Tuesday, January 02, 2007

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.

Sunday, December 24, 2006

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:


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.


Requests for a security freeze should be submitted via certified or overnight mail to:
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.


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:

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.

Thursday, June 29, 2006

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.

Wednesday, June 21, 2006

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.

Tuesday, June 20, 2006

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?

Monday, June 19, 2006

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.

Thursday, June 15, 2006

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.

Wednesday, June 14, 2006

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.

Tuesday, June 13, 2006

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.)

Monday, June 12, 2006

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.

Tuesday, May 30, 2006

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?

Thursday, May 25, 2006

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.


Acopia Networks
Adaptive Marketing LLC
Aegon Direct Marketing Services, Inc.
American Association of Libraries
Association of Research Libraries
Awow Communications
Borsetti & Co.
Business Software Alliance
Christian Coalition
Circumedia LLC
CommPartners Holding Company
Comunicano, Inc.
Consumer Federation of America
Consumers Union
Cornerstone Brands, Inc.
Dagdamor Media
Data Foundry
Dave Pettito Direct
eBrands Commerce Group
Economics & Technology, Inc.
Elaine P. Dine
Electronic Retailing Association
Entertainment Publications
Free Press
Free World Dialup
GotVoice, Inc.
Graceline Canada
Hawthorne Direct
Home Shopping Network
Iceland Health Inc.
iFreedom Communications
InPulse Response
Interactive Travel Services Association
Interval International
Invens Capital
Isen.com, LLC
IVR Technologies
J. Arnold & Associates
Lafayette Group, Inc.
Lingo, Inc.
McFadden Associates
MCM Telecom
Media Access Project
Media Partners Worldwide
Mercury Media
Merrick Group
Miller & Van Eaton
National Retail Federation
Primus Telecommunications
Product Partners LLC
Public Knowledge
S & B Technical Products
Sling Media Inc.
Sonus Capital Management
Sony Electronics Inc.
Symercy Financial Corp.
Telekom Austria
VI Technologies
WCW Networks

Wednesday, May 17, 2006

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.

Monday, April 17, 2006

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.

Wednesday, March 15, 2006

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.

Monday, March 13, 2006

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.

Tuesday, March 07, 2006

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.

Monday, March 06, 2006

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?

Tuesday, February 28, 2006

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

Monday, February 27, 2006

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.

Thursday, February 09, 2006

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.

Wednesday, February 08, 2006

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.

Monday, February 06, 2006

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.

Thursday, January 12, 2006

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.

Friday, November 18, 2005

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?