiz-kid Harvard spyware expert, explores recent developments, including the decision by Microsoft and other distributors of anti-spyware tools to go easy on Claria's adware.

Edelman has long documented adware makers' threats against anti-spyware companies (click here to see his compilation). He doesn't necessarily believe Bill Gates' company is giving Claria special treatment. Instead, he shows how its recent decision to advise computer to "ignore" some adware fits a pattern of bowing to adware makers' arguments. (Here's Microsoft's own explanation of Claria's treatment.)

To Edelman, that pattern demonstrates the folly of legitimizing adware, even if Microsoft feels compelled to compete as Google and others experiment with their own adware-like innovations. As always, Edelman brings the argument down from the theoretical to the practical:

"These odd recommendations demonstrate the misguidedness of Microsoft's 'Ignore' classification. I know of no PC technician who advises users to ignore infection with any of these programs, which give users extra ads without anything offering substantial in return. If Bill Gates sought to clean up a friend's PC, I bet he'd want all these programs gone. Competing anti-spyware programs all recommend removal. Yet somehow Microsoft's AntiSpyware app sees no problem."

Do you really want any more software that can gum up your computer's performance – even if it can deliver brilliantly targeted ads?

Not me.

What payday lenders really fear

Since a federal-law loophole already allows payday lenders to do business openly in Pennsylvania, why are leading purveyors of these ultra-high-rate loans pushing the state legislature to enact a payday-lending law?

Why, in other words, would they want this small measure of added legitimacy, especially if the price is more regulation and oversight by the state Department of Banking?

State Rep. Kathy Manderino has been asking herself that same question.

“When’s the last time an industry came to government and said regulate me, regulate me? They just don’t do it,” Manderino says.

Manderino is pretty sure she knows the answer. The key, she says, lies in growing resistance among federal regulators to so-called “rent-a-bank” arrangements — the kind that enable Cash Today in Philadelphia to claim that it isn’t making one- or two-week loans to the borrowers who visit its stores. Some bank in Delaware is.

Of all the federal banking regulators, only the Federal Deposit Insurance Corp. still allows rent-a-bank arrangements. And the FDIC has recently done some clamping down of its own.

The FDIC recently warned County Bank of Rehoboth Beach, the lender behind Cash Today, that it may put its depositors at risk by allowing out-of-state payday lenders to make loans without adequate bank oversight.

The FDIC also issued guidelines that impose new limits on payday loans — stricter limits than those in the legislation being pushed in Pennsylvania. (To see the FDIC guidelines on payday lending, click here.)

Payday lenders are plainly worried that the new rules will cut into their profits. But their ultimate fear is that the FDIC will join other regulators and just say no to rent-a-bank payday loans. That would drive them out of states that have declined to give their business a safe harbor, or underground — back, some would say, to their loanshark origins.

Manderino answers her own question: “Why do payday lenders want the state of Pennsylvania to regulate them? Because they’re afraid that the FDIC will put a stop to their business.”

Web is great place for health info, but no substitute for medical care

Today’s Consumer Watch column about new ratings of the top 20 health-information Web sites drew a quick response – and a word of caution – from Kathy Dibling, of Williamstown, N.J., who says she once turned to the Web whenever she had medical concerns but doesn't anymore.

“I thought I could diagnose myself,” Dibling says. “I always ended up doing it incorrectly and increasing my anxiety level. So I stopped. Now, I just call the doctor.”

“These sites are very useful if you know what the problem is or are fairly sure,” Dibling adds. But she argues, as some doctors do, that in the wrong patient’s hands, a little knowledge can be a dangerous thing.

I had that point in mind when I wrote that consumers use these sites, for better or worse, to guide critical choices. But Dibling's e-mail makes me realize that I should have addressed it head-on. So let me emphasize it here:

A smart patient should never substitute his or her own research – online or at the library – for a visit to the doctor.

But two other points are also worth emphasis:

One is that by becoming an informed and knowledgeable consumer of health services, you can sometimes help your doctor reach the right diagnosis; occasionally, some patients may find good reason to seek another opinion, or even a more trustworthy doctor.

The other point is that, no matter how you use the health information you find on the Web, the best-rated sites are likely to leave you better-informed. That's why these new Consumer Health WebWatch ratings are valuable. (To see them, click here.)

But don’t fall into the trap that Dibling did, of using the Internet instead of seeing a doctor.

And remember: No matter how well-informed you are, the doctor is the one with the medical education and training, and the experience in knowing how to apply them.

The mattress problem, and other consumer woes

In the early days of e-commerce, oh so many years ago, there was much talk about the Internet's ability to foster what’s sometimes called “perfect pricing.”

The idea was that the Internet could approach the ideal of a perfectly functioning market, where everybody has complete information, the invisible hand works its magic, and profit is reduced to the barest minimum – just enough, presumably, to provide incentive for producers to produce instead of giving up and fleeing to the Bahamas with last year's earnings.

Even Bill Gates weighed in on the subject, arguing in his 1995 book, The Road Ahead, that the Internet would lead to “friction-free capitalism,” where buyers and sellers would cut out the middleman, markets would function with maximum efficiency, and consumers would reap the rewards. Some contrarians wondered if capitalism could actually survive perfect pricing, if it ever materialized on a wide scale, but those heady days were tough times for skeptics.

Well, guess what? It never happened.

The closest we’ve come is eBay, where buyers and sellers, in theory, negotiate directly. EBay isn’t always what it seems – it has suffered from the problem of shill bidders, and from the fact that individual sellers can be hard to distinguish from big businesses – but, at its best, it operates like a nationwide bazaar.

Elsewhere, most sellers still know far more than most buyers, and can use that knowledge to keep consumers off balance. And one technique that has moved online quite happily is what Joe Turow would call "the mattress problem."

Ever try to comparison shop for mattresses? You've probably noticed what Turow has: Manufacturers and retailers go out of their way to dodge head-to-head price and quality comparisons. It’s rarely apples to apples, or even to oranges. Sometimes it’s more like apples to begonias.

Internet marketers have adopted that tactic, says Turow, a professor at the University of Pennsylvania’s Annenberg School for Communication. Many now offer their best deals in forms, such as travel packages, that defy straight-up comparisons.

But that's not the only impediment to perfect, friction-free e-commerce, or even the biggest one. According to a new study by Turow and two grad students, some marketers are using the Internet's advantages to sharpen their edge against customers who'll never know what's hit them.

Turow's study (to see it, click here) reveals widespread consumer ignorance about how personal and financial data are bought and sold nowadays. Nor do consumers understand “price discrimination” – the practice, online or offline, of giving different prices to different people in differing circumstances, sometimes based on that personal information.

In case you're wondering, price discrimination is perfectly legal, as long as a seller doesn’t discriminate against a “protected class,” such as by charging more to Asian people or Anglicans. Benign examples abound, such as senior-citizen discounts, or doctors’ charging less to the poor. So do cases where businesses openly use leverage – as when airlines, for instance, charge more to those who make last-minute plans.

But Turow believes that a more insidious form of price discrimination has emerged from the Internet's capacity to present individual buyers with customized prices.

With so much data for sale, businesses can easily profile our personal finances and habits. As a result, I might get one price while you get another, for reasons known only to the sellers and their computer programmers. Loyal customers may still get discounts, as they do at groceries that reward regular shoppers. But they also might get charged more – say, by a business that can identify those whose loyalty seems unshakable – without ever even noticing.

It's a crafty, smart practice that many consumers would abhor if they knew about it. It's made possible by our extremely loose laws on the privacy of most personal data.

The one thing it isn't is “perfect pricing” – unless the perfection you’re talking about is a business' ability to charge every customer what his or her pocketbook and attention span will bear.

Has drug advertising driven switches from Vioxx?

Did heavy marketing after the withdrawal of Vioxx lead to a spike in prescriptions — and in price — for Mobic, another anti-inflammatory drug used to treat patients with arthritis?

That intriguing question was raised today by Consumers Union, in a report on trends since Vioxx was removed from the market in September because of evidence linking it to increased risk of heart attacks and strokes.

According to the report (read it here), prescriptions for Mobic rose 136 percent in the six months following Vioxx’s withdrawal, and Mobic’s price for cash-paying retail customers climbed 9 percent, to an average of $111 or $157, depending on dose.

Mobic is not a COX-2 drug like Vioxx, Bextra or Celebrex — the only one of the three still on the market.

Instead, it’s one of the most recently developed brand-name entrants in the broader category of nonsteroidal anti-inflammatories, or NSAIDs, which includes the COX-2s as well as generic ibuprofen and naproxen, drugs that are also available over-the-counter.

Not coincidentally, that makes it one of the most expensive alternatives for patients who were being treated with Vioxx or Bextra and whose doctors want to avoid Celebrex. Prescriptions for Celebrex have fallen by more than 50 percent.

(The Food and Drug Administration says evidence of increased risks from Celebrex is inconclusive. To read the FDA’s most recent analysis of overall NSAID risks, click here. )

The Consumers Union report says the average retail price for a month’s worth of 7.5-mg tablets of Mobic rose 7 percent, from $104 to $111. For the 15-mg dose, it rose 11 percent, from $142 to $157.

Prices for some doses of prescription ibuprofen and naproxen also rose, though others stayed level or dropped. But the prices were already much lower. In March 2005, a month’s supply of prescription-strength ibuprofen ranged from $26 to $30. Generic versions of prescription-strength naproxen cost $44 to $50 a month.

So is the mass switch to Mobic a good choice by doctors, or something else?

Consumers Union says it may partly “reflect the belief among some doctors that Mobic may be easier on the stomach (the advantage touted for the COX-2s) — a belief fostered by some discussion in the professional literature but not endorsed by the FDA, many experts, or supported by definitive clinical trial data.”

But the report concludes that it’s more likely just further evidence of the distorting effect of drug advertising, both to doctors and directly to consumers.

“Doctors and consumers are unquestionably swayed by the ads and promotions for costly new medicines, even when lower-cost options that are just as effective are available,” says study author Steven Findlay.

Many doctors also make the point that rare side-effects for any medication take a while to get noticed and documented. A newer drug may indeed be safer and better. But it also may pose unexpected risks that won’t show up for a while.

So go ahead and ask your doctor about Mobic, or the latest brand-name medicine you read or hear about.

Then ask why it’s being prescribed, and whether an older, less-expensive drug might be a better choice.

Rating the experience of Internet shoppers

How do Internet shoppers rate the top e-retailers? Not as well as many would like, according to a study out today by ForeSee Results, which uses the University of Michigan’s American Customer Satisfaction Index to rank the top 40 online sellers.

The Ann Arbor, Mich., company recently surveyed 11,000 people who had visited at least one of the 40 companies' sites within the previous two weeks. (To learn more, click here.)

They didn’t necessarily make a purchase. ForeSee says it’s interested in the reactions of anyone who browses the sites, because it believes the attitudes of those who shop without buying are at least as important, in the long run, as the attitudes of those who click and spend.

Among its main conclusions:

* Web shoppers aren’t especially price-sensitive, even if the Internet is often the first place people to go to compare prices.
* Some of the biggest names in traditional retailing are doing a pretty poor job online.

(Full disclosure: Even the worst-ranked of these e-retailers look good when compared with some other industries, including my own. Newspapers in general scored a 63, tying us with wireless phone companies, according to a recent Inquirer article by my colleague Tony Gnoffo about the University of Michigan's latest survey. We were ahead only of cable and satellite-TV companies, which came in at 61. On the other hand, the U.S. Postal Service scored a 73 – better than Buy.com, CompUSA.com, Costco.com, and Kmart.com.)

Here are 42 Web sites ranked by browser satisfaction on a scale, on which 100 would be completely satisfied. (The number is parentheses is the e-retailer’s ranking by revenue – there are more than 40 sites listed because some companies own multiple sites. I’ve also omitted Cornerstone Brands, 37th in revenue, because there was insufficient data to rank its sites.)


Netflix.com (17th in revenue) – 85
Amazon.com (1) – 84
QVC.com (28) – 84
Newegg.com (9) – 82
LLBean.com (38) – 82
OldNavy.com (21) – 81
TigerDirect.com (32) – 81
Apple.com (16) – 80
Avon.com (19) – 80
BN.com (Barnes & Noble) (20) – 80
Williams-Sonoma.com (22) – 80
HarryandDavid.com (34) – 80
HSN.com (Home Shopping Network) (31) – 79
Gap.com (21) – 78
Drugstore.com (27) – 78
EddieBauer.com (29) – 78
PotteryBarn.com (27) – 77
Dell.com (2) – 77
HPShopping.com (Hewlett-Packard) (5) – 77
JCPenney.com (11) – 77
Quixtar.com (14) – 77
ToysRUs.com (23) – 77
OfficeDepot.com (3) – 75
Staples.com (4) – 75
BestBuy.com (10) – 75
Walmart.com (12) – 75
Overstock.com (18) – 75
1800Flowers.com (30) – 75
NeimanMarcus.com (40) – 75
Sears.com (6) – 74
SonyStyle.com (7) – 74
Target.com (13) – 74
CircuitCity.com (15) – 74
FTD.com (39) – 74
BananaRepublic.com (21) – 73
CDW.com (CDW Corp.) (8) – 73
Gateway.com (24) – 73
Chadwicks.com (25) – 73
Buy.com (33 ) – 71
CompUSA.com (35) – 71
Costco.com (26) – 70
Kmart.com (36) – 69

More warranty warnings: Steer clear of misleading pitches

Jeff Ketterer, of Newtown, thinks my recent warnings about service contracts, often called “extended warranties,” still don’t go far enough, and raises a point that probably can’t be overemphasized: Some companies use highly questionable tactics to push third-party warranties on unsuspecting consumers.

If you read your junk mail, you know what I’m talking about: The pitches often seem designed to fool you into thinking that you’re being offered an extension on your original warranty. In all likelihood, the companies are buying mailing lists of vehicle owners whose warranties are about to lapse. Nowadays, such information is routinely being bought and sold.

Ketterer saw two recently — sent to his mother — that seemed designed to confuse. He was there to prevent her falling for the pitch, but he worries about others who are vulnerable.
“My mom is 80 years old. She can't be the only person out there getting these things,” he says.

Some third-party extended warranties undoubtedly come from good companies that will do what they say. But before you sign up, look carefully into any company you’re considering.

Start with the Better Business Bureau, and also do a broader Internet search for complaints to make sure the company hasn’t been targeted by law-enforcement officials. But remember, too, that in any field, the worst scammers know how to hide, sometimes by changing names or addresses.

If you’re tempted to buy such coverage, the best option is an actual extension of the full warranty from the manufacturer, if one is available.

If a car dealer offers you a service contract, find out who’s behind it, and why the dealer considers that company trustworthy.

Here’s some advice on auto service contracts from the Federal Trade Commission (to see its whole brochure, click here. ):

Many service contracts sold by dealers are handled by independent companies called administrators. Administrators act as claims adjusters, authorizing the payment of claims to any dealers under the contract. If you have a dispute over whether a claim should be paid, deal with the administrator.

If the administrator goes out of business, the dealership still may be obligated to perform under the contract. The reverse also may be true. If the dealer goes out of business, the administrator may be required to fulfill the terms of the contract. Whether you have recourse depends on your contract's terms and/or your state's laws.

Learn about the reputation of the dealer and the administrator. Ask for references and check them out. You also can contact your local or state consumer protection office, state Department of Motor Vehicles, local Better Business Bureau, or local automobile dealers association to find out if they have public information on the firms. Look for the phone numbers and addresses in your telephone directory.

Find out how long the dealer or administrator has been in business, and try to determine whether they have the financial resources to meet their contractual obligations. Individual car dealers or dealer associations may set aside funds or buy insurance to cover future claims. Some independent companies are insured against a sudden rush of claims.

My advice: Always remember that the fine print matters. You need to know what a service contract covers and what it doesn’t cover. Equally important, you need to know who stands behind it.

And remember, too, that auto manufacturers often stand behind their products beyond the original warranty period. According to an estimate in the Center for Auto Safety's report on hidden warranties, as many as 500 secret warranties are probably in effect at any given time. If a problem is related to a design defect, you may be covered even without a service contract.

Extended warranties: Should you just say no?

Readers weighed in heavily last week against buying extended warranties for most products, after last Monday's column about a Haddonfield woman who ran into trouble getting Sears to deal with her broken-down dishwasher.

Several complained of getting the hard sell for coverage, even when they were buying furniture. But getting their warranties enforced was another matter altogether.

Diane Sufler of Huntington Valley says she was promised a warranty that covered “everything, even cigarette burns and punctures” when she bought a leather sofa set several years ago at a Willow Grove department store. It was a promise that should have reminded her of the adage, "If something sounds too good to be true, it probably is." But it's hard to fault her for trusting what she was told by a reputable retailer.

My husband has never, in fifteen years of marriage, bought an extended warranty on anything. He is of the opinion that they are not worth it, as whatever goes wrong is usually excluded. Unfortunately, he was not with me when I bought the furniture, and I succumbed. My feeling was that this furniture was going to be in my family room and, with two children and a cat, was going to take a beating.
In May 2004, I called as my cat had caused small scratches in the sofa and chair. I was informed that damage caused by pets was not covered. I commented that the salesman had told me "everything" was covered and searched the literature I received with the warranty for any reference to pet damage. No exclusions are noted. Score one for my husband.

That wasn’t the end of her frustrations. Sufler also tried to invoke the warranty a while later after trying unsuccessfully to remove a spot from the sofa. After about three months’ worth of frustrating phone calls and, finally, a visit from the outside company servicing the warranty, she got an offer: She could pick a new sofa that sold for up to $630, or take $200 in cash – exactly what the warranty had cost her.

That would be like paying $1,000 for homeowners insurance and having the company offer you your $1,000 back when your house burns down. Is that how a warranty is supposed to work?

Other readers argued that thinking of extended warranties as insurance illustrates why they are generally such a bad deal – a point that Jerome Bacchetti of Moorestown says I missed in last week’s column

Any insurance, Bacchetti writes, is worth buying only if the loss you’re insuring against could cause you serious economic harm. Otherwise, it’s a losing proposition, because you’ll be paying for covered losses plus the insurance company’s cost of doing business.

Example 1: You are the sole bread winner of a family in which several minor children depend on your income. If you died or became disabled, the family would be in serious trouble. You must have high levels of life insurance and disability insurance.

Example 2: You buy new tires for your car every few years. You can afford the loss of a tire from a “road hazard.” It makes no sense to buy road-hazard insurance, since over the years you will pay more for the insurance than for replacing damaged tires.

Appliances tend to fall in the same category as tires. They are highly reliable, don’t cost a lot to replace, and an annual repair bill costs about the same as the annual insurance premium. Plus, without the insurance, you have more control over who will do the repairs.

Bacchetti would forgo coverage on a computer for those reasons, plus one more: We know we’ll want the latest gizmos, anyway. “If one breaks,” he says, “it gives us an excuse to buy a new one.”

Fred Schumacher of King of Prussia says he’s ready to respond whenever a sales clerk pushes an extended warranty by “citing all the dire things that could go wrong”:

The answer is, of course: If it’s that bad, maybe I shouldn't buy this.

Schumacher continues:

Another aspect to consider is what reliability people call “infant mortality,” which says that if something is going to fail, it most likely will fail early in its life and then be failure-free for X number of years; then failures will occur more frequently as time goes on, till the product’s end-of-life is reached. I'm sure that manufacturers have this information on each of their products. It would be nice to see them, but I'm sure that [companies keep this] confidential. …

I have a rule of thumb, that if an appliance is over 10 years old and it fails, just get a new one, don’t even call a serviceman.

Other readers warned of pitfalls lurking in the fine print. For instance, Richard Herbert, of Oxford, Pa., was one of several who pointed out that some extended warranties don’t last as long as promised, because they begin right away, not when the original warranty expires.

And Chuck Kilian of Levittown reminded me about the confusion that results when both manufacturers and retailers offer coverage on the same product – confusion that almost proved costly to his 78-year-old mother, who was baffled when she got a letter recently from General Electric offering her extended-warranty coverage on her dishwasher. Hadn’t she bought the four-year extended warranty when she purchased it?

Kilian eventually straightened things out: The warranty came from the retailer, a home-supply chain. But Kilian wonders how often consumers wind up with worthless double coverage. “What a racket!” he says.

Getting started

My editor says a blog should begin with introductions, so here goes.
I’m Jeff Gelles. I’ve been the consumer columnist at The Philadelphia Inquirer since 2001 and a consumer writer since 1996. When somebody asks what that means, I like to say that I cover the marketplace from a consumer’s perspective.
Consumer Inq isn’t just an attempt to re-create the same sort of coverage online. My hope is to use the Internet’s advantages – especially its immediacy and interactiveness – to take the genre where it’s never been before.
For that, I’ll need your help: questions, ideas, feedback. If you disagree with something, don’t be shy. I'll freely admit that I often know less about a subject than readers with firsthand experience. I want to learn all I can. (To contact me, click here or call 215-854-4558.)
After all, we're in this together. As a consumer writer, I strive to be dispassionate, but I have an undeniable conflict of interest: I'm a consumer, too.
Just like you, I shop at stores, surf the Web for information and bargains, and argue over the occasional late fee. I buy prescription drugs, and might even ask my doctor about a new one I hear about on TV. I get lured by some ads and put off by others. (You’ll never hear me defending online pop-ups, even if they do help pay the bills on this site.)
Just like you, I worry about insurance coverage, credit scores, and my wife’s aging automobile. I get spammed and phished and bothered by telemarketers – oh, excuse me, survey-takers.
Just like you, I’ve been slammed and crammed and maybe even scammed.
As a consumer writer, I gather information on all these subjects, and many more, on a daily basis. Consumer Inq will allow me to share more of that, and more quickly, than I can in the paper.
Of course, in my role as a journalist, I have some advantages over ordinary consumers. I can usually get past the endless phone trees and voice mail at a company, and get answers if not action. I wish I could intervene on your behalf, but unless it’s a subject I’m writing about, I really can’t.
But I can make this promise: Read Consumer Inq regularly, along with my columns in The Inquirer, and you’ll become a smarter, more knowledgeable consumer. And the more you know, the better off you'll be.